A Tort Reform Example
Tort reforms can reduce malpractice
crises, as we have witnessed in
Texas. But effective reforms must address several issues.
Texas. But effective reforms must address several issues.
DON’T READ THIS if you practice in
California, Colorado, New Mexico, Wisconsin, Indiana or
Louisiana. Why? Because one could successfully argue that your
chosen domicile has indeed had effective tort reform. At least
that’s inference from the American Medical
Association’s analysis of
the medical malpractice liability crisis it published in 2003.
However, if you
practice anywhere other than these six states, you may want to
take a few minutes to peruse this article. That’s because
the AMA and other organizations classify your state as either
already one of the 19 states in crisis or is showing signs of
joining that illustrious group. This crisis group of nineteen
states in need of immediate medical malpractice liability
relief include: Arkansas, Connecticut, Florida, Georgia,
Illinois, Kentucky, Mississippi, Missouri, New Jersey, Nevada,
New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas,
Washington, West Virginia, and Wyoming. (Texas is on its way to
improving the situation, as we will discuss later.)
The remaining 28
states are on the AMA list of states ‘showing problem
signs.’ Symptoms typically presented in such states
include many of the following malpractice carrier actions:
malpractice premiums increase by multiples; malpractice
coverage is reduced or restricted; carriers cease writing new
business or cancel existing policies; insurance
companies’ financial ratings are reduced; carriers become
insolvent. The fallout from such actions causes physicians to
react defensively in ways that are detrimental to
patients—they reduce the scope of their practices,
retire, or move to another state. If enough physicians respond
in this way, health-care availability suffers, crisis ensues.
So what can be done
about the crisis? How do we treat this epidemic of medical
malpractice disease? The current consensus, even among some
trial lawyers, is that tort reform is the treatment of choice.
Of course, trial lawyers want the tort reform to focus on the
identification and reduction of the number of bad doctors,
thereby eliminating bad medicine and the need for high jury
awards.
Successful tort reform
measures may indeed include measures for reporting and
sanctioning bad medicine. No one disagrees that those
provisions are helpful. They are, in at least some cases I
suspect, a bone thrown to the plaintiffs’ bar—the
price of politics. The main elements of contemporary tort
reform for medical malpractice liability, however, rightly
focus on creating a climate that, while allowing for legitimate
and equitable resolution of acts of medical negligence,
overlays a blanket of reasonableness in all phases of the legal
process and for all parties.
Typical provisions of tort reform
The most important elements usually found
in a successful tort reform measure (or series of measures)
deal with at least some of the following:
Joint and Several Liability—This theory allows recovery from multiple
defendants collectively or individually based on their ability
to pay rather than solely on their relative responsibility for
the injury. For instance, if two defendants are legally
responsible 90 percent and 10 percent, respectively, for a
plaintiff’s injury, but the 90 percent responsible party
is bankrupt, the 10 percent responsible party can be made to
pay the entire judgment under joint and several liability.
Non-Economic Damage Caps—Plaintiffs recovering non-economic damages are
recovering for pain and suffering, loss of consortium, and loss
of marital companionship—things that are difficult to
quantify, emotionally volatile, and subject to extremely high
and unpredictable judgments.
Venue Shopping—Many
states have sub-jurisdictions where juries are notorious for
awarding unusually high verdicts. Plaintiff attorneys find ways
to file suits in those locales to increase their chances for
higher awards.
Limitations on Attorneys’ Fees—Most attorney fees for personal injury
lawsuits are paid out of the proceeds of successful litigation,
supposedly to allow people without the means to otherwise pay
for legal services to access the court system. These fee
arrangements, called contingency fees (contingent upon money
being awarded) can range from 25 percent to 50 percent or more
of the judgment. Limiting of these fees (on perhaps a sliding
scale) would reduce the incentive to file frivolous lawsuits.
Pre-Trial Screening and Certification of
Legal Actions—Requiring
medical and legal experts to certify the legitimacy of filed
suits reduces non-meritorious lawsuits.
Arbitration/Alternative Dispute Resolution
(ADR)—These can be very
effective methods of resolving medial malpractice actions prior
to trial, saving court time and expense and is often a more
cost-effective way to adjudicate disputes.
Statute of Limitations—Restricts the amount of time following an
alleged injury during which injured patients or their families
may initiate legal action.
Contributory/Comparative Negligence—If an injured party is found to have
contributed in some way to her injury, some states hold that
she is guilty of contributory negligence and would bar her from
recovering money from her caregivers. Comparative negligence is
the theory that if an injured party was, for instance 25
percent negligent, her recovery would be reduced by the 25
percent comparative negligence on her part.
Periodic Payment of Damages—Forcing payments to be made over time
rather than as a lump sum is thought by most to ensure more
prudent application of the funds for their intended use.
Collateral Source Rule—Consideration that a plaintiff has already been
compensated by an independent source when determining the
damages payable to a claimant.
Texas Tort Reform
A speech by Texas Governor Rick Perry to
the Manhattan Institute for Policy Research in October cited
that prior to enactment of the recent tort reform measures,
Texas was designated as one of the worst five states in terms
of the litigation climate in the nation by the U.S. Commerce Department. He stated that the American
Tort Reform Association in
2002 listed four Texas counties as judicial hell
holes—areas where judicial fair play and balance of rules
under law do not exist. He claimed that as of the year 2000,
fifty percent of physicians in Texas had had at least one claim
filed against them.
The fallout for
medical malpractice insurance in such a climate is predictable:
premiums skyrocket—if one can find a carrier
willing to provide coverage (6,500 doctors had their policies
cancelled), carriers pull out of the state (the number of
medical malpractice insurers fell from 17 to three in three
years), doctors retire or leave to practice elsewhere, and
patients loose the access to services they need.
Texas legislators took
actions to turn this scenario around. They successfully enacted
legislation in spite of a very strong plaintiffs’ bar.
In their recent
attempt at tort reform, Texas first passed caps on non-economic
damages—health-care providers now have a $250,000 maximum
liability per case, health-care institutions have a separate
$250,000 per-facility cap, a $500,000 total facility cap,
and an entire claim against all providers and institutions
cannot exceed $750,000. This limitation applies only to
non-economic damages. Previously, these award damages had
tripled over the last decade in Texas and accounted for
two-thirds of the total awarded damages.
Since previous caps on
non-economic damages had been challenged in courts in Texas and
around the country, many times successfully, Texas went a step
further and passed Proposition 12. Proposition 12 clarifies in the Texas
Constitution the legislature’s authority and intent and
lays the groundwork for future caps on other types of
litigation.
In 2003, the threshold
for joint and several liability was raised from 15 percent to
50 percent. Now a defendant only pays the assessed percentage
of fault unless the defendant is 50 percent or more
responsible. The defendants can also designate other
responsible third parties whose fault contributed to the
plaintiff’s injury.
Medical expert reforms
were implemented requiring certain minimum requirements of
doctors testifying as a medical expert.
Frivolous lawsuits are
discouraged by requiring plaintiffs to pay for a
defendant’s legal costs once a settlement offer is
rejected by the plaintiff, if the plaintiff doesn’t
subsequently receive an award greater than the settlement offer
made by the defendant.
Venue shopping has
also been addressed by closing the loophole allowing attorneys
to choose their trial location.
Other tort reforms
were also enacted. They include: class action lawsuit
reforms, relaxation of appeal bond limit requirements to
reasonable levels, the establishment of limits for liability
for Good Samaritans, and now evidence that injured parties
failed to use seat belts may be introduced in trials in auto
accident cases. Punitive damages are capped at four times
economic damages.
Texas is interesting,
and discussed here as much for the way the tort reform measures
evolved as what was actually accomplished. Politics were very
much responsible for the legal climate that created the
deplorable environment in Texas. In 1985, every member of the
(elected) Texas Supreme Court was a Democrat. Today, of the 29
statewide elected offices, (including nine Supreme Court
justices and nine appeals court judges), every one is
Republican, from the Governor on down.
An intense grass roots
movement over several years is primarily responsible for the
change in the political landscape in Texas. Much of that
success is due to the efforts of various physician
organizations—The Texas Medical
Association, The Lone Star Medical
Association, the Primary Care
Coalition, and the activism of county and medical specialty
organizations. Indeed, the medical community contributed a
great deal to the success of tort reform.
In the words of Texas
Governor Rick Perry, “We won. We reached into
people’s hearts and said, is it important to you, is it
important for your child, injured in a Saturday night
automobile accident to have access to a neurosurgeon in your
community? Is it important for your population of young women
to have access to that obstetrician so that that child and
mother can be safely taken care of?”
The medical malpractice
environment in Texas already is showing early signs of recovery
since the 2003 tort reform. Insurers are again entertaining new
applications for malpractice coverage and Texas Medical
Liability Trust, insuring about one third of Texas doctors,
reduced their rates by 12 percent after Texas passed
Proposition 12, ensuring the authority of the Texas Legislature
to enact the reforms. n
Richard Vento is the president of Medical
Risk Management Services, Inc., a malpractice insurance
brokerage and consulting firm in Jamison, Pennsylvania. He may
be reached at rvento@medriskman.biz.
