BILL ANALYSIS C.S.H.B. 971 By: T. Hunter 4-4-95 Committee Report (Substituted) BACKGROUND The high costs associated with defending medical liability claims have led to an increase in malpractice insurance premiums, difficult physician recruitment in medically underserved areas and an incentive for defendants to settle suits early. These costs can be attributed to a rise in non-meritorious claims and a lack of controls in the Medical Liability and Insurance Improvement Act. Medical liability lawsuits are often frivolous because proof of medical corroborations by expert witnesses is not required until 90 days after a claim is filed, though defendants do not have access to this information under the discovery process. Standards regarding expert testimony are broad and vague, often resulting in unqualified medical experts. while claims for medical negligence cannot be brought under the Deceptive Trade Practices Act (DTPA), medical claims can be brought under DTPA for a violation or representation of express or implied warranties, thereby increasing defense costs. The collection of governmental benefits does not have to be considered when awarding damages, and damages are sometimes awarded against defendants and against third parties such as insurance companies. Prejudgment interest on costs accruing after the date of judgement is also allowed. PURPOSE As proposed, H.B. 971 reforms limits on health care liability claims against physicians and provides penalties for claims in bad faith. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sect. 13.01, Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes), as follows: Sect. 13.01. COST BOND, DEPOSIT, AND EXPERT REPORT. (a) In a health care liability claim, the claimant must, within 90 days, file: (1) a separate $5,000 cost bond for each physician or health care provider named in the suit; (2) $5,000 in a cash escrow account for each physician or provider named; or (3) an expert report for each physician or provider if no cost bond or cash in lieu of bond has been deposited under (1) and (2). Deletes existing language in (a) dealing with affidavits from experts. (b) If, for each defendant, no expert report, cost bond or cash in lieu of bond has been filed as specified by (a) or (h), then the court, on motion of the named defendant, shall enter an order that: (1) requires the filing of a $7,500 cost bond for each physician or provider within 21 days after the date of the order; and (2) provides that if the claimant fails to comply with the order, the suit shall be dismissed for want of prosecution with respect to the named defendant, subject to reinstatement in accordance with the rules of civil procedure and Subsection (c). of this section. Deletes existing language in (b) dealing with posting a bond with surety or another type of security. (c) Before the action dismissed under (b)(2) may be reinstated, the claimant must pay the defendant's court costs prior to dismissal and file a $7,500 cost bond for each defendant. Deletes existing language in (c) dealing with a claimant who has not posted security. (d) Not later than 180 days after filing the action or within any extended period established under Subsection (f) or (h) of this section, the claimant shall, for each physician or provider against whom a claim is asserted: (1) furnish to counsel for each physician or provider one or more expert reports, with a curriculum vitae of each expert; or (2) voluntarily nonsuit the action against the physician or provider. Deletes existing language in (d) dealing with an extension to comply filing deadlines. (e) If a claimant has failed, for any defendant physician or provider, to comply with (d) of this section, within the time required, the court shall, on the motion of the affected physician or provider, enter an order as sanctions against the claimant or the claimant's attorney: (1) the reasonably attorney's fees and costs of court incurred by the defendant; (2) the forfeiting of any cost bond on such claim (to the extent necessary to pay the award); and (3) the dismissal of the suit against the defendant with prejudice to the claim's refiling. Deletes existing language in (e) dealing with discovery concerning the affidavit. (f) The court may, for good cause shown after motion and hearing, extend any time period specified in subsection (d) for any additional 30 days. Only one extension may be granted. (g) If a claimant has failed to comply with a deadline in Subsection (d) and after hearing, the court finds that the failure of the claimant or the claimant's attorney was an accident or mistake, but not intentional or the result of conscious indifference, the court shall grant a grace period of 30 days to permit the claimant to comply with (d). A motion by a claimant for relief under this subsection shall be deemed timely if filed prior to any hearing on a motion by a defendant under (e). (h) The affected parties may agree to extend any time period specified in Subsections (a) or (d) and any such agreement is binding and shall be honored by the court if signed by the affected parties or their counsel and filed with the court. (i) A claimant may satisfy any requirement for filing an expert report by filing reports of separate experts regarding different physicians or providers or regarding different issues arising from the conduct of a physician or provider, such as issues of liability and causation. Nothing in this section shall be construed to mean that a single expert must address all liability and causation issues with respect to all physicians or providers or with respect to both liability and causation issues for a physician or provider. (j) An expert report is not required to be filed on any issues other than liability or causation issues. (k) An expert report under this section: (1) is not admissible in evidence by a defendant; (2) shall not be used in any deposition, trial or other proceeding; and (3) shall not be referred to by a defendant during the course of the action for any purpose. (l) A motion challenging the adequacy of an expert report shall be granted only if it appears to the court, after hearing, that the report does not represent a good faith effort to comply with the definition of an expert report in Subsection (r)(6) of this section. (m) Once the claimant complies with Subsection (d): (1) any cost bond filed or cash deposited in an escrow account by the claimant shall be released; (2) the claimant, the claimant's counsel, and any surety have no liability on the cost bond or cash deposit; and (3) an execution shall not be issued on the cost bond or cash deposit. (n) If a claimant nonsuits a health care liability claim against a physician or health care provider before filing a cost bond, and then seeks to refile the same or similar claims against the physician or provider within 30 days, then the claimant must file a $7,500 cost bond for each previous nonsuited physician or provider contemporaneous with the filing of the claim. If the claimant fails to file the $7,500 cost bond for each physician or provider, upon motion and hearing, the court shall order the filing of the cost bond and the claimant shall pay the movant reasonable attorneys' fees for obtaining the relief. (o) A claimant who is proceeding pro se and who is unable to afford a cost bond or cash deposit may file an affidavit in the same form required by the Rules of Civil Procedure for an affidavit in lieu of security for costs. (p) In the event of conflict between this section and another law, including a rule of procedure or court rule, this section controls to the extent of the conflict. (q) Prohibits the Texas Supreme Court from amending or adopting rules in conflict with this section, notwithstanding Sect. 22.004, Government Code. Prohibits district courts and statutory county courts in a county from adopting local rules that conflict with this section. (r) In this section: (1) "Affected parties" means the claimant and the physician or health care provider who are directly affected by an act or agreement required or permitted by this section and does not include other parties to an action who are not directly affected by the particular act or agreement in question. (2) "Claim" means a health care liability claim against a physician or health care provider. (3) "Claimant" means a party who files a pleading asserting a claim, providing that all plaintiffs claiming to have sustained damages as the result of the bodily injury or death of a single patient shall be deemed to be one "claimant". (4) "Defendant" means a physician or health care provider against whom a health care liability claim is asserted an includes a third-party defendant, cross-defendant, or counter-defendant. (5) "Expert" means: (A) in the case of one giving opinion testimony regarding whether or not a physician departed from accepted standards of medical care, means an expert qualified to testify under the requirements of Sect. 14.01(a), or (B) in the case of one giving opinion testimony about a non-physician health care provider, means an expert who has knowledge of accepted standards of care for the diagnosis, care or treatment of the illness, injury or condition involved in the claim. (6) "Expert Report" means a written report by an expert which provides a fair summary of the expert's opinions as of the date of the report regarding applicable standards of care, the manner in which the rendered by the physician or health care provider in question failed to meet such standards, and the causal relationship between such failure and the injury, harm or damages claimed. SECTION 2. Amends Sect. 14.01 (a), Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes), as follows: SECTION 14.01. QUALIFICATION OF EXPERT WITNESS IN SUIT AGAINST PHYSICIAN. (a) In a health care liability claim against a physician for injury or death of a patient, an expert witness must be a physician who: (1) is practicing medicine at the time such testimony is given or was practicing medicine at the time the claim arose; (3) is qualified on the basis of training or experience to offer an expert opinion regarding those accepted standards of medical care. (b) Expands the definition of an expert witness to ensure that the witness is "practicing medicine" or has had a "medical practice". (c) In determining whether a witness is qualified on the basis of training or experience, the court shall consider whether, at the time the claim arose or at the time such testimony is given, the witness: (1) is board certified or has other substantial training or experience in an area of medical practice and procedure relevant to the claim; and (2) is actively practicing medicine in rendering medical care services relevant to the claim. (d) The court is required to apply the criteria in Subsection (c) of this section in determining whether an expert is qualified to offer expert testimony on the issue of whether or not the physician departed from such criteria if, under the circumstances, the court determines that there is a good reason to admit the expert's testimony, which shall be stated on the record by the court. (e) A pre-trial objection to the qualifications of a witness shall be made within 21 days after the date the objecting party receives a copy of the witness' curriculum vitae or the witness' deposition, whichever occurs later. Nothing in this subsection shall prevent said party's making an objection as soon as practicable if circumstances arise thereafter which could not have been reasonably anticipated by a party within the 21 days and which said party believes in good faith provides a basis for an objection to an expert's qualifications where no objection was made previously. The court shall then conduct a hearing as soon as practicable (if possible, prior to trial) after the filing of an objection to determine whether or not the witness is qualified. If the objection party is unable to object in time for the hearing to occur before the trial, the hearing shall be conducted outside the presence of the jury. Further states that nothing shall prevent the examination or cross-examination of a witness at trial about the witness' qualifications. (f) Nothing prevents a physician, who is a defendant, from qualifying as an expert. SECTION 3. Amends the Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes) by adding new Subchapter P. SUBCHAPTER P. PREJUDGMENT INTEREST Sect. 16.01 APPLICATION OF OTHER LAW. Notwithstanding Sects. 6(a)-(f), Art. 1.05, Title 79, Revised Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes), prejudgment interest in a health care liability claim shall be awarded in accordance with this subchapter. Sect. 16.02. COMPUTATION OF PREJUDGMENT INTEREST. (a) In a health care liability claim, no prejudgment interest shall be charged with respect to a defendant physician or provider who has settled the claim within 180 days after the date notice was first mailed to the physician or provider. (b) In a health care liability claim where no settlement has been reached within the time specified in Subsection (a) of this section, the judgement shall include a prejudgment interest on past damages found by the trier of fact, but shall not include prejudgment interest on future damages found by the trier of fact. (c) Prejudgment interest allowed under this subchapter shall be computed in accordance with Sect. 6(g), Art. 1.05, Title 79, Revised Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes), for a period beginning on the date of injury and ending on the date before the date the judgement is singed. (d) In this section: (1) "Past damages" means damages awarded to compensate the claimant for loss the claimant will incur for a period beginning on the date of injury and ending on the date before the date of judgement. (2) "Future damages" means damages awarded to compensate the claimant for loss the claimant will incur after the date of judgement. SECTION 4. Amends Sect. 10.02, Medical Liability and Insurance Improvement Act of Texas (Art. 4590i, Vernon's Texas Civil Statutes) as follows. Sect. 10.02. EFFECT OF FILING SUIT ON BEHALF OF MINORS. (a) The limitation period for a minor on a healthcare liability claim shall begin to run not later than the date on which the first action on such claim is commenced in a court of competent jurisdiction suit where such minor is represented by a licensed attorney. (b) When an action is filed and causes the statute of limitation to begin to run, no non-suit, dismissal with prejudice, dismissal without prejudice, or dismissal for want of prosecution of the minor's action as to all parties will be permitted until the court has appointed an attorney ad litem who is experienced in trying medical malpractice cases or personal injury cases to represent the interests of the minor child and to advise the court. Deletes existing language in Sect. 10.02 on causes of action covered by other law. SECTION 5. Effective Date - September 1, 1995. SECTION 6. Except for Section 7, this Act applies only to a cause of action that accrues on or after the effective date of this Act. SECTION 7. Sects. 13.01 and 14.01, Medical Liability and Insurance Improvement Act of Texas (Art. 4590i, Vernon's Texas Civil Statute), as amended by this Act, applies only to a health care liability claim filed on or after the effective date of this Act. SECTION 8. Emergency Clause. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. COMPARISON OF ORIGINAL TO SUBSTITUTE Deletes Sections 1, 2, 3, 6, 8, 11 and 12 of the original. Deletes Section 4 of the original and adds new language on an attorney affidavit or cost bonds to become Section 1 of the substitute. The substitute is designed to ensure that a reputable expert examines the case early in the litigation to determine whether the physician or health care provider deviated from the applicable standard of care. The bill also strengthens the cost bond requirement to encourage early review of cases and also increases the range of available options when the claimant file neither a report nor security for costs and expenses. Deletes Subsections (2), (4) and (5) of Section 5 of the original. The substitute further clarifies that an expert witness is a physician who is practicing medicine. The substitute develops standards for experts to ensure they are qualified and knowledgeable in the area in which they are testifying. The substitute also allows the court to consider whether the witness is qualified on the basis of training or experience and the procedure for objecting to the person as an expert witness. Substitutes Section 7 of the original with Section 3 of the substitute on pre-judgement interest. Prejudgment interest on future damages are eliminated. The substitute will bar the award of prejudgment interest on damages which have not occurred at the time of judgement. It will also allow prejudgment interest on past damages to accrue from the date of injury. The substitute has a new Section 4 dealing with the statute of limitations on minors. This is designed to eliminate the practice of filing a claim and dismissing it, and then repeating the process, on multiple occasions before a minor reaches majority. The substitute protects minors by requiring the court to appoint an experienced trial attorney to serve as ad litem for the child if an effort is made to obtain a "not on the merits" disposition of the entire case. SUMMARY OF COMMITTEE ACTION H.B. 971 was considered by the Civil Practices Committee in a public hearing on March 22-23, 1995. The following people testified in support of the bill: Bob Glasgow, representing the Texas Medical Association (T.M.A.); Mike Hull, representing the T.M.A.; Michael Wallach, representing himself and the T.M.A.; Harold Freeman, representing the T.M.A.; Greg Hooser, representing the Texas College of Emergency Physicians; Dave Kittrell, M.D., representing himself, the T.M.A. and the Texas Association of Obstetricians and Gynecologists; Charles Neblett, M.D., representing himself and the T.M.A.; Gustavo Ramos, M.D., representing himself, the T.M.A. and the Texas Association of Neurological Surgeons; Michael Bullen, M.D., representing himself and the T.M.A.; H. David Cook, M.D., representing himself and the T.M.A.; James Anderson Allums, representing himself and the T.M.A.; Charles Bailey, representing the Texas Hospital Association; and C. Dean Davis, representing the Texas Hospital Association. The following individuals testified in opposition to the bill: Tommy Jacks, attorney, representing himself; and Bill Whitehurst, attorney, representing himself and the Texas Trial Lawyers Association. The following people testified neutrally on the bill: David C. Warner, representing himself and the Texas Hospital Association; and Larry L. Tonn, representing himself. The bill was left pending. H.B. 971 was considered by the Civil Practices Committee in a public hearing on March 29, 1995. The committee considered a complete substitute for the bill. The substitute was adopted without objection. The bill was reported favorably as substituted with the recommendation that it do pass and be printed, by a record vote of six ayes, zero nays, zero present not voting, and three absent.