How Tort Reform Failed in Texas

Haven’t states like Texas had success with tort reform?

Texas tort reform is a failure and a burden for everyone except the special interest groups who promoted it.

Texas is still at the bottom in important health care areas.

According to S. News and World Report Texas ranks:

  • 50th in nursing home quality.
  • 49th in health care affordability.
  • 46th in health care access.

Arkansas ranks ahead of Texas in each of these categories:

  • 31st in nursing home quality.
  • 40th in health care affordability.
  • 38th in health care access. (29)

Under Texas tort reform, the cost of health care was supposed to be lower because doctors would pay less for malpractice insurance and would no longer practice defensive medicine, i.e., ordering unnecessary and expensive tests and procedures for fear of being sued. Any savings for doctors does not seem to be passed on to patients.

The practice of defensive medicine, and the cost, remains the same as before.(11)

Patient health care insurance premiums have gone up.  (11)

Healthcare spending has increased annually everywhere including in the states with caps.  (9)

The promised increase in the number of doctors in Texas due to tort reform did not occur.

Studies indicate that tort reform has little or no impact on physician supply. There is no evidence that the number of physicians per capita practicing in Texas is larger than it would have been without tort reform, but rather it is other, larger forces affecting physician supply, both in Texas and nationally. (13) The rate of increase in the number of doctors treating patients has gone up, as has the population, but the rate of increase has slowed since tort reform. One study found the number of direct-care physicians grew by more than 9 percent prior to tort reform, and about 4 percent afterward. (9)

There was no net increase in the number of doctors caring for patients. Statistics showing increased number of licenses issued are misleading since they do not account for doctors retiring or leaving the state and doctors who do research or teach and do not directly care for patients. (11)  Only 39 percent of licensed Texas physicians actively treat patients, down from 41 percent before tort reform. (9)

There was no exodus of doctors before Texas tort reform and there has been no huge increase since they passed tort reform. (11)

The number of doctors in rural Texas has declined since tort reform was passed.

There is still a shortage of doctors in rural communities. (9)

The number of doctors in rural areas has declined since Texas passed tort reform. Physician growth in rural Texas fell by 1 percent since reform, after having grown more than 23 percent prior to the law. (9)

Tort reform in Texas has not stopped rural hospitals from closing.

Tort reform has not stopped the closing of rural hospitals or increased the availability of emergency room care. Rural hospitals in the whole nation are in “crisis mode.” (26)  Most of the reasons for Texas rural closings are financial. (28)

Tort reform has not improved the Texas economy.

Tort reform has not improved the Texas economy as promised by the proponents.

The purported lagging economy before tort reform did not exist. (4)

There is evidence that the Texas tax structure, their lack of business regulation, and their oil and natural gas resources have helped the Texas economy.

After tort reform, the lawsuit climate rankings for Texas are lower. Rankings best to worst, Texas 2012 rank 36; 2017 rank 39.  Arkansas 2012 rank 35; 2017 rank 36. (Rankings based on tort liability systems as perceived by businesses, related to attractive places to locate.)  (25)

Nursing homes, hospitals, and doctors in Texas are less accountable now than before tort reform was passed.

A principle goal of tort law is to alter negligent behavior.  With the Texas tort reform law, there is less accountability for negligence or error. (1)

Wrongdoers can avoid liability.

Tort Reform has slowed down progress in patient safety initiatives. (16) Without the threat of lawsuits, there is no motivation to avoid carelessness and negligence.

Medical errors are increasing across the nation.  There is strong evidence that patient safety gradually falls after tort reforms. (2)   10% of all U.S. deaths are now due to medical error.  The third highest cause of death in the U.S. is medical error. (16)

Government studies confirm that there is an epidemic of abuse and neglect in our nation’s nursing homes. (19) Texas ranks dead last nationally in quality of nursing home care. (29)

Nursing home residents have been particularly vulnerable with tort reform.

Nursing homes no longer have the threat of lawsuits to deter abuse and neglect. Some have even stopped carrying liability insurance. “. . . some recent tort reform laws and Texas Supreme Court decisions have compromised the safety of our elder loved ones and make it increasingly difficult for abused and neglected nursing home residents to secure compensation for what they have endured . . . they represent reforms that give unfair advantages to the nursing homes themselves.” (24)

Those harmed in nursing homes have very little recourse. “Meritorious nursing home lawsuits serve as valuable tools for policing a nursing home industry rife with instances of negligence, malpractice, neglect, and abuse.” There is a “disparate effect of noneconomic damage caps on the elderly residents of nursing homes due to the general lack of meaningful economic damages among typical nursing home claimants. Noneconomic damage caps effectively doom many elder abuse and mistreatment claims by removing incentives for attorneys to accept these meritorious lawsuits.” (19)

Proponents of Texas tort reform led rural Texans to believe that their local hospital would close unless they voted for the Texas tort reform amendment.

The proponents knew the original tort reform law passed in 2003 violated the Texas constitution’s guarantee of access to the courts, the right “to go to court and hold someone accountable by presenting evidence to a jury of your peers.” (5) They put an amendment on the ballot which passed by a very narrow 1.2% margin because they deceived the rural people into believing they would lose their doctors if Proposition 12 did not pass.

Proponents of tort reform said the ultimate goal of the Texas reform was to stop frivolous lawsuits by capping damages awarded to victims in medical malpractice lawsuits. They said fewer lawyers would get rich on huge damage awards and that his would lead to more doctors practicing in Texas due to the lowered threat of a lawsuit and lower malpractice insurance premiums. (5)(4)

What Texas voters didn’t know.

With Prop 12 and caps on noneconomic damages in the law, the people have lost access to courts and juries.

The Legislature has set the amount of damages that can be awarded instead of allowing a jury to decide each case according to the circumstances.

Fewer lawyers can afford to practice tort law because many meritorious cases are not economically practical. Therefore, a person of limited means who would receive no economic damages cannot find a lawyer to take the case. (12)

While a wealthy person can afford to pay “up front” to cover the cost of the trial, a person of limited means cannot.

An injured person of limited means has no way to hold the wrongdoer accountable.

Which promises of Texas tort reform promoters actually occurred?   

Medical malpractice lawsuits declined.

The reform was successful in reducing the number of malpractice lawsuits—a 70% decrease in medical malpractice claims. (9)

The average amount awarded in medical malpractice lawsuits declined.

The average amount of damages fell, as would be expected by a cap.

Caps reduced damage awards by 73%. (1)

Malpractice claim payouts dropped more than 75%. (9)

Medical malpractice insurance premiums decreased.

Malpractice premiums are lower—as much as 50% lower. (1)

The number of trial lawyers decreased.

Fewer lawyers are practicing tort law. (12)

Many meritorious cases are not economically practical. The cost of preparing the case, paying expert witnesses, trying the case is too high to be covered by the cap-limited damages that might be awarded. (4)

Fewer health care clients (hospitals, healthcare corporations, nursing homes) are being sued so they have no need for a lawyer. (12)

References

  1. Moohr, Geraldine Szott and Sherman, Roger, Medical Malpractice Tort Reform in Texas: Treating Symptoms Rather than Seeking a Cure. Journal of Consumer & Commercial Law, Vol. 12, 2009; U of Houston Law Center No. 2010-A-37. Available at SSRN: https://ssrn.com/abstract=1707715
  2. Zabinski, Zenon and Black, Bernard S., The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform (February 15, 2015). Northwestern Law & Economics Research Paper No. 13-09. Available at SSRN: https://ssrn.com/abstract=2161362or http://dx.doi.org/10.2139/ssrn.2161362
  3. Swartz, Mimi. Hurt? Injured?  Need a Lawyer?  Too Bad!  Texas Monthly, November 2005.  https://www.texasmonthly.com/politics/hurt-injured-need-a-lawyer-too-bad/
  4. Lomax, John. Is It Time to Reform Tort Reform? Houstonia, October 2014.    https://www.houstoniamag.com/articles/2014/9/30/justice-undone-torn-reform-gone-too-far-october-2014
  5. Cohen, Steve. On Tort Reform, It’s Time to Declare Victory and Withdraw. Forbes, March 3, 2015.  https://www.forbes.com/sites/stevecohen/2015/03/02/on-tort-reform-its-time-to-declare-victory-and-withdraw/#20d5f10863ea
  6. Jacob, Steve. Studies:  Texas Tort Reform Has Had No Effect on Physician Supply, Lowering Costs.  D CEO Healthcare, August 28, 2012.  http://healthcare.dmagazine.com/2012/08/28/studies-texas-tort-reform-had-no-effect-on-physician-supply-lowering-costs/
  7. Rasansky, Jeff. Tort Reform FAILS to Reduce Health Care Costs in Texas.  Rasansky Law Firm, October 30, 2014.  https://www.jrlawfirm.com/blog/tort-reform-fails-to-reduce-health-care-costs-in-texas/
  8. Roser, Mary Ann. New study: Tort reform has not reduced health care costs in Texas, AMERICAN-STATESMAN, September 1, 2012.  https://www.statesman.com/news/local/new-study-tort-reform-has-not-reduced-health-care-costs-texas/XJHJL3GWWdJtVa35WvZCCL/
  9. Carter, Terry. Tort Reform Texas Style. ABA Journal, October 2006. http://www.abajournal.com/magazine/article/new_laws_and_med_mal_damage_caps_devastate_plaintiff_and_defense_firms_alik/
  10. Hyman, David A. and Silver, Charles and Black, Bernard S. and Paik, Myungho, Does Tort Reform Affect Physician Supply? Evidence from Texas (February 14, 2014). nearly final version, published in International Review of Law and Economics, Vol. 42, 2015, pp. 203-218; Northwestern Law & Econ Research Paper 12-11; Illinois Program in Law, Behavior and Social Science Paper No. LBSS12-12; U of Texas Law, Law and Econ Research Paper No. 225. Available at SSRN: https://ssrn.com/abstract=2047433or http://dx.doi.org/10.2139/ssrn.2047433
  11. 10 Years of Tort Reform in Texas Bring Fewer Suits, Lower Payouts. Insurance Journal, September 3, 2013. https://www.insurancejournal.com/news/southcentral/2013/09/03/303718.htm
  12. Martin Makary, M.D., M.P.H., and Michael Daniel, Johns Hopkins University School of Medicine. Study Suggests Medical Errors Now Third Leading Cause of Death in the U.S.  May 3, 2016. https://www.hopkinsmedicine.org/news/media/releases/study_suggests_medical_errors_now_third_leading_cause_of_death_in_the_us
  13. Rustad, Michael L. Neglecting the Neglected:  The Impact of Noneconomic Damage Caps on Meritorious Nursing Home Lawsuits. The Elder Law Journal, January 2007, Vol. 14 No. 2, p. 331, 2006; Suffolk University Law School Research Paper No. 07-07. http://publish.illinois.edu/elderlawjournal/files/2015/02/Rustad.pdf
  14. Hernandez, Nina and Annamarya Scaccia. Sounding the Alarm on Texas’ Nursing Home System.  The Austin Chronicle, October 20, 2017. https://www.austinchronicle.com/news/2017-10-20/sounding-the-alarm-on-texas-nursing-home-system/
  15. Rasansky, Jeff. How does Texas tort reform affect a nursing home injury or abuse case?  December 7, 2013.  https://www.jrlawfirm.com/library/texas-nursing-home-laws-tort-reform/
  16. Lawsuit Climate Ranking, U.S. Chamber Institute for Legal Reform. http://www.instituteforlegalreform.com/states
  17. Bauerlein, Valerie, Wall Street Journal. WSJ: Rural hospitals under more pressure than ever.  One town rallies to save its rural hospital before it shutters.  May 13, 2014 https://www.advisory.com/_apps/dailybriefingprint?i={B6C023FD-57EF-48DF-9261-0E70E45B5A83}
  18. 2017 America’s Health Rankings® Annual Report, The United Health Foundation. www.AmericasHealthRankings.org.
  19. Twenty-Five Things to Know About Texas Rural Hospitals. Texas Organization of Rural & Community Hospitals.  February 2017.  https://capitol.texas.gov/tlodocs/85R/handouts/C2102017030910301/be43111d-e0d4-4de3-bc7d-935d111daced.PDF
  20. U.S. News and World Report, March 19, 2018; Leading States Index, Mckinsey & Company, New York, New York.
  21. Association of American Medical Colleges; American Medical Association Physician Masterfile (December 31, 2016).