TLR Advocate: Celebrating 20 Years of Transformational Lawsuit Reform in Texas
House Bill 4
Celebrating 20 Years of
Transformational Lawsuit Reform in Texas
The Omnibus Tort Reform Bill of 2003
Twenty Years and Counting
“When we founded TLR in 1994, we believed that in this democracy, citizens who see a wrong, an abuse, or a problem have both the right and the duty to organize themselves to petition their government to right the wrong, end the abuse, or cure the problem.”
Those are the words we wrote in our June 2003 Advocate, celebrating the enactment of the Omnibus Tort Reform Bill of 2003—House Bill 4—which still to this day is the most comprehensive tort reform bill passed by any state legislature in America. The words were true then and they are true today. Much has been done in the three decades of TLR’s engagement. Much is left to do.
You will read in these pages the transformational elements of HB 4 and the positive consequences of that legislation on Texas’ economic growth and job creation, delivery of health care, and the integrity of our civil justice system. Our road to reform started in 1994, when George W. Bush adopted TLR’s tort reform package as a key component of his campaign platform for governor. Bush defeated incumbent Ann Richards, ushering in Republican dominance in state government—no Democrat has won a statewide office in Texas since 1994.
In the 1995 legislative session, Gov. Bush worked with TLR, Lt. Gov. Bob Bullock and Speaker Pete Laney— both of whom were Democrats—to enact most of TLR’s tort reform package. While those reforms were meaningful, resulting in a significant improvement in the litigation environment in Texas, many of the reforms were watered down in the legislative environment of that time.
That is why TLRPAC worked hard in 2002 to gain strong pro-tort reform majorities in the Texas House and Senate, which set the stage for the comprehensive reforms contained in HB 4 in the 2003 legislative session. We worked closely with Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Tom Craddick to pass HB 4, against the vigorous opposition of the personal injury trial bar, which at that time had several of their own serving in the Texas House. Sen. Bill Ratliff, chairman of the Senate State Affairs Committee, and Rep. Joe Nixon, chairman of the House Civil Practices Committee, authored HB 4 in their respective chambers and worked night and day for its passage.
As a result of HB 4, businesses have come to Texas in droves, propelling it to become the 8th largest economy in the world. In some years, Texas creates more jobs than all the other states combined. And our healthcare system has been transformed from one in which doctors were fleeing our state, emergency rooms were shutting their doors, and hospitals were besieged by frivolous lawsuits to one that is the most robust and renowned in the world, and to which medical specialists of all kinds are flocking.
Unfortunately, however, many Texas judges are undermining HB 4 and other tort reform measures simply by refusing to follow the law. We will always have work to do in the Legislature, but we need to pay increasing attention to improving the overall quality of our judiciary.
But whatever the challenges in front of us, we can all take pride in HB 4 and the host of other reforms that make Texas a place where its citizens can thrive.
Richard W. Weekley
Richard J. Trabulsi, Jr.
Hugh Rice Kelly
Senior General Counsel
“In the early 1990s, lawsuit abuse was a crushing burden on the Texas economy. Employers wouldn’t move to or expand in Texas because of our unfair legal system. Doctors were fleeing the state because of high medical liability costs. I wanted Texas to be a great place to do business, an entrepreneurial heaven—where dreamers and doers felt comfortable risking capital and creating jobs—not a haven for frivolous lawsuits. I knew something needed to be done.
Lawsuit reform was a pillar of my campaign for governor in 1994. In my first legislative session, I signed eight major tort reform bills into law. I’m proud those reforms were the first steps in transforming Texas’ economy and making it a better place for families and businesses.”
—GEORGE W. BUSH, 43RD PRESIDENT OF THE UNITED STATES AND FORMER GOVERNOR
“It’s not an understatement to say that lawsuit reform is a pillar of the Texas Miracle. But laying the foundation for Texas’ economic success did not happen overnight. It was the result of diligent and persistent work in the face of seemingly insurmountable odds.
House Bill 4 was a major and historic reform that had a significant impact on Texas families. But in addition to the big reforms were countless smaller, but meaningful, measures that improved the way Texas’ courts work and shut down unscrupulous lawyers who exploited Texas laws to manufacture lawsuits.
Taken as a whole, these measures transformed Texas from the “lawsuit capital of the world” to a state whose civil justice reforms serve as a model for other states.
I’m proud to have been part of this monumental movement in our state. As I’ve traveled the country, both as governor and today, it’s clear that Texas is a national example for common-sense lawsuit reforms.”
—RICK PERRY, FORMER GOVERNOR AND UNITED STATES ENERGY SECRETARY
“Passing House Bill 4 was one of the most significant efforts of my first term as speaker of the Texas House. Prior to 2003, House members had not been given the opportunity to vote on important lawsuit abuse issues like this. But we knew we couldn’t continue on with the jackpot justice legal system Texas had become known for. After marathon debate on the House floor, I’m proud to say we delivered historic tort reform for Texans and led the way nationally to rein in out-of-control lawsuits. Texas is the envy of the nation today because of these critical reforms that were passed 20 years ago in my first session as speaker of the Texas House.”
—TOM CRADDICK, FORMER SPEAKER OF THE TEXAS HOUSE
“The Texas of today is very different than the Texas of 20 years ago when House Bill 4 was passed. Back then, our civil justice system was ridiculed around the world. Jackpot justice took a heavy toll on the rule of law, access to healthcare and our economy. But we have come a long way from the days when Texas’ legal system was a burden on economic growth and was forcing our doctors to flee the state because they could not afford the medical liability premiums caused by excessive litigation.
Today we are known as a leader in creating and maintaining a fair, efficient and accessible legal system for all Texans. And today, our economy leads the nation largely because of it.
When I speak to CEOs around the country, our strong state legal system and the common-sense lawsuit reforms we have enacted are hailed as critical assets that set Texas apart from other states. When combined with our low taxes, smart regulations and world-class workforce, the Lone Star State’s economy is now the eighth largest in the world. Simply put, Texas would not be what it is today without tort reform.”
—GOVERNOR GREG ABBOTT
“Years before ever running for office, I was a radio talk show host and station owner. I knew tort reform would transform the Texas economy in a very positive way. Therefore, I put the full weight of my station into urging our listeners to vote yes on the proposition. I also knew the vote would be close in Harris County. The historic tort reform legislation that passed in 2003 forever changed the future of our state and we are still reaping the rewards as I thought we would. Texas is now the premier destination in America for job creation and innovation, and Texans are more prosperous than ever as a result. The massive power of tort reform continues to drive our economic juggernaut forward into the mid-21st century and beyond.”
—LIEUTENANT GOVERNOR DAN PATRICK
“I have no doubt that the passage of House Bill 4 in 2003 prompted much of the historic economic growth the Lone Star State has seen over the last 20 years. Not only has this legislation helped make our legal system more fair, efficient and balanced— no matter which side of a legitimate lawsuit you’re on— it has helped improve the quality of life for every Texas family that has needed access to a physician in a high-risk specialty, particularly in rural areas of the state. I’m confident that when Texans mark the anniversary of House Bill 4 in another 20, 40 or 100 years, it will stand as one of the most important measures passed by the men and women of the Texas Legislature.”
—SPEAKER DADE PHELAN
A Country Doctor’s View—Pre and Post Reform
By Dr. Len Dingler
Chart Courtesy of the Texas Alliance For Patient Access
Leo Linbeck, Jr.
“And he shall be like a tree planted by the rivers of water,
that bringeth forth his fruit in his season; his leaf also shall
not wither; and whastoever he doeth shall prosper.”
Summary of House Bill 41
» Gave the Texas Supreme Court jurisdiction to hear an appeal from a trial court order certifying or refusing to certify a class. Stays trial court proceedings pending that appeal.
» Required the Texas Supreme Court to promulgate rules for trial courts to calculate the fees awarded to class counsel, including requiring that:
- the fee is calculated using the lodestar method, which requires a reasonable fee based on the hours actually worked by class counsel.
- if part of the recovery by the class is non-cash, class counsel’s fee must be paid in the same cash/non-cash percentage.
Offer of Settlement
» Provided incentives for parties to make and accept reasonable settlement offers early in lawsuits by shifting litigation-related costs when a party refuses a pre-trial settlement offer that turns out to be as good as or better than what they ultimately win.
- Cost-shifting applies to both parties, but only if the defendant invokes it.
- The defendant’s litigation costs are shifted to the plaintiff if the plaintiff’s judgment is less than 80 percent of the defendant’s settlement offer.
- The plaintiff’s litigation costs are shifted to the defendant if the plaintiff’s judgment is more than 120 percent of the plaintiff’s settlement offer.
» Created the five-member Judicial Panel on Multidistrict Litigation, modeled on federal law and appointed by the chief justice of the Texas Supreme Court, and gave it power to transfer factually related cases pending in multiple counties to a single court for coordinated pretrial proceedings.
» Cases are returned to the counties in which they were filed for trial.
» Created a right to an immediate appeal of a trial court’s decision that a plaintiff in a multi-plaintiff case independently established venue in the county of suit.
Forum Non Conveniens
» Created a single standard based on federal law for dismissing cases with no connection to Texas so they may be pursued in a more appropriate state or country.
» Provided that named defendants are responsible only for the portion of fault attributable to them. This is accomplished by requiring the jury to consider the conduct of all potentially responsible parties, even if that party is a debtor in a bankruptcy proceeding, a person who committed a criminal act or a person beyond the court’s jurisdiction.
» Provided that the credit given to a defendant for a co-defendant’s pre-trial settlement with the plaintiff is based on the percentage of responsibility allocated to the settling defendant, not the amount of the co-defendant’s settlement. In cases involving healthcare liability claims, the nonsettling defendants can choose the dollar-fordollar settlement credit or the new percentage credit as defined by HB 4.
Products Liability Reform
» Established a 15-year statute of repose for product liability claims, except in “latent disease” cases in which the disease does not manifest for many years after use of the product.
» Created an “innocent retailer defense” under which a retailer—subject to some exceptions—cannot be held liable for a product defect unless the retailer has some actual responsibility for the design, manufacturing or altering of the product.
» Provided liability protection to manufacturers, distributors or prescribers of pharmaceutical products in cases alleging the defendant failed to provide an adequate warning about the product’s risk.
- Defense is available if the defendant provided government approved warnings with the product, but not available if the manufacturer misrepresented or withheld required information from the government.
» Provided liability protection to manufacturers that comply with federal standards or regulatory requirements applicable to a product.
- Applies only if the standard was mandatory, applicable to the aspect of the product that allegedly caused harm, and adequate to protect the public from risk.
» Prohibited the assessment of prejudgment interest on an award of future damages.
» Established a post-judgment interest rate based on the prime rate published by the Federal Reserve and adjusted the current floor and ceiling for post-judgment interest from 10-20 percent to 5-15 percent.
» Modified the laws relating to appeal bonds to ensure the size of the bond does not make appealing a trial court judgment prohibitively expensive.
Evidence Regarding the Use of Seat Belts
» Allowed the jury to know whether a plaintiff was wearing a seat belt at the time of a collision for purposes
of allocating fault and determining the cause of damages.
Healthcare Liability Reform
» Subject to a requirement that healthcare providers have insurance in some circumstances, capped noneconomic damages at:
- $250,000 for each claimant in a judgement against healthcare providers other than healthcare institutions, regardless of the number of physicians named as defendants;
- $250,000 for each claimant against a healthcare institution if only one healthcare institution is a defendant; and
- $500,000 for each claimant against all healthcare institutions if more than one institution is a defendant in the case (each institution’s damages are limited to $250,000).
» Allowed the periodic payment of future damages of $100,000 or more awarded in a healthcare lawsuit, other than medical expenses.
- The trial court’s judgment must specify how and when periodic payments are made. Also provided that periodic payments for future healthcare expenses must terminate upon death of recipient, while periodic payments for future earnings do not terminate upon death of recipient.
- Defendant must provide proof of insurance or assets to ensure full payment in the future.
- Attorney’s fees are paid at the time of judgment based on present value of future damages.
» Established a 10-year statute of repose for healthcare liability cases.
» Modified pre-trial procedures to address frequency of claims.
- Subject to an agreement to extend the deadline, a plaintiff must serve a physician’s report connecting the defendant’s malpractice to the plaintiff’s injury early in a healthcare liability lawsuit.
- Defendants must object within 21 days to the sufficiency of the report.
- If the expert report is not timely filed, the court shall dismiss the action and award attorney’s fees and costs to defendant.
- Allowed an interlocutory appeal when a trial court fails to dismiss a claim due to failure to meet expert report requirement.
» Established a HIPAA-compliant process for disclosure of patient medical records.
» Clarified the qualifications for experts rendering opinions on the causal relationship between an injury and a defendant’s alleged departure from the applicable standard of care.
» Clarified the Good Samaritan Law.
Claims Against Employees of a Local Governmental Unit
» Extended the existing limit on personal liability of governmental employees to healthcare workers employed by a local governmental unit.
» Limited the liability of nonprofit organizations that manage a city or hospital district hospital.
» Required a unanimous jury verdict in order to award punitive damages.
» Limited recovery of healthcare expenses to those actually incurred by the plaintiff.
» Allowed juries to consider a plaintiff’s income taxes when awarding lost future income.
Public School Teachers
» Provided additional protection for teachers against frivolous litigation related to in-school actions taken by the teacher.
Successor Liability for Asbestos-Related Litigation
» Limited a successor corporation’s liability in asbestos-related litigation to the amount of the assets of the acquired company if the acquisition that generated the liability took place before May 13, 1968.2
» This provision, added to the bill by advocates other than TLR, was declared unconstitutional by the Texas Supreme Court.
» Protected charitable organization volunteers and volunteer firefighters from lawsuits.
» In a suit against a registered architect or licensed professional engineer, required the plaintiff, at the time the suit is filed, to provide an affidavit by a third-party registered architect or licensed professional engineer setting forth the specific acts of negligence allegedly committed by the defendant.
Migration of Particles in the Air
» Allowed a trespass action for migration or transport of an air contaminant only on a showing of actual and substantial damage to the plaintiff.
Limitation of Liability for Nonprofit Hospitals
» Limited the liability of nonprofit hospitals and hospital systems that provide charity care.
1) A few of these statutes have been amended in the 20 years since the enactment of HB 4.
2) This provision, added to the bill by advocates other than TLR, was declared unconstitutional by the Texas Supreme Court.
In This Issue
- The Omnibus Tort Reform Bill of 2003 Twenty Years and Counting
- A Country Doctor’s View—Pre and Post Reform
- Summary of HB 4