Medical lawsuit caps shutting some out of courthouse

Malpractice insurance rates are down, but non-frivolous lawsuits are also stymied

Sunday, March 26, 2006

The typed letters with fancy legal letterheads started arriving at Sonya Counts' Round Rock ranch house in August 2004. They were apologetic but firm.

"Unfortunately, we must regretfully decline representation of you in any potential medical negligence claim at this time," read one.

"Thank you again for contacting us," said another. "You should not construe our decision as a decision on the merits of your case."

Not all the lawyers went into specifics. But most explained that, though Counts' tale was tragic, pursuing justice for a medical error that might have killed her 70-year-old husband just isn't worth a lawyer's time these days.

Two and a half years ago, Texas lawmakers and residents voted to limit the amount of money patients could win in medical malpractice suits. Since September 2003, the most an aggrieved patient can expect to earn in courtfornoneconomic damages commonly known as "pain and suffering" is $250,000 from doctors and, in some cases, another $500,000 from hospitals.

The new law was sold as a cure for skyrocketing medical malpractice insurance rates caused,supporters claimed, by frivolous lawsuits and multimillion-dollar verdicts. Bloated insurance rates, in turn, were scaring doctors away from Texas and making quality medical care more difficult to find. The reforms would help everyone except, perhaps, a few greedy lawyers.

Since the law went into effect, physicians and hospitals have gotten some relief. Malpractice insurance premiums are about 14 percentlower today than they were three years ago, and more companies have begun competing to sell policies in Texas. Hospitals report fewer lawsuits. Jaw-dropping malpractice verdicts have disappeared, and many malpractice lawyers are turningtheir attention elsewhere to earn a living.

But the reforms have exacted a high price, particularly among the very old and very young, patient advocates say. Because they can't ask juries for large pain and suffering awards anymore, lawyers now look for cases in which a patient or survivors have suffered a large economic loss generally, lost wages as a result of injury or death. Complex malpractice cases can cost $100,000 to prepare. If injured patients' best earning days are behind them, or the patient is a child whose future income is impossible to predict,the potential rewards may be too small to make the case worth filing.

Such economics seem brutally unjust to Counts, a retired postal worker. On June 25, 2004, her husband, Paul, was vigorous and active a three-times-a-week golfer, a retired Army sergeant major, a bull of a man. The two were planning to leave for Paris the next day to celebrate their 46th wedding anniversary. The only stop before they left was a routine visit to the Heart Hospital of Austin for some tests. Based on the test results, doctors recommended that Paul Counts have a standard stent procedure.

"We expected to be on our way by 10:30," Counts recalls. But the hours dragged on. Just after 1 p.m., an attendant finally came out. She was sorry, she told Counts, but her husband was dead.

Medical records said he died of coronary artery disease, but that wasn't the complete explanation. Doctors had made several attempts to insert the stent, a tube used to open blocked arteries. One punctured a blood vessel, the records said, and he died on the operating table.

"The hospital told us what had happened was extremely rare, one in a hundred," son Steve Counts said. "But when it's my father, I don't like those odds."

In a written statement, the Heart Hospital said it could not comment on individual patient cases but noted that the facility had received top marks from health care rating organizations several years running.

"We are truly sorry for the Counts family loss," a spokeswoman said.

Sonya Counts said she began contacting lawyers after getting stonewalled by the hospital not to make money, but to get answers. "I didn't know how else you make people accept responsibility for what they've done," she said.

Nobody disputes that Texas had an insurance crisis five years ago. Medical malpractice rates rose dramatically in the late 1990s and early 2000s. Regularly, it seemed, a jury awarded another patient several million dollars for a medical mishap.

The bruising political battle over changing malpractice laws reflected the big money at stake. In June 2003, Gov. Rick Perry, who pushed hard for the changes, signed new malpractice limits into law.

"We are removing the incentive personal injury trial lawyers currently have to file frivolous lawsuits and run doctors out of business," he declared.

Three months later, after a contentious campaign in which supporters and opponents spent $11 million to influence voters, Texans narrowly approved Proposition 12, which embedded the Legislature's right to establish lawsuit caps in the state constitution.

Lawsuits take years to work their way through the system, so the precise effecton cases filed andthe number and size of post-2003 verdicts is still unclear. But recentstudies suggest that the idea of an insurance crisis driven by out-of-control verdicts was at least as much perception as reality.

Last spring, a malpractice case filed just before the new laws kicked in ended when a Dallas jury awarded $606 million to the family of an 82-year-old man who'd died from a double dose of chemotherapy drugs. Yet even under the old laws the family didn't collect anywhere near that. A deal cut before the trial slashed the payout to $1 million.

"You read about the big verdicts," said Tommy Jacks, a longtime Austin trial attorney who has won his share of them. "But there aren't that many stories that follow up."

In the past year, University of Texas researchers have produced two studies trying to fill that knowledge gap by examining the outcome of Texas malpractice jury awards between 1988 and 2002. One study found that four out of five verdicts over $40,000 received so-called "haircuts" after being announced, slashed by legal appeals or behind-the-scenes deals.

"The larger the verdict, the more likely it was to receive a haircut, and the larger the haircut," professors Bernard Black and Charles Silver wrote in a still-unpublished report. The largest awards over $5 million were cut by an average of more than half.

Poring over the same records, Black and Silver also found that despite the splashy headlines, the number of big verdicts really hadn't increased all that much in the years leading up to 2003.

"At least in Texas, the rapid rise in insurance premiums that sparked the crisis may reflect . . . insurance market dynamics rather than changes in claim outcomes," the study, published last year, concluded.

But perceptions can move markets, and if fear as much as economics drove reform, today hope seems to be the engine.

In the past two years, eight new companies have begun insuring Texas doctors, following a sharp decline before malpractice reform. Austin-based Advocate, MD is one of them. "We see it as a good environment," company President Jack Murphy said.

The competition has helped drive down insurance costs. Though specifics vary, according to the Texas Department of Insurance, medical malpractice insurance rates have dropped about 13.5 percent since the end of 2003.

Whether the changes stick, of course, depends on whether insurance companies turna profit. Even some of the new insurers aren't celebrating just yet.

"I think they're beating their chests prematurely," said Pam Browning , chief operating officer of Physicians Insurance Co., based in Florida, which entered the Texas market in September. She added that, in the rush of competition, some new companies may be drawing rates down artificially low.

Regardless of what happens in the insurance industry, most doctors are thrilled. Robert Gunby, a Dallas obstetrician and gynecologist, said the yearly premiums for his $200,000 malpractice policy have dropped to $30,000 from $40,000. The Texas Alliance for Patient Access estimates Texas physicians will save $49 million this year in premiums.

John Durand, a Fort Worth cardiologist, used the savings to fund a new cardiology center. "It couldn't have been done if tort reform hadn't passed," he said.

The promise of a gentler legal landscape also has made Texas a more attractive place to practice medicine, Durand and others say. They note that the number of physicians in Texas has grown since 2003, overall and in hard-to-insure high-risk specialties.

Texas has about 42,000 doctors today, compared with about 37,000 in 2003. But the population has grown, and some hard-to-insure specialists actually have become more scarce. In 2000, there was one obstetrician for every 7,450 Texans. In 2005, the number dropped to one per 7,950 residents. Per capita, the number of neurosurgeons and orthopedic surgeons dropped slightly as well.

Analyzing the state's physician population before and after 2003,Texas Watch, a consumer advocacy group, found the rate of growth in traditionally underserved, rural areas the Panhandle, for example has slowed.

"You're still not going to have a new obstetrician in Loving County," an area in West Texas with a declining population, said Alex Winslow, the organization's executive director.

Even if tort reform entices new physicians, Winslow said, he worries that, with less likelihood they will get sued, doctors may practice medicine less cautiously, resulting in more patient-injuring errors. "Proposition 12 makes the patients' environment more dangerous because there is less accountability," he said.

As both an Austin physician and attorney, Michael Archuleta sees both sides of the issue. He appreciates his lower malpractice premiums, but Texas' new laws limit legitimate cases along with frivolous ones, he said. "When you have a manifestly catastrophic case, it's manifestly unjust."

Archuleta agrees that medical errors are the real issue, and that Texas' reforms address only half of the problem the insurance without tackling actual malpractice. Studies consistently show that a small number of doctors account for an outsized portion of malpractice awards. "The state medical board doesn't do enough" to get rid of those doctors, Archuleta said.

Part of the campaign to sell tort reform to voters and lawmakers was built on promises to punish bad doctors more vigorously. A companion law createdthe Office of Patient Protection to field consumer complaints about health care professionals.

And the Texas Medical Board, which licenses and disciplines physicians, is doing far more today than it has in the past to penalize bad doctors. Before malpractice reform, the board disciplined between 100 and 190 doctors a year. In the years since, it has levied closer to 300 penalties annually.

"I don't know if you can attribute that to insurance reform," said Jill Wiggins, a spokeswoman for the board. Still, she added, the attention surrounding Proposition 12 helped. Perry gave the medical board $200,000 to hire new staff members to clean up the board's caseload, and the agency received a healthy increase in its budget.

But the governor's grant was a one-time payment. Last year, lawmakers slashed $700,000 from the medical board's annual budget. When he asked the 2005 Legislature to add several positions to maintain enforcement levels, Executive Director Donald Patrick recalls, "They ignored us."

And the Office of Patient Protection? Six months ago, it was quietly dissolved after the Legislature declined to fund it. "It was the one thing that patients could rely on after Proposition 12, and they killed it," Winslow said.

Proposition 12 has had an undeniable impact on trial lawyers. Those who specialize in malpractice cases say they have dramatically scaled back their operations. Jacks said his firm once supported nine busy lawyers. Now it's down to three. In the past three years, he's filed just three cases one of which he handled for free.

Jay Harvey, another longtime Austin plaintiff's attorney, admits he screens cases much more vigorously not just for how winnable they are, but also for how much money he might recover in lost wages. He's currently considering the case of an 80-year-old man "healthy as a horse, worked out at the gym three times a week" who died during a medical procedure.

"Pre-Prop 12 we'd have jumped all over that case," Harvey said. Now he probably won't take it.

That's bad news for other potential clients whose economic losses resulting from a medical error are small like Sonya Counts and Angie Meza of Pflugerville.

Meza's daughter, Monica, was 4 when she developed cold-like symptoms. Her pediatrician diagnosed her with the flu and sent her home. The next day, Meza said, her daughter still had not improved, and so she returned to the doctor, who noted that Monica's blood-oxygen levels seemed low.

Meza took Monica to the hospital, where physicians recommended keeping her for observation and using a large IV to give her medications.

While the line was being inserted, one of Monica's veins was punctured, and the bleeding wouldn't stop. A little over two weeks later, on Dec. 4, 2003, Monica died. Her death certificate listed a rare blood disorder as the cause. Meza was furious.

"It had never crossed my mind to bring in lawyers," she said. "But this seemed a way out of (the doctors) admitting they'd made a mistake. I know people sue for all sorts of ridiculous things. I wasn't looking to get money or to get rich. I wanted answers."

But, like Sonya Counts, Meza probably won't get them. The $250,000 cap, attorneys told her, make her story financially unworthy of attention.

"At this point I've given up," Meza said. "We live in a country where people sue for the silliest thing. But I lost a child, and I can't get justice."

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