Side Effects: Outcomes in other states indicate that med-mal bill would have marked impact on the business of law

By SYLVIA ADCOCK, Staff Writer

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The Texas Trial Lawyers Association used to attract anywhere from 250 to 350 people to its seminars on medical malpractice.

That was before Texas enacted a cap on damages in med-mal cases. “This past year, we had 31 people show up,” said Jay Harvey, past president of the association that represents plaintiffs’ attorneys.

  The public-policy issues behind medical-malpractice reform are a matter of debate. But judging from the experience of other states, it’s apparent that the reforms create a lasting impact on the business of law, leading to fewer attorneys able or wiling to take on med-mal cases, fewer billable hours available for firms that represent insurance companies, with some attorneys refocusing their practice or entirely dropping a concentration they developed.

If a bill now in the N.C. General Assembly becomes law, North Carolina would join 25 other states with some form of cap on damages in medical-malpractice cases. The bill, which passed the Senate last week, would cap noneconomic damages at $500,000.

In Texas, the state enacted a $250,000 cap on noneconomic damages per physician/claimant and a $250,000 cap on noneconomic damages per institution in 2003. After that, filings of medical-malpractice claims dropped by two-thirds, said Charles Silver, a University of Texas law professor who has done extensive studies of the reforms and their effects in Texas.

“It’s a huge cut in revenue for lawyers who handled plaintiffs’ cases, and for defense attorneys as well,” Silver said. “It takes two to tango.”

Harvey, who is a partner in Winckler & Harvey in Austin, said that today fewer than a dozen firms in the state concentrate on medical malpractice. A stark example of the lack of litigation, he said, is the fact that a large hospital that serves as a regional trauma center for the panhandle currently has only one action pending against it. That wouldn’t have been the case before the reforms, he said.

Plaintiffs’ lawyers have always had to pick their medical-malpractice cases carefully. But when caps are in place, many attorneys say people who would have otherwise had a case simply can’t find anyone to represent them. Harvey said that he usually can’t take a case that requires more than one expert unless it involves significant economic damages.

In Michigan, where med-mal reforms put a cap on noneconomic damages in 1994, plaintiffs’ attorney Norm Tucker said he can’t take a case that doesn’t have a value of at least a half-a-million dollars.

“It’s sixth-grade math,” he said. “You can’t try a birth-injury case for less than $200,000.” With the damages capped at around $400,000, the defense attorney who spends that much or more on a case but gets a one-third contingency fee will wind up in the hole.

For the defense bar, the changes have been dramatic as well.

Rob Roby was the founding partner of Gwinn & Roby, a 45-member firm with offices in three Texas cities. The firm concentrated heavily on insurance defense, and the medical-malpractice reform sent business plummeting.

“It closed the courthouse to the typical medical user who might have a claim, those that are geriatric, people who are unemployed,” he said. “Those cases disappeared. … There was a dramatic reduction in claims being filed.”

As a result, he said, “If they’re not filing, I’m not defending.”

At his firm, the drop-off in litigation “made it more difficult to function in a firm that size.” The firm went through a winding-down and the attorneys dispersed, with Roby and several others joining Curran Tomko & Tarski in Dallas, where he supplements insurance-defense work with commercial litigation.

The statute in Michigan not only capped damages but also made it more difficult to file a claim. In the past, it was enough to file a notice with an affidavit from an expert, but that requirement has been expanded to a require notice of intent that gives the doctor and the hospital a very detailed analysis of the allegations before any discovery has taken place. Then a six-month waiting period – designed to encourage settlement – begins. The lawsuit can be filed on the 182nd day after the waiting period ends.

Genie Eardley, a plaintiff’s attorney who practices in Cannonsburg, Mich., said that time requirement sent her own legal-malpractice liability premiums “through the roof.”

Today, she said, “many good lawyers who used to do it aren’t doing it anymore,” she said. “You see those people doing wills and probate work. … And the defense lawyers put themselves out of business. You’ll see them doing custody, divorce cases and trying to figure out how to write a will.”

Tucker, of Sommers & Schartz in Detroit, said that filings of medical-malpractice cases went from over 3,000 a year in 1986 to 931 in 2006.

Like most plaintiff’s attorneys, Tucker said that frivolous lawsuits in the med-mal arena are few and far between.

“Don’t get me wrong, there are people out there who don’t know what they are doing,” Tucker said. “But you only file a frivolous medical-malpractice case once in your career because you will end up losing a fortune.”

That’s echoed by Keith O’Connell, president of the Texas Association of Defense Counsel. “Plaintiff’s lawyers don’t take unmeritorious cases, or at least the good ones don’t. It’s not unusual for a plaintiff’s lawyer to have half-a-million dollars out on this.”

Although he represents clients who benefit from the caps, O’Connell said he sees the laws establishing caps on damages as a fundamental distrust of the jury system. “And I just don’t get that,” he said. “We can enact laws to favor lawyers or doctors or real estate agents or contractors, but how does that help us? It’s a bad idea. We need to trust the system.”

In eight states, laws providing caps were enacted but found unconstitutional by an appellate court. The most recent came last year, when the Georgia Supreme Court upheld a $1.265 million verdict against a plastic surgeon in a case where a woman’s surgery was botched so badly that she was left with gaping wounds on her face and was permanently disfigured.

The court said that Georgia’s $350,000 cap was unconstitutional because it was in direct conflict with a right to trial by jury, a right which predates the Georgia constitution.

O’Connell, who said the caps disproportionately affect the elderly and unemployed, said that attorneys need to remember there are bigger issues at stake.

“The lawyers are going to adjust,” he said. “The elderly and the poor families will not.”