Study Shows Tort Reform Doesn’t Work

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by Eric Pearson

In 2003, doctors and insurance companies spent millions of dollars on a pervasive ad campaign to convince Texas voters that “tort reform” was necessary to fix what they labeled a “medical malpractice crisis” in Texas.  To convince consumers to give away their legal rights, these groups promised that medical malpractice tort reform would lead to lower medical costs.  Opponents argued that any cost savings as a result of fewer medical malpractice lawsuits would simply be pocketed by doctors and insurance companies and would never be passed on to consumers in the former of lower costs.  Guess who was right?

A new 2012 study by, among others, a prominent University of Texas law professor, has found no evidence that health care costs in Texas dipped after a 2003 constitutional amendment limited payouts in medical malpractice lawsuits.  The study examined Medicare spending in Texas counties and saw no reduction in doctors’ fees for seniors and disabled patients between 2002 and 2009.  The researchers’ findings come after a report last fall in which the consumer group Public Citizen said it found Medicare spending in Texas rose much faster than the national average after tort reform.  Another study yet to be published on physician supply and tort reform agrees that malpractice suits and payouts sharply dropped after tort reform but strongly disputes claims of a mass exodus of Texas doctors before tort reform and huge increases afterward.

What all three of these studies show is that tort reform has caused there to be far fewer medical malpractice lawsuits than before and lower awards in the few cases still being filed.  But at what cost?  Under new medical malpractice laws, non-economic damages are capped at $250,000.  That means that in cases where the victim of medical negligence is a child, a retiree or a stay at home mom, in other words, a non-wage-earner, and does not have significant medical expenses, damages are capped at $250,000.  This is true regardless of the degree of the doctor’s negligence or culpability.  Even if a doctor admits he was negligent and his negligence caused his patient’s death, the maximum a jury can award the surviving family members of a non-wage-earner is $250,000.  Is $250,000 is fair compensation for the loss of a child, parent or spouse?

Besides resulting in inadequate compensation for deserving victims, tort reform actually prevents most of these victims from receiving any recovery whatsoever.  Why?  Because most attorneys cannot afford to take on a case where the most they can recover is an attorneys’ fee of 40% of $250,000 ($100,000), especially when the out-of-pocket costs of trying such a case can easily exceed $100,000.  What rationale lawyer would risk $100,000 of their own money for the chance of a $100,000 fee?  What client would want to endure the emotional trauma of a trial for the possibility of recovering paltry $50,000 for the death of their loved one after paying attorneys’ fees and expenses?  What tort reform has done has kept thousands of deserving victims of medical negligence out of court, thereby lowering the costs of litigation to doctors and insurance companies.  And what have these doctors and insurance companies done with their windfall?  Lined their pockets.

Tort reform has utterly failed to lower healthcare costs in Texas.  The promised “payout” for the enactment of tort reform has failed to materialize, at least for the consumers who bear the brunt of the legislation’s changes.  Bad for consumers, but good for negligent doctors and their insurance companies — that’s Texas tort reform in a nutshell.