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Texas tort reform vote signals lower liability rates

Physicians believe a constitutional amendment will ease the state's medical liability crisis.

By Damon Adams, amednews staff. Oct. 6, 2003.

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Passage of a Texas medical malpractice ballot initiative appears likely to produce the impact physicians desired -- a decrease in liability premiums. And doctor groups hope that the measure's success will spur similar action in other states.

"It's going to send a message all over the nation that it can be done. This will give greater impetus to other states," said AMA President Donald J. Palmisano, MD. The AMA contributed $100,000 to support the initiative, called Proposition 12.

The measure amends the Texas Constitution to allow caps on noneconomic damages in medical malpractice lawsuits. Within days of the vote, some insurers announced plans to reduce liability insurance rates.

For example, Texas Medical Liability Trust, the state's largest medical liability insurer, said it would cut premiums 12% beginning Jan. 1, 2004.

"We believe the 12% [reduction] is really just the start," said W. Thomas Cotten, president and CEO of physician-owned TMLT, which has about 10,800 policyholders. "Hopefully, the number of carriers will increase so there will be more sources of competition. With that competition, carriers will need to reduce their rates."

The Doctor's Company, a medical liability insurer based in Napa, Calif., plans at least a 12% reduction on $1 million policies in Texas, said Richard E. Anderson, MD, company chair. With 2,000 physician policies in the state, the insurer is looking at other potential savings to doctors and hopes to write more policies, he said.

"I guarantee the rates will be lower than they otherwise would have been," Dr. Anderson said.

State Rep. Joe Nixon said insurers' premium cuts would save doctors about $100 million a year.

Now that the amendment has passed, state leaders said, some doctors will feel secure enough to go back to practicing high-risk procedures. Medical students and practicing doctors will be less likely to leave Texas, said Charles W. Bailey Jr., MD, president of the Texas Medical Assn. and a Houston plastic surgeon.

"The real winners of this election are the people of Texas, who can be more certain that their doctor will be there for them when they're sick or injured," he added.

But opponents of the measure said it strips juries of their power and gives it to special interests. They are watching to see if insurers follow through on promises to lower rates.

"There is no guarantee that's going to happen," said Abby Sandlin, deputy director of Texas Watch, a group that is part of Texans Against Proposition 12. "We've had empty promise after empty promise from insurers over the decades. Now is the time they are going to have to put up."

The Medical Protective Co. in Fort Wayne, Ind., is still exploring whether to change its rates.

"We are assessing the impact this will have on our rates," said John Novaria, spokesman for the company, which has 7,000 physician policyholders in Texas.

Heading off a legal challenge

Earlier this year, the Texas Legislature passed a law placing a $750,000 cap on noneconomic damages in medical malpractice lawsuits. It limited an individual physician's liability to $250,000.

Knowing the law would face a legal challenge, legislators called for a ballot measure, Proposition 12, to ratify the Legislature's cap on noneconomic damages in civil lawsuits. A similar cap was passed in 1977, but after a legal challenge, the Texas Supreme Court found it unconstitutional.

Supporters and opponents of Proposition 12 waged media campaigns to woo voters. The two camps spent more than $13 million on television commercials and mailings. About 12% of Texas' 12 million registered voters cast ballots Sept. 13. The measure passed narrowly, with 51% supporting it and 49% opposing it.

Supporters said the amendment means the cap would survive any legal challenge.

"I'm extremely relieved we came out on the positive side of it. It was a very intense media campaign," Dr. Bailey said. "The key thing is it will at least hold premiums at their current level so we can stop this escalation."

The passage of Proposition 12 will benefit Texas' liability insurance market in other ways, proponents said. "The stability in the state will allow other medical insurers an opportunity to come sell their policies in Texas," said Nixon, who sponsored the legislation on damage caps.

Since the vote, the Texas Dept. of Insurance said no insurers had contacted the agency about coming back to a state that once had 17 medical liability insurers and now has only a handful left. That likely will change.

"We fully expect that companies will return to Texas," said department spokesman Jim Hurley.

But for some doctors, it's too late.

"The doctors that already left or have gone out of practice will not go back into practice," said David Schneider, MD, president of the Texas Academy of Family Physicians. "Once you've made that decision to change your life, you won't come back."

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