Texas Caps Chill Victims Lawsuits

Nearly three years after Texas moved to cap the amount of jury awards, the number of lawsuits filed and the size of those awards are shrinking

When news of a $606 million jury award hit the news wires last year, Michael Sawicki's phone was ringing off the hook.
People wanted to know if Sawicki, a Dallas lawyer, could secure the same justice for their medical malpractice claims that he secured for the survivors of William Jameson, who a Dallas County jury determined was dosed with a fatal level of chemotherapy drugs from his doctor.
But when Sawicki answers calls from those interested in filing medical lawsuits, he must determine if the cases merit the time and expense they require. He filed the chemo suit a week before Texas' major 2003 tort reform law took effect, limiting non-economic damages to $250,000 per physician, up to $750,000 if another doctor and hospital are involved.
Another cold reality: The chemo suit netted only $2.5 million, the amount of insurance coverage the medical practice carried. Attempting to collect any more would likely prompt the physician's clinic to file for bankruptcy.
A year after landing the second-largest jury award in the United States, Sawicki is far from being set for life; the scarcity of money from medical malpractice suits has prompted him to branch out into business law and general negligence cases.
"While the jury might feel the plaintiffs might deserve it, the legislators haven't heard the evidence and have put caps on awards," said Sawicki, who practices at the firm Brown, Sawicki & Mitchell L.L.P. Few lawyers would argue that jury awards are becoming smaller in Texas, and that the number of medical cases has dropped.
What's more a point of discussion: Has the backlash against major jury awards gone too far?
'Hellhole' no more?
The Texas Gulf Coast has been consistently named a "Judicial Hellhole" by the American Tort Reform Association for the past four years, mainly because of major verdicts in Beaumont and courts nearby. Many cases are heard in that area because of the area's blue-collar juries, one of which handed down the $253 million Vioxx award in Angleton, a town about 40 miles south of Houston. It was the third-largest award handed down by a jury in the United States in 2005, according to Lawyers Weekly USA, which monitors jury awards across the country.
Headlines announcing such awards are deceptive because juries aren't told of lawsuit caps before they hand down their verdicts, or that judges ultimately decide how much money is awarded, many lawyers say.
Yet public reaction to such awards is what's triggering a juror groundswell elsewhere.
"In the 10-years-plus I've been doing this in Texas, I've seen a shift in the mindset of the population," said James Lowery of the law firm of Kirk & Lockhart. "I think the tort reform is the result of the shift of the mindset. The people I've encountered in the jury selection process ... have developed a feeling that it should not be a lottery."
Median jury compensatory awards have continued to shrink in Texas, from $23,150 in 2000 to $12,000 in 2003, according to Pennsylvania-based Jury Verdict Research, which tracks large jury awards nationwide. Texas' median jury award in 2003 was less than a third of the national median, the organization reports.
Lowery said he successfully defended a client in Beaumont in 2003, and has handled numerous toxic tort cases.
He said he saw jury awards drop before tort reform took hold.
Changes in the law
In 2003, the Texas Legislature passed House Bill 4, the most comprehensive tort reform bill in state history, capping non-economic damages in medical liability cases at $250,000 per claimant. Then, Texas voters approved Proposition 12, a constitutional amendment to protect HB 4 from legal challenges. Last year, Senate Bill 15 required medical proof from those claiming to have illnesses related to asbestos or silica. The bill also requires each case to be tried individually, instead of in groups.
Another reform in Texas includes limiting punitive damages to twice the amount of economic damages. Various iterations of tort reform have been adopted by legislators since 1987. More than 40 states have engaged in some type of tort reform.
Proponents of tort reform argue that excessive lawsuits drive up the cost of virtually everything, from cars to fast food.
But opponents of the current tort reform -- such as Sawicki -- argue that current laws have gone too far.
He said that under current laws, the $250,000 cap makes it cost-prohibitive to recover damages for the very young or the aged, either of whom have little earning power. One example he cites is the elderly in nursing homes. A lawsuit on behalf of an elderly person who dies of neglect in a nursing home might result in only a $250,000 jury award.
"When you do the math on it, the average expert in a case of moderate complexity will cost $20,000 to $50,000 -- nearly a quarter of the recovery," Sawicki said.
Factoring in the survivor's award and other costs, Sawicki said it's unlikely attorneys will pursue such cases.
Yet Jon Opelt, executive director of Texas Alliance for Patient Access, said the caps for non-economic damages don't preclude plaintiffs from punitive damages in cases where physicians were negligent, or recouping the cost of medical treatment and lost wages. The alliance is a coalition of doctors, hospitals, nursing homes, health care providers and medical liability insurers working to change medical liability laws. Before tort reform, according to the alliance, in Texas the average medical liability award quadrupled from 1989 to 1999, rising from $472,982 to $2,048,541, mostly due to a surge in non-economic awards.
"Damages were so high, they might have taken on a punitive nature," Opelt said.
The stronger tort reform laws have likely dropped the number of medical liability lawsuit filings across North Texas. Where 2001 saw 487 medical suits filed in Dallas County, 2004 saw 142, according to information compiled by the Texas Alliance for Patient Access.
Opelt said he believes lawyers are still adapting to the cap on awards, and that many potential suits were filed just before the 2003 caps took effect. He said the alliance expects the number of medical lawsuits to amount to two-thirds of what they used to be.
Dallas trial lawyer Don Godwin of the firm Godwin, Pappas, Langley Ronquillo L.L.P. said he believes that before the major tort reform took effect in Texas, nearly 65% of all civil jury trials were personal injury cases, and the rest involved commercial suits and intellectual property law violations.
Now, he estimates that only 20% involve personal injuries and the rest involve commercial litigation and intellectual property laws.
Godwin said the state laws limiting jury awards might have gone too far.
He said rather than limiting punitive and non-economic damages, the state should have passed laws banning plaintiffs from "shopping" for more generous venues, such as Beaumont.
"You would still have a threat out there, policing people," Godwin said. "If you've got a senior in high school (who is a victim of medical malpractice), I think it's a little harsh to say you don't have any economic damages."
A job too well done?
"I have to work twice as hard for half has much, but it's still double what I'm worth," said Fort Worth trial lawyer Chuck Noteboom, who has landed a $102 million jury verdict against State Farm Insurance Co. and a $250 million negligence verdict against a nursing home. But, he says, major jury verdicts have all but vanished.
"It's like winning the Lotto," Noteboom said. "You read about people winning, but don't expect any money when you buy a lottery ticket."
He said a conservative groundswell has risen against labor unions, Hollywood and trial lawyers.
"They've essentially legislated trial lawyers out of existence," he said of the recent tort reforms.
Sawicki said even defense trial lawyers are going the way of the buffalo, in light of a drop in lawsuits.
Southern Methodist University law professor Ellen Pryor said 93% of jury verdicts aren't affected by the award caps.
She said research that she has read indicates the tort system overcompensates in small injury cases and underpays in serious injury cases. She said the situation usually plays itself out in traffic accidents. Many drivers unknowingly take part in a sort of "lottery," where they find themselves and other drivers underinsured when in serious accidents.
"What happens if someone gets rear-ended ... and there's a serious brain injury, and another victim becomes a paraplegic, and the driver of the gravel truck has no insurance, or has a $1 million policy. Are you going to be paid off by the other person's insurance? That's the lottery. Because there's very little self-insurance."