As the Senate State Affairs Committee convened on April 28 to examine the economic impact of tort reform, Texans for Lawsuit Reform released a study that indicates the reforms that began in 1995 have brought more business, more money, and more medicine to Texas.

“A Texas Turnaround: The Impact of Lawsuit Reform on Business Activity in the Lone Star State,” by Dr. Ray Perryman of the Perryman Group, makes the case that about 8.5 percent of the state’s economic growth since 1995 is the result of tort reform.

The growth that Perryman chalks up to tort reform includes: $112.5 billion increase in annual spending; $51.2 billion increase in goods and services produced annually in Texas; and 499,000 permanent jobs.

The study also points to improvements in medical care in the wake of tort reforms.  Among these:

—  1,887 new doctors; a 24 percent increase in charity care in Texas hospitals;

— 430,000 Texans with health insurance who would otherwise be uninsured.

Perryman acknowledges s that “we still have a huge uninsured problem.”

Perryman testified April 28 before the Senate State Affairs Committee.  The Waco-based economist was hired by Texans for Lawsuit Reform to examine the economic impact of lawsuit reforms.

The report says that the medical malpractice insurance rates have gone down substantially.

Sen. Leticia Van De Putte (D-San Antonio) questioned the study’s finding that tort reform had increased access to health care, saying omplaints from the medical field are “more urgent now” than before tort reform.  Perryman replied that rates rose less than they would have absent tort reforms.

He said more affordable insurance and more types of medical procedures are available now than in 2003, when the Legislature enacted a $750,000 cap on non-economic damages in medical liability litigations and required a unanimous jury verdict for the awarding of punitive damages.

Since 2003, the report states, the Texas Medical Board reports licensing 10,878 new physicians, up from just over 8,000 in the previous four years. Perryman said that at least 1,887 of those came into Texas specifically because of lawsuit reform.

Several members of the medical community testified before the committee to corroborate the findings.

Sister Michelle O’Brien of CHRISTUS Santa Rosa Health Care testified that lawsuit reform has “greatly benefitted the patients and communities we serve” because the organization now can re-appropriate dollars that previously would have been spent on torts on new projects to expand charity care for the needy.

But the study and its conclusions have not been without detractors.

Prof. Bernard Black of the University of Texas Law School, testifying for himself, stated that the damages cap from 2003 was never necessary.

“Juries may occasionally go crazy, “ i.e. by awarding huge damages, Black said. Still, he argued, “There’s no evidence that they’re any crazier today than they were 20  years ago … and there’s no evidence that more claims are being brought.”

The Texas Trial Lawyers Association’s (TTLA) president-elect,  Nelson Roach, said that Perryman refused to share the methodology by which he arrived at his numbers.  

Roach called it “extremely ironic if not hypocritical that the same individuals who complained about junk science in the courtroom would come to the Legislature and present testimony and present evidence as scientific evidence without revealing the methodology, such that if they did the same thing in the courtroom, that study would not be admissible in evidence.

“ You have to prove the reliability of your work. And they’re asking you as the Legislature to make policy decisions based upon scientific studies that they will not reveal the methodology of their own studies.”

Perryman told LSR the allegation that he refuses to share his methodologies is an odd claim because he spends over a dozen pages in an appendix discussing it.  

Roach also said that to his knowledge Perryman has never published his studies in a peer-reviewed  . “I think it’s quite ironic,” he said, “that Dr. Perryman refuses … to disclose [his] methodology or to submit [his] works to peer review.”

Perryman said such arguments were misplaced. Whereas academic reports go to academic journals for peer review, his own report, Perryman said, is a policy report.

Roach argued that the non-economic costs of tort reform have outweighed the economic savings. He observed that the Perryman study relies on the Rubin and Shepherd study from 2006, which looks at death rates, but excludes death rates from motor vehicles.

 Roach attriburted the sharp drop in motor vehicle deaths over the last four years to the increased rigorousness of the tort system among automobile manufacturers.

Roach said the Rubin and Shepherd study concludes that collateral source reforms and joint and several liability reforms are associated with increased death rates. Thus if the Rubin and Shepherd study were valid, Roach argued, it would indicate that the reforms made in 2003 and in joint and several liability are associated with a higher death rate.

Committee chairman Robert Duncan (R- Lubbock), despite commending Perryman’s report and accepting its conclusions in part,  expressed concerns.

Duncan acknowledged that tort reforms were certainly positive in bringing down the “in some cases prohibitive” costs of malpractice insurance for medical providers.

But he said he is now concerned that those providers did not have enough coverage to handle economic, much less non-economic, costs, and that the difference might be shifting to the patient. He suggested perhaps mandating a minimum cap for insurance rates.

“I’m not saying I’m filing a bill or anything,” Duncan said, “I’m just kind of interested in that development.”

Duncan said that the report “does show some significant progress.”

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