Could the recent federal lawsuit challenging the constitutionality of Texas’ cap on noneconomic damages in health care liability cases be a prelude to a renewed legislative effort to raise the cap or abolish it altogether?

For the past several sessions, legislation has been filed to index the $250,000 cap retroactively to September 1, 2003. Rep. Gene Wu (D-Houston) most recently filed the bill (HB 501) during the 2021 regular session. Though the bill did not receive a hearing last spring, but the same bill did get one in the House Judiciary & Civil Jurisprudence Committee in 2019.

Since nearly two decades have gone by since the enactment of the cap, it would be helpful to review exactly where the law has been and where it stands today. The Legislature first enacted medical liability reforms in the late 1970s. The old Art. 4590i included alternative caps of $500,000 on most damages, including economic damages, and if the courts struck down that one, a $150,000 cap on noneconomic damages alone. As those of us who have been around for a long time recall, the plaintiff-friendly Texas Supreme Court of the 1980s made short work of the caps as soon as they could get the case before them. See Lucas v. United States, 757 S.W.2d 687 (Tex. 1988). The Court did, however, uphold caps on medical liability in wrongful death claims because they arose from statute, not common law. See Rose v. Doctors Hospital, 801 S.W.2d 841 (Tex. 1990).

The loss of the caps contributed to a malpractice insurance crisis that engulfed the state in the 1990s, resulting in significant access to care issues in large parts of the state (especially in certain specialties, such as obstetrics). Following a large-scale legislative interim study in 2001-02, the Legislature undertook comprehensive medical liability and tort reform in the 2003 session. When the dust settled, the Legislature passed and the Governor signed HB 4, which enacted Chapter 74, CPRC. Chapter 74 does a number of things, including requiring an export report in order to maintain a health care liability claim, establishing a higher standard of care for emergency care, and, of course, prescribing caps on noneconomic damages. Along with HB 4, the Legislature sent a proposed constitutional amendment to the voters authorizing the Legislature to enact those caps. Voters narrowly approved Proposition 12 on September 13, 2003, giving immediate effect to the caps.

Art. 3, §66, Texas Constitution, authorizes the Legislature to determine the limit of liability for all damages, other than economic damages, “of a provider of medical or health care with respect to treatment, lack of treatment or other claimed departure from an accepted standard of medical or health care, or safety . . .” This provision further authorizes the Legislature to define a medical or health care liability claim. Finally, establishing the cap (or to change one) requires a vote of three-fifths of the members of each house. HB 4 anticipated voter approval of Art. 3, §66 by establishing a $250,000 per claimant cap on noneconomic damages in a health care liability claim (§74.301, CPRC). In addition, in a claim involving more than one health care institution, there is an overall cap of $500,000 for each claimant. When these caps are stacked, the maximum amount of noneconomic damages a claimant can recover in a health care liability claim is $750,000.

Almost from the inception of the statute, the plaintiff’s bar kicked into gear to challenge its constitutionality on both federal and state grounds. In Prabhakar v. Fritzgerald (No. 05-10-00126-CV), decided August 24, 2012, the Dallas Court of Appeals upheld Art. 3, §66 on the basis that the plain text of the provision pre-empts any other potentially conflicting constitutional provision, such as the right to a jury trial or open courts provisions. The court likewise rejected the argument that the caps violate the U.S. Constitution’s guarantees of a right to a jury trial, equal protection of the laws, and no taking without just compensation. In its opinion, the court relief heavily on a federal case, Watson v. Hortman, 844 F.Supp. 795 (E.D. Tex. 2012), in which the plaintiff sought a declaratory judgment regarding the constitutionality of Art. 3, §66 and HB 4.

In that case, the district court adopted a magistrate’s recommendations that all the plaintiff’s federal constitutional claims be dismissed on the following grounds:

  • SCOTUS has held that “the Seventh Amendment (jury trial) has not been incorporated into the 14th Amendment (equal protection) to apply to state court proceedings,” citing Palko v. Connecticut302 U.S. 319, 324(1937), overruled on other grounds by Benton v. Maryland395 U.S. 784 (1969);
  • Federal courts routinely hold that statutory damage caps do not violate the Seventh Amendment because federal courts do not “re-examine a jury’s verdict or impose its own factual determination regarding what a proper award might be”;
  • No equal protection violation exists because the cap applies equally to all claimants and the Legislature had a rational purpose for the adoption of the statute (citing Lucas v. United States, 807 F.2d 414, 421 (5th 1986), which considered the 4590i caps);
  • Federal courts do not view caps as denying access to the courts because they are rationally related to the Legislature’s goals of reducing malpractice insurance premiums and enhancing access to care;
  • No takings violation exists because plaintiffs do not have a vested right in a rule of common law or more specifically in an uncapped award of damages.

The court of appeals, though not bound by federal court decisions, nevertheless found these findings conclusive and rejected the plaintiff’s arguments. It should be noted that the court’s judgment was later vacated and the case dismissed because the parties reached a settlement. The opinion, however, remains good law.

A recent opinion by a Harris County trial judge considered another Seventh Amendment challenge to the cap and came to the same conclusion. In Joplin v. Leggett (No. 2015-46430), District Judge Tanya Garrison found, just as the Hortmancourt did, that federal precedent consistently holds that caps do not violate the Seventh Amendment.

In view of this precedent, one would think that the federal lawsuit on which we reported Monday does not have a snowball’s chance. So what’s going on? A review of the complaints of each of the individual class representatives reveals a very wide spectrum of alleged severe injuries, health care settings, providers, and potential damages that would result from a judgment in the plaintiffs’ favor. None of the precedent on the books right now looks anything like that, nor has it focused solely on the Seventh Amendment argument (there are always multiple claims). Presumably, given the firepower of the plaintiffs’ team, the resources are available to push the case all the way to SCOTUS. Is there any indication that the high court would be willing to revisit more than a century of Seventh Amendment jurisprudence in this case? It is never a good idea to predict the courts, but supposing the current state of the law holds up and the lawsuit is ultimately dismissed, what might it accomplish?

One possibility that has occurred to us is that this effort forms part of a larger strategy to persuade the public and the Legislature that after 20 years, the time has come to revisit the original caps. The legislation introduced during the past several sessions has not been supported by any concerted effort to build public pressure for a change. Perhaps now, when so many of the legislators who voted for the cap in 2003 are no longer in the Legislature (we count fewer than 15 House members and 6 Senators), the advocates for change see an opportunity to take the case not only to the federal courts, but to the voting public. If this is the case, we can expect an extended multi-session effort. It seems unlikely that they would file a lawsuit and then let it work its away quietly through the system for several years, like most litigation. It would be wise for those of us who remember 2003 and how important the hard cap was to resolving the crisis that existed at that time to prepare now for what might lie ahead.

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