Perpetuating Injustice:Non-Economic Damage Caps in Texas

A teenager loses both arms and legs due to medical negligence.  She comes to a lawyer for help, but the lawyer is unable to explain how or why the legislature of our state determined eighteen years ago that the non-economic aspects of her injury have little or no value.  The lawyer has to inform the prospective client that in 2003, the legislature — purporting to act on behalf of we the people — determined the losses of her ability to walk, to brush her teeth, or even to hold her own future children are simply unworthy of meaningful compensation.

Three surviving children of a retired woman come to a lawyer seeking justice because their mother unnecessarily died in a hospital as a result of clear health care provider negligence.  The lawyer is at a loss to explain to them in understandable terms that their maximum recovery for the loss of years of their beloved mother is worth a maximum of around $6,700 – $16,667 apiece.

That does not overstate the case.  In the 2003 frenzy to institute unneeded “tort reform,” the Texas legislature decided that in any medical malpractice case the maximum amount that can be recovered for “non-economic damages” is $250,000.  Out of that amount, the plaintiff must pay her attorneys’ fees, typically 40% of the recovery, and reimburse case expenses incurred in pursuing the case, which could easily be $100,000.  Which means that if everything goes very well, the teenager might recover as much as $50,000 for the completely avoidable loss of her four limbs, or the three surviving children for the premature death of their mother.

Wait, it’s worse.  The $250,000 cap, instituted effective September 1, 2003, never changes.  The dollar has inflated at around 2.32% per annum since 2003.  The result is that a $250,000 recovery in 2021 is the equivalent of a $165,500 recovery in 2003 dollars.  In other words, the net amount recovered by the teen or the children for their non-monetary human losses is 33.8% lower today than it would have been had their cases been tried in 2003.  And that net value will get continually lower every year going forward.

It does not stop there.  In order to recover $250,000 for non-economic damages, most cases would have to be tried.  The reason is because no defendant will pay in settlement the maximum amount they might lose if the case were tried and lost.  Bottom line, the best settlement value of any non-economic claim typically is somewhere between $175,000 and $225,000.  That means on an average settlement of $200,000, a plaintiff would recover perhaps $20,000, or maybe nothing at all.

But realistically most carriers will not offer anything close to $200,000 to settle the case.  They know that if the plaintiff’s lawyer is forced to try the case: (a) there is no guarantee the plaintiff will prevail; (b) even if they do prevail, litigation expenses will likely double — meaning the plaintiff would have an even lower net recovery; and (c) the damages will still be capped.  Accordingly, carriers frequently take advantage by making unrealistic lowball offers.  Because the risks of trying the case are so high, such hardball negotiation tactics work for carriers more often than not, meaning that most cases are settled for far less than what any objective person would consider their true settlement value within the scope of the caps.

But wasn’t that problem was fixed by the legislature in 2003, by making economic damages unlimited, and by providing that the cap is applicable to each plaintiff and each defendant?  Not hardly.

While economic damages, like past and future medical care and lost wages, are unlimited, that is merely to compensate the victim for monetary losses, and has nothing to do with compensation for the real harm incurred, the loss of enjoyment of the beauty of life.  And those economic damages are also subject to 40% attorneys’ fees and reimbursement of case expenses. And don’t forget the health insurer that paid for those medical expenses will have its hand out, eager to be reimbursed for the amounts it was contractually obligated to pay for the plaintiff’s care (but without reimbursement of the premiums paid, of course).  And the law elevates the health insurer’s claim over that of the injured patient, so that the health insurer must be paid first before the patient sees a dime.

Which means that at best, the severely impaired teen typically at best can recover 50% or less of her monetary losses.  Also, about 85% of malpractice victims are the elderly who have no lost wages.  Moreover, they often die as a result of the malpractice and, even if they are alive, they can only recover medical expenses over their expected lifetimes, which may be very short.

In short, for various reasons the plaintiff may have incurred little in the way of medical expenses, may be unable to demonstrate any lost wages, and will always be required to pay attorneys’ fees, case expenses, and health insurer subrogation claims from any economic recovery.  Which means: (a) there may be no meaningful economic damages; and (b) even “unlimited” economic damages will never compensate any injured patient fully for whatever economic damages he or she can prove.

Plus, no law requires health care providers to carry liability insurance coverage and, even when they voluntarily choose to do so, very few physicians carry enough liability insurance to cover large economic damage awards.  Recovering from the personal assets of a defendant physician is always expensive and most often fruitless, due to assets smartly deposited in protected retirement accounts, as well as exemptions from collection from current wages or urban or rural homesteads.  That means there is in most cases a practical cap of the insurance policy limits, often as little as $200,000.

Wait again, though, the cap is $250,000 per defendant, right?  No.  That is what citizens were told in 2003 to trick them into passing a constitutional amendment allowing such caps.  But by sleight-of-hand, the legislature by definition made all defendants sued for the same event “one defendant” under this cap.  Thus, if the plaintiff were able to prove that three physicians were responsible for the mishap, her total recovery for non-economic damages against all three combined would be a grand total of $250,000, making the liability exposure of each physician’s insurance carrier only a paltry $83,333.33.

But wait, can’t she get a separate cap against the hospital?  Yes, but most of these cases arise from physician negligence, not hospital policies or nursing negligence, and the law has evolved to insulate hospitals from all claims arising from physician negligence.  So, recoveries from hospitals in these cases is often completely unavailable, or the settlements from hospitals frequently are nominal because the hospitals realize that ultimately they will have no meaningful liability exposure in the case.

Okay, then, but if there are multiple plaintiffs, that means each plaintiff can get $250,000, right?  Again, no. By the same sleight-of-hand the legislature defined a “single claimant” to be all persons making a claim for the same medical event.  In other words, if medical practitioners negligently cause the death of the beloved parent mentioned above, each surviving child would be entitled to only 1/3 of the $250,000 cap, meaning about a $6,700 – $16,667 net recovery, assuming everything goes perfectly and expenses are kept fairly low.  Maybe double those amounts if the lawyer can somehow find a way to prove the hospital was also at fault for the death.

The easiest fix to this problem would be simply to eliminate the non-economic damage cap in health care liability claims.  That would put medical malpractice claimants on equal footing with those suffering injuries and death at the hands of negligent truckers or defective and dangerous products.

If there is no political will to do so, though, there are six common-sense means by which this problem could be ameliorated and at least partially restore justice to victims of medical negligence:

  1. Increase the cap to $500,000.
  2. Index the cap to inflation, retroactive to 2003.
  3. Make the cap applicable only to those health care providers who carry a minimum of $1 million in liability coverage.
  4. Make the cap applicable to each plaintiff and each defendant, eliminating the deceptive definitions to the contrary.
  5. Make hospitals jointly and severally liable with physicians for injuries and deaths negligently caused by staff physicians in hospital facilities.
  6. Define attorneys’ fees and case expenses as recoverable economic damages, the amount of which would be determined by the court after a jury verdict favoring the plaintiff.

One last thought on caps.  At one time, if a physician’s liability insurance carrier negligently failed to settle a case within policy limits, resulting in a verdict in excess of the policy limits, the insurer could not claim the cap on liability.  That was removed in the same tort reform frenzy.  Bring that cap exemption back to encourage carriers to settle meritorious claims, for the protection of patients as well as for insured health care providers.

There is no question the current cap on non-economic damages in Texas health care liability claims is an injustice.  If we do nothing to correct the injustice it will only increase as time continually reduces the value of the $250,000 cap.  Fundamental fairness dictates the injustice created by the legislature in 2003 needs to be corrected by the legislature in 2023.  That will only happen if citizens demand it.

© 2021 Riley Law Firm

Direct Republish Inquiries to the Author:

Tim Riley

Riley Law Firm

112 E. 4th St.

Houston, TX 77007-2502

713-646-1000

tdr@txtrial.com

Firm Files New Car Wreck Case

November 12, 2021.  The firm today filed in Harris County a personal injury lawsuit arising from a car wreck.

Riley Named to “Best Lawyers in America” for 2021

August 2020.  Riley was designated among “Best Lawyers in America” for Houston area for Commercial Litigation by Best Lawyers, a U.S. News & World Report affiliate.  Sixth year in a row for designation.

Firm Files Car Wreck Lawsuit

September 2021.  The firm filed a personal injury lawsuit in Montgomery County over a car wreck resulting in personal injuries.

Firm Files Medical Malpractice Wrongful Death Lawsuit

March 2021.  The firm filed a lawsuit in Harris County on behalf of a surviving widow against a hospital and two physicians.  Case involved failure to provide post-operative anti-coagulation to a surgical patient, allegedly resulting in a pulmonary embolus and death.