Impact of Texas Liability Reforms (2003-2009)

In 2003, Texas implemented a number of liability reforms and voters passed a constitutional amendment securing the legislature’s constitutional authority to limit damages in medical liability cases.  The reforms enacted included:

·         Caps on non-economic damages at: $250,000 per physician per claimant, $250,000 per health care institution per claimant, and a second $250,000 per health care institution per claimant if the second institution is completely separate from the first.

·         Periodic payments are mandatory for future medical expenses and discretionary for others.
If either party in a medical lawsuit makes a reasonable settlement offer which is rejected, and the rejecting party loses the court judgment, the rejecting party may be liable for the offering party’s attorney fees and court costs.   

·         Plaintiff attorneys must file a report from an expert substantiating their charges within 90 days of filing the suit. 

·         In emergency care cases, the claimant bringing the suit may prove that the treatment departed from accepted standards of care only if the claimant shows by a preponderance of the evidence that the physician, with willful and wanton negligence, deviated from the degree of care and skill reasonably expected of prudent physician in the same/similar circumstances.  Juries must also be instructed in such cases to consider factors including the availability of medical history, whether a physician-patient relationship existed and the nature of the emergency.

Change in Liability Insurance Rates in Texas Since the Reforms Were Enacted:

Texas Medical Liability Trust announced a 5% reduction in rates effective January 2006, the third reduction after the reforms were enacted.  TMLT cut rates by 12% after enactment, and reduced rates again by 5% in 2005.  American Physicians Insurance Exchange announced a 13% rate decrease in August of 2005 after cutting rates by 5% just six months earlier.  The Doctors Company announced a 9 to 14% cut effective May of 2005. JUA, which tried to raise rates by 35% in 2003, cut rates by 10% in 2005.  In 2005, the Texas Medical Association reported every carrier had dropped rates since the reforms were passed, saving doctors $50 million in premiums.  The New York Times reported in October 2007 that average rates fell 21.3% since reforms were enacted. By 2008, the TMA reported that rates dropped by 31.3% on average since 2003.  Updated TMLT rate trends available at http://www.texmed.org/Template.aspx?id=3868 

Change in Insurance Availability in Texas Since the Reforms Were Enacted:

The Texas Department of Insurance reported that there were 17 insurers writing policies in 1999, which fell to 4 in 2002. As of February of 2005, news reports stated that 15 new insurance companies  started selling malpractice insurance in Texas or would do so soon.

Change in Physician Availability in Texas Since the Reforms Were Enacted:

From May 2003 to August 2005, more than 3000 physicians established practices in the state, according to the Texas Tech Law Review.  In the two years since the reforms were passed, the Texas Medical Association said it has become easier to recruit specialists like neurosurgeons, obstetricians and anesthesiologists.  The State Board of Medical Examiners reported an 8.4% increase in the number of physicians in Harris County from 2003-2005. TMA reports that more than half of physicians reported stopping some high risk services in 2003.  By 2005, that percentage dropped to 13%.  In 2006, new physician applications jumped to 4,026, up 35 percent from 2005, according to the Texas Medical Board, with applications increasing by about 100% since reforms were passed in 2003. According to an October 2007 New York Times article, the growth in physicians from 2001 to 2005 was twice as high as the growth in population.

Changes in Number of Medical Liability Cases Filed and in Number of Awards in Texas Since the Reforms Were Enacted:

In Harris County, which includes Houston, 40 medical liability lawsuits were filed between January and March of 2004, compared with an avg. of 120 filed during the same period each of the prior three years, (Texas Medical Association.) There were 204 cases filed in the county in 2004 compared with 441 in 2001 and 550 in 2002.  1154 were filed in 2003 before reforms went into effect. The Dallas Morning News reported that the rate of liability filings in most major Texas cities dropped by 80% after the reforms.  1075 paid claims in 2003 or 22.3 per 1000 active nonfederal physicians.  US avg. was 18.8 per 1000. 1018 paid claims in 2005 or 20.7 per 1000 active nonfederal physicians.  US avg. was 17.1 per 1000. (Kaiser). 628 total number of paid claims for 2006 or 11.1 per 1,000 active, non-federal physicians. 538 paid claims in 2007. In 2007, the average claims payment amount in Texas was $162,265, while the national average payment amount was $323,266