High cost of medical malpractice insurance in Texas sparks debate

The Dallas Morning News

AUSTIN: The Texas Legislature formally launched debate Wednesday over whether to place a cap on medical malpractice lawsuit judgments, with proponents calling it the last hope to rein in rising physician costs and opponents saying it’s a misguided solution that hurts the poor.

In the first hearing open to the public, the House civil practices committee, chaired by Rep. Joe Nixon, R-Houston, heard testimony from all walks of medical life – from physicians and personal injury lawyers to AARP members and consumer advocacy groups.

The focus of debate is a bill filed by Mr. Nixon – similar to one introduced in the Senate by Sen. Jane Nelson, R-Lewisville – that proposes to cap noneconomic damages in medical liability lawsuits at $250,000, reduce attorney contingency fees and give juries information about other revenue – such as Social Security and disability pay – that claimants already received.

Doctors, hospitals and other care providers said soaring liability premiums and high lawsuit judgments are financially threatening their practices and forcing many medical professionals to leave certain specialties or markets in Texas.

The cap would slow the acceleration of premium rates and ensure that doctors remain in the state, they argued.

Lawyers and consumer advocates said the rising premiums are due to insurance companies’ haphazard management of their finances and that the key to curbing the number of lawsuits is to further crack down on bad doctors.

Important issue

Many of the arguments heard Wednesday already had been put forward by interested groups in the weeks leading up to the hearing, and no vote was taken on the bill.

But as the crowded room proved, the issue is sure to garner more heated debate, especially since Gov. Rick Perry declared it an emergency issue for the 78th Legislature.

“Rising health care liability premiums have forced many providers to leave the state,” Mr. Nixon said in the opening statement. He added that the ratio of doctors per resident in Texas – which he put at 152 to 100,000 – is lower than that of other states.

Curbing the limit on noneconomic judgments, which account for two-thirds of all judgments, would help to stem the number of frivolous lawsuits, he said.

Spencer Berthelsen, a representative of the Texas Medical Association, argued that many malpractice claimants view suing doctors as “a lottery award,” and lawsuits have forced doctors to consider “which conditions, which patients and which locations” prior to practicing.

“It truly is a crisis,” he said. “If it’s not resolved, it’ll truly affect the care provided.”

David Bragg, a legal counsel for AARP, said many of the claimants don’t stand to gain much in economic judgments, and capping noneconomic judgments would harm some plaintiffs.

The limit of $250,000 is “a drop in the bucket for large chains” of nursing homes, he said.

Michael Regier, general counsel of Austin-based Seton Healthcare Network, arguing for the bill, testified that his company’s liability premium grew 75 percent last year from the year before. The increase was more than 50 percent of its net income, he said.

Darlene Evans, owner of a nursing home, testified that she was “a meritless claim away from closing” her business. In 1998, her company paid $12,000 in premiums for a $3 million aggregate policy. In 2002, she paid $118,000 for the policy but with a higher deductible.

California law

Mr. Nixon’s bill is similar to a law in California, which also has a $250,000 cap. In 1988, the state’s voters approved Proposition 103, which rolled back insurance rates and called for more stringent reviews of insurers’ policies. That measure did more to stabilize the state’s malpractice insurance market, said Harvey Rosenfield, president of the Foundation for Taxpayer & Consumer Rights, and the author of Proposition 103.

The insurance industry spent $80 million to fight the proposition, and after it passed, premiums went down 20 percent, he said.

“What we have is an insurance problem,” said Reggie James, a regional director of Consumers Union. Only one in eight malpractice cases is turned into a claim, he said.

Rep. Yvonne Davis, D-Dallas, questioned the bill’s proponents on how it would actually lower doctors’ insurance rates.

Mr. Regier responded that addressing the “circumstances of rising premiums” is required before rate rollback provisions are considered.

Rep. Will Hartnett, R-Dallas, said that the state hasn’t disciplined enough doctors. He also wondered if the bill would fall short of “full compensation” for those who were truly deserving.

And Rep. Beverly Woolley, R-Houston, pointed out that a hospital in her district has already closed its OB/GYN practice because of rising premium rates.

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