Results in Texas support initial promises of backers
It’s been 9 years since Texas adopted landmark reforms to its civil liability system, but opponents are still disputing the positive results for patients’ access to care and the healthcare providers who serve them. Most recently, Public Citizen’s “A Failed Experiment” charged that the proponents of reform promised lower healthcare costs, which have not been realized.
In fact, the following are the promises that were made (and kept):
- The number of lawsuits filed will go down.
- Insurers will return to Texas.
- Professional liability insurance rates will decrease.
- The number of physicians in Texas will increase.
- Medical specialists will return to the state.
- Access to care will improve.
David Teuscher, MD, at the Fall Meeting.
Like many other states, Texas was hammered by a full-blown crisis in medical liability that began in the late 1990s. According to the Texas Department of Insurance (TDI), commercial carriers increased professional liability insurance rates by 64 percent between 1999 and 2002. The state’s largest insurer, the nonprofit Texas Medical Liability Trust (TMLT), more than doubled premiums during this period due to explosive costs of defending claims.
As a result, doctors were taking early retirement, leaving the state, or avoiding high-risk patients, and patient access to care was in peril. As professional liability carriers fled the state, more than 6,500 Texas physicians were left uninsured and forced into the state-backed high-risk pool, the Joint Underwriting Association (JUA), with the highest professional liability insurance rates.
Physicians were not the only ones affected. Average hospital malpractice premiums more than doubled between 2000 and 2003, leading to staffing shortages for emergency department coverage and closure of facilities or curtailment of services. Nursing homes had only three carrier options, including the very expensive JUA. Jury verdicts were part of the problem. The average claim against a nursing home reached a staggering $4,000,000, second only to Florida. This led the TDI to conclude that “underwriting losses are the major factor affecting rates, not insurance company investment losses.”
Although a previous medical liability crisis had resulted in a $500,000 cap on damages, the Supreme Court of Texas eventually overturned the law. In response, the Texas Medical Association and its Political Action Committee organized like-minded groups and patients to replace each of the majority decision judges. Texas physicians continued their advocacy involvement by electing legislators and leaders who understood and supported these issues and patients.
Legislative, voter support
When the legislature convened in January 2003, then-governor Rick Perry issued an emergency proclamation allowing it to immediately consider medical liability reforms. House Civil Practices Chairman Joe Nixon, an attorney, authored HB4, the comprehensive legislation that reformed nearly every type of civil litigation in Texas and included important elements affecting medical liability coverage, as well as HJR3, the state constitutional amendment that enabled the Legislature to apply noneconomic damage caps to healthcare providers.
Key elements of HB4 included a $250,000 nonindexed noneconomic cap for all defendants in the aggregate, expert witness requirements, a “willful and wanton conduct” negligence standard in emergency medical cases, periodic payments for awards exceeding $100,000, proportionate responsibility, and a 10-year statute of repose. A broad-based coalition of physicians, hospitals, nursing homes, insurers, and businesses—Texans Allied for Patient Access—was formed to convince legislators to vote for the bills.
Despite the governor’s emergency legislation designation allowing early action on HB4 and HJR3, a compromise wasn’t reached until three days before the session adjourned. It established a separate noneconomic damage cap on healthcare facilities, as well as a $250,000 noneconomic cap for all physicians in the aggregate. The governor signed HB4 into law, but HJR3 only enabled the voters of Texas to decide to amend the state constitution. The measure passed and had an immediate effect on the liability market. Even before the vote (but contingent on its passage), TMLT announced a 12 percent reduction in renewal premiums.
Since then, TMLT has cut rates every year, in addition to further savings through annual dividends for renewing physicians of as high as 25 percent. Private insurers have also slashed rates to less than half of the pre-reform levels. Four new rate-regulated carriers have entered the professional liability market, bringing the total number of commercial carriers in the state to 13, plus 26 risk retention groups, captives, surplus lines, and other unregulated carriers.
According to a recent study published by the American College of Surgeons, medical liability reforms in Texas have resulted in a ﬁve-fold decrease in the risk of a malpractice lawsuit being ﬁled against a healthcare provider. Across the state, claims filed against physicians and healthcare facilities are less than half the number filed before reform. With both fewer claims and lower verdicts, lower premiums and greater surety in assessing a case for settlement have resulted.
To improve access to care for its growing population, Texas needed to license more physicians. The Texas Medical Board received 2,561 new applicants for licensure in 2003. But in every year since 2006, more than 4,000 applications for new licenses have been filed, a sustained 60 percent increase. Reform led to an average of 1,300 more doctors licensed every year, dramatically improving access in medically underserved areas, especially for high-risk specialists.
The most dramatic gains have been in pediatric subspecialists, emergency care physicians, anesthesiologists, obstetricians, orthopaedic surgeons, and neurosurgeons. What can’t be quantified, but is a real positive effect, is the number of physicians who stayed in the state, stayed in practice, and opened their practice to more high-risk and emergency department patients.
The facts are clear. Medical lawsuit filings have decreased dramatically. Professional liability insurance options have expanded exponentially, while rates have gone down approximately 50 percent. The number of physicians licensed and practicing in Texas has grown at historically unprecedented rates, and patient access to care continues to improve.
Texas tort reform: promises made, promises kept.
David Teuscher, MD, chairs the AAOS Board of Councilors and practices orthopaedics in Beaumont, Texas, once known as a “judicial hellhole” and now a fine place to be an orthopaedic surgeon.