In one of the more bizarre moments in 40 years of our involvement in civil justice reform legislation, a representative of the Attorney General’s Office showed up uninvited to last night’s hearing on SB 30 to raise questions about the constitutionality of the bill. The witness cited two provisions of “concern,” the Open Courts provision (Art. I, § 13) and Article III, § 66.
As to the Open Courts provision, the witness referred back to the “Justice for Sale” Texas Supreme Court’s decision in Lucas v. United States, 757 S.W.2d 687 (Tex. 1988), in which the court struck down statutory caps on noneconomic damages in medical malpractice cases. In an opinion by Justice Kilgarlin, the Court ruled that it was “unreasonable and arbitrary to limit their recovery in a speculative experiment to determine whether liability insurance rates will decrease.” His opinion also pointedly took a shot at the legislature, stating that “we simply note that this is a power [to assure that awards are rationally related to actual damages] properly attached to the judicial and not the legislative branch of government.”
Former Chief Justice Tom Phillips and Justice Raul Gonzalez filed dissenting opinions. Justice Gonzalez wrote that “[t]he issue is not the wisdom or fairness of the cap, but whether the cap bears a reasonable relation to a proper legislative purpose.” He would have upheld the cap as an appropriate exercise of legislative authority. “I am not prepared to hold,” Justice Gonzalez wrote, “that an award of close to $1 million ($500,000 plus consumer index adjustment []) for nonmedical damages coupled with no limitation on past and future medical expenses is so arbitrary and unreasonable that it does not pass constitutional muster. . . . For us to ‘unfind’ that there is a crisis on the state of this record is to act like a ‘super legislature’ in violation of the separation of powers doctrine. We must respect the process. Whatever flaws exist in the legislative findings, the proper forum to correct them is the Texas Legislature and not this court.”
Justice Phillips would likewise have held that the statutory cap did not violate the Texas Constitution. First, he rejected the notion that the cap infringed the right to trial by jury (Art. I, § 15). “If separation of powers is to be meaningful,” Justice Phillips wrote, “the legislative branch of government must have authority to pass laws which alter the availability and scope of remedies. To hold otherwise would eviscerate the Legislature’s ability to ‘remedy defects in the common law as they are developed, and to adapt it to changes of time and circumstances” (citations omitted).
As to the Open Courts provision, Justice Phillips aligned with Justice Gonzalez, asserting that “a ‘reasonable exercise of the police power in the interest of the general welfare’ thus requires that the statute address an important, not merely legitimate, state interest, that such interest be perceived and articulated by the state, and that the remedies provided bear a real relationship to the social evil being addressed.” In his view, the statutory cap did not violate Open Courts because: (1) the legislature articulated an important state interest (ensuring access to available and affordable health care); and (2) the cap bore “a real relationship to a rationally perceived malpractice crisis.” He went on to state that the “primary purpose of the cap was not to protect health care providers, but to protect the public” (emphasis added). And even though the “results [of imposing the cap] are uncertain, in the real world, social policy must frequently be made on the basis of incomplete and even conflicting information, and the law of unintended consequences may override even the noblest of intentions. The Legislature should be commended, not condemned, for this realization. To turn constitutionality on the presence of a declaration of certitude might serve only to reward arrogance, ignorance or hypocrisy.”
The OAG witness appeared to suggest that allowing the jury to hear evidence of the reasonableness of medical charges in the form of actual data from both public and private third-party payors might somehow be construed as capping economic damages. In addition to the Open Courts provision, he pointed to Art. III, § 66, the 2003 constitutional amendment imposing the $250,000 cap on noneconomic damages in medical liability cases. As everyone knows, that provision explicitly excluded economic damages.[1] Obviously. The witness seemed to offer an interpretation of that exclusion as some kind of implied prohibition of legislating on the procedures and evidentiary requirements for proving medical damages.
All we can say about all of this is, seriously? (We might also ask why, but that’s another issue.) In four decades of legislative policymaking in this area, we cannot remember a single instance in which a representative of the OAG even appeared at a hearing, much less threw shade on a civil justice reform bill. (If it happened somewhere along the way, we stand to be corrected.) We should point out that in just about every one of these fights, opponents of the bills raised a hue and cry about the Open Courts provision. Interesting that not a single bill for which we advocated and which the Legislature enacted has been declared unconstitutional on this or any other basis.[2] Could it be that the Open Courts argument is fundamentally fallacious, if not entirely specious?
Perhaps not in every situation we can think of, but as applied to legislation we have supported, including SB 30, we feel pretty confident that there is not a ghost of a chance that the Texas Supreme Court as it has existed since 1988 (or for that matter, as it existed before about 1980) would overthrow a legislative policy decision of this nature. Even if Lucas was still good law,[3] SB 30 has no statutory cap of any kind, and even a cursory review of Lucas reveals that the majority’s analysis could not be applied to SB 30. We assume that the OAG witness might have been referring to the safe harbor for providers that allows them to take 300% of Medicare reimbursement if they do not wish to testify about their charges. (But he didn’t say that, so we’re not sure what specific provisions of the bill he had in mind). Just to be clear again, all that provision does is give the health care provider a more than reasonable amount for services in exchange for being left alone. If the provider thinks that’s not sufficient, he or she can be deposed and testify at trial about the basis of the charges (and why 300% of any negotiated rate is unreasonable). Nothing else in the bill prevents a plaintiff from putting one whatever evidence about charges is relevant. It’s hard for us to fathom how allowing a defendant to do the same thing constitutes a “cap” or why a jury shouldn’t be able to hear that evidence. If that’s the standard, then maybe we should be the ones making the Open Courts argument.
Insisting that he was not stating a position on the bill, the witness repeatedly stated that the AG’s office felt compelled to testify so that in the future, if the bill were successfully challenged, it “wouldn’t be thrown back in [the AG’s] face” (whatever that means). If that is the reason for inserting the OAG into a highly contentious and important public policy debate, it makes no sense. The Legislature considers dozens of bills every session that raise real constitutional issues. Does the OAG show up at every hearing and offer a critique? Of course not. They are not expected to do that nor should they. Their job is to defend the Legislature come what may, not to “warn” them that what they are doing may theoretically end up in court. We might even suggest that doing so constitutes a violation of separation of powers, an impermissible infringement of the executive branch on legislative prerogatives. However it came about that the witness appeared when he did and how he did, it was, to use a technical term, weird. In any event, it might have been alright if he had fully briefed the issue and laid out all of the applicable authority, not just a case that has very likely disappeared from history as an unfortunate aberration in what has been a fairly consistent application of Open Courts at all other times.
[1] Not too many people might remember this, but HB 4, the 2003 legislation that created the current version of Chapter 74, CPRC, included an alternative statutory cap on noneconomic damages just in case the proposed constitutional amendment failed. The bill further included minimum financial responsibility requirements for providers. See H.B. No. 4, § 74.302, 78th Reg. Session (2003). We will never know how this provision might have fared in the Texas Supreme Court, but judging from the vast difference between the Court in the 2000s and the 1988 Court, we think it highly likely that it would have been upheld against an Open Courts challenge.
[2] Undoubtedly, somebody reading this is ready to pounce: “Aha! You’re wrong! The successor liability bill regarding asbestos liability was found unconstitutionally retroactive!” That is true. That bill essentially applied to one company, so the Court threw it out. It was also not a bill that we had anything to do with. The more important takeaway from the asbestos litigation is that, in spite of the most dire and vehement warnings that the medical criteria and inactive docket provisions in the 2005 legislation would run afoul of Open Courts, no such thing ever happened. The MDL continues to function to this day with nary an issue. You’d think that if there had been a constitutional problem, someone from the OAG would have shown up then as well.
[3] It is interesting to note that in Chief Justice Phillips’ majority opinion in Texas Workers’ Compensation Commission v. Garcia, 893 S.W.2d 504 (1995), which upheld the constitutionality of the 1989 Texas workers’ compensation reforms against Open Courts and other challenges, didn’t cite Lucas as authority for the open courts analysis. We acknowledge, of course, that Garcia challenged the Act’s statutory benefits as an inadequate substitute for common law remedies, but even so, as Chief Justice Phillips reiterated, “Our duty to enforce the open courts guarantee does not allow us to rewrite legislation merely to try to craft a remedy that we might believe to be more inclusive or equitable.” And quoting Texas State Bd. Of Barber Examiners v. Beaumont Barber College, 454 S.W.2d 729, 732 (Tex. 1970), “It is not the function of the courts to judge the wisdom of a legislative enactment.”
