Study Says Texas Medical Malpractice Tort “Reform” Is A Bust (Is Congress Listening?)

I’ve written before about the savage Texas medical malpractice “reform” that was implemented in 2003 and its inherent injustice. The premise was that if the state capped pain and suffering awards at $250,000 for doctors (no matter how many were liable) and $250,000 for hospitals, it would encourage more doctors to practice medicine in Texas. The cap was nominal, meaning it was not adjusted for inflation, so it remains at that stagnated level.

Now there is a study that debunks the premise of that so-called reform. And even tort “reformer” Ted Frank agrees that the report is so damning that he will no longer cite Texas for the proposition that such reforms will lead to an increase in doctors in the state.

The report is exceptionally damning to those who argued that providing protections and immunities to negligent doctors would bring more doctors to Texas (though I’ve often wondered what kind of doctors they were looking to bring in with that logic). The summary:

Before Texas adopted tort reform in 2003, proponents claimed that physicians were deserting Texas in droves. After tort reform was enacted, proponents claimed there had been a dramatic increase in physicians moving to Texas due to the improved liability climate. We find no evidence to support either claim.

That is a big, fat ouch for those that have supported government protections for tortfeasors.

The $250,000 cap that was enacted back in 2003 did have some affect, of course. It cut down medical malpractice payments by 70% and premiums by 50%. But this wasn’t the reason for the changes in the law, since claim payouts had been stable for the preceding decade. But claims will clearly drop under such circumstances as cases are difficult and expensive to bring, and if it isn’t a economically viable to bring the suits, lawyers won’t take them. It isn’t easy to risk tens of thousands of dollars of your own money and hundreds of hours over many years if the case isn’t substantial enough. The rent still has to get paid, as does the secretary, and the lights need to be kept on.

But did the 70% drop in payouts bring the flood of doctors? You would think so according to the initial reports (including from the New York Times) that looked at the increase in licenses being issued. According to the report:

Proponents argued that physicians were fleeing Texas because of lawsuit risk and high insurance premiums, but would stop leaving if the state adopted the reforms. After the reforms took effect proponents asserted that the reforms brought new physicians to the state in droves – a more impressive result than they originally predicted, which was only that doctors already in Texas would stay put.

But using data from 2003 up until 2010, the authors conclude:

There is no evidence that the number of physicians per capita practicing in Texas is larger than it would have been without tort reform.

The evidence has been brewing. In 2007, four years after reform, the Texas Observer ran a piece discussing the nonsense that was sold to voters by the insurance industry to get the bill passed, claiming that “doctors were fleeing Texas, leaving scores of counties with no obstetricians to deliver babies, no neurologists or orthopedic surgeons to tend to the ill.” This wasn’t true.

Also from the Observer, to get that bill passed Gov. Rick Perry and his minions from the Texas Medical Association argued in a flier mailed out in English and Spanish and posted in waiting rooms around the state that:

‘152 counties in Texas now have no obstetrician. Wide swaths of Texas have no neurosurgeon or orthopedic surgeon. … The primary culprit for this crisis is an explosion in awards for non-economic (pain and suffering) damages in liability lawsuits.’

Doctors to deliver your babies or lawsuits, they argued, which would you like? And you know what? Four years after the “reforms” were passed there were still 152 rural counties without an obstetrician. Because it seems that doctors, like many other professionals, happen to like living in urban areas.

The reports of an increase in doctors attributable to tort “reform” that came out, and are often echoed in Congress by advocates of establishing federal standards over the state tort systems, have not been accurate. The authors attribute this to the fact that the number of doctors going to Texas was rising before 2003 (as was the population as a whole), that researchers at universities should not be counted as they are unaffected by the issue, and that there was an increase in medical care after Hurricane Katrina in 2005 as people relocated.

And finally, the statistics showing an increase in doctors was based on new licenses being issued. But that didn’t take into account those that left the state or had retired. You can’t just count docs entering Texas healthcare without also accounting for exiting docs if you want to figure out whether the net population is increasing or decreasing. According to the authors, “using the number of licenses granted as a measure of the “success” of tort reform is potentially very misleading.”

The fact that the physician population was increasing before the “reforms” and continued to increase at the same rate after the “reforms” is very telling. The authors write, “There was neither an exodus before reform, nor a dramatic increase after reform.” How damning is this report? The authors go on to write about those who made the claims for “reform”:

When making the case for lawsuit restrictions and when claiming enormous post-reform success, the identified speakers made statements that were false. And, not just garden variety false, but “liar, liar, pants on fire” false.

And that my friends, is a whole lot of false.

The report is filled with facts and figures that shows that in the post-reform era, Texas has actually done worse at attracting doctors then the rest of the nation. Not better. And not even the same.

I end on this note: As I type, Republicans in Congress (it is always those that claim they want limited government that do this) seek to expand federal power and put nationwide damage caps in place. One of the prime reasons is that were used in Texas. And those that were used in Texas have now been debunked.

(P.S.   For those that want to shift the argument to arguing that such reforms will lower health care costs, well, it doesn’t do that either. I covered that last year here:  The Failure of Medical Malpractice Caps (Healthcare Costs Rise in Texas).

Elsewhere:

New Study Crushes Key Claim in Federal Medmal Debate (Andrew Cochran)

Did You Know… Medical Malpractice Lawsuits Are Declining? (Brett Emison)

 

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17 Responses Leave a comment

  • mythago 2012.5.10 at 12:42 | Quote

    You’re giving Mr. Frank’s comment an awfully generous reading; after throwing out several hypotheses (for which he concedes there is no evidence), he insists that limiting malpractice suits is a transfer of money from lawyers to doctors and patients. (Apparently, insurance companies in his world do not exist or operate pro bono, and patients receive no money from a successful malpractice lawsuit.

  • Dan Fisher 2012.5.10 at 12:56 | Quote

    Frank also notes correctly that malpractice insurance isn’t that big a deal for most specialties, so the study should focus the high-risk specialties like obstetrics and surgery. And one for the lawyers: Isn’t there a problem with a system that requires non-economic damages, which are highly variable and subjective based on the views of the jury, to be financially viable? Isn’t there a better way to compensate injured people?

  • Eric Turkewitz 2012.5.10 at 12:56 | Quote

    You’re giving Mr. Frank’s comment an awfully generous reading

    True, but it isn’t easy turning against long held beliefs. And he has now seen evidence that does challenges those beliefs.

    That whole money transfer thing is another argument for a different day. Personally, I think that losses should be absorbed by those that negligently injure others and not the victim or the taxpayer.

  • Eric Turkewitz 2012.5.10 at 13:05 | Quote

    @Dan Fisher

    Frank also notes correctly that malpractice insurance isn’t that big a deal for most specialties, so the study should focus the high-risk specialties like obstetrics and surgery.

    The study does, in fact, address that issue, starting on page 21. The data showed two specialties had actually grown more before tort “reform” and one had grown slightly afterward.

    Isn’t there a problem with a system that requires non-economic damages, which are highly variable and subjective based on the views of the jury, to be financially viable? Isn’t there a better way to compensate injured people?

    First, as to the amount, in New York there are three levels of review, so it isn’t nearly as variable as you might think. First the jury, then the judge on post-trial motion and then an appeal if the award seems to deviate materially from what would be reasonable compensation.

    The big opposition from consumer groups is that a one-size fits all model is far more subjective and doesn’t take into account what actually happened to the person.

    Second, as to the source of the payments, do you think the taxpayers should pick up the tab instead?

  • Dan Fisher 2012.5.10 at 13:20 | Quote

    @Eric Turkewitz – The taxpayers wouldn’t pick up pain and suffering payments. Those are what are needed to support this lawsuit model of compensation. Maybe bad outcomes could just be paid for some other way. Maybe through institutional liability — although that would require more aggressive disciplining of incompetent docs.

  • Eric Turkewitz 2012.5.10 at 13:29 | Quote

    The taxpayers wouldn’t pick up pain and suffering payments.

    There are only three possibilities: The victim must bear the cost, the tortfeasor bears the cost or the taxpayer.

    Not sure what you mean by “institutional liability,” but if that is some kind of pooled resource from business then it sounds just like insurance that should be paid for by the hospitals and doctors (and car drivers, etc.).

  • Dan Fisher 2012.5.10 at 13:57 | Quote

    The problem with the current system is much — maybe most — of the money is consumed by the legal process of determining who should pay the cost, instead of distributing benefits. Institutional liability would have malpractice expense covered by large institutions, which presumably would self-insure and have a huge incentive to monitor care and reduce mistakes. Insurance companies have a hard time doing that one doc at a time.

  • Eric Turkewitz 2012.5.10 at 14:23 | Quote

    Institutional liability would have malpractice expense covered by large institutions, which presumably would self-insure and have a huge incentive to monitor care and reduce mistakes.

    Dan: I’ve dealt plenty with self-insured. And some of them, like the insurance companies, deal with it this way: We are going to litigate you to death. We may lose out on this case, but the end result will be that fewer cases get brought if everyone understands we are a bunch of SOBs.

    Every so often you will see decisions where claims of bad faith are made, and you will see that attitude reflected there.

    And then there are the ones that hope to litigate you to death in the hopes that the claimant will become desperate (can’t work short of funds), then s/he might settle with for just pennies on the dollar.

    We are now a bit far afield of the post’s subject, but you should know that your gut reaction as to what may be common sense is not necessarily followed by those that hold the money.

  • Anthony T. DiPietro 2012.5.10 at 21:33 | Quote

    Originally Posted By Dan FisherAnd one for the lawyers: Isn’t there a problem with a system that requires non-economic damages, which are highly variable and subjective based on the views of the jury, to be financially viable? Isn’t there a better way to compensate injured people?

    Hi, thanks for your question. A jury is literally the voice of the community. And performing “jury service” is way for the community to simultaneously help people who have been injured, and at the same time punish conduct which the community rejects. I trust the community to make these kinds of decisions over all the other alternatives. Is there a better way? Would the community safer with a “professional” who has been officially appointed to make these kind decisions? The great part about the community deciding cases is that the jury can’t be bought or sold, wined or dined – compared to some pseudo political/professional decision maker.

    With regard to the injured being compensated for pain or loss of a loved one with money, I say “so what”. Is there a better exchanged that can be made which will serve the above considerations: help the aggrieved and at the same time punish the culprit?

    Unfortunately, the jury system has gotten a bad rap as a result of insurance companies, special interest groups (AMA, ACR, Chamber of Commerce, etc) and their lobbyists spreading FUD and trying to prejudice potential jurors against anyone who dares to sue one of their members or insureds. The jury system is the greatest prosocial invention that we have in our society, but it has been under attack by companies who have the money to spend to advance their own agenda. These organizations are not interested in keeping the public safe, only in upping their profits. That’s my take on it, and I look forward to learning more about your views.

  • Jason 2012.6.4 at 08:50 | Quote

    Some of the logic used here is flawed. The population of Texas has been increasing, and the doctor-patient ratio has remained steady. That means that doctors *are* moving into TX, keeping pace with the increased population.

    The $250,000 cap only applies to non-economic damages, something I don’t see mentioned in this article.

  • Eric Turkewitz 2012.6.4 at 09:22 | Quote

    That means that doctors *are* moving into TX, keeping pace with the increased population.

    The premise of the “reforms” was not that the doctor/patient ratio stay even (on per capita basis), but that more docs would come to Texas. That didn’t happen. Thus, the consumers lost rights (access to the courthouse for fair compensation) and got nothing in return.

    The $250,000 cap only applies to non-economic damages, something I don’t see mentioned in this article.

    It’s in the opening paragraph.

  • Anthony T. DiPietro 2012.6.4 at 09:51 | Quote

    Originally Posted By JasonSome of the logic used here is flawed. The population of Texas has been increasing, and the doctor-patient ratio has remained steady. That means that doctors *are* moving into TX, keeping pace with the increased population.

    I think I understand what you’re saying, but there’s another variable to consider. It seems that you’re saying that since the general population in Texas has increased, and the doctor/patient ratio has remained the same, it must mean that the number of doctors *moving* into the State of Texas has increased – which has caused an increase in the total number of doctors in Texas – which has caused the doctor/patient ratio to remain steady.

    If that the case, I think you’re overlooking the fact that the number of doctors is ‘always’ increasing in every State where the population is increasing. Look at it this way: a certain percentage of the population is going to pursue medicine as a career. If the population increases, the number of doctors will then increase as well – in the same proportion. Therefore, the increasing number of doctors is more likely to be caused by population growth (and math), not the implementation of tort reform laws. The only one’s to benefit by tort reform are the insurance companies – at the cost of the rest of the human race.

  • Dan Fisher 2012.6.4 at 16:52 | Quote

    Just to stir the pot a bit more:
    “A criminal defendant who brings a legal malpractice case against his attorney cannot recover damages for loss of liberty and emotional distress, New York state’s high court ruled Thursday, finding “no compelling reason to depart from the established rule limiting recovery in legal malpractice actions to pecuniary damages.”
    Does that have any effect on the volume of legal malpractice claims?

  • Eric Turkewitz 2012.6.4 at 17:22 | Quote

    @Dan Fisher

    Well, we are quite far afield here. But one reason that the general volume of legal malp cases is relatively small is that you have to prove two cases: First, that the lawyer was negligent, and second that it would have made a difference. To prove it made difference, you have to show you would have won the underlying action.

    As to criminal cases (which I don’t do), my understanding is that on appeal, there are many attempts to get a bad verdict tossed out by pleading ineffective assistance of counsel. If a court allowed the malpractice case to continue, it would impinge on the original lawyer throwing himself on his sword for the benefit of the client. How can he put in a supporting affidavit saying he screwed up if it would come back to haunt him in a malpractice trial?

  • Dan Fisher 2012.6.4 at 18:31 | Quote

    @Eric Turkewitz – Good questions, all. But when another class of professionals ask them — specifically physicians — the court answers a different way. What incentive does a physician have to ‘fess up if it subjects her to pain and suffering damages? And what about the argument non-economic damages are necessary to make these cases worthwhile to bring? Just saying… (and apologies for beating a seriously impaired horse)

  • Eric Turkewitz 2012.6.4 at 19:46 | Quote

    What incentive does a physician have to ‘fess up if it subjects her to pain and suffering damages?

    There is no obligation to ‘fess up. But studies seem to indicate that when they do, there are fewer lawsuits.

    And what about the argument non-economic damages are necessary to make these cases worthwhile to bring?

    Non-economic damages should be permitted when a person has suffered a loss and a cause of that loss was someone else acting negligently. The victim should not be victimized a second time.

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