Texas Tort Reform
May 31, 2011
By George Jarkesy, NEAA Chairman
Being a Texan, I was naturally very excited to hear that the Texas Legislature had passed the 2011 Omnibus Tort Reform Bill (HB 274) that gives Judges a quick remedy to dismiss lawsuits “that have no basis in law or fact.” While the law that was finally passed by the entire legislature did not quite have the firepower of the initial proposal, I believe it is an important step toward decreasing unnecessary and frivolous litigation that directly affects small business. As an owner of small businesses, I have personally felt the waste of time and treasure created by a frivolous lawsuit, and it is no small problem. Governor Perry declared this issue a legislative emergency and his leadership placed this issue “in front of the queue”. I congratulate Governor Perry on the passage of this important new law.
The law instructs the Texas Supreme Court to write new procedural rules which modernize legal procedure for evaluating whether lawsuits have any legal basis early in a lawsuit. The group Texans for Lawsuit Reform stated that “Federal courts and 42 states utilize such a procedure and have for decades. It is well-tested and works well all across the country. It allows courts to dismiss cases that should not have been filed, and requires courts to assess fees and costs against losing parties.” This important new law also creates a process to speed up or dismiss early claims under $100,000 and to create an environment to adjudicate these cases more inexpensively due to procedural changes. The Institute for Legal Reform stated that 93% of small businesses say that frivolous lawsuits are a problem. To my mind, this might be the most important section of the bill for small business, as it provides a mechanism for quick dismissal therefore not tying up a firm’s capital in paying attorney’s fees.
The Houston Chronicle said it best in their May 28th editorial, “This new step in tort reform in Texas is important because it, like others before it stretching back to 2003, help make the state more attractive for business and industry – and that’s what creates jobs.”
This bill dovetails nicely with the Texas Medical Liability Bill which passed in 2003. A group of Texas E.R. Physicians were actually in Washington D.C. last week pushing for a national version of the bill entitled the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act. U.S. Representative Kevin Brady (R) was quoted in the Houston Chronicle saying that Texas has added 21,000 new physicians in the state since the 2003 Texas law was passed. In my opinion there is no doubt that Texas medical malpractice reform, which limits non-economic damages to $250,000 per claim has played a key role in attracting more physicians to Texas and more importantly to rural and underserved communities within Texas.
Physicians are just one good example of small businesses, as the 2010 U.S. Bureau of Labor Statistics reported that the average Internal Medicine physician in the United States earned $199,000. As over 40% of these physicians still work in solo or small group practices, they employ staff, rent office space and contribute positively to their communities. These physicians are a great example of a small business that is protected by tort reform. NEAA is committed to advocate for small business which we know is the engine of growth for our economy.