The Texas legislature overhauled the state's civil justice system five years ago with the passage of Texas House Bill 4 - the Medical Malpractice and Tort Reform Act of 2003.
The comprehensive tort reform bill regarding health care liability claims includes limits on non-economic damages. Economic losses are not capped and include factors like medical costs and lost income.
The legislative changes include three non-economic damages caps:
(1) In medical malpractice cases, physicians or other healthcare providers are liable for a maximum of $250,000 per claimant (a claimant is a person or estate claiming damages) and each hospital or institution is liable for a maximum of $250,000 or $500,000 total per claimant. These caps are not adjusted for inflation.
(2) In wrongful death medical malpractice cases, awards are limited to a maximum of $500,000 economic and non-economic damages plus any medical care costs. This cap is adjusted annually for inflation and by 2007 was at $1,650,000.
(3) Medical malpractice suits involving criminal conduct are limited to two types of economic damages, such as medical costs and lost income, plus a maximum non-economic damage amount not to exceed $750,000.
The damage award limits apply to each defendant individually, not combined. In addition, a claimant's receipt of benefits from a collateral source, such as insurance, does not reduce the recovery.
Since enactment, supporters claim the tort reform measures are meeting many of its goals. They say it has increased access to medical and charity care, provided a greater opportunity for medical specialists to come to Texas, increased insurance companies' ability to write medical malpractice insurance and has allowed hospitals and institutions to upgrade medical equipment, instead of paying high premiums.
The increase in medical specialists and physicians is supported by the medical board's office is reporting an 18 percent increase in applications in 2007. Since 2003, the office has granted licenses to 10,875 new physicians.
According to the Texas Department of Insurance and the Texas Medical Association, the measures have provided rate stabilization and rate cuts by an average of 24.3 percent. The American Medical Association states that since the reform measures were enacted, the largest six insurance carriers in Texas have reduced premiums by over $327 million. In addition, the Association states that there has been a 50 percent reduction in lawsuits filed in most Texas counties.
Critics of the tort reform bill charge that the bill unfairly targets lower income or unemployed persons. For people falling in those categories, previously the only way to get a large settlement was through compensation for non-economic damages such as for pain and suffering. Now critics say that lawyers are less likely to take those cases centering on non-economic damages and instead take cases involving plaintiffs with a high salary because juries can still award a multi-million dollar award for lost income.