Has Tort Reform Worked Too Well?

By most accounts the tort reform measures enacted by the Texas Legislature in 2003 have worked very well.

Among other things the reforms placed a $250,000 cap on non-economic damage awards against individual health care practitioners, a $250,000 cap on non-economic damages against single health care institutions and a $500,000 cap on non-economic damages against combined health care institutions in a single case. Other aspects of the reform legislation revised the “Good Samaritan” law to protect volunteer firefighters, teachers and charity volunteers from litigation abuse; allowed defendants to appeal class certification directly to the Texas Supreme Court to decide if the plaintiff has a class action status; and limited the ability of trial lawyers to venue shop.

Upon their passage, Texas Gov. Rick Perry praised the reforms, saying they would fuel the economy and create jobs.

“These comprehensive reforms restore balance to the Texas system of justice while maintaining proper protections and compensation for Texans who are truly harmed,” Perry said. He added that the lawsuit reforms were expected to add 240,000 permanent jobs and $36 billion to the Texas economy.

Since 2003, medical liability insurance rates have fallen and the number of medical liability insurers has increased, along with the numbers of physicians willing to locate their practices in Texas.

But at least one insurance defense lawyer wonders whether the success of tort reform in the state is a case of — be careful what you ask for, you just might get it.

It Has Worked

“Tort reform has worked. It has accomplished everything everyone hoped it would accomplish and I think even accomplished a whole lot more,” said Gary Schumann, a partner in the law firm of Savrick, Schumann, Johnson, McGarr, Kaminski & Shirley.

Speaking at the 2007 annual meeting of the Texas Surplus Lines Association in Austin, Schuman told attendees that the reforms are working so well, judges are trying cases that might otherwise go to mediation, just to have something to do.

“I’ll just give you an anecdote,” Schumann said. “I was down at the Travis County [Texas] Courthouse just a few weeks ago and I had a motion to compel mediation. I had a case I wanted to get to a settlement. I wanted to get it to a mediated settlement conference and the other side didn’t want to do it. …

“I argued the motion to compel mediation and the judge sat back and said, ‘You know, used to I would always be happy to send cases to mediation. But I really don’t have a lot on my docket right now … and we need to have a few cases around here to try, so I’m going to deny the motion to compel mediation. Let’s try this thing.'”

Schumann said such an incident — a judge not wanting to get rid of a case because they wanted something to try — was not only unheard of previously, it was a direct consequence of tort reform.

“And that’s the consequence I think the people who were lobbying for it wanted to achieve,” Schumann said.

Unintended Consequences

Schumann noted that there also are consequences to the reforms that might not be what most advocates would have wanted to see, such as people who were truly injured in a medical negligence situation not being able to pursue litigation.

“We had a fellow come into our office that had had Lasik [surgery] done,” Schumann explained. “His pupils were too large for the Lasik and he had terrible problems … it was almost crippling for him.” Subsequent doctors said the procedure should never have been performed on the client, that it was negligence, and the client wanted to bring suit.

However, Schumann said, in order to go forward with the case as part of tort reform another Lasik licensed professional would have “to certify that it was negligence and … testify against the doctor at trial. We couldn’t get that. We went to doctor after doctor after doctor who all agreed it was negligence but not a single one of them was willing to be the one who would certify.”

He said no doctor was willing to “step up to the plate” and testify and the statute of limitations ran out before a lawsuit could be brought to trial.

“I don’t know if that was what we were wanting to accomplish with tort reform,” he said.

“Everybody is sort of happy if judges sit around and don’t have a lot to do. And if lawyers don’t have cases to bring, who cares about that? But what about you guys?” Schumann asked.

He suggested total protection from the threat of litigation could affect the sales of insurance, citing the case of an acquaintance whose family owns a chain of nursing homes in Texas.

“Because of tort reform, nursing homes are considered health care providers,” Schumann said.

His friend told him the family is “so unconcerned about liability they are not going to buy insurance this year. If we don’t have to worry about liability, what do we need insurance for?”

The group will self-insure in lieu of buying insurance, Schumann said.

So, he asked, “We want a little bit of litigation out there, don’t we? We want a little bit of risk. We need risk or we’re all out of business. … We’ll see what happens but tort reform has worked. I just hope for all of our sakes it hasn’t worked too well.”