In this issue...
Profile on Chief Justice Phillips
Is Prop. 12 Working?
Vote on Referral Fees
Spotlight on Ken Hoagland
Recent TLR Events
Justice Tom Phillips Led Historic Change On Supreme Court
Tom Phillips, Chief Justice of the Texas Supreme Court, has announced his retirement from the bench in September, after sixteen years on the Court. His initial plans include teaching constitutional law at the South Texas College of Law in Houston. A Harvard Law graduate and native of Dallas, Phillips was one of the first Republicans elected to a statewide office in Texas in modern times.
Tom Phillips was first appointed as Chief Justice by Governor Bill Clements, after former Chief Justice John Hill resigned in 1988 in order to spend more time advocating judicial selection reform. Phillips is credited with restoring the reputation of the Court, after a 60 Minutes segment in 1987 exposed improper linkage between plaintiff lawyers and some members of the Court. He is also credited with bringing greater harmony to a court often populated by strong personalities with differing views of the law.
Is Prop 12 Working?
For the past several months, plaintiffs’ lawyers and surrogate groups funded by them have criticized House Bill 4 (HB4) and Proposition 12 as not delivering lower professional liability insurance (PLI) rates for physicians and healthcare facilities in Texas. Prop. 12 is the Texas constitutional amendment passed by the voters in September of 2003, that caps subjective non-economic damages, such as pain and mental anguish, in medical liability lawsuits.
Left out of the accusation is the elephant in the room: a 300-500 percent increase in medical malpractice lawsuits that were filed in courtrooms across Texas in the first nine months of 2003, before the new law went into effect. This barrage of filed lawsuits guarantees continued high PLI costs in the short run, whether those lawsuits prevail or not. Why? Because it costs money—a lot of money—to defend such lawsuits. Until the underwriting cycle takes its course over the next 2 to 3 years, PLI rates can’t adjust lower until we pay for the expense of the mountain of “old law” cases. The fact that the vast majority of these lawsuits will prove to be without merit is another fact that is not mentioned by critics of civil justice reform.
According to the independent group, Jury Verdict Research, judges and juries find 82 percent of such lawsuits without merit and deliver no judgment for the plaintiff. The cost of defending claims against physicians nonetheless averaged $92,000 for cases that go to trial. Is it any wonder that 14 of 17 medical liability insurers fled Texas because of runaway lawsuits? Why do you think that so many Texas doctors in high risk specialties retired early, moved out of state, or simply stopped practicing? Help is on the way, and the healing of the medical PLI system has already begun. The very personal injury plaintiffs’ lawyers who caused the growing access to healthcare crisis are now blaming the slow progress of reduced insurance rates on everyone except themselves. The critics of Prop.12 choose to ignore that the largest insurer of physicians in Texas, the Texas Medical Liability Trust, cut rates by 12 percent immediately after passage of Prop. 12. In addition to the rate cut by the TMLT, the Doctors Company, a leading national physician-owned medical malpractice carrier, announced plans to expand coverage in Texas and dropped a planned 19 percent rate increase, holding their premiums steady for the first time in many years.
Rest assured that the medical leadership of Texas, Governor Perry, TDI Commissioner Montamayor, and the Texas Legislature are carefully monitoring insurance rate relief in the medical field and have declared that they will take action to assure that insurance companies are fairly setting premiums to reflect the expected improvement in liability costs resulting from Proposition 12. As of today, ten new medical liability insurers are in the process of gaining permission to sell PLI policies in Texas. Increased competition should lead to lower rates, and there is every sign that Texas will see more companies re-enter the market to compete for the insurance business of physicians, hospitals and other healthcare providers. Money saved helps healthcare professionals, but it also helps healthcare consumers.
One Corpus Christi based hospital chain has already seen more than $20 million a year decrease in liability costs, which they have promised will be reinvested in new patient services. Texas has also seen the early signs of reversing of the alarming trend of obstetricians abandoning their practices in Texas. Since passage of Prop. 12, Texas has gained 82 new obstetricians throughout the state and there is every indication the number will continue to rise. Before Prop. 12, 160 of Texas’ 254 counties were without the services of an obstetrician, and the numbers were increasing. What the detractors of tort reform don’t want you to know is that medical professional lawsuits have significantly decreased since Prop. 12 became effective last fall. Objective observers clearly see that the capping of highly subjective and unpredictable non-economic damage awards is having the intended effect of reducing lawsuits without merit. Despite statements to the contrary, Texas, like California (which passed a very similar cap more than 25 years ago) will still have medical liability cases filed and tried when they are meritorious. The difference will be that frivolous cases, filed in the hopes of forcing settlements from defendants who find it cheaper to settle than to litigate, will be reduced.
Physicians, hospitals and tort reformers have taken steps to enforce strong standards of care and safety in the healthcare profession. That is why groups representing both healthcare providers and civil justice reformers supported legislation to strengthen the enforcement powers and annual investigative and enforcement budget of the Texas Board of Medical Examiners. Enforcement actions by this agency have increased nearly 100 percent over the past 12 months.
Both Republicans and Democrats supported this legislation and sent it to the people of Texas by an overwhelming legislative majority. Texans enacted Prop. 12 last September by popular vote. Real progress is being made to repair a healthcare system that was suffering the effects of avaricious litigation. Now that same avarice is slowing the healthcare system’s recovery, but Prop. 12 is working – a fact that will become increasingly evident as previously filed lawsuits work their way out of the system.
Dr. Teuscher is an orthopaedic surgeon practicing in Beaumont. He serves as the Chairman of the Committee on Professional Liability for the American Academy of Orthopaedic Surgeons.
Vote on Referral Fees
Under pressure from the Texas Supreme Court, the State Bar of Texas has initiated procedures to adopt limited reforms of “referral fees” practices among trial lawyers. A referral fee is a kind of finder’s fee paid by a trial lawyer to another lawyer whose only service is signing up a client, according to TLR general counsel Hugh Rice Kelly. Although the “referring lawyer” does no work on the case, he receives a kickback of as much as half of the final legal fee. Using referral fees, “ litigation hucksters are wheeling and dealing in cases on a mass basis in derogation of the public interest and with little regard for client welfare,” Kelly said in his dissenting opinion to the recommendation by the State Bar’s task force, of which he was a member.
BROAD SOLUTIONS BRING EFFECTIVE REFORM
Kelly supports passage of a modified version of the Supreme Court’s original proposal and not the more limited approach recommended by the Texas Bar task force. The limited reforms offered by the task force are productive, but the proposal does not go far enough to deal with abuses effectively. “The Supreme Court originally proposed a much broader reform that included maximum limits on referral fees and public disclosure of all such arrangements,” Kelly said. “These provisions were key components of the Supreme Court’s original proposal, and both will be necessary for effective reform.”
A SITUATION RIPE FOR ABUSE
Long controversial, referral fee practices in Texas boiled over in 1999 in a Texas Lawyer story quoting critical comments by a number of prominent plaintiff lawyers. For example, Houston plaintiff lawyer Richard Mithoff was quoted that “when you have lawyers whose only credentials are a law license and enough money to take out an advertisement, then you have a situation ripe for abuse.” The Supreme Court followed by appointing a committee headed by noted plaintiff attorney Joe Jamail to make recommendations. Jamail’s committee report recommended strict limitations, which were published for comment by the Supreme Court. Ironically, Kelly said, the Jamail committee recommendations then came under a barrage of criticism by the plaintiffs’ bar, many whom claimed that “tort reformers” were behind Jamail’s proposal.
NO WORK, NO RESPONSIBILITY, NO PAY
The Bar’s limited proposal declined to adopt fee limitations or public disclosure, but did adopt a model provision advocated by the American Bar Association. The ABA rule forbids referral fees where the referring lawyer retains no working role or responsibility for the case, but permits them if the referring lawyer retains joint legal responsibility. Additionally, Kelly said, the Bar proposal recommends a number of worthwhile improvements to existing rules regulating lawyer advertising.
The proposal by the State Bar must be ratified by the general membership of the Bar this fall. The Texas Supreme Court, which has constitutional authority over the state’s legal profession, retains the ultimate authority to impose additional rules, should it see fit to do so.
Spotlight on Ken Hoagland
Ken Hoagland is TLR's Communications Director. He oversees all activities related to disseminating our message — everything from The Advocate to opinion pieces in newspapers to legislative alerts to TLR supporters to appearing on television and radio talk programs. Ken is widely known and well respected among editors and reporters across Texas. Over the years, Ken has debated several of our State's most experienced trial lawyers — he has never been bested, and has usually clearly prevailed. Ken grew up in California, served his country in the Air Force, and has had extensive experience in political organization and public relations. Ken is married and has two sons, is a movie buff, chess player and avid outdoorsman. He is at the heart of everything we do in TLR — his steady judgment, extensive knowledge, broad skills and dedication to our cause contribute mightily to TLR's efforts and successes.
Recent TLR Events
June started out with TLR at the Republican State Convention in San Antonio. Many, many delegates, alternates and guests visited the TLR booth to say “hello,” pick up tort reform material, and sign our TLR Speakers Bureau sheet to be contacted for a program on tort reform.
On June 9th, Dick Trabulsi and Dick Weekley were in El Paso for an Executive Briefing and Reception for business leaders hosted by Regional Chairmen Bob Hoy and Bert Mijares. The briefing detailed TLR’s strategy and efforts leading up to and including the very successful legislative session of 2003. While in El Paso, Bob Bowling, a prominent homebuilder there, agreed to become our third Regional Chairman in the area.
The next day Dick Trabulsi and Dick Weekley traveled to Harlingen to honor Senator Eddie Lucio for his steadfast support last year of HB4, the comprehensive tort reform bill, and Prop. 12, the constitutional cap on non-economic damages in medical lawsuits (see “Is Prop. 12 Working? page 12). The Civil Justice Leadership Award awarded to Sen. Lucio is the highest honor that TLR presents to any lawmaker. More than 150 of Senator Lucio’s constituents, friends and fans were present to see him honored.
The evening of June 23rd, Dick Weekley and Leo Linbeck, Jr. were speakers at a TLR fundraising Reception in Waco on the Brazos Belle riverboat, hosted by long time supporters F.M. Young and Tom Salome. It was great to see so many Waco friends and supporters, and TLR is grateful to all who responded to our fundraising appeal.
The following evening, Dick and Leo were again the featured speakers at a fundraising reception in Corpus Christi, hosted by Jerry Kane, Sam Beecroft and Mike Scott along with many cohosts, representing the entire spectrum of the business and professional communities in Corpus. What a terrific occasion, and the fundraising far exceeded the goal.
Many thanks to every one of our dedicated supporters, who spent their time and effort arranging these activities and raising funds for TLR’s continuing work to bring fairness and balance to the Texas civil justice system.
