In the late 1990s, the number of medical liability claims filed against Texas physicians increased at an alarming rate. Though the majority of these claims were non-meritorious, it cost malpractice insurers millions of dollars to manage them. Disproportionately high jury verdicts in malpractice cases and rising legal costs further aggravated the problem, forcing many insurers to withdraw from Texas or go out of business altogether. Malpractice insurers remaining in the state responded by raising rates for physicians. With declining reimbursements already taking a bite out of physicians' incomes, rising medical liability premiums placed a difficult burden on Texas physicians. To compensate, some physicians changed their practice structure while others moved their practices out of higher risk areas such as the Rio Grande Valley. The end result: restricted access to health care. The driving force behind the crisis: an out-of-control legal system.
Although these problems seemed overwhelming, we believed they could be solved. Medical liability reform could significantly reduce the number of non-meritorious lawsuits filed while still providing compensation to patients for true losses and injuries. This reform would allow medical liability premiums to be reduced, and physicians could continue to practice medicine without having to choose between paying their medical liability premium or closing their doors.
In Fall 2001, TMLT, the Texas Medical Association, the Texas Hospital Association, and other interested organizations joined together in the fight to achieve meaningful medical liability reform by the 2003 Texas Legislature. This coalition became the Texas Alliance for Patient Access (TAPA) and membership grew to more than 200 entities. TAPA created a legal team that analyzed the medical liability laws and prepared legal proposals to correct them. TMLT was part of this team.
During the 2003 legislative session, TAPA led the way in providing witnesses to testify before the House Civil Practices Committee and the Senate State Affairs Committee. TMLT provided information and testimony that clearly showed that skyrocketing insurance premiums were driven by increasing claims payout because more and more litigation was filed against physicians, hospitals, and nursing homes.
When the dust settled at the state capitol, House Bill 4 passed, and TAPA and its allies had achieved the best quality medical liability reform seen in 25 years in Texas. The cornerstone of the reforms — the $250,000 cap on noneconomic damages — would allow insurers to maintain a reasonable rate structure without affecting the rights of plaintiffs to collect economic damages for meritorious clams.
To ensure the legality of the caps, Texas voters were asked to adopt a constitutional amendment — Proposition 12 — giving the Texas Legislature the authority to set damage caps in health care lawsuits. Supporters and opponents of Proposition 12 spent more than $17 million in one of the most heated constitutional amendment elections in recent history.
Proposition 12 passed — the final tally was 51.12% for and 48.88% against. The difference was 33,005 votes or 2.25% of the total vote. According to the Office of the Secretary of State, voter turnout for the September 13th election was 12.2%, the highest turnout for a constitutional amendment election since 1993.
Following the passage of Proposition 12, TMLT continued efforts to reduce costs for physicians and improve patient care. We were the first carrier to reduce rates in Texas — 12% in 2004. Rates continued to fall: 5% in 2005; 5% in 2006; and 7.5% in 2007; 6.5% in 2008; and average 4.7% in 2009. This amounts to $275 million in premium savings for TMLT policyholders. Additionally, TMLT returned nearly $105 million in dividends to policyholders. Since the passage of Proposition 12, our policyholders will have saved more than $380 million.
Four of the state's other physician liability carriers, including the Joint Underwriting Association, have cut their rates since the 2003 reforms took effect. These cuts have ranged from 2% to 24%. In addition to rate cuts by existing carriers, the Texas Department of Insurance lists more than 30 carriers licensed to write medical liability coverage in Texas. This is up from just four carriers in 2003.
On May 16, 2005, Texas was removed from the American Medical Association's list of states in medical liability crisis. The AMA cited the medical liability reforms of 2003 as the reason for the improved conditions in Texas.
Access to care
Texas patients are also benefiting from reform. Since 2003, there has been a net gain of 4,000 physicians in Texas. The Texas Medical Board (TMB) also reported a significant increase in physician licensure applications in 2006, 2007, 2008, and 2009.
"Tort reform as enacted appears to be working as envisioned by the Texas Legislature. Physicians with no malpractice history are flocking to Texas because it provides a more encouraging environment for the practice of medicine," said TMB Executive Director Donald Patrick, MD.
The medical liability reforms of 2003 are working as predicted. Non-meritorious claim intake is down while legitimate malpractice claims are still going to court. In these cases, plaintiffs can still collect unlimited economic damages for past and future medical bills, lost wages, and custodial care. The noneconomic damage caps alleviate the unpredictability and subjectivity of awards for pain and suffering, making it possible to evaluate cases more accurately and keep insurance rates at a reasonable level. In turn, new physicians are flocking to Texas and Texans now have greater access to the health care they need.
Given the resounding success of medical liability reform, it is essential to keep these reforms in place. TMLT will continue to work closely with TAPA and other groups to combat efforts to undermine medical liability reform.
Read more about the effects of medical liability reform and the fight to maintain these reforms at the TAPA web site.