President's Page October 2003

Robert W. Haley, MD

After Prop 12
Practicing the New Environment of House Bill 4

What a year this has been! Out of the dismal darkness of the November general election, the physicians of Texas rallied, coming together as never before, winning a lopsided majority of both houses for House Bill 4, a comprehensive medical liability reform. And now, in the national spotlight, we have fought off a withering counterattack by well-funded trial lawyers to capture a majority of Texas voters for Proposition 12, the constitutional amendment that forever upholds the cap on noneconomic damages.

From busloads of white coats repeatedly descending on the capitol in Austin to mobilizing our patients, office staffs, hospital colleagues, and friends for the general referendum, Texas physicians rose to a new level of political strength. Physicians in other states, with smaller, less-organized medical societies, are seeing what can be done with large society memberships and effective organization.

As the smoke from the grand battles clears, it’s time to see what reforms we have won and how they will work in quelling the crisis that brought us to this point. Here are the important ones I see.

Caps on noneconomic damages. Awards for pain and suffering, loss of life or limb, loss of companionship, etc (noneconomic damages) are now limited to $250,000 collectively for all physicians and other personnel, plus $250,000 for one involved hospital and $250,000 for the unlikely second hospital, nursing home, or clinic. The size of awards for economic damages is not capped. By containing runaway juries, these caps should reduce the financial incentive for plaintiff attorneys to file meritless lawsuits.

Caps on exemplary (punitive) damages. To award damages for gross negligence, a jury now must return a unanimous verdict for exemplary damages, and, when this occurs, the amount of the exemplary damages is limited to twice the economic plus noneconomic damages. This protects physicians from runaway juries.

Incentive for reasonable settlement/Loser pays winner’s court costs. 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. This provision gives the parties a strong new incentive to settle cases early on the merits, which discourages frivolous suits and reduces litigation costs.

Shortened statute of limitations for minors. Suits regarding infants and children injured younger than 4 now must be filed within 10 years of injury, those injured between 5 and 12 years of age must be filed by age 14, and older children have a 2-year limit, like adults. This greatly reduces physicians’ exposure, which formerly ran until children reached 20. This provision may be vulnerable to court challenge.

Increased burden of proof for emergency care. Plaintiffs suing for care received in an emergency situation on a roadside, in an emergency room, or in post-ER obstetrical or surgical care now must prove by preponderance of evidence that a physician was “willfully or wantonly negligent,” rather than merely negligent. The ambiguous wording of this provision makes it susceptible to court interpretation; if it withstands such interpretation, it substantially will reduce physician exposure for emergency care situations.

Periodic payments for future damages. In cases where plaintiffs are paid for future healthcare costs or lost earnings, they will be paid as the costs are accrued rather than as a lump sum estimate up front. This is likely to be the biggest cost-saving provision of the bill.

Requirement for timely expert report. This requires plaintiff attorneys to develop, pay for, and file an expert report substantiating their charges within 90 days of filing the suit (or 150 days with good cause), rather than presenting a bond or a $5000 cash payment. If the expert report is not filed by the deadline, the judge shall permanently dismiss the claim. This will speed up the proceedings and reduce frivolous suits, particularly where expert reports are costly or difficult to write credibly.

Physicians’ proportionate liability limited. If codefendants become insolvent, a minor party (< 50% liable) no longer can be stuck with the entire award.

Elimination of the Stowers Doctrine. Watch out here. If a physician rejects a reasonable settlement offer and loses in court, he now is responsible for damages above the policy limit, with no recourse against the insurance company. Formerly, under the Stowers Doctrine, physicians had recourse against the insurance company if the company handled the claim in bad faith. Under the new provision, the insurance company effectively can gamble at trial with the physician’s money. To minimize the risk of severe losses, physicians should retain their independent counsel in high-amount lawsuits. This provision requires considerable study by TMA to develop advice on the best strategy for attorney selection and possibly to develop remedial legislation for the next legislative session.

Dr Haley thanks Bauer Horton, JD, MS2, for assistance in analyzing the statute.

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