Fair Legal System

Tort Reform

Employers can't focus on success and growth if they're constantly tied up in court fighting frivolous lawsuits. Texas has taken bold steps to improve our legal system, balancing the needs of private citizens with real concerns about protecting employers from job-killing chronic lawsuits, as well as shielding doctors from skyrocketing malpractice insurance rates.

According to the U.S. Tort Liability Index 2010, Texas ranks second overall in tort inputs to the U.S. tort liability system which "include the rules on the books in each state that shape its tort-system outputs – its monetary tort losses and tort litigation risks." Texas ranks No. 1 in several input categories, including: class-action rules, "Illinois Brick repealer" statute, pre-trial screening or arbitration for medical malpractice lawsuits, venue rules, the standard of scientific review of evidence by an expert witness, and statute of limitations in general tort lawsuits.

Over the last decade, Governor Perry has led the effort to pass sweeping reforms so that innocent employers can put their money into job growth rather than damage awards.

House Bill 274 implemented a loser pays component for frivolous lawsuits in the state. The governor designated this issue as an emergency item for the legislative session. The law employs several measures to streamline and lower the cost of litigation in Texas courts, allowing parties to resolve disputes more quickly, more fairly, and less expensively. This includes:

  • Allowing a trial court to dismiss a frivolous lawsuit immediately if there is no basis in law or fact for the lawsuit
  • Allowing a trial judge to send a question of law directly to the appellate court without requiring all parties to agree if a ruling by a court of appeals could decide the case
  • Allowing plaintiffs seeking less than $100,000 to request an expedited civil action
  • Encouraging the timely settlement of disputes and helping prevent a party from extending litigation by seeking a "home run" if they have already been offered a fair settlement

Gov. Perry signed several laws to limit frivolous lawsuits in 2005. The reforms include:

  • Cracking down on junk asbestos claims that were forcing innocent employers into bankruptcy and putting thousands of people out of work
  • Preventing trial lawyers from suing restaurants on the charge of obesity-related health problems
  • Stopping venue-shopping which had allowed lawyers to sue dredging companies in hostile forums hundreds of miles away from the site of their operations

Key provisions of the 2003 reforms include:

  • Defendants can appeal class certification directly to the Texas Supreme Court to decide up front, not after years of costly litigation, if the plaintiff has a class action
  • Law ensures that lawyers are paid in coupons if clients in a class-action suit get paid in coupons
  • A new standard to ensure sued parties pay only their proportionate responsibility
  • Reformed product liability laws so retailers are not liable for a manufacturer's mistake
  • Enacted liability limits for good Samaritans, volunteer firefighters, charity volunteers and teachers
  • Closed loopholes that allowed trial lawyers to venue shop

Texas' commitment to a fair legal environment for businesses has stemmed the tide of frivolous and excessive litigation by ending class action abuse, protecting innocent parties from expensive product liability suits, reining in excessive punitive damages claims, and cracking down on phony asbestos suits. Ultimately, the reforms have imposed reasonable limitations on lawsuits while still allowing Texans with valid claims their day in court.

Medical Liability Reform

Before Governor Perry took action in 2003, an increasing trend of frivolous lawsuits against doctors and other health care providers had led to runaway increases in malpractice insurance premiums. In 2003, Gov. Perry declared medical malpractice reform an emergency issue, giving the medical liability crisis high priority on the legislative agenda. The Legislature responded by passing a sweeping tort reform bill that capped hard-to-calculate "non-economic damages" at $250,000 per defendant, up to $750,000 per incident. Under the new law, patients can continue to recover unlimited "economic damages," which involve costs actually incurred by patients, including the cost of medical care and lost wages due to their injuries.

Since the passage of these reforms, claims and lawsuits in most Texas counties have been cut in half and predatory plaintiffs' lawyers have moved on to suing other targets. More than 10 new insurance carriers have sought entry into the Texas market, providing competition and lowering rates for Texas doctors. Within the first four years of the law's passage, every major physician liability insurance carrier in Texas cut its rates. On average, Texas doctors received at least a 27.5 percent decrease in liability insurance premiums. As a result, near-record numbers of neurosurgeons, orthopedic surgeons, and obstetricians have applied to practice in Texas.

As a direct result of tort reform, since 2003, the number of doctors applying to practice in Texas has skyrocketed by nearly 60 percent. In 2009, the Texas Medical Board received a record 4,094 license applications and issued 3,129 new licenses. In all, in just the first six years after reforms passed, 17,625 doctors either returned to practice in Texas or began practicing here for the first time.

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