Under English common law, a person could not sue the government for wrongs committed against a person. The King could do no wrong. Because our laws are based on the English common law, the law initially adopted in the United States followed this rule. The doctrine is called “sovereign immunity.” Through time however, most states have passed laws that allow citizens to sue the government if a governmental employee or agent, including a hospital employee, is negligent and causes injury. In 1969, the Texas Legislature enacted such a waiver of sovereign immunity when it passed the Texas Tort Claims Act. The Act was a partial waiver of the sovereign immunity of governmental units of the state.

The Act was only a partial waiver because it created only two circumstances under which the government (e.g., state, county or city) can be sued. They are 1) damage or injury arising from the operation of a motor-driven vehicle, and 2) personal injury and death caused by a condition or use of tangible personal or real property. Also, damages were capped at $100,000 for cases against a county and $250,000 for cases against cities or the state. Because medical malpractice cases typically don’t involve motor-driven vehicles or a condition or use of personal or real property, under the Texas Tort Claims Act, a hospital cannot be sued for the negligence of its employees. However, until recently, the employees (e.g., nurses or doctors) themselves could be held responsible for their own negligence. All of this changed because of an opinion of the Texas Supreme Court earlier this year.

In Franka, M.D. v. Velasquez, the Court construed Section 101.106(f) of the Texas Tort Claims Act. Section 101.106(f) provides:

If a suit is filed against an employee of a governmental unit based on conduct within the general scope of that employee’s employment and if it could have been brought under this chapter against the governmental unit, the suit is considered to be against the employee in the employee’s official capacity only. On the employee’s motion, the suit against the employee shall be dismissed unless the plaintiff files amended pleadings dismissing the employee and naming the governmental unit as defendant on or before the 30th day after the date the motion is filed.

 
Prior to the Franka case, this provision of the Act had generally been understood to require a plaintiff injured by a government employee to sue the governmental unit instead of the employee if such a claim fit under one of the two areas of waiver of sovereign immunity (i.e., “could have been brought under this chapter”). If, however, a claim against the governmental unit was not allowed under the Act, then the employee could be held responsible. In an amazing contortion of the language and intent of Section 101.106(f), the Texas Supreme Court changed this understanding of the Texas Tort Claims Act. In this regard, the Court held that when the statute says “could have been brought under this chapter,” it does not mean that a claim has to be allowed by the Act. The Court found that “any tort claim against the government is brought ‘under’ the Act for purposes of section 101.106 even if the Act does not waive immunity.” The Court reasoned:

Two other sections of the Act also make plain that suits brought “under” the Act include those for which immunity is not waived. Section 101.103(a) requires the attorney general to “defend each action brought under this chapter”. One would hardly suppose that the attorney general would be relieved of this responsibility whenever he thought, as he regularly does, his client’s immunity remained intact despite the plaintiff’s allegations. Section 101.102, entitled “Commencement of Suit”, provides that “[a] suit under this chapter shall be brought in state court in the county in which the cause of action or a part of the cause of action arises.” If this applies only to suits for which immunity is waived, can suits for which immunity is not waived, of which there are many, be brought anywhere? One would hardly think so. These examples serve to illustrate the obvious: that suit is brought under the Act when it is filed, not when waiver of immunity by the Act is established.

 
The Court asserted several other equally convoluted explanations for its holding. In the end, the Court admitted that their “construction of Section 101.106(f) does, however, foreclose suit against a government employee in his individual capacity if he was acting within the scope of employment.”

Under this new court ruling, if you are the victim of medical malpractice at a governmental hospital (or the victim of the negligence of some other governmental agent), the bottom line result is that you cannot bring a claim for injury or damages no matter how egregious their conduct. Clearly, this was not the intent of the legislature. If this had been the intent, the statute could have easily just stated in one sentence that government employees cannot be sued for acts or omissions committed in the course and scope of their employment. Hopefully the legislature will correct this Texas Supreme Court’s blatant legal activism that was clearly intended to protect negligent healthcare providers and other negligent governmental agents from liability for wrongs they commit.

Setting aside the logic gymnastics Justice Hecht had to undergo to reach this ruling and how he had to set aside and ignore decades of prior rulings regarding statutory construction and sovereign immunity to do so, this opinion sends a devastating message to the public by saying, “In Texas, we will not hold people responsible for their own actions if they work for the government”.

At a time when our politicians and community leaders consistently preach for us all to accept greater personal responsibility in our lives to help our society out of the current economic downturn, how can it be anything but catastrophic to enunciate a rule that not only fails to require governmental workers to accept responsibility for their own actions but actually provides them immunity for egregious negligent conduct that hurts and kills others?  What kind of message is that sending?

In a post-Franka v. Velasquez Texas:

• A driver of a city garbage truck is texting his girlfriend and not paying attention to the road while running a red light and killing a 5 year old girl: No liability for the driver of the garbage truck!




• A surgeon employed by a state hospital amputates a woman’s right leg when he should have amputated her left leg: No liability for the surgeon!

This is just not right.

Regardless of one’s political inclination or personal social or economic views, it should be so easy to rally around this simple premise:  People should be held responsibility for their own actions.  When the highest court in a state says otherwise, it demonstrates much too clearly how high the hurdle of justice often is.

As a brief reminder, there are two types of personal jurisdiction, (1) general personal jurisdiction, and (2) specific personal jurisdiction General jurisdiction is the broadest type of personal jurisdiction and exists when a defendant’s contacts with a state are “continuous and systematic.” International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945). Under this theory of jurisdiction, a court may hear any and all claims against a defendant. Specific jurisdiction, by contrast, limits a court to resolving only those claims that “arise out of or are connected with the activities [of the defendant] within the state.” Id. at 319.

While the Goodyear and McIntyre Machinery decisions are important in their own right, any claim that they changed the test for general jurisdiction over corporations is misplaced. The issue before the Court in McIntyre Machinery was whether a manufacturer whose product ended up in, and caused injury in, New Jersey could be sued in New Jersey under a “stream-of-commerce” theory. See 131 S. 2786, 2790. Notably, the defendant did “not have a single contact with New Jersey short of the machine in question ending up in this state.” Id. at 2790.

As a preliminary matter, any reliance on McIntyre as creating a new rule for general jurisdiction is misplaced because the case involved specific, not general, jurisdiction. While the Court discussed in passing the concept of general jurisdiction, it merely observed that the state of incorporation and principal place of business are “examples” of where the exercise of general jurisdiction would be proper.

A person may submit to a State’s authority in a number of ways. There is, of course, explicit consent. Presence within a State at the time suit commences through service of process is another example. Citizenship or domicile — or, by analogy, incorporation or principal place of business for corporations — also indicates general submission to a State’s powers. Each of these examples reveals circumstances, or a course of conduct, from which it is proper to infer an intention to benefit from and thus an intention to submit to the laws of the forum State. These examples support exercise of the general jurisdiction of the State’s courts and allow the State to resolve both matters that originate within the State and those based on activities and events elsewhere. By contrast, those who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts as a general matter.

McIntyre Machinery, 131 S. Ct. at 2787 (emphasis added) (citation omitted). It is unclear how anyone could come away from this excerpt with a rule that a corporation is subject to general jurisdiction in only in its state of incorporation or where it has its principal place of business.

In Goodyear, the Court addressed the issue of whether the fact that a small percentage of a foreign manufacturer’s tires were ultimately distributed in North Carolina could subject the manufacturer to general jurisdiction under a stream of commerce theory. There is, admittedly, a single sentence from the Goodyear decision in which the Court noted that the “paradigm” bases for general jurisdiction are the corporation’s principal place of business and state of incorporation. 131 S. Ct. at 2854. But that is not a statement that the exclusive bases for general jurisdiction are the location of the corporation’s principal place of business and its state of incorporation. Indeed, in direct contradiction to any new bright-line rule, the Goodyear Court went on to conduct a traditional general jurisdiction analysis and examine the defendant manufacturers’ contacts with North Carolina, despite the fact that the manufacturers were incorporated and had principal places of business in foreign countries. The Court ultimately concluded that the defendants’ attenuated contacts with the state “fall far short of the continuous and systematic general business contacts necessary to empower North Carolina to entertain suit against them on clams unrelated to anything that connects them to the State.” Id. at 2857. In short, it is inaccurate to claim that the Goodyear court established new rules for general jurisdiction. Rather, the Goodyear court simply applied well-established principles and reversed a decision by a state court that was far outside established, general jurisdiction precedent.

Post-Goodyear and McIntyre Machinery decisions only further confirm the fact that the systematic and continuous contacts test prevails to this day. No court has interpreted Goodyear or McIntyre Machinery as imposing a new bright-line rule. Indeed, since Goodyear and McIntyre Machinery, numerous courts have continued to conduct the “continuous and systematic” analysis in assessing general jurisdiction. See, e.g., Harrelson v. Seung Heun Lee, 2011 U.S. Dist. LEXIS 79383, at *18 (D. Mass. July 21, 2011) (citing Goodyear and then concluding that general jurisdiction was proper under a corporate veil-piercing due to the fact that corporations operated a number yoga centers in Massachusetts, which demonstrated systematic and continuous business activities in the state of Massachusetts); Arlington Industries v. Electric Custom Distributions, No. 3:10-cv-842, 2011 U.S. Dist. LEXIS 105009 (M.D. Pa. September 15, 2011) (citing Goodyear and then conducting traditional general jurisdiction analysis to see if a Texas corporation with its principal place of business in Texas could be subject to general jurisdiction in Pennsylvania); Francis v. Bridgestone Corp., No. 2010/30, 2011 U.S. Dist. LEXIS 72804, at *24-25 (D.V.I. July 6, 2011) (citing Goodyear and then recognizing that “[w]hen the claim is based on defendant’s non-forum related activity, the focus in determining jurisdiction is on the totality of the defendant’s activity within the jurisdiction, which must be ‘continuous and substantial’ to meet due process requirements.”); Austin Hardware and Supply, Inc., No. 11-cv-00485, 2011 U.S. Dist. LEXIS 88207, at *7-8 (W.D. Mo. Aug. 9, 2011) (concluding Tennessee corporation not subject to general jurisdiction because of a “lack of the systematic, on-going, continuous contacts required to establish general jurisdiction: SFI is not authorized to do business in the state of Missouri; it has no employees, representatives, or agents in Missouri; it does not own, lease or use any real property in the state of Missouri; and, it never had an employee or agent visit Austin Hardware’s offices or warehouse in Lee’s Summit, Missouri.”). In sum, Goodyear and McIntyre Machinery in no way created a new rule that corporations can only be sued in their states of incorporation or that state where their principal place of business is located. The law was and still remains that a corporation may be subject to general jurisdiction in any state with which it had continuous and systematic contacts.

First, with so much money at stake, insurance companies hire only the most experienced insurance adjusters and attorneys to handle cases involving injury or death from an 18-wheeler. Initially, the insurance company will feign friendship and sympathy towards an accident victim in an effort to earn their trust. The insurance adjusters will frequently arrange for the victim give an informal recorded “statement” in which they ask questions that are designed to elicit answers that are later used to hurt the case. In some cases, the trucking company may even make a low-ball settlement “offer” to tempt accident victims to surrender valuable rights they would otherwise have in court. They will even encourage accident victims to not hire attorneys by telling them that they will receive more money if the lawyers are “kept out of it.”

If none of these tactics work, the trucking company will hire a highly skilled defense team whose job is to limit, if not eliminate, an accident victim’s recovery. Crucial pieces of evidence may never be found; important deadlines may pass; cases may even be dismissed outright because of legal maneuvers and strategies that catch plaintiffs or their inexperienced attorneys by surprise. Ultimately, an accident victim’s chance of securing full compensation is jeopardized if they forego the representation of seasoned and aggressive attorneys who place the interests of their clients above all else. What is true with passenger automobile accidents is especially true with trucking accidents: you cannot afford to not hire an attorney.

Under what is known as the collateral-source rule, a defendant generally cannot use compensation that an injured plaintiff received from a source independent from the defendant to reduce the damages that the defendant would otherwise have to pay the plaintiff. For example, a defendant cannot introduce evidence of Social Security Disability benefits received by an injured person to reduce the amount of damages that the defendant must pay to the injured plaintiff.

Courts in Arizona and several other states have ruled that the collateral-source rule precludes a defendant from using a negotiated discount to reduce the amount owed to an injured plaintiff for medical expenses. But the Texas Supreme Court and the California Supreme Court have recently ruled that, despite the collateral-source rule, an injured plaintiff cannot recover the reasonable value of her medical care if she paid a lower amount pursuant to a negotiated insurance discount. See Howell v. Hamilton Meats and Provisions, 52 Cal.4th 541 (Cal. Aug. 18, 2011); Haygood v. De Escabedo, 54 Tex. Sup. J. 1377 (Tex. July 1, 2011).

The Texas Supreme Court and California Supreme Court decisions negatively impact injured insured plaintiffs by allowing a defendant use a plaintiff’s negotiated discount on her hospital bill to award less than the reasonable value of the medical care, the amount that the defendant would have to pay to an uninsured defendant. These decisions, which allow a defendant to unfairly benefit from a plaintiff’s insurance contract, are contrary to the spirit of the collateral-source rule.

There is one important difference between the Texas and California decisions. The Texas Supreme Court also ruled that a plaintiff with a negotiated discount cannot introduce evidence of the full reasonable value of her medical care at trial. Juries often use the amount of medical expenses to assess the seriousness of injuries and tend to award higher non-economic damages (e.g., pain and suffering, mental anguish, etc.) in cases with higher medical expenses. Therefore, the Texas Supreme Court’s decision will likely result in lower non-economic damages to insured plaintiffs with negotiated discounts (because juries will not be permitted to hear evidence of the full reasonable value of their medical care) than to uninsured plaintiffs (where juries will hear evidence of the full reasonable value of the care). The California Supreme Court’s decision appears to contemplate reducing an insured plaintiff’s medical expenses through a post-trial motion instead of preventing a plaintiff from introducing evidence of the reasonable value of her medical expenses at trial. Hopefully, this will prevent the California Supreme Court’s decision from negatively impacting the non-economic damages awarded to insured plaintiffs in the same way that the Texas decision will.

The evidence is clear. Fentanyl patches are an extremely dangerous product, and when they fail, the results are devastating. If you or a loved one has experienced the tragedy of losing a family member as a result of Fentanyl pain patch usage, you and your family deserve answers to your questions, and if the loss was as a result of a defective Fentanyl patch, to demand that the drug company be held responsible. Contact us for a free consultation so we can help you determine the best way to protect your legal rights and interests and hold the drug companies responsible for your preventable and unnecessary loss.

In 2003, Dr. Stephen Gass and others petitioned the CPSC to enact performance standards that would reduce or eliminate injuries from contact with the blade of a table saw. Dr. Gass is the creator of a revolutionary technology known as SawStop that uses electrical current running through the blade of a table saw to detect skin contact with the blade. Upon sensing such contact, the SawStop system releases a heavy-duty spring that instantly pushes a block of aluminum into the teeth of the spinning blade, causing the blade to stop and then retract within 3-5 milliseconds. When activated, the SawStop technology will completely eliminate the possibility of serious injury; a saw user who in the past might have experienced a serious injury or amputation will instead receive only a small nick or scratch:

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The development of the SawStop technology in 2000 should have been the beginning of another American success story based on product safety and innovation. In fact, for some time, Dr. Gass was negotiating with power tool companies to license the SawStop technology so it could be added to their table saws. In fact, Gass was able to negotiate a contract with Ryobi, one of the world’s largest saw manufacturers. But when he noticed a typo in the contract and called Ryobi’s lawyer to get it corrected, the corrected contract never came. It seemed that Ryobi had gotten cold feet.

Around this same time, the large power tool manufacturers formed an unprecedented alliance to research and develop new saw safety systems. But rather than creating their own flesh-sensing technology or licensing Gass’s, the saw companies rejected the SawStop technology as unproven. Gass claims that he was told by one saw manufacturer that “safety didn’t sell.” He also believes that Ryobi and other big tool companies rejected his technology because they were afraid that adding it would make them more vulnerable to lawsuits filed by users injured by older saws that did not have the technology. For whatever reason, the big tool companies essentially “blackballed” Dr. Gass and refused to incorporate his important new technology into their table saws. Now, years later, it seems that the government and the court system may force their hand.

On October 5, 2011, the federal First Court of Appeals in Osorio v. One World Technologies, Inc., No. 10-1824, 2011 U.S. App. LEXIS 20174 (1st Cir. Oct. 5, 2011) upheld a $1.5 million verdict for Carlos Osorio, a Massachusetts man injured in a construction site accident involving a Ryobi table saw. The accident occurred when Osorio’s hand slipped while cutting along the length of a piece of hardwood flooring, causing his left hand to slide into the saw’s blade and leading to a severe injury to his hand. At trial, the jury heard about the SawStop technology that could have prevented Osorio’s injury. They also heard the defendants argue that the SawStop technology was too expensive and would unreasonably increase the cost of smaller table saws like the one Osorio was using. The jury rejected this argument and determined that Ryobi’s table saw was defective in design. The First Circuit Court of Appeals affirmed. The verdict in Osorio will undoubtedly apply added pressure to the big power tool companies to add the SawStop technology to their table saws.

Additional pressure may be coming from the federal government. On October 5, 2011, the Consumer Product Safety Commission unanimously approved a recommendation to begin the process of creating new performance standards for table saws that would require the reduction or elimination of blade contact injuries. In voting to approve the recommendation, one of the Commissioners stated as follows:

Shortly after I joined the Commission in 2009, I saw a demonstration of a braking mechanism for table saws, called SawStop, which would stop a saw blade instantaneously upon encountering someone’s finger or hand. This led me to take a look at the injury data for table saws. The injuries associated with this product are horrific – deep lacerations to the arms and hands, broken bones and, worst of all, amputations to fingers and thumbs. Injuries like these often leave victims facing long, painful recoveries as well as significant financial hardship and employment challenges. I have met a number of these individuals, and, as far as I could tell, every one of them was an experienced woodworker who made a single small misstep or had a momentary lapse in attention – with ghastly consequences. To my mind, small errors like these should not produce tragic results on such a grand scale. In the case of table saws, roughly 36,000 blade contact injuries occur annually, with about 10 percent of them resulting in amputations.

While a new federal regulation may be months or years away, we can only hope that the pressure put on the power tool industry by the CPSC’s recent vote and the verdict in Osorio will lead to the implementation of SawStop technology sooner rather than later. The tens of thousands of Americans injured every year while using table saws deserve nothing less.

If you have suffered a serious injury or amputation while using a table saw, you may be entitled to compensation. Please contact Heygood, Orr & Pearson at (214) 237-9001 to see if you may have a case.

Avandia’s bust turned out to be Actos’ boom. Actos, manufactured in Osaka, Japan by Takeda Pharmaceuticals, is a diabetes drug similar to Avandia. Both drugs are members of a class of drugs known as thizolidinediones that decrease the insulin resistance of body tissue and modify the production of cholesterol. As a result of the problems associated with Avandia and its loss of market share, sales of Actos rocketed to $4.8 billion in 2010, accounting for 27% of Takeda’s revenue.

One advantage Actos had over Avandia is that the same studies that had documented the cardiac risks of Avandia showed that Actos carried much less cardiac risk for its users. However, in August 2010, a new study was published that concluded that the cardiac risks of taking Actos were just as severe as those from taking Avandia. The August 2010 study, however, was just the beginning of the ongoing problems for Takeda and its blockbuster drug.

In September 2010, the FDA announced that it was reviewing the interim results of an ongoing 10-year study examining whether the long-term use of Actos could lead to an increased risk of bladder cancer. A review of the five-year interim results of the study, set to conclude at the end of 2012, showed an increased risk of bladder cancer for those patients using Actos the longest and those patients taking the highest doses of the drug. Specifically, the study showed that patients taking Actos for more than 12 months or at the highest dosage had a 40% higher risk of bladder cancer. The FDA’s press release announcing these findings also noted that studies conducted before the FDA approved Actos showed that male rats receiving a clinical dose of Actos had a higher incidence of bladder tumors and that patients taking Actos had a higher incidence of bladder cancer than patients taking comparable drugs.

In June 2011, the FDA announced that, on the basis of the interim review of the ten-year study begun in 2003, it had concluded that “the use of diabetes medication Actos for more than one year may be associated with an increased risk of bladder cancer.” In the same press release, however, the FDA took pains to point out that the 5 year-review did not show an overall increase in the risk of bladder cancer from taking Actos. According to the FDA, the review showed that “there was no significant increase in the risk for bladder cancer in patients ever exposed to [Actos] compared to patients never exposed to [Actos].” This assertion, however, was quite misleading. The study results actually showed an overall Hazard Ratio (“HR”) of 1.2, indicating a 20% increase in the risk of bladder cancer from the use of Actos. However, the Confidence Interval (“CI”) for those particular results ranged from .9 to 1.5. What that means is that there was a 95% likelihood that the true HR was somewhere between .9 and 1.5; or between a 10% reduction in risk and a 50% increase in risk. Any time a study has a CI range that includes 1.0 (1.0 means the risk is the same between the two groups being compared), statisticians typically conclude that the results of the study are not “statistically significant.” But a lack of “statistical significance” does not mean there are no adverse effects from taking Actos even short term. By downplaying the results of the five-year review, the FDA may be seriously underestimating the risks of taking Actos and jeopardizing the health of thousands of Americans.

At the same time the FDA was announcing its opinions, health agencies in Europe were doing the same. In June 2011, French authorities announced the results of a three-year study of 1.5 million diabetes patients taking Actos. That study showed results similar to that of the FDA’s five-year review. Overall, patients taking Actos had a 22% higher risk of bladder cancer (HR of 1.22, with a CI of 1.05 to 1.43). Patients using Actos for more than 12 months had a 34% increase and those using Actos for more than 24 months had a 36% increase. Most significantly, the study showed that patients using the highest doses of Actos had a 75% higher risk of bladder cancer. The French study concluded that there was a “statistically significant association between exposure to [Actos] and incidence of bladder cancer.” Unlike their U.S. counterparts, the French authorities reacted strongly and swiftly to their study, removing Actos from the market completely on June 9, 2011. Germany removed Actos from the market shortly thereafter. The drug continues to be sold in the United States.

So what is the moral of the story? Unfortunately, the history set out above raises more questions than it answers. Among them:

Why was Actos approved when clinical trials showed an increased risk of bladder cancer in both humans and mice?

What did Takeda know about the risks of bladder cancer from taking Actos?

Like GSK did with Avandia, did Takeda hide negative test results from the public?

Why hasn’t the FDA removed Actos from the market given both its risks of bladder cancer and its cardiac risks?

How many billions of dollars will Takeda have to spend defending itself against the inevitable lawsuits that will be brought by the families of Actos users who died or suffered from bladder cancer?

Only time will tell.

Since the 1980s, business groups have been conducting a
well-orchestrated public relations campaign to convince the public – and our
elected officials – that the civil justice system is out of control and needs
reforming.  One of the most effective weapons in the business community’s
tort reform efforts is to misrepresent the facts of a real court case to make
the result seem outrageous.  The best-known example of this is the
McDonald’s hot coffee case.    The business community was so
effective at misrepresenting the facts of the McDonald’s coffee case that the
case continues to be one of the most commonly cited examples of the need for
tort reform.  “Hot Coffee” tells the whole story of the McDonald’s case and
explains how the business community distorted the facts of the case to promote
their tort-reform agenda.  In addition, “Hot Coffee” explains how damage
caps and arbitration clauses have unfairly limited the rights of injured
people.

When most people think of the McDonald’s coffee case, they
remember the news headlines and jokes about a woman who was awarded
millions of dollars for spilling hot coffee on herself in the car.  But
most people don’t know know what really happened in the case.  “Hot
Coffee” puts the case in perspective by explaining:

• That Stella Lieibeck, the 79 year-old woman who
  was injured by the hot coffee, was not driving the car;
• The car was parked when the injury occurred;
• McDonald’s brewed the coffee that injured Ms. Liebeck
  between 180 and 190 degrees;
• Before Ms. Liebeck was injured, McDonald’s knew
  that over 700 other people had been burned by its coffee;
• Ms. Liebeck received third degree burns that
  required an 8-day hospital stay and extensive skin grafts; and
• Although the jury awarded Ms. Liebeck $160,000
  in compensatory damages and $2.7 million in punitive damages, the judge reduced
  the punitive damage award to $480,000 and the case ultimately settled.

As “Hot Coffee” demonstrates, the advocates of tort reform take a kernel of truth –
such as a $2.7 million punitive damage award in a case involving spilled coffee – but leave out the facts that make the outcome of the case seem reasonable.  “Hot Coffee” does an excellent job of telling the other side of the hot coffee case.

The data reveals that this theory – a linchpin of “tort reform” advocacy – boils down to little more than an unfounded collection of unsupported inferences.  How do we know this?  First, by looking at areas where medical malpractice reforms have been implemented and noting how little things have changed.  For instance, Texas is a model medical malpractice “reform” state that enacted legislation in 2003 which, among other things, capped non-economic medical malpractice damages at $250,000.00.  Some politicians have cited Texas’ reforms as “successful,” but the success of this legislation certainly cannot be measured by its effect in controlling health care costs.  Consider the chart below, which compares Medicare reimbursement trends between Texas and the nation as a whole during the years 2000-2007.

Source: Dartmouth Atlas of Health Care, “Selected Medicare reimbursement measures.”

Not only has per person Medicare spending in Texas continued to exceed the national average, the data also show that such spending rose at nearly twice the national average (15.1% versus 8.7%) in the four years since the medical liability reform legislation was passed.  Furthermore, before such “cost-saving” legislation went into effect, per person Medicare reimbursement rates in Texas were the tenth highest in the nation.  In 2007, reimbursement rates in Texas had risen to the second highest.  None of this is resounding evidence that tort reform has been successful in controlling health care costs.

Another test of the impact that medical liability reform has on health care costs is to compare regions with both high and low malpractice premiums.  In the September 2010, the Journal of Health Affairs did just that, and found that while tort reform may result in as much as a 10% decrease in malpractice premiums, such savings have translated into total health-care spending reductions for consumers of around 0.1% – a mere sliver of the total health care spending pie.

In reality, since the passage of Medical Liability Reform, Texas has fallen behind in virtually every measure used to evaluate the quality of health care – be it cost, access, or the number who go without health insurance.  Spending increases for diagnostic testing have exceeded the national average, Texas’ uninsured rate has increased, the cost of health insurance has more than doubled, and growth in the number of doctors per capita has slowed.  The only measurable improvement in Texas since 2003 has been a decline in physician liability premiums. But payments by liability insurers on behalf of physicians have fallen far more than the premiums, suggesting that insurance companies have simply pocketed most of the savings.

None of this is meant to say that these unsettling trends are a consequence of medical liability reform.  Clearly, though, the political justifications offered in support of such legislation have not come to pass.  Insurance companies and, to a lesser extent, doctors, have seen some savings. But sheltering doctors from lawsuits has proven to have absolutely zero effect on reducing overall health care costs for consumers.