BILL ANALYSIS C.S.H.B. 971 By: Hunter (Sibley) Economic Development 04-28-95 Senate 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 corroboration 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 misrepresentation 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 again against third parties such as insurance companies. Prejudgment interest on costs accruing after the date of judgment is also allowed. PURPOSE As proposed, C.S.H.B. 971 amends the responsibilities of the claimant and the defendant in health care liability claims; requires prejudgment interest in health care liability claims to be awarded in a certain manner; establishes the time at which a period of limitations begins in a suit filed on behalf of a minor. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 13.01, Article 4590i, V.T.C.S. (Medical Liability and Insurance Improvement Act of Texas), as follows: Sec. 13.01. New heading: COST BOND, DEPOSIT, AND EXPERT REPORT. (a) Requires a claimant in a health care liability claim not later than the 90th day after the date the claim is filed, to: (1) file a separate cost bond in the amount of $5,000 for each physician or health care provider named by the claimant in the action; (2) place cash in an escrow account in the amount of $5,000 for each physician or health care provider named in the action; or (3) file an expert report for each physician or health care provider with respect to whom a cost bond has not been filed and cash in lieu of the bond has not been deposited under Subdivision (1) or (2). Deletes language requiring the plaintiff or plaintiff's attorney to file, within 90 days of when the action commenced, an affidavit attesting to negligence on the part of the physician or health care provider. (b) Requires the court, if as to a defendant physician or health care provider, an expert report, cost bond, or cash in lieu of the bond has not been filed or deposited within the period specified by Subsection (a) or (h) of this section, to enter an order that requires the filing of a $7,500 cost bond with respect to the physician or health care provider not later than 21st day after the date of the order; and to dismiss the action for want of prosecution with respect to the physician or health care provider subject to reinstatement in accordance with the applicable rules of civil procedure and Subsection (c) if the claimant does not comply with the order. Deletes existing Subsection (b) requiring the plaintiff or the plaintiff's attorney to be deemed in compliance if the plaintiff posts bond with a surety or other equivalent security. (c) Requires the claimant to pay court costs incurred by the defendant before the dismissal and file a $7,500 cost bond for each defendant physician or health care provider before a claim that has been dismissed under Subsection (b)(2) of the section may be reinstated. Deletes existing Subsection (c) requiring the amount of the required security to be increased by the court if the plaintiff fails to meet certain requirements. (d) Requires the claimant, by the 180th day after the date on which a health care liability is filed or the last day of any extended period, to furnish to counsel for each physician or health care provider one or more expert reports, with a curriculum vitae of each expert listed in the report; or voluntarily nonsuit the action against the physician or health care provider. Deletes existing Subsection (d) authorizing the court to extend the amount of time a plaintiff has to comply with Subsection (a) or (b). (e) Requires the court, on the motion of the affected physician or health care provider if a claimant has failed, for any defendant physician or health care provider, to comply with Subsection (d) within the required time, to enter an order awarding as sanctions against the claimant or claimant's attorney including: the attorney's fees and court costs incurred by the defendant; the forfeiture of any cost bond respecting the claimant's claim against the defendant to the extent necessary to pay the award; and the dismissal of the action of the claimant against the defendant with prejudice to the claim's refiling. Deletes existing Subsection (e) prohibiting the allowance of the affidavit unless the expert who supplied the opinion is designated as an expert witness by the plaintiff. (f) Authorizes the court, for good cause shown after motion and hearing, to extend any time period specified in Subsection (d) for an additional 30 days. Authorizes only one extension to be granted. (g) Requires the court to grant a grace period of 30 days to permit the claimant to comply with that subsection if a claimant has failed to comply with a deadline established by Subsection (d) and after a hearing the court finds that the failure was not intentional or a result of conscious indifference but was the result of an accident or mistake. Requires a motion by a claimant for relief under this subsection to be considered timely if it is filed before any hearing on a motion by a defendant under Subsection (e). (h) Authorizes the affected parties to agree to extend any time period specified in Subsection (a) or (d). Provides that an agreement under this subsection is binding. Requires the agreement to be honored by the court if signed by the affected parties or their counsel and filed with the court. (i) Authorizes a claimant to satisfy any requirement of this section for filing an expert report by filing reports of separate experts regarding different physicians or health care providers or regarding different issues arising from the conduct of a physician or health care provider, such as issues of liability and causation. Prohibits anything in this section from being construed to mean that a single expert must address all liability and causation issues with respect to all physicians or health care providers or with respect to both liability and causation issues for a physician or health care provider. (j) Prohibits anything in this section from being construed to require the filing of an expert report regarding any issue other than an issue relating to liability or causation. (k) Provides that an expert report filed under this section is not admissible in evidence by a defendant; shall not be used in a deposition, trial, or other proceeding; and shall not be referred to a defendant during the course of action for any purpose. (l) Requires the court to grant a motion challenging the adequacy of an expert report 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). (m) Sets forth provisions contingent on the claimant's compliance with the requirements of Subsection (d). (1) Requires any cost bond filed or cash deposited in an escrow account by the claimant under this section to be released. (2) Provides that the claimant, the claimant's counsel, and any surety have no liability on the cost bond or cash deposit. (3) Prohibits an execution from being issued on the cost bond or cash deposit. (n) Requires the claimant to file a $7,500 cost bond for each previously nonsuited physician or health care provider at the time of the filing of the health care liability claim if a claimant nonsuits a health care liability claim against a physician or health care provider before filing a cost bond and seeks to refile the same or a similar health care liability claim against the physician or health care provider. Requires the court to order the filing of the cost bond if the claimant fails to file the $7,500 cost bond for each physician or health care provider. Requires the claimant to pay the movant reasonable attorney's fees incurred in obtaining the relief. (o) Authorizes a claimant who is proceeding without an attorney and who is unable to afford a cost bond or cash deposit to file an affidavit in the same form required for an affidavit in lieu of security for costs under the Texas Rules for Civil Procedure. (p) Provides that in the event of a 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 supreme court from adopting or amending rules in conflict with this section. Prohibits the district courts and statutory courts in a county from adopting local rules in conflict with this section. (r) Defines "affected parties," "claim," "claimant," "defendant," "expert," and "expert report." SECTION 2. Amends Section 14.01, Article 4590i, V.T.C.S., as follows: Sec. 14.01. QUALIFICATION OF EXPERT WITNESS IN SUIT AGAINST PHYSICIAN. (a) Authorizes a person to qualify as an expert witness on the issue of whether the physician departed from accepted medical standards of medical care only if the person is a physician who is practicing medicine at the time of testimony or was practicing medicine at the time the claim arose and is qualified on the basis of training or experience to offer an expert opinion regarding those accepted standards of medical care, among other requirements. Makes nonsubstantive changes. Deletes existing Subsection (2) requiring the court to determine if a person qualifies as an expert witness. (b) Defines "practicing medicine" and "medical practice." (c) Requires the court, in determining whether a witness is qualified on the basis of training or experience, to consider whether, at the time the claim arose or at the time the testimony was given, the witness is board certified or has other substantial training or experience in an area of medical practice relevant to the claim; and is actively practicing medicine or rendering medical care services relevant to the claim. (d) Requires the court to apply the criteria in Subsections (a), (b), and (c) in determining whether an expert is qualified to enter expert testimony on the issue of whether the physician departed from accepted medical standards of medical care. Authorizes the court to depart from those criteria if, under the circumstances, the court determines that there is good reason to admit the expert's testimony. Requires the court to state on the record the reason for admitting the testimony if the court departs from the criteria. (e) Requires a pretrial objection to the qualifications of a witness to be made not later than the later of the 21st day after the date the objecting party receives a copy of the witness's curriculum vitae or the date of the witness's deposition. Provides that if the circumstances arise after the date on which the objection must be made that could not have been reasonably anticipated by a party before that date and that date the party believes in good faith provide a basis for an objection to a witness's qualifications, and if an objection was not made previously, this subsection does not prevent the party from making an objection as soon as practicable under the circumstances. Requires the court to conduct a hearing to determine whether the witness is qualified as soon as practicable after the filing of an objection and, if possible, before trial. Requires the hearing to be conducted outside the presence of the jury if the objecting party is unable to object in time for the hearing to be conducted before the trial. Provides that this subsection does not prevent a party from examining or cross-examining a witness at trial about the witness's qualifications. (f) Provides that this section does not prevent a physician who is a defendant from qualifying as an expert. SECTION 3. Amends Article 4590i, V.T.C.S., by adding Subchapter P, as follows: SUBCHAPTER P. PREJUDGMENT INTEREST Sec. 16.01. APPLICATION OF OTHER LAW. Requires prejudgment interest in a health care liability claim to be awarded in accordance with this subchapter. Sec. 16.02. COMPUTATION OF PREJUDGMENT INTERESTS. (a) Prohibits prejudgment interests from being charged with respect to a defendant physician or health care provider who has settled a claim before the 181st day after the date notice of the claim was first mailed to the physician or health care provider. (b) Requires the judgment in a health care liability claim that is not settled within the period specified in Subsection (a) to include prejudgment interest on past damages found by the trier of fact. Prohibits the judgment from including prejudgment interest on future damages found by the trier of fact. (c) Requires prejudgment interest allowed under this subchapter to be computed in accordance with Section 6(g), Article 5069-1.05, V.T.C.S., for a period beginning on the date of the injury and ending on the date before the date the judgment is signed. (d) Defines "past damages" and "future damages." SECTION 4. Effective date: September 1, 1995. SECTION 5. Makes application of this Act prospective except as provided by Section 6 of this Act. SECTION 6. Makes application of Sections 13.01 and 14.01, Article 4590i, V.T.C.S., prospective. SECTION 7. Emergency clause.