Texas is a shining example of the positive effect comprehensive tort reform can have on medical malpractice insurance premiums. And, in response to shrinking medical malpractice insurance rates, doctors are flocking to practice in the state.
Texas has long had a physician-friendly legal system. In 1989, Texas lawmakers made it a requirement that juries be instructed that a bad medical outcome does not necessarily equate to negligence and also indemnified emergency room physicians and OB/Gyns for the first $100,000 of any finding of error.
In 2003, the Texas state government doubled-down on its tort reforms, passing sweeping liability legislation and successfully ushering through a ballot initiative that validated its ability to set noneconomic damage caps. This ceiling on noneconomic damages is at the heart of Texas’ success, capping pain-and-suffering compensation at $250,000 per occurrence for all healthcare workers; $250,000 per occurrence for hospitals; and a second $250,000 per occurrence for any other separate healthcare institution.
Whereas, when other states pass noneconomic damage cap legislation, the medical professional liability insurers tend to take a wait-and-see approach prior to lowering premiums, Texas was able to sidestep the waiting game because its citizenry voted to affirm a constitutional amendment that enshrines the legislature’s authority to create noneconomic limits. This removes any argument by the judicial branch that such caps clash with any constitutional right to have damages decided by a jury. In 2010 alone, both Illinois’ and Georgia’s Supreme Courts struck down their noneconomic caps based on this reasoning.
According to the Texas Medical Association, the ballot initiative’s success is attributable to a near constant grassroots effort. Because the trial lawyer lobby has deep pockets and is able to employ a team of professional lobbyists, it was crucial to create strong relationships at the local level, especially with the media. The TMA helped physicians write testimonials and letters to the editor as well as sponsored media training seminars for physicians looking to be the face of the reform movement.
The effect on Texas medical malpractice insurance premiums was almost immediate. The largest medical malpractice insurance company iin Texas cut rates by 12 percent the year after the tort reforms passed, and—to date—malpractice insurance rates have fallen by 27.5 percent on average, while the number of doctors applying to practice in the state has grown by 60 percent.
The influx of physicians has been a literal lifesaver in Texas. Once facing an access-to-care crisis, 82 counties have seen a net gain in emergency room physicians; 26 counties now have their first emergency room doctor; and more than 10, their first OB/Gyn. Hospitals are able to reinvest the malpractice insurance savings in scarce, high-risk services like neurosurgery and neonatal units.
With medical malpractice insurance rates in a freefall, and the number of insurers writing medical liability coverage in the state growing, it is more important than ever to enlist the help of a reputable broker with access to every carrier. The broker with the greatest access to carriers has the ability to impartially shop for the best coverage at the most reasonable price point.