HB4: The 2003 Tort Reform in Texas
Tricia Guzman
MGT6106.E1 – Law Applications for Managers
Amberton University
Professor David Campbell
May 15, 2015

HB4: The 2003 Tort Reform in Texas Texas is known as a tort reform state. Tort reform is essentially any attempt to limit someone’s rights to seek redress in a court of law for a civil wrong. The goal of tort reform in Texas is to create and maintain a fair, honest, and predictable civil justice system that balances the rights of both plaintiffs and defendants. House Bill 4 (HB4) was enacted to curtail frivolous lawsuits, limit runaway jury awards, and reduce malpractice liability insurance premiums in 2003. Depending on whom you agree with, Texas tort reform has helped in some areas, but also hurt in other areas.
The Need for Reform Prior to 2003, Texas was known as one of the nation’s “judicial hellholes.” The state’s system of justice allowed for laws to be applied arbitrarily. Enforcement of personal property rights and contracts varied depending on which local court had the case. Furthermore, certain counties had bad reputations regardless of the court. Judicial outcomes often depended on which attorney was before which judge in which county (Nixon, 2013). The following examples show the mess of the Texas tort system: * One out of every four doctors had a malpractice claim filed against them each year. * 85 percent of medical malpractice claims failed, but cost more than $50,000 to defend. * The number of medical malpractice insurers in Texas dropped from 17 in 2000 to only four in 2003. * Class action defendants almost always settled once the class was certified by the trial judge. * Plaintiffs were given too much latitude in choosing which county to bring suit.
The Basics of HB4 in 2003
In 2003, HB4 was introduced to bring efficiency, equality, and balance to the Texas court system. The bill contained procedural, substantive, evidentiary, medical malpractice and general civil reforms needed to extinguish the litigation crisis (Nixon, 2013). The bill contained nothing new or innovative. The reforms came from laws adopted in other reform states. The reforms written into HB4 included: * Juries should hear more evidence. * Only those individuals at fault should pay and then only to the extent of their own fault. * Damages should be limited to what the plaintiff paid or incurred or what someone paid or incurred on their behalf, this eliminated “phantom damages.” * A medical report written by a physician in the same or similar field as the physician being sued should be submitted within 120 days of the filing of the lawsuit, clearly identifying the appropriate standard of care, how the standard of care was violated, and the damages that resulted from the violation of the standard of care. * Non-economic damages should be capped at $250,000 for any doctor sued with an additional cap of $250,000 for each of up to two medical institutions. * Procedural and substantive devices used to tilt the final decision should be eliminated.
Positive Aspects of HB4 The medical community seems to be the primary beneficiary who gained the most from HB4. Medical doctors don’t fear malpractice suits as much and enjoy lower premiums for insurance. Sick and injured Texans have more physicians to choose from when they need medical care. Many hospitals also experienced an economic prosperity. Lower premiums for doctors. 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. After HB4, 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 (Teuscher, 2015). Decrease in lawsuits and payouts. Since an injured party usually isn’t able to afford a lawsuit, the lawyers agree to work under contingency arrangements. This basically means that if they win, they receive part of the judgment award. These arrangements encouraged lawsuits to be filed. The lawyers mainly focus on cases that promise a high reward because if the award was low then they probably wouldn’t be able to recoup their expenses. Medical malpractice lawsuits usually cost over $100,000 in lawyer fees. After the tort reform laws were enacted, resolution with medical lawsuit dropped by two-thirds while the average settlement dropped by 22% (Nixon, 2013). Litigation, paid claims, and premiums have been slashed in half after sweeping reforms were passed in 2003. The malpractice payout per capita (at $3.03) is now the lowest in the country (Roslund, 2014). Economic impact to hospitals. HB4 is fulfilling the promise of healing our health care delivery system by allowing hospitals to use money previously spent on lawsuits to expand their facilities and services. Christus Health, a nonprofit Catholic health system with hospitals throughout Texas, saved so much money on its liability costs that it expanded its charity care by $100 million per year starting in 2004. Total cost-basis charity care in Texas was $594 million greater in 2006 than it was in 2003. Sister Michele O’Brien of Christus stated that the expanded charity care is a direct result of the lawsuit reforms. Texas Children’s Hospital also underwent a multi-billion dollar expansion. The total health care facilities expansion exceeded over $10 billion and is attributed to the success of HB4 (Nixon, 2013). Increase in doctors throughout Texas. Since HB4 passed, the Texas Board of Medical Examiners has licensed over 14,500 new doctors. This is double the number of physicians the Board expected to license in the same time period without tort reform taking place. Since 2004, there have been a record number of applicants. Many doctors with mature practices are relocating to Texas from other states due to HB4. Specialists in the high risk areas of orthopedic surgery, emergency medicine, pulmonology, oncology, anesthesiology, neurology, neonatology and pediatric cardiology are locating their practices in the state. A lot of these new doctors have gone to rural Texas or those areas previously underserved in the health care community. El Paso has outpaced every county with a 76 percent greater growth rate of newly located physicians. Doctors already licensed in Texas are expanding their practices. For instance, two doctors in a rural town announced they’d deliver babies once again. In another rural town, two neurosurgeons, who had previously announced their decision to leave their practice; changed their intentions due to the relief in premium expenses. Texas, once listed as 47th worst state in the ratio of doctors per citizen, will soon be in the lower 30s and improving (Nixon, 2008).
Negative Aspects of HB4 Patients in Texas are struggling with the high costs of health care that was supposed to be improved by HB4. Patients’ rights to seek legal remedies for medical errors have been greatly impacted. And malpractice tort reform does nothing to control medical malpractice itself. Medicare and health care costs increase instead of decreasing. Texas Medicare spending has always been higher than the National Average. Spending for Medicare part A (inpatient services) and part B (outpatient services) increased over 5 percent more than the National Average after the tort reform of 2003. Many who blamed medical practice litigation for rising health care costs said that spending would be decreased because doctors wouldn’t be practicing “Defensive Medicine.” Defensive medicine can best be defined as doctors prescribing unnecessary tests and procedures to insulate the physicians against potential litigation. Medicare part B spending was thought to decline after the tort reform of 2003; however the spending rate more than doubled from 2003 to 2007. The reduced fear of doctors being sued should have reduced the spending rate of the number of tests and procedures ordered (Access to Justice, 2011). Patients’ rights for legal remedies. In 2003, the state enacted a new standard in torts. Under that law, to assert a claim on the provision of emergency medical care, the claimant has to show a “willful and wanton negligence.” That is a higher level of culpability than the garden variety negligence seen in many other states. Generally, “willful and wanton” would suggest an egregious level of negligence is needed to prove the case. Jay Harvey, past president of the Texas Trial Lawyers Assn., said more plaintiff lawyers are turning down complicated negligence cases because they can’t afford the often high expense. The cap discriminates against patients, especially those seriously injured who are left with little compensation, he said. Children, stay-at-home moms, and the elderly have disproportionately been impacted by HB4 because often they do not have substantial economic losses (i.e., lost wages or salary) from medical injuries, but their quality of life has been substantially, even permanently diminished. Accountability of doctors. As part of HB4, the Office of Patient Protection, was supposed to serve as a counterbalance for patients, but it was abolished before it could even represent any patients. The Texas Medical Board, which nominally regulates physicians, does not have the will to consistently remove incompetent doctors from the practice, nor does it have a mechanism to compensate patients, or adjust liability disputes between patients and doctors. Because of our broken legal and regulatory systems, Texas threatens to become a dumping ground for dangerous doctors (Ten Years Later, 2013). “Texas’ tort reform has essentially established a lower standard of care for emergency rooms. Injured patients with permanent disabilities cannot find lawyers who will take their cases,” said Billy Corriher, Director of Research for Legal Progress. “As a result, the crushing cost of negligent medical errors has been shifted from insurance companies and hospitals to victims of negligence.”
Conclusion
Lowering medical malpractice insurance premiums for doctors has not benefitted patients in Texas. The reforms attack malpractice insurance cost, which are a symptom of medical malpractice by limiting damage award payments to those patients who are harmed by malpractice; but the reform ignores the genuine and more fundamental problem of medical malpractice, and can even be said to encourage it by reducing the cost to doctors of negligence. Before tort reform, the pendulum swung too heavily towards the plaintiffs in medical malpractice lawsuit; but after tort reform, the pendulum seems to have swung too far in favor of the doctors especially incompetent doctors. The Medical Board and special medical courts could be the balancing force that could bring tort into equilibrium. Actions are urgently needed now that tort reform has weakened control over medical malpractice in Texas. Medical boards should provide information to the public about provider quality and take action against problem doctors. The board needs to be composed of impartial people instead of just medical doctors who have a tendency to protect their own. In addition to medical board action, a special medical court will improve the handling of medical malpractice cases. They will be more specialized and knowledgeable in handling medical cases and could be more impartial. If both of these things are added, some tort reform laws should be abolished so patients who are actually severely harmed by incompetent doctors should receive appropriate compensation for their loss of income, pain, and suffering.

REFERENCES
Access to Justice. (2011, October 1). Retrieved May 8, 2015, from http://www.citizen.org/a-failed-experiment-report
Nixon, J. (2013, July 26). Ten Years of Tort Reform in Texas: A Review. Retrieved May 3, 2015, from http://www.heritage.org/research/reports/2013/07/ten-years-of-tort-reform-in-texas-a-review
Nixon, J. (2008, September 1). The Purpose, History and Five Year Effect of Recent Lawsuit Reform in Texas. Retrieved May 6, 2015, from http://www.bmpllp.com/files/1227547109.pdf
Roslund, MD, G. (2014, July 21). The Medical Malpractice Rundown: A State-by-State Report Card. Retrieved May 6, 2015, from http://www.epmonthly.com/departments/subspecialties/medico-legal/the-medical-malpractice-rundown-a-state-by-state-report-card/
Ten Years Later: How House Bill 4 Has Harmed Texans. (2013, July 30). Retrieved May 8, 2015, from http://www.texaswatch.org/2013/07/ten-years-later-how-house-bill-4-has-harmed-texans/
Teuscher, MD, D. (2015, May 1). Medical liability reform works. Retrieved May 3, 2015, from http://www.aaos.org/news/aaosnow/dec11/advocacy4.asp