Burnt Orange Report

July 23, 2003

No on 12: A Burnt Orange Endorsement

By Byron LaMasters

On September 13th, yes, everyone September 13th, Texans, ok, a very small percentage of Texans will go to the polls to decide the future of lawsuit damages in Texas. Voters will decide whether to continue to allow juries to award damages in which they see fit, or allow the legislature to take the power to award damages out of the hands of the juries, and cap a value on one's life.

First off, you might wonder why the election is on September 13th. Who holds elections in September? And on a Saturday? Republicans, scared of likely high turnout among Democrats in the November election for mayor of Houston. That aside, what does Proposition 12 really do? Here's the description for the website of the Texas Secretary of State:

HJR 3 would immediately authorize the Legislature to limit non-economic damages assessed against a provider of medical or health care and, after January 1, 2005, to limit awards in all other types of cases.

The proposed amendment will appear on the ballot as follows: "The constitutional amendment concerning civil lawsuits against doctors and health care providers, and other actions, authorizing the legislature to determine limitations on non-economic damages."

You may read the entire text of the joint resolution from the House and the Senate, here. Essentially, this amendment to the Texas constitution would allow the legislature to cap non-economic damages. It's likely that it would cap non-economic damages at $250,000 in most cases. But this amendment gives the power to the legislature (the last group I trust) to decide what a human life is worth, be it 50 cents, $50,000 or $500,000. In some cases, $250,000 is a reasonable amount for non-economic damages. In some cases, it's too much. In other cases, it's not enough. The point is that juries ought to decide what should be awarded in non-economic damages on a case-by-case basis. It's right there in the seventh amendment to our constitution:

In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.

Proposition 12 takes the power away from juries to decide damages, it puts it in the hands of the legislature. The "Yes on 12" folks think that Texans serving on juries are too stupid to decide what damages are appropriate. It's that simple.

Sure, there's arguments from the other side. I hear them every day. My father is a doctor. I think that we'll have to agree to disagree on this issue. Doctors are obviously concerned about their malpractice premiums. They've skyrocketed in recent years, and it's a legitimate concern. However, the blame for those high premiums lies much less with frivolous lawsuits, than it does with the very small minority of bad doctors:

Since malpractice premiums started rising, doctors have surfed on a wave of sympathy, perhaps because Texans also have seen their homeowner and auto policy bills skyrocket.

And just as auto and homeowner premiums didn't rise only for those who filed claims, doctors' premiums didn't increase just for the 2.2 percent responsible for one-fourth of malpractice payouts, or the 6.1 percent responsible for more than half. Even doctors with spotless slates got huge bills.

That's right. Six percent of doctors are responsible for half of all malpractice payouts. Something tells me that that's not an accident. The solution to the problem is two-fold. First, there needs to be insurance reform in order to prevent insurance companies from artificially inflating their rates. Second, doctors ought to do a better job of disciplining the 6% of doctors responsible for one half of malpractice payouts. Those two things will go a lot further to lower malpractice premiums than caps on damages. Take a look at the evidence. Capping non-economic damages has no effect on lowering malpractice premiums:

Fib: Caps on non-economic damages will bring down doctors' malpractice insurance premiums

FACT: Experience in states with caps has shown - and insurers and tort "reformers" admit - that caps and tort "reform" won't lower doctors' premiums.

In California, which limits non-economic damages to $250,000, the average actual premium is $27,570, eight percent higher than the average of all states that have no caps on non-economic damages. Medical Liability Monitor, 2001.

Malpractice premiums in California increased by 190% during the first 12-years following enactment of the $250,000 MICRA cap. Proposition 103 Enforcement Project Study, 1995. It took California's Proposition 103 - insurance reform - to lower and stabilize malpractice premium rates.

"[A]ny limitations placed on the judicial system will nave no immediate effect on the cost of liability insurance for health care providers." Final Report of the Insurance Availability and Medical Malpractice Industry Committee, a bipartisan committee of the West Virginia Legislature, issued January 7, 2003.

"Nevada's new medical-liability program won't see immediate improvement in premium rates after a recent legislative initiative. . . . [A]nother company insuring physicians for medical liability, American Physicians Assurance, also wasn't planning any reduction." Best's Insurance News, August 20, 2002.

"We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." Sherman Joyce, President of the American Tort Reform Association, "Study Finds No Link Between Tort Reforms and Insurance Rates," Liability Week, July 19, 1999.

"Insurers never promised that tort reform would achieve specific premium savings . . ." From a March 13, 2002 press release by the American Insurance Association (AIA).

An internal document citing a study written by Florida insurers regarding that state's omnibus tort "reform" law of 1986 said that "The conclusion of the study is that the noneconomic cap . . . [and other tort 'reforms'] will produce little or no savings to the tort system as it pertains to medical malpractice." Medical Professional Liability, State of Florida, St. Paul fire and Marine Insurance Company, St. Paul Mercury Insurance Company.

In Missouri, which has caps, the number of claims has been declining, the cost per claim has been declining, yet medical malpractice premiums are going up.

Folks, there's a better way to solve this problem. Proposition 12 is not the answer. This shouldn't be about doctors against lawyers. This is about the constitutional right of a trial by jury, and empowering the jury to make fair decisions in regards to non-economic damages, or taking that right away. Join us in fighting Proposition 12. Want to get involved? Go to Save Texas Courts to donate and get more information. Most importantly, remember to get off your ass that Saturday in September and vote.

Posted by Byron LaMasters at July 23, 2003 02:07 PM | TrackBack

Comments

Apparently, it doesn't matter HOW people vote on that amendment. If its voted down, there's a provision for an alternative way to impose caps. That alternative will have to be approved by the TX Supreme Court. But do you really think they'll have a problem with it?

Posted by: hope at July 23, 2003 10:05 PM

I'll put more faith in the Texas Supreme Court than I would with the Craddick controlled Texas Legislature.

Posted by: pc at August 6, 2003 05:05 PM

Did you forget to mention tnat economic damages would be preserved in addition to the non economic potantial of $750. I agree with you that the value of human life can not be set in cents, dollars or hundred thousands. If you are a lawyer it should be in at least an 8-figure number, of which the compasionate attorney would suck 40%?, maybe 50-60%. This is real justice. Juries will still try this cases, thay will still make the right decisions, what proposition 12 limits is the right to win the lottery every time you sue your doctor, hospital or nursing home, which by the way I can not find ANYWHERE in our constitution. If only 6% of the doctors are bad, then, why 98% of us get sued?, maybe that is why our premiums are skyrocketing, it kind of makes sense, doesn't it?. Rates will come down, maybe it will take 2-3 years, because in this country when the market is balanced and predictable (neither of which we have at this time) player will enter and compete for our premium dollars. I hate to put to you that california rates are 1/2 to 1/3 in my specialty, and in other high risk specialties, you must also know that injured patients receive an average 16% more and 23% faster that in the rest of the country. So caps is a win-win for patients, doctors, business ans texans. Sorry for my grammar I am not the writing kind.

Posted by: vicente juan md at September 2, 2003 10:24 AM

I wanted to know why you are against proposition 12?
I personally know what will come of voting against this proposition, not only have doctors all across the state of Texas packed up their stuff and looked for work in other states, but in Tarrant county alone we lost several hundred doctors this year to malpractice suits being more than necessary. So you go ahead and vote no to prop. 12 and you may have your rights, but where will you find a doctor to treat you? They are leaving!!! You might try Arkansas!!!

Posted by: Alan Farmer at September 4, 2003 11:16 AM

Alan, stupid questions get stupid answers. Why am I against Prop 12? Because, umm well, read my endorsement of a NO Vote on Prop 12. That, after all, was the purpose of this post.

I'm all for helping doctors, but limiting accountability of irresponsible people and taking the U.S. Constitutional Power away from juries to determine their own rewards is not the answer. Let's go take on the insurance industry that inflates their rates, or maybe get the AMA to discipline the very small percentage of doctors that are responsible for the vast majority of malpractice payouts.

Posted by: ByronUT at September 4, 2003 02:02 PM

I am voting for Prop 12, but what we really need is to be able to go online and look up a Doctor and see how many complaints have been lodged against them. Maybe people would stop using the bad docs and they would go out of business.

Posted by: Elaine Kyle at September 4, 2003 09:28 PM

A vote for prop. 12 will not stop outrageous lawsuits from being filed. They will still be filed and still be in our courts taking up space and time , they might not get as much as before but they'll still be there. But what won't be there is Your individual right to have a jury hear you and decide damages. Instead you will not have a voice in anything that happens. Why on earth would you want to take away your own right to have a voice By voting for something this outrageous and tricky as this prop 12.

Posted by: Rhonda at September 5, 2003 10:27 AM

I live in South Texas and am hoping to run out all of our cardiologists. When I'm having a heart attack, and not even a veterinarian will see me, that's when I'll be glad I voted No on 12.

Posted by: Andrew at September 5, 2003 11:08 AM

Proposition 12 will stop ambulance-chasing lawyers from cashing in big everytime they see even a crack in the wall, even one little piece of dead carcass on the road. These lawsuits are way out of hand and they are costing not only those who practice medicene but are costing everyone, just so that the demonrat lawyers can make huge contributions to the Democratic party. These excessive lawsuits are part of the grand scheme of the Democrats to take out privatized medicene and to implement a socialized from of medicene! Stop the madness now! SAY YES TO 12 ON THE 13th!!!!!!!!!!!!!

Posted by: Matt at September 5, 2003 01:46 PM

I plan to vote against proposition 12 for no other reason other than the fact that our company insurance has refused to pay several of its honest obligations over the last three years, and, when we asked the state board of insurance to aid us we were refused. Since the governor is the only recourse in matters pertaining to the state board of insurance, when his office refused to help in our cases, we had noone to turn to. So, as I see it, if Governor Perry is for Proposition 12, it is probably because it has no regard for Texas residents, and in all likelyhood is benefitting the governor in some fashion or other.

Posted by: Jerry Griffin at September 9, 2003 02:23 PM

We need to stop frivolous lawsuits that cost all of us money. Voting yes to Prop 12 will NOT accomplish that. Contrary to popular belief, frivolous suits do NOT win big bucks AT TRIAL. If a "frivolous" case wins big at trial, was it really frivolous? No. Frivolous suits obtain modest settlements from insurance companies that decide to pay $50K to make a case go away rather than $75K to defend it through trial. Prop 12's caps will not ever affect such a case. What insurance companies should do is defend those cases to discourage the filing of such cases in the future, not try to pass unfair legislation. If Prop 12 doesn't stop frivolous lawsuits, what does it prevent? It prevents the horribly burned and permanently disfigured and crippled drunken-driver accident victim (because Prop 12 is not limited to just medical malpractice cases) from recovering what the jury (the only folks that heard all the facts in the case) thought was fair recovery for enduring the hell of the accident AND facing a lifetime of physical pain at every move, humiliation in every public place, and anguish at not being able to do what was once possible. Vote against that? Heck yeah I will! If you would not agree to be placed in that condition for $250K, $500K, or $750K, how can you support the legislature's imposing that arbitrary price on a victim?

Posted by: Nghiem at September 9, 2003 04:06 PM

Your example of the burn victim is flawed. While Prop 12 limits NON-ECONOMIC damages to $250,000, let's examine what your burn victim gets in economic damages:

Let's assume he was 20 years old and working in a fast food joint for $10 per hour. Also, let us assume that this is all that he would have done for the rest of his life, and we expect him to live to be 70. For 50 years * 2000 hours per year * $10 per hour, this fast food worker should receive:
$1 million.

Now factor in the interest he would have earned on that, maybe at 3%, and the ECONOMIC damages are about:
$4 Million.

So, if he gets $4,250,000, pays half a million in medical expenses, and puts the rest in the bank, he could live pretty comfortably off of the annual interest of:
$110,000

Of course, without Prop 12, there's a good chance that no burn unit would be available, and he would just be dead.

So... only $110,000 per year for not flipping burgers, or a chance at $200,000 with a higher risk of death? Those are your choices.

($200,000 per year requires a $3.2 Million non-economic award instead of the $250K )

Posted by: Firefly at September 10, 2003 05:22 PM

GAO Report Confirms Caps like Prop 12 Have Dropped Malpractice Rates in Other States
by Kurt Reyes, BS Economics and Current Medical Student

GAO recently released (August 2003) a report to Congress titled “Medical Malpractice- Implications of Rising Premiums on Access to Health Care.” The GAO performed several studies and analyses. Some of the analyses included Texas and other studies did not. Prop 12 is a proposed amendment that will uphold current legislation that places a limit or cap on non-economic (pain and suffering) damages.

Have caps on pain and suffering lowered the growth of malpractice premiums in the past?
GAO report: Yes. States with caps show less growth in malpractice premiums than states that do not have caps or those states with weaker reforms. (GAO-03-836, p. 30).

Are medical malpractice claims the greatest contributor to increased premiums?
GAO report: Yes. The greatest contributor to malpractice premiums appears to be malpractice payouts. The GAO did state other factors, but the greatest contributor was payouts for claims (GAO-03-836, p. 9).

Will caps lower the price of malpractice premiums in the long run?
GAO and Congressional Budget Office (CBO): Yes, a federal cap will drive down the long-term price of malpractice premiums by 25 to 30 percent over a ten year period (GAO-03-836, p. 34). Passing a cap in Texas will add momentum to legislation for a federal cap.

Was Texas included in the study about the causes of increased premiums?
GAO report: Yes (GAO-03-836, p. 9 footnote 14).

Did this GAO report directly address healthcare access in Texas?
GAO report: No.

Is there a lack of access to care due to malpractice premiums in Florida, Nevada, Pennsylvania, Mississippi, and West Virginia?

GAO report: Debatable. In the few localized instances and often in rural that received much media coverage, GAO confirmed that certain events (such as the ER closure in Nevada and patients in Mississippi having to drive 65 miles to deliver because OBs closed their rural practices) were in fact due to high premiums. “However, we [GAO] also determined that many of the reported physician actions and hospital-based service reductions were not substantiated or did not widely affect access to health” (GAO-03-836, p. 12).

In other words, GAO did not find evidence that statewide problems with access to health care due to high premiums in the five states currently existed. (Many opponents of Prop 12 are misquoting the above GAO statement to claim that a national healthcare crisis does not exist. This GAO report did not investigate access to health care on the national level. GAO has yet to determine if there is a national healthcare access problem due to high premiums, and GAO will continue to monitor the problem for Congress.) AMA claims that 18 states including the above five states are in a health-care crisis because of high premiums (GAO-03-836, p. 38).

The confirmed instances of limited access to care are few, but they maybe implications of a greater problem for the underserved. One implication is that rising premiums could lead to a lack of access of health care for the underserved (Mississippi example). Another implication is that these few incidents are random and that they indicate nothing.

If access to health care for the poor is not a problem in Texas, do we wait until premiums get so high that we do have problems with access to health care for our less fortunate? AMA/TMA claim that these high premiums are already obstructing access to healthcare in Texas. Vote Yes for Prop 12 and reduce the malpractice premiums.

Kurt Reyes
Medical Student
UT Health Science Center at San Antonio

Source: GAO-03-836, “Medical Malpractice- Implications of Rising Premiums on Access to Health Care,” August 2003 accessed 7 September 2003 at http://www.gao.gov/new.items/d03836.pdf.

Posted by: Kurt Reyes at September 11, 2003 06:13 AM

Prop 12 is a no-brainer. When you or a member of your family needs a neurosurgeon, cardiologist or orthopedic surgeon because of an accident or sudden illness, you won't give a damn about non-economic damages. You will want the doctor there in the ER, not a hundred or two hundred miles down the road. A trial lawyer won't help you then.

Posted by: Ed at September 12, 2003 11:45 AM

News, Politics, and Fun From Deep in the Heart of Texas

July 23, 2003

No on 12: A Burnt Orange Endorsement

By Byron LaMasters