Diary

Tort Reform Spurs Economic Growth; Aids Access to Healthcare

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.

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)

Tort Reform & The Man In The Arena

The number of doctors applying to practice medicine in Texas has skyrocketed by 57 percent. In 2008, the Texas Medical Board received 4,023 licensure applications and issued a record 3,621 new licenses.

In all, in just the first five years after reforms passed, 14,498 doctors either returned to practice in Texas or began practicing here for the first time.

And our reforms finally brought critical specialties to underserved areas. The number of obstetricians practicing in rural Texas is up by 27 percent, and 12 counties that previously had no obstetricians now have at least one. The statistics show major gains in fields like orthopedic surgery, pediatrics, neurosurgery and emergency medicine.

The Rio Grande Valley has seen an 18 percent growth in applications to practice medicine, adding about 200 doctors to this critically underserved area.

And what about the money that used to go to defending all those frivolous lawsuits? You can find it in budgets for upgraded equipment, expanded emergency rooms, patient safety programs and improved primary and charity care.