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How Tort Reform Works
TEXAS: Tort Reform Spurs Economic Growth; Aids Access to Healthcare
In 2003, the Texas state Legislature passed H.B. 4 to further reform the state's civil justice system. The bill addressed issues such as: limits on noneconomic damages; product liability reform; punitive damages; medical liability reform joint and several liability; and class action reform. Voters also approved a constitutional amendment, Proposition 12, in 2003, which eliminates potential court challenges to the law that limited noneconomic damages to $250,000. Since the enactment of H.B. 4 and the subsequent passage of Proposition 12, Texas has made great strides in growing its economy and providing jobs and accessible healthcare to its citizens.
Success in the business community:
Texas was awarded the 2004 Governor's Cup award for the largest number of job creation announcements (Site Selection Magazine, 3/05).
Texas also was selected as the state with the best business climate in the nation by Site Selection Magazine (Site Selection Magazine, 3/05).
Successes in the medical community:
The American Medical Association dropped Texas from its list of states in medical liability crisis (Houston Chronicle, 5/17/05).
Malpractice claims are down and physician recruitment and retention are up, particularly in high risk specialties (Houston Chronicle, 5/17/05).
The five largest Texas insurers cut rates, which will save doctors about $50 million, according to the AMA (Houston Chronicle, 5/17/05).
Malpractice lawsuits in Harris County have dropped to about half of what they were in 2001 and 2002. There were 204 cases filed in 2004, compared with 441 in 2001 and 550 in 2002. There were 1,154 lawsuits filed in 2003, attributed to attorneys trying to file before the new law took effect (Houston Chronicle, 5/17/05).
Harris County has seen a net gain of 689 physicians, an 8.4 percent increase, according to the Texas State Board of Medical Examiners (Houston Chronicle, 5/17/05).
Texas Medical Liability Trust, the state's largest liability carrier, reduced its premiums by 17 percent (Houston Chronicle, 5/17/05).
Fifteen new insurance companies have entered the Texas market (Associated Press, 2/16/05).
Health Care Indemnity, the state's largest carrier for hospitals, cut rates by 15 percent in 2004 (Associated Press, 2/16/05).
American Physicians Insurance Exchange and The Doctor's Company also reduced premiums (Associated Press, 2/16/05).
The American Physicians Insurance Exchange saw a $3.5 million reduction in premiums for Texas physicians in 2005. In addition, beginning May 1, 2005, 2,2000 of the 3,500 physicians insured by the company would see an average drop of 5 percent in their premiums (The Heartland Institute, 5/1/05).
Texas: Tort Reform Spurs Economic Growth
In 1995 the Texas Legislature passed a series of bills to reform the state's civil justice system. These bills addressed: limits on punitive damages, joint and several liability, sanctions for filing frivolous suits, limits on venue shopping and out-of-state filings, modifications to deceptive trade practices and medical malpractice reform.
According to the study, The Impact of Judicial Reforms on Economic Activity in Texas, the total cost of the Texas tort system in 2000 was $15.482 billion. Without reforms, it is estimated that the total cost would have been $25.889 billion. Of the $10.407 billion in total direct savings, approximately $2.777 billion may be attributed to improvements at the national level while $7.630 billion in savings were from reforms in Texas.
Of the total savings, $2.542 billion went directly to benefit consumers.