Analyzing Texas’ Tort Reforms

Malpractice claims are not a popular topic around a physician’s dinner table – in fact, throughout my medical training, I’ve heard peers express unwillingness to pursue certain specialties specifically due those specialties’ high malpractice premiums. And with the annual cost of the U.S. medical liability system estimated to be about $55 billion per year, tort reform is a popular proposal among physicians for reducing medical costs.

In 2003, the Texas legislature amended the state’s constitution and passed aggressive tort reform in such a way that reduced physician liability. A recent study investigated what effect these reforms may have had on the number and relevant aspects of malpractice claims filed against the University of Texas (UT) System. They investigated 822 closed claims in seven fiscal years: 2001-2 and 2009-10 through 2014-5.

The number of closed claims, closed claims following lawsuits, and paid claims per year all decreased drastically following reform, with paid claims decreasing from 60 cases in 2001-2 to a mean of 20 per year for the following years. Additionally, mean payment dropped from $279,851 in 2001-2 to $92,661 in subsequent years. Although this retrospective study cannot prove causation, coincidence seems unlikely.

The study also explored changes in several other patient-centered attributes, such as change in time from purported malpractice to case closure. These showed little change compared to the drastic changes mentioned above. For instance, time from event to closure decreased slightly after tort reform, but this change was perhaps due to decrease in the statute of limitations. An encouraging number of paid claims from 2012 to 2015 underwent mediation (36%) – mediation is thought to decrease conflict and hasten case closure – although the mean time from event to mediation was a sluggish 891 days. The degree of restrictions in non-disclosure agreements actually increased after tort reform – in stark opposition to the UT System’s commitment to increase transparency after medical errors. Ultimately,  the UT System rectified their non-disclosure policy in 2015.

We need further analysis to determine effects on malpractice claims outside the UT System. We should hope that tort reform elicits changes beneficial not just for doctors but also for patients.

This Policy Prescriptions^® review is written by Benjamin Sketchler as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine. Mr. Sketchler is a first year medical student.

Abstract

OBJECTIVE: To describe the litigation experience in a state with strict tort reform of a large public university health system that has committed to transparency with patients and families in resolving medical errors.

DATA SOURCES/STUDY SETTING: Secondary data collected from The University of Texas System, which self-insures approximately 6,000 physicians at six health campuses across the state. We obtained internal case management data for all medical malpractice claims closed during 1 year before and 6 recent years following the enactment of state tort reform legislation.

STUDY DESIGN: We retrospectively reviewed information about malpractice claimants, malpractice claims, and the process and outcome of dispute resolution.

DATA COLLECTION/EXTRACTION METHODS: We accessed an internal case management database, supplemented by both electronic and paper records compiled by the university’s Office of General Counsel.

PRINCIPAL FINDINGS: Closed claims dropped from 244 in 2001-2002 to an annual mean of 96 in 2009-2015, closures following lawsuits from 136 in 2001-2002 to an annual mean of 28 in 2009-2015, and paid claims from 60 in 2001 to an annual mean of 20 in 2009-2015. Patterns of resolution suggest efforts by the university to provide some compensation to injured patients in cases that were no longer economically viable for plaintiffs’ lawyers to litigate. The percentage of payments relating to cases in which lawsuits had been filed decreased from 82 percent in 2001-2002 to 47 percent in 2009-2012 and again to 29 percent in 2012-2015, although most paid claimants were represented by attorneys. Unrepresented patients received payment in 13 cases closed in 2009-2012 (22 percent of payments; mean amount $60,566) and in 24 cases closed in 2012-2015 (41 percent of payments; mean amount $109,410). Even after tort reform, however, claims that resulted in payment remained slow to resolve, which was worsened for claimants subject to Medicare secondary payer rules. Strict confidentiality became a more common condition of settlement, although restrictions were subsequently relaxed in order to further transparency and improve patient safety.

CONCLUSIONS: Malpractice litigation risk diminished substantially for a public university health system in Texas following legal changes that reduced rights to sue and available damages. Health systems operating in a low-tort environment should work with policy makers, plaintiffs’ attorneys, and patient groups to assist unrepresented patients, facilitate early mediation, limit nondisclosure obligations following settlement, and expedite the resolution of Medicare liens. PMID: 27813058

Sage, WM, et al. Health Serv Res. 2016; 51 Suppl 3: 2615-2633.