Tort reform is good medicine

Good things happen when states reform their legal systems to end abuses that lead to “jackpot justice,” including expanding the availability of health care, cutting health care costs, improving health in at-risk communities and increasing job creation, among other benefits.

The list of success stories in states enacting lawsuit-abuse reforms is growing, especially when governors, legislatures and judges work together to make needed changes a reality.

Some of the biggest recent tort-reform success stories have come from states long rated by various interest groups as being among the worst “judicial hellholes.” The hellish reputations result from having rules that encourage the filing of frivolous suits or outrageously large financial awards for dubious injury or other claims of harm. Reforms seem to have the most visible results in the health care arena.

Texas, for instance, is garnering widespread attention for lawsuit-abuse reforms it passed in 2003 and 2005, including a cap on ambiguous “pain and suffering” damages and a requirement that a lawsuit can proceed only after an independent medical expert files a report supporting the claimant.

Before 2003, doctors (especially specialists such as obstetrician-gynecologists) were fleeing Texas because of high malpractice insurance premiums, but now the state’s medical board literally cannot keep up with all the paperwork from doctors applying to move into the state.

Since the reforms became law, the number of medical insurance companies in Texas increased from four to more than 30. Malpractice insurance premiums fell by as much as 31 percent. And Christus Health, a statewide nonprofit health system, was able to spend $100 million serving poor patients that it previously had devoted to paying legal defense fees and insurance premiums.

Also, an estimated 499,000 additional Texans today own health insurance, thanks to the reforms, according to the Perryman Group, a Waco, Texas-based economic analysis company.

Likewise in West Virginia, where the Charleston Daily Mail reported in January 2007 that positive results were being produced by reforms officials there approved in 2003. After the state legislature put a $250,000 cap on pain and suffering damages, the Charleston Area Medical Center was able to add about 100 new doctors in three years. Before the reforms, the center could barely keep enough doctors, especially orthopedic surgeons, to remain staffed around the clock.

In Mississippi, the largest medical malpractice insurer cuts its rates for 2008 by 15.5 percent. Since 2004, when the state strengthened caps on pain and suffering damages, the rates have come down a whopping 45 percent.

Similar results have been obtained in Missouri, Alabama and many other states since a wave of lawsuit-abuse reforms were enacted during the same period when Texas, West Virginia and Mississippi acted.

Coincidentally, 2003 is the year the U.S. Department of Health and Human Services reported that high litigation costs contributed to declines in health care quality. The report noted that California’s 25-year-old limit on noneconomic damages reduced health care costs without other adverse consequences.

Indeed, “insurance premiums in California have risen by [just] 167 percent over this period while those in the rest of the country have increased 505 percent,” the report said.

Researchers Jonathan Klick of Florida State University and Thomas Stratmann of George Mason University found strong evidence last year that capping pain and suffering damages has “a large and statistically significant effect on doctor location decisions,” and therefore “can generate large increases in the supply of medical services in a state.”

Klick and Stratmann further report that reforms also appear to have a marked effect on historically underserved populations, including lowering black infant mortality rates 6 percent.

Quin Hillyer is associate editorial page editor of The Washington Examiner.