Senator Robert "Bob" Deuell, M.D.

The Texas State Senate
District 2

***CAPITOL UPDATE***

Summary of House Bill 4, Part Two

(AUSTIN) - Last week, I outlined the first eight articles of House Bill 4, the most comprehensive lawsuit reform package in Texas history. This week's article covers the remaining articles, which include the landmark medical malpractice reforms.

Article 10 - Health Care Liability Reform

• Current Art. 4590i , Title 71 of Vernon's Texas Civil Statutes is moved to Chapter 74 of the Civil Practices and Remedies code.
• The limit on non-economic damages varies based on whether the defendant is a physician or health care provider or a health care institution:
  1. a $250,000 cap applies to all physicians and health care providers (other than health care institutions) on a per case/occurrence basis, and
  2. a $250,000 cap applies to each health care institution on a per case/occurrence basis; however, total damages against health care institutions, collectively, cannot exceed $500,000 in any single case.
  3. Cap on non-economic damages not indexed for inflation
  4. Health care provider not required to maintain proof of financial responsibility in order for cap on non-economic damages to apply
• An alternative limit on non-economic damages is established that is linked to an insurability requirement; this would be necessary only in the event the cap above, without the insurance requirement, is found unconstitutional (i.e., if HJR3 is not passed by the voters and a constitutional challenge to the above cap is successful). This cap is the same cap as above, but linked to the following insurance requirement:
  • Cap on non-economic damages applies to physician or registered nurse who provides proof of financial responsibility:
    • effective 9/1/03 - $200,000/$600,000
    • effective 9/1/05 - $300,000/$900,000
    • effective 9/1/07 - $500,000/$1million
  • Cap on non-economic damages applies to physicians in residency training programs who provides proof of financial responsibility of $100,000/$300,000
  • Proof of financial responsibility established by:
    • purchase of liability insurance or plan of insurance; or
    • purchase of coverage through risk retention group
    • maintenance of reserves in financial institution or letter of credit
• Clarifies limitation on damages in wrongful death and survival cases
  Note: this is an existing $500,000 cap, which was deemed by the courts to apply only to statutory/wrongful death actions; It is indexed for inflation since 1977. This cap, as indexed, is approximately $1.4 million today.
  • This cap continues to exclude all actual health care expenses (past and future) and will continue to be adjusted for inflation (same as current law).
  • Clarifies that this cap includes punitive damages
  • Clarifies that this cap applies to all claimants seeking recovery for another's injury (per occurrence) and that the cap applies to all defendants ($500,000, regardless of the number of defendants).
  • Liability of insurer under Stowers' Doctrine limited to liability amount of insured
    Note: This is the doctrine that requires an insurer to settle a case within policy limits if the insured wants to settle. [It is often in the interest of the insured to settle a case within policy limits so that he/she is not at risk for any potential awards above policy limits if the case were to proceed. This is true regardless of the merits of the case.]
• Limits the recovery of health care expenses to the amount actually paid or incurred by claimant.
• Allows future damages other than medical expenses to be paid through periodic payments
  • Future damages in excess of $100,000 made be made by periodic payments rather than by lump-sum, but court not required to order periodic payments plan
  • Judgment shall specify how and when the periodic payments are made
  • Periodic payments of future health care will terminate upon death of recipient
  • Periodic payments of future earnings will not terminate upon death of recipient
  • Court shall require defendant(s) to provide proof of adequate insurance or post security adequate to assure full payment of the periodic payment
  • Attorney fees are paid at time of judgment based on present value of future damages
• 10 year statute of repose established for health care liability cases
• Emergency Care:
  • Requires jury instructions on circumstances associated with emergency care
  • Provides that standard of proof in cases involving emergency care is preponderance of evidence
• Modifies various pre-trial procedures to address frequency of claims
  • Eliminates cost bond requirement
  • Allows parties to extend date for serving expert report by agreement
  • Defendants must object to sufficiency of report within 21 days
  • Allows time extensions to cure deficiencies in expert report
  • If expert report not timely filed, the court shall dismiss the action and award attorney fees and costs to defendant(s)
  • Allows interlocutory appeal if trial judge fails to dismiss claim due to failure to meet expert report requirement
• HIPAA confidentiality requirements: Establishes process for disclosure of patient's medical records in compliance with HIPAA.
• Experts: Clarifies qualifications for expert rendering opinion on causal relationship between injury and alleged departure from applicable standard of care. Establishes qualifications for expert in suit against providers, other than a physician
• Clarifies how the Good Samaritan Law applies to health care providers who respond to emergency situations.
• Limits liability of hospitals that provide charity care services.
• Defers application of a nursing home insurance requirement that was to go into effect September 1, 2003, until September 1, 2005.

Article 11 - Claims Against Health Care workers in Public Hospitals

• Extends limit on personal liability of governmental employees to health care personnel workers employed by a public hospital and physicians who provide emergency services at the hospital.
• Limits liability of nonprofit organizations that manage a city or hospital district hospital.

Article 13 - Damages

• Requires jury awards of punitive damages to be based on a unanimous jury verdict
• Limits recovery of health care expenses to expenses actually incurred by the plaintiff
• Allows the jury to consider a plaintiff's income taxes when awarding lost future income

Article 15 - Public School Teachers

• Provides additional protection for teachers against frivolous litigation related to the actions taken by the teacher at school (same as SB930, which also passed).

Article 16 - Admissibility of Evidence (Nursing Homes)

• Limits the admissibility of various surveys, reports, and other findings by state agencies.

Article 17 - Successor Liability for Asbestos Related Litigation

• Limits a successor corporation's liability in asbestos related litigation to the amount of the assets of the acquired company if the acquisition that generated the asbestos related liability took place before May 13,1968. [Does not limit the successor corporation's liability for its own wrongdoing - only for the acts of the acquired company].

Article 18 & 19 - Charitable / Volunteer Immunity

• Provides protection from lawsuits for volunteers of charitable organizations and volunteer firefighters.

Article 20 - Design Professionals

• In a suit against a registered architect or licensed professional engineer, requires the plaintiff, at the time suit is filed, to provide an affidavit by a third-party registered architect or licensed professional engineer setting forth the specific acts of negligence it is alleged the defendant committed.

Article 21 - Limitation on Trespass Actions for Air Contaminants

• Limits a trespass action for migration or transport of an air contaminant to require a showing of actual and substantial damage to the plaintiff. [Excepts those relating to odors.]

Article 22 - Limitation of Liability for Nonprofit Hospitals

• Limits the liability of a nonprofit hospital or hospital system that provides charity care and community benefits in an amount equal to at least 8% of the net patient revenue of the hospital or system, and provides at least 40% of the charity care provided in the county in which the hospital or system is located.

Article 23 - Effective Dates

• All provisions in the bill take effect September 1, 2003.
• The following apply to lawsuits filed on or after July 1, 2003:
• Article 4 - Proportionate Responsibility
• Article 5 - Product Liability
• Article 8 - Evidence Relating to Seat Belts.
• Article 2 on Settlement Offers applies to actions filed on or after Jan. 1, 2004.

To contact Sen. Deuell about the legislative process, contact the Capitol Office at (512) 463-0556 or mail to Sen. Bob Deuell, Texas Senate, P.O. Box 12068, Austin, TX 78711. The website for the Texas Senate is www.Senate.state.tx.us. The e-mail address for Sen. Deuell is: bob.deuell@senate.state.tx.us.