Tort Reform in Texas: Governor Perry’s is a Bad Deal for Ordinary Taxpayers

In 2003, Governor Rick Perry pushed for and passed tort reform, which capped non-economic damages at $250,000. The Governor has stated that due to tort reform, doctors who once left the state have returned, insurance premiums are down, and it has brought specialist to underserved areas. Governor Perry calls this change a success story because he does not believe in “one size fits all” mandates. But, Governor, “If every plaintiff is capped at $250,000, isn’t that “one size fits all?” Are you saying that every lawsuit is the same? Aren’t you talking out of both sides of your mouth?

Now, Perry is pandering for votes from big business and big insurance, at taxpayer expense. Perry would like more tort reform stating that “More is needed to restrain frivolous lawsuits and personal injury lawyers." Here is his most recent, politically motivated, initiatives:

Loser Pays for Frivolous Lawsuits: If a court determines that a lawsuit is groundless or a jury determines a suit is frivolous, then the plaintiff should be required to pay the defendant’s attorney’s fees.

This may sound reasonable, but losing a case does not mean the plaintiff brought a frivolous lawsuit. The “loser pays” philosophy mistakenly assumes otherwise. There is a significant amount of time and money that goes into a case. When the plaintiff loses, the lawyer loses. So, why would a lawyer bring a “frivolous” case to court? This raises the question of what is “frivolous” and what is the difference between a “frivolous” case and one that is not “frivolous” but doesn’t succeed?

For example, if an attorney could predict in advance that a given lawsuit had less than a 50% chance of success, should it still be brought to court? Not all losing plaintiffs filed a “frivolous” lawsuit. And, there is a significant disparity in economic power in litigation. A corporate defendant can easily afford “loser pays”; an injured or disabled plaintiff cannot. Must a plaintiff chose between filing or not filing a lawsuit because of his economic circumstance? This would create a chilling effect on use of the civil justice system. A “loser pays” system is heavily biased against the average citizen and, even more so, against those at the poverty level. The current system is already heavily weighted in favor of the corporate defendant, but, at least, it does not currently discriminate based on economic circumstance against poor people.

Keep in mind that litigation spending by a corporate defendant (who can easily afford it) must be matched by the plaintiff (who may not easily afford it and whose costs are being advanced for him/her by the attorney). With ‘loser pays’, a corporate defendant can simply try to spend you into a voluntary dismissal, for fear of a loss. Must you match the defendant dollar for dollar? Can you, your case, or your lawyer afford to do this? Litigation could end up like an auction where the person who makes the highest bid wins.

Early Dismissal for Frivolous Lawsuits: Forty-two states and the federal courts already have this mechanism in place for the early dismissal of clearly frivolous lawsuits. If a lawsuit is frivolous, Texas judges should be able to dismiss the case immediately before the legal bills pile up and the trial court should award attorney fees to the defendant.

This sounds reasonable as well, but who decides if a case is “frivolous?” Did you know that the presiding judge already has the power to declare a case ‘frivolous’ and dismiss it. Governor Perry is merely pandering to his Republican base; it is a ploy to woo supporters on the campaign trail. If a lawsuit is truly “frivolous”, the judge will never let it see the light of day. And what possible incentive does a plaintiff lawyer working on a contingency fee have to file a worthless case. He/she will spend money and make none. Does that make sense to you!? There are a number of variables to factor when determining the likelihood of success or failure in litigation. The fact that a plaintiff suffers the misfortune of losing a case does not mean it was frivolous when he/she filed it.

Legislature Determines New Causes of Action: Texas judges should not be permitted to create a cause of action from the bench. We should require the legislature to explicitly state when they are creating a new cause of action in statute, forcing courts to read statutes strictly, and providing only those rights and remedies the legislature intended.

What in heaven’s name does this mean?! Most cases sound in common law or statutory theory. The majority of cases are contract, negligence, or criminal cases. No judge that I have ever been in front of has created a cause of action from the bench. And no judge I have ever been in front of would permit a lawyer to do so, either. I do know this: a State legislature is not experienced or knowledgeable enough to legislate causes of action without the assistance of the judicial branch or practicing attorneys.

Increased Access to Courts for Legitimate Claims: The court system should be more accessible to Texans with legitimate claims without the incurred costs associated with a drawn out trial. Lawsuits with claims between $10,000 and $100,000 should have expedited trial settings and limited discovery in order to get litigants in and out of the court quickly and allow swifter recovery for damages.

Here is a situation where Governor Perry, again, speaks from both sides of his mouth. He is in favor of a $250,000 damage cap on all serious lawsuits and against “frivolous” ones, but lumps the rest into a “drive-through” court system. We are not talking about how quickly we want a meal.

In 1999, Texas implemented the “Discovery Rules” which is meant to simplify and encourage timely disclosure of information, and cut down on the number of unnecessary objections and arguments that slow down litigation. The purpose was not to push cases through the system as quickly as possible. Perry is just grandstanding on a non-issue.

Tort reformers argue for lower healthcare costs. But capping damages in serious cases increases the cost of healthcare because it passes the responsibility from the person or company who caused the damages in excess of the cap on to the public; after all, the health care system must bear the burden of medical amounts in excess of capped limits. While the insurance companies are profiting, big time, the taxpayers are paying and paying and paying. Governor Perry is only supporting big business, not everyday taxpaying citizens.

“Frivolous” lawsuits are not a glut on the system; they are miniscule in number and they are not hurting the quality of healthcare. Malpractice lawsuits are caused by the healthcare industry’s failures to meet appropriate standards of care or, in many instances, the industry’s lack of appropriate standards. And, with tort reform, the patient is left to suffer the consequences without adequate remedy. The Governor thinks you’re stupid and will buy into this ridiculous notion that any systemic problems are the victim’s fault. It is tort reform that produces added burden on taxpayers in the form of higher health care costs. Contrary to the rhetoric, there is no “lawsuit tax”, unless you excuse, as tort reform does, the bulk of the perpetrators’ responsibility. And I thought the Republicans were the "personal responsibility" party. I guess they have carved out an exception for large corporations who harm ordinary citizens but contribute heavily to political campaigns of politicians who support the corporate, anti-citizen, agenda.

So, if you are an ordinary citizen, and not a corporate polluter or deliverer of substandard care, and you support these types of policies, I implore you to reconsider your support. Consider who these policies help and who these policies hurt. If you vote your pocketbook, and most people do, Governor Perry’s proposals will make the rich and fat corporations richer and fatter at the expense of you, the ordinary citizen taxpayer. Is that really what you want?

Mark Bello has thirty-three years experience as a trial lawyer and twelve years as an underwriter and situational analyst in the lawsuit funding industry. He is the owner and founder of Lawsuit Financial Corporation which helps provide legal finance cash flow solutions and consulting when necessities of life litigation funding is needed by a plaintiff involved in pending, personal injury, litigation. Bello is a Justice Pac member of the American Association for Justice, Sustaining and Justice Pac member of the Michigan Association for Justice, Business Associate of the Florida, Tennessee, and Colorado Associations for Justice, a member of the American Bar Association, the State Bar of Michigan and the Injury Board.