Consumer groups say damages cap will not lower rates

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Associated Press

AUSTIN: A cap on damages awarded for pain and suffering in medical malpractice lawsuits likely won’t reduce insurance rates for doctors, consumer groups warned state lawmakers Wednesday.

In lengthy testimony before the House Civil Practices Committee, consumer groups said stronger regulations over the insurance industry’s ability to raise rates would have a greater effect on stemming rising costs for doctors and hospitals.

The committee is considering legislation to cap pain and suffering awards at $250,000, similar to what California did in the 1970s. Doctors, hospitals and business groups say a “crisis” of frivolous medical malpractice lawsuits is driving up insurance costs and forcing doctors to limit their practice or leave Texas. The bill would not cap damages for economic and other losses.

Both the House and Senate are considering lawsuit damages caps. Rep. Joe Nixon, R-Houston, sponsor of the House bill and chairman of the Civil Practices Committee, said a cap would lower rates by nullifying a “lawsuit lottery” of meritless lawsuits seeking large judgments.

Harvey Rosenfeld of the California-based Foundation for Taxpayer and Consumer Rights said rates continued to rise sharply in that state until voters there passed Proposition 103 in 1988, which mandated rollbacks on premiums. Rosenfield was the author of the measure.

The proposition also froze rates for a year, refunded hundreds of millions of dollars to doctors, changed that state’s regulatory system and made the insurance commissioner an elected office. Premiums have remained steady ever since, he said.

“If you want to lower premiums, you’ve got to regulate rates,” Rosenfield said.

Business groups disputed that, however. Jon Opelt of Citizens Against Lawsuit Abuse, said the California scenario worked only because insurance companies were showing a profit in the late 1980s.

Supporters of capping damages in Texas say the state’s four medical malpractice insurers are paying out an average of $1.50 for every $1 collected to defend against lawsuits.

Reggie James, director of the Southwest Regional office of Consumers Union, said damage caps would effectively prevent some medical malpractice victims from taking their case to court.

The limited jury awards, plus the bill’s sliding scale for attorneys fees, would keep many lawyers from taking cases, he said, drawing a loud laugh from supporters of the bill in the audience.

“What we have here is a one-sided bill that places hurdles in front of the patients,” James said.

Last week, representatives from insurance companies and defense lawyers told the committee that California’s damages cap had not reduced the number of lawsuits filed, just the amount of money awarded.

Michael Regier, vice president for the Seton Health Care network in Austin, said its hospitals have seen the effects of high premiums first hand. The hospitals recently lost orthopedic and neurosurgeons, who are “critical to providing trauma care.”

Dr. Spencer Berthelsen of Houston, representing the Texas Medical Association which supports the cap bill, said doctors would agree to strengthening the power of the Board of Medical Examiners to revoke the licenses of bad doctors.

“We need to remove bad doctors so they don’t injure patients in the first place,” Berthelsen said.

Gov. Rick Perry has already tagged the medical malpractice issue with “emergency” status to allow lawmakers to pass a bill quickly. And House Speaker Tom Craddick has said a bill capping damage awards will pass.

Consumer Watchdog
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