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 $750,000. 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:
Successes in the medical community:
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.
The Perryman Group. The Impact of Judicial Reforms on Economic Activity in Texas Overall Economic Impact on State's Economy. (August 2000)
Facts to Consider: Benefits to Consumers
It is estimated that reforms enacted in 1995 resulted in savings of $2.542 billion that directly benefits consumers.
$1.796 billion in annual cost savings from reduced inflation ($216 per household)
$7.056 billion in annual total personal growth income ($862 per household)
The net result was a savings of $1,078 per year to the typical Texas household.
The Perryman Group. The Impact of Judicial Reforms on Economic Activity in Texas Overall Economic Impact on State's Economy. (August 2000)
MISSISSIPPI: Tort Reform Already Achieving Desired Results
In a 2004 legislative special session called by Governor Haley Barbour, the Mississippi Legislature passed H.B. 13, which included reforms relating to: product liability; joint and several liability; jury service; medical liability; and noneconomic damages. Improvements in the state's economy and healthcare system already are being demonstrated since the law took effect on Sept. 1, 2004.
Successes in the business community:
Businesses have made new investments in the state starting in 2004. These include:
Successes in the medical community:
TORT REFORM AT A GLANCE: Other States Begin to Make Strides
Missouri
Expansion Management, a monthly business magazine, ranked Missouri as one of the leading states in the nation for having a business friendly climate that attracts industry and new jobs. Missouri, along with Ohio and Virginia, each had five metro areas earning top honors (Jefferson City News Tribune, 6/23/05).
New Jersey
In 1995, the state legislature passed the Affidavit of Merit Statute. The law provides that in any suit alleging professional malpractice or negligence, 'the plaintiff shall, within 60 days following the date of the filing of the answer to the complaint by the defendant, provide each defendant with an affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint fell outside acceptable professional or occupational standards or treatment practicerthes.'
Enactment of the law coincides with a measured drop in the number of medical malpractice suits filed. In 2004, 1,493 medical malpractice suits were filed, a 24 percent decrease from 1997 when 1,971 suits were filed. 1997 is the earliest year for which data is available from the state Administrative Office of the Court (New Jersey Law Journal, 6/13/05).
West Virginia
After passing tort reform measures in 2003 that included a $250,000 cap on noneconomic damages, West Virginia has seen an increase in the number of new physicians in the state. According to the West Virginia Board of Medicine, 377 new physicians were licensed to the state in 2004, the most since 391 were licensed in 1999. The state previously had hit a low point with 305 new licenses in 2000 (The Heartland Institute, 5/1/05).
West Virginia Physician's Mutual, the states largest medical malpractice insurer has added 100 new doctors who had previously left West Virginia to its membership rolls. In addition, the company has applied in 2005 for a 5 percent reduction in premiums physicians pay for malpractice coverage. The president credits the reduced premiums and the addition of doctors to medical malpractice reforms that have been passed since 2001 (Charleston Gazette, 8/20/05).
Woodbrook Casualty Insurance, the state's largest private malpractice coverage provider serving about 250 doctors, sought a 3.9 percent rate decrease in 2005. The request must go to the state Insurance Commission for approval (Charleston Gazette, 8/20/05).
STUDIES: Noneconomic Damages Caps Led to Greater Percentage of Physicians
According to a study conducted by senior economists from the Center for Delivery, Organization, and Markets Agency for Healthcare Research and Quality, states where noneconomic damages are limited in medical malpractice cases have more physicians per capita than states without limits. The study found that:
According to a study in the Journal of the American Medical Association (JAMA), the adoption of direct medical malpractice reforms that limit the size of awards led to a greater growth in the overall supply of physicians. Three years after adoption of reforms, the study found that the physician supply increased by 3.3 percent. The direct reforms had a larger effect on: