Malpractice Risk and Cost Are Significantly Reduced after Tort Reform

Transcription

1 Malpractice Risk and Cost Are Significantly Reduced after Tort Reform Ronald M Stewart, MD, FACS, Kathy Geoghegan, BSN, John G Myers, MD, FACS, Kenneth R Sirinek, MD, PhD, FACS, Michael G Corneille, MD, FACS, Deborah Mueller, MD, FACS, Daniel L Dent, MD, FACS, Steven E Wolf, MD, FACS, Basil A Pruitt Jr, MD, FACS BACKGROUND: STUDY DESIGN: Rising medical malpractice premiums have reached a crisis point in many areas of the United States. In 2003 the Texas legislature passed a comprehensive package of tort reform laws that included a cap at $250,000 on noneconomic damages in most medical malpractice cases. We hypothesized that tort reform laws significantly reduce the risk of malpractice lawsuit in an academic medical center. We compared malpractice prevalence, incidence, and liability costs before and after comprehensive state tort reform measures were implemented. Two prospectively maintained institutional databases were used to calculate and characterize malpractice risk: a surgical operation database and a risk management and malpractice database. Risk groups were divided into pretort reform (1992 to 2004) and post-tort reform groups (2004 to the present). Operative procedures were included for elective, urgent, and emergency general surgery procedures. RESULTS: During the study period, 98,513 general surgical procedures were performed. A total of 28 lawsuits (25 pre-reform, 3 postreform) were filed, naming general surgery faculty or residents. The prevalence of lawsuits filed/100,000 procedures performed is as follows: before reform, 40 lawsuits/100,000 procedures, and after reform, 8 lawsuits/100,000 procedures (p 0.01, relative risk 0.21 [95% CI to 0.62]). Virtually all of the liability and defense cost was in the pretort reform period: $595,000/year versus $515/year in the postreform group (p 0.01). CONCLUSIONS: Implementation of comprehensive tort reform in Texas was associated with a significant decrease in the prevalence and cost of surgical malpractice lawsuits at one academic medical center. (J Am Coll Surg 2011;212: by the American College of Surgeons) Rising medical malpractice premiums have reached a crisis point in many areas of the United States. 1 The economic and emotional costs of malpractice claims are driving physicians and surgeons away from high risk specialties and high risk litigious environments. 2 In 2003, the Texas legislature passed a comprehensive package of tort reform laws that included a cap on noneconomic damages in most medical malpractice cases at $250,000 (Appendix 1, available online). The voters in Texas subsequently approved a state constitutional amendment supporting this legislation (Appendix 2, available online). Disclosure Information: Nothing to disclose. Presented at Southern Surgical Association 122nd Annual Meeting, Palm Beach, FL, December Received December 15, 2010; Accepted December 15, From the Department of Surgery, University of Texas Health Science Center at San Antonio, and University Hospital, San Antonio, TX. Correspondence address: Ronald M Stewart, MD, Department of Surgery, University of Texas Health Science Center at San Antonio, 7703 Floyd Curl Dr, San Antonio, TX stewartr@uthscsa.edu We have prospectively maintained a database of malpractice claimsand lawsuits in our institution, and previously reported the risk of malpractice in general surgical and trauma patients. Using these data we were able to compare malpractice risk and cost at our institution before and after tort reform in Texas. 3,4 We hypothesized that the enactment of Texas tort reform would significantly reduce the risk of malpractice lawsuits in an academic medical center. To test this hypothesis, we compared the malpractice lawsuit prevalence, risk, and liability costs before and after comprehensive state tort reform measures were implemented. METHODS Study setting The study was performed in a single, self-insured academic medical center consisting of 2 major components: The University of Texas Health Science Center at San Antonio (UTHSCSA); and University Hospital, San Antonio, TX (of the Bexar County Hospital District). The medical 2011 by the American College of Surgeons ISSN /11/$36.00 Published by Elsevier Inc. 463 doi: /j.jamcollsurg

2 464 Stewart et al Tort Reform and Malpractice Risk J Am Coll Surg school faculty and resident physicians were the sole physician care providers for University Hospital during the study period. The UTHSCSA is governed by the University of Texas system. As a part of this system, the University participates in a self-insured malpractice plan and maintains its own risk management office, which includes legal counsel, a full time director, and administrative support. UTHSCSA employs a full range of clinical faculty who provide comprehensive patient care at University Hospital. The Department of Surgery exists within the School of Medicine at UTHSCSA. Over the course of the study period, the Department of Surgery consisted of the following 10 divisions: general and laparoendoscopic surgery, trauma and emergency surgery, surgical oncology, vascular surgery, plastic surgery, emergency medicine, transplant, cardiothoracic surgery, neurosurgery, and urology. For the purposes of this study, general surgery is defined as the faculty in the first 4 of these divisions. University Hospital is a 604-bed, county tax-supported hospital, with governance separate from that of the medical school. The hospital functions as a tertiary referral center for patients with a wide range of medical conditions. It is also the primary safety-net hospital for the uninsured of Bexar County. University Hospital, an American College of Surgeons-verified Level I trauma center, serves as the lead trauma center for 22 counties in southwest Texas. The primary catchment area for University Hospital (Trauma Service Area P) encompasses a 26,904-square-mile region with 2.1 million residents. The secondary catchment area includes Trauma Service Areas S, T, U, and V, extending from Laredo to Brownsville. This secondary catchment area includes an additional 26,102 square miles and an additional 2 million people. Medical records data source The UTHSCSA Risk Management Office maintains records on all reported adverse medical events, medical malpractice claims, and medical malpractice lawsuits. A record was considered closed if the case had been settled, a judgment had been rendered, or the statute of limitations had expired. The office maintains pertinent medical records and/or medical record summaries, transcripts of depositions, expert witness testimony or consultation, court records, and minutes of the UTHSCSA Risk Management Committee meetings. In addition to these hard files, the office maintains an electronic database of pertinent aspects of each file extending back to A record of all defense costs (attorney and expert witness fees) and payment to plaintiffs is maintained. These records are prospectively maintained and were retrospectively reviewed for this study. The Department of Surgery at UTHSCSA maintains a computerized operative database of all procedures performed at University Hospital. This database has been continuously maintained since 1979 and was previously described in the literature. 5,6 The information in the database is completed at the time of each operative procedure and serves as a computergenerated operative note. This database captures every operation performed by the general surgery services at University Hospital. Since 1999, the operative database also has included minor procedures such as tube thoracostomy, done by general surgeons outside of the operating room. The operative database has 179 separate fields and since 1998, has included a narrative text of the operation. This computerized database was used to obtain the patient cohort. Study methods The study period was from July 1, 1992 until June 30, The risk management database was queried for all malpractice claims and lawsuits filed during this period. One case was still open and is included, but no record review was performed; however, because a lawsuit had been filed in the study period, this case is numerically included in the data. All claims involving surgeons were reviewed. Lawsuits involving general surgery residents and faculty were used in the analysis of prevalence, incidence, and risk. The record review included the date of occurrence, surgeon, patient age, sex, employment status, education level, occupation, diagnosis, outcome, presence of disability, procedures performed, the plaintiff s claim of malpractice, internal review classification, root cause leading to the claim, total paid liability, and total legal expenses. The surgical operative database was queried for all surgical cases during the study time period. All procedures performed by either the elective or emergency/trauma general surgical services were included. Tube thoracostomy, percutaneous endoscopic gastrostomy, and dilatational tracheostomy were included as procedures. Malpractice suit prevalence rate for general surgery was defined as the number of lawsuits filed/ number of procedures during the time period (lawsuits/100,000 procedures). Malpractice incidence rate was calculated by dividing the total number of filed lawsuits by the total number of procedures by the number of years (lawsuits/100,000 procedures/year). The general surgery population was used as the primary study group because these surgeons used the surgical operative database for the entire study period. Other surgical specialists did not use this system for a part or all of the study period, so the total denominator data for nongeneral surgery patients was unknown, making calculation of prevalence, incidence, and risk in these subsets impossible. However, to make certain that the trends were consistent

3 Vol. 212, No. 4, April 2011 Stewart et al Tort Reform and Malpractice Risk 465 Figure 1. Prevalence of general surgery malpractice lawsuits per 100,000 procedures performed before and after tort reform. across the entire Department of Surgery and to provide a more global description, all lawsuits in the Department of Surgery were analyzed without denominator data, and a separate additional comparison was made contrasting the 6 years before tort reform to the 6 years immediately after tort reform for the entire department. Student t-test, odds ratio, chi-square with Yates correction, and Fisher s exact test were calculated using MedCalc for Windows, version 7.5 (MedCalc Software) and Microsoft Excel for Windows XP. RESULTS During the study period, 98,513 general surgical procedures were performed. A total of 28 lawsuits (25 pre-reform, 3 postreform) were served to general surgery faculty or residents. During the entire period, 9 were dismissed. Four had summary judgments to the defense. Thirteen lawsuits resulted in a settlement with payment going to the plaintiffs. One case went to trial with judgment to the defendants, and one case is Figure 3. Comparison of all litigation and defense legal expenses before and after tort reform. All costs, regardless of whether a lawsuit was filed or not, are included. Figure 2. A summary of all malpractice lawsuits filed against Department of Surgery faculty and residents from 1976 to 2010, divided into 7-year intervals. still open. Summarizing, of the 28 cases in general surgery, 13 were closed in favor of the plaintiff (46%); total paid liability was $5.56 million. Total legal defense costs were $1.59 million. Two of the lawsuits in the postreform group were dismissed and the third is still open. The prevalence per 100,000 procedures performed is as follows: Before reform, 25 lawsuits/62,350 operations a prevalence of 40 lawsuits/100,000 procedures. After reform, 3 lawsuits/36,163 procedures a prevalence of 8 lawsuits/100,000 procedures (p 0.01) (Fig. 1). The relative risk of being sued after tort reform compared with that before tort reform is 0.21 (95% CI to 0.69). The incidence of malpractice lawsuits before tort reform was 3.3 lawsuits/100,000/year. After tort reform, the malpractice lawsuit incidence was 1.3 lawsuits/100,000/year. In the general surgery group (including settlements), virtually all of the liability and defense cost was in the pretort reform period: $7.15 million, or approximately $595,000/year versus $3,345, or approximately $515/year in the postreform group (p 0.01). In the Department of Surgery as a whole (all 10 divisions), 61 lawsuits were served over the entire study period: 55 before tort reform and 6 after tort reform (Fig. 2). Total Department of Surgery (10 divisions) malpractice liability and legal expenses over the 6 years before, and the 6½ years after tort reform are displayed in Figure 3and are normalized to 2010 dollars. Figure 3includes all paid settlements and legal expenses at the time of payment, regardless of whether a lawsuit was filed or not, so this figure represents total cost to the entire Department of Surgery. DISCUSSION Key findings Implementation of comprehensive tort reform in Texas was associated with almost a 5-fold decrease in the risk of a malpractice lawsuit being filed. This was, in turn, associ-

4 466 Stewart et al Tort Reform and Malpractice Risk J Am Coll Surg ated with a significant decrease in the cost of medical malpractice lawsuits. This is the first report of which we are aware that specifically examines the actual risk reduction (number of lawsuits/number of procedures performed) after tort reform. Limitations These data have limitations that should be considered when interpreting the results of this work. This study is localized to a single hospital with a single group of surgeons and patients. There are local and regional differences with respect to the risk of medical malpractice. For these reasons, our data may not be generalizable to other surgical specialties or regions. In addition, there are provisions in the comprehensive Texas tort reform statutes that limit liability for state institutions, so it is conceivable that the group studied may not be representative of the typical Texas surgical group. But our experience mirrors previous published anecdotal reports from Texas. 7 Malpractice lawsuit is a rare event, and with only 3 malpractice lawsuits in the general surgery group after tort reform, even 1 or 2 pending lawsuits might influence the calculations of incidence and prevalence in the post-tort reform period. The temporal decrease in lawsuit prevalence and cost immediately after tort reform was dramatic (and we believe causative); however, there have been substantial changes in the clinical practice over the entire study period including greater supervision of residents, system improvements in care, duty hours changes, and greater direct patient care with faculty. We do not believe these changes explain such a dramatic temporal change in malpractice lawsuit prevalence and risk, but these measures could conceivably have decreased our malpractice risk exposure by improving quality and patient service. These data deal only with malpractice claims and lawsuits. Locally, we believe we have seen an increase in the frequency of patients filing complaints against physicians to the Texas Medical Board. Before passage of tort reform, our risk management office did not maintain a database of faculty being investigated by the Texas Medical Board; however, we believe this was a very rare event in our practice before tort reform. Such reporting is potentially damaging, costly, and, at least for the physician, probably represents an unintended negative consequence of malpractice tort reform. Potential benefits of tort reform for the patient Medical malpractice tort reform is generally viewed as beneficial for the surgeon and other health care practitioners; however, it is directly or indirectly beneficial to the patient in several key areas: improved access to care, improved quality of care, and decreased cost of care. With respect to access, tort reform reduces a major disincentive for the continued practice of surgery in a given geographic or specialty area, potentially increasing access to care. Removing or reducing this disincentive to practice is particularly important given the current and looming shortage of surgeons, particularly in general surgery. From 2003 to 2009, the Texas population increased 12% from 22,118,509 to 24,782,302; during the same time period, the number of licensed physicians practicing in the state increased 24%, from 38,035 to 47,084. 8,9 Post-tort reform, physician practice in the state grew at double the rate of the Texas population. Quality of care is potentially improved because tort reform removes perceived barriers to those who are committed to performance improvement. Studdert and colleagues 2 cited a deep seated tension between the malpractice system and the goals and initiatives of the patient-safety movement. In matters of disclosure and reporting, transparency is a key initiative of the patient safety movement. In order to correct errors, one must be free to discuss them frankly and openly with all care providers in the system. Our previous study 4 lends direct support to the notion that internal transparency with respect to discussion of errors does not lead to increased risk of lawsuit. Surgeons have led the way with respect to a candid appraisal of errors and complications; however, many surgeons still resist open discussion of errors because of a fear of increased malpractice risk. This is clearly exacerbated by the modern malpractice crisis. 1 We previously documented that such discussions are not associated with a risk of lawsuit, but many still believe this should be limited to a closed discussion among peers. A closed approach to process improvement fails on 3 fronts. First, system problems are not easily corrected. Second, other disciplines that have a stake in the problem are excluded. Third, the closed peer review process tends to create a culture of secrecy and suspicion among those excluded from the process. If tort reform reduces the risk and cost of litigation, there is less need for a closed process. Indeed, the data included in this report document less risk and cost, and, optimistically, provide some objective support for a more open process. And last, a less risky tort system potentially further reduces the perception barrier that certain high-risk specialties have an undue risk of malpractice litigation. 4,10 An additional goal of tort reform is to reduce the overall cost of health care, which is an essential, if not the primary, driving force behind health care reform. Conservatively, tort reform reduced the total Department of Surgery

5 Vol. 212, No. 4, April 2011 Stewart et al Discussion 467 litigation-related cost by approximately two-thirds ($6.4 million in the 6 years before tort reform and $2.3 million in the 6 years after tort reform). In the general surgery group, total litigation cost was reduced by an order of magnitude ($595,000/year vs $515/year). These data do not address cost savings related to the practice of medicine; however, tort reform diminishes an incentive for what many have termed defensive medicine. Tort reform is not without critics among physicians and surgeons. Hsieh, Tan, and Meng, urologists practicing in Texas, reviewed urologic malpractice claims by state using the LexisNexis database. 11 They compared states with and without malpractice reforms and concluded that, there is little evidence that decreased physician premiums and improved access to care have been achieved via tort reform. The data from our current study and other physician data from Texas do not seem to support their conclusion. Studdert and colleagues 12 reviewed a sample of closed malpractice claims from 5 major insurance carriers. The authors stated, Frivolous litigation is in the bull s-eye of the current tort-reform efforts of state and federal legislators... Our findings suggest that moves to curb frivolous litigation, if successful, will have a relatively limited effect on the caseload and costs of litigation. The vast majority of resources go toward resolving and paying claims that involve errors. This specific conclusion is clearly not supported by our data (lawsuits and cost both significantly declined),and indeed, is not supported by the authors own data. They state, The combination of defense costs and standard contingency fees charged by plaintiffs attorneys...brought the total costs of litigating the claims in our sample to 54 percent of the compensation paid to plaintiffs. Not the vast majority, but as their data demonstrated, the majority of resources go to someone other than the plaintiff. For the majority of patients, we believe comprehensive tort reform establishes, at least, a framework for improvements in access, quality, and cost. Tort reform in Texas was associated with a significant reduction in the risk of surgical malpractice lawsuits in one academic medical center, and also was associated with a major decrease in the cost of surgical malpractice lawsuits. This is the first report of which we are aware that specifically examines an actual reduction of risk (number of lawsuits/number of procedures performed) after tort reform. REFERENCES 1. Mello MM, Studdert DM, Brennan TA. The new medical malpractice crisis. N Engl J Med 2003;348: Studdert DM, Mello MM, Brennan TA. Medical malpractice. N Engl J Med 2004;350: Stewart RM, Johnston J, Geoghegan K, et al. Trauma surgery malpractice risk: perception versus reality. Ann Surg 2005;241: Stewart RM, Corneille MG, Johnston J, et al. Transparent and open discussion of errors does not increase malpractice risk in trauma patients. Ann Surg 2006;243: Stewart RM, Page CP, Brender J, et al. The incidence and risk of early postoperative small bowel obstruction. A cohort study. Am J Surg 1987;154: Pittman-Waller VA, Myers JG, Stewart RM, et al. Appendicitis: why so complicated? Analysis of 5755 consecutive appendectomies. Am Surg 2000;66: Flood M. Malpractice work shrinks after law tightens standards. Houston Chronicle 2007; August 13, Hoque N and the Population Estimates and Projections Program. Texas State Data Center 2003 and 2009 Total Population Estimates for Texas Places. Available at: tpepp/txpopest.php. Accessed January 14, Texas Medical Board. Available at agency/statistics/demo/docs/docdemo.php. Accessed February 25, McGwin G, Wilson SL, Bailes J, et al. Malpractice risk: trauma care versus other surgical and medical specialties. J Trauma- Injury Infec Crit Care 2008;64: Hsieh MH, Tan AG, Meng MV. Medical malpractice in American urology: 22-year national review of the impact of caps and implications for contemporary practice. J Urol 2008;179: Studdert DM, Mello MM, Phil M, et al. Claims, errors, and compensation payments in medical malpractice litigation. N Engl J Med 2006;354: Discussion DR BENJAMIN LI (Shreveport, LA): I congratulate Dr Stewart and his group for an excellent presentation. this is a concise study that examines the impact of tort reform and cap on noneconomic damages on 2 outcomes: the incidence of malpractice suits filed, and the cost of liability and legal expenses in a single university-based general surgical practice. This deceivingly simple and highly potent study convincingly demonstrates that, within the confines defined here, tort reform significantly reduced the risk of malpractice suits and the cost of medical malpractice liability and legal expenses. The cost savings here do not even measure other, more indirect costs of malpractice, such as the practice of defensive medicine, increased costs of recruiting surgeons into high-risk medical malpractice environments, and loss of opportunities to correct system error, due to inhibition of open discussion of medical errors for fear of medical malpractice. I have 2 questions for the authors and would appreciate their insight. You chose to measure a clear-cut outcome: Liability cost and legal expense. A poignant outcome for patient care improvement is medical error reduction. Did you measure the actual incidence of medical errors and whether tort reform either negatively or positively affects medical error rate? The second question is, other covariates may have an impact on the

6 467.e1 Stewart et al Discussion J Am Coll Surg Appendix 1 The actual text of the legislation passed in H.B. No. 4 AN ACT Relating to reform of certain procedures and remedies in civil actions. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: ARTICLE 1. CLASS ACTIONS SECTION Subtitle B, Title 2, Civil Practice and Remedies Code, is amended by adding Chapter 26 to read as follows: CHAPTER 26. CLASS ACTIONS SUBCHAPTER A. SUPREME COURT RULES Sec ADOPTION OF RULES BY SUPREME COURT. (a) The supreme court shall adopt rules to provide for the fair and efficient resolution of class actions. (b) The supreme court shall adopt rules under this chapter on or before December 31, Sec MANDATORY GUIDELINES. Rules adopted under Section must comply with the mandatory guidelines established by this chapter. Sec ATTORNEY S FEES. (a) If an award of attorney s fees is available under applicable substantive law, the rules adopted under this chapter must provide that the trial court shall use the Lodestar method to calculate the amount of attorney s fees to be awarded class counsel. The rules may give the trial court discretion to increase or decrease the fee award calculated by using the Lodestar method by no more than four times based on specified factors. (b) Rules adopted under this chapter must provide that in a class action, if any portion of the benefits recovered for the class are in the form of coupons or other noncash common benefits, the attorney s fees awarded in the action must be in cash and noncash amounts in the same proportion as the recovery for the class. [Sections reserved for expansion] SUBCHAPTER B. CLASS ACTIONS INVOLVING JURISDICTION OF STATE AGENCY Sec STATE AGENCY WITH EXCLUSIVE OR PRIMARY JURISDICTION. (a) Before hearing or deciding a motion to certify a class action, a trial court must hear and rule on all pending pleas to the jurisdiction asserting that an agency of this state has exclusive or primary jurisdiction of the action or a part of the action, or asserting that a party has failed to exhaust administrative remedies. The court s ruling must be reflected in a written order. (b) If a plea to the jurisdiction described by Subsection (a) is denied and a class is subsequently certified, a person may, as part of an appeal of the order certifying the class action, obtain appellate review of the order denying the plea to the jurisdiction. (c) This section does not alter or abrogate a person s right to appeal or pursue an original proceeding in an appellate court in regard to a trial court s order granting or denying a plea to the jurisdiction if the right exists under statutory or common law in effect at the time review is sought. SECTION Section , Government Code, is amended by amending Subsections (b) and (d) and adding Subsection (e) to read as follows: (b) Except as provided by Subsection (c) or (d), a judgment of a court of appeals is conclusive on the law and facts, and a petition for review is not allowed to the supreme court, in the following civil cases: (1) a case appealed from a county court or from a district court when, under the constitution, a county court would have had original or appellate jurisdiction of the case, with the exception of a probate matter or a case involving state revenue laws or the validity or construction of a statute; (2) a case of a contested election other than a contested election for a state officer, with the exception of a case where the validity of a statute is questioned by the decision; (3) an appeal from an interlocutory order appointing a receiver or trustee or from other interlocutory appeals that are allowed by law; (4) an appeal from an order or judgment in a suit in which a temporary injunction has been granted or refused or when a motion to dissolve has been granted or overruled; and (5) all other cases except the cases where appellate jurisdiction is given to the supreme court and is not made final in the courts of appeals. (d) A petition for review is allowed to the supreme court for an appeal from an interlocutory order described by Section (a)(3) or (6), Civil Practice and Remedies Code. (e) For purposes of Subsection (c), one court holds differently from another when there is inconsistency in their respective decisions that should be clarified to

7 Vol. 212, No. 4, April 2011 Stewart et al Discussion 467.e2 remove unnecessary uncertainty in the law and unfairness to litigants. SECTION Sections (a), (b), and (c), Civil Practice and Remedies Code, are amended to read as follows: (a) A person may appeal from an interlocutory order of a district court, county court at law, or county court that: (1) appoints a receiver or trustee; (2) overrules a motion to vacate an order that appoints a receiver or trustee; (3) certifies or refuses to certify a class in a suit brought under Rule 42 of the Texas Rules of Civil Procedure; (4) grants or refuses a temporary injunction or grants or overrules a motion to dissolve a temporary injunction as provided by Chapter 65; (5) denies a motion for summary judgment that is based on an assertion of immunity by an individual who is an officer or employee of the state or a political subdivision of the state; (6) denies a motion for summary judgment that is based in whole or in part upon a claim against or defense by a member of the electronic or print media, acting in such capacity, or a person whose communication appears in or is published by the electronic or print media, arising under the free speech or free press clause of the First Amendment to the United States Constitution, or Article I, Section 8, of the Texas Constitution, or Chapter 73; (7) grants or denies the special appearance of a defendant under Rule 120a, Texas Rules of Civil Procedure, except in a suit brought under the Family Code; (8) grants or denies a plea to the jurisdiction by a governmental unit as that term is defined in Section ; (9) denies all or part of the relief sought by a motion under Section (b), except that an appeal may not be taken from an order granting an extension under Section ; or (10) grants relief sought by a motion under Section (l). (b) An interlocutory appeal under Subsection (a), other than an appeal under Subsection (a)(4), stays the commencement of a trial in the trial court pending resolution of the appeal. An interlocutory appeal under Subsection (a)(3), (5), or (8) also stays all other proceedings in the trial court pending resolution of that appeal. (c) A denial of a motion for summary judgment, special appearance, or plea to the jurisdiction described by Subsection (a)(5), (7), or (8) is not subject to the automatic stay under Subsection (b) unless the motion, special appearance, or plea to the jurisdiction is filed and requested for submission or hearing before the trial court not later than the later of: (1) a date set by the trial court in a scheduling order entered under the Texas Rules of Civil Procedure; or (2) the 180th day after the date the defendant files: (A) the original answer; (B) the first other responsive pleading to the plaintiff s petition; or (C) if the plaintiff files an amended pleading that alleges a new cause of action against the defendant and the defendant is able to raise a defense to the new cause of action under Subsection (a)(5), (7), or (8), the responsive pleading that raises that defense. SECTION Section , Government Code, is amended by adding Subsection (e) to read as follows: (e) For purposes of Subsection (a)(2), one court holds differently from another when there is inconsistency in their respective decisions that should be clarified to remove unnecessary uncertainty in the law and unfairness to litigants. SECTION (a) The changes in law made by Section 1.02 of this Act to Section (d), Government Code, apply to any case in which a petition for review to the Supreme Court of Texas is filed on or after the effective date of this Act. b) The changes in law made by Section 1.03 of this Act to Sections (b) and (c), Civil Practice and Remedies Code, apply to any case in which an appeal allowed by Section (a), Civil Practice and Remedies Code, as amended by this Act, is taken and the notice of appeal is filed on or after the effective date of this Act. ARTICLE 2. SETTLEMENT SECTION Subtitle C, Title 2, Civil Practice and Remedies Code, is amended by adding Chapter 42 to read as follows: CHAPTER 42. SETTLEMENT Sec DEFINITIONS. In this chapter: (1) Claim means a request, including a counterclaim, cross-claim, or third-party claim, to recover monetary damages.

8 467.e3 Stewart et al Discussion J Am Coll Surg (2) Claimant means a person making a claim. (3) Defendant means a person from whom a claimant seeks recovery on a claim, including a counterdefendant, cross-defendant, or third-party defendant. (4) Governmental unit means the state, a unit of state government, or a political subdivision of this state. (5) Litigation costs means money actually spent and obligations actually incurred that are directly related to the case in which a settlement offer is made. The term includes: (A) court costs; (B) reasonable fees for not more than two testifying expert witnesses; and (C) reasonable attorney s fees. (6) Settlement offer means an offer to settle or compromise a claim made in compliance with this chapter. Sec APPLICABILITY AND EFFECT. (a) The settlement procedures provided in this chapter apply only to claims for monetary relief. (b) This chapter does not apply to: (1) a class action; (2) a shareholder s derivative action; (3) an action by or against a governmental unit; (4) an action brought under the Family Code; (5) an action to collect workers compensation benefits under Subtitle A, Title 5, Labor Code; or (6) an action filed in a justice of the peace court. (c) This chapter does not apply until a defendant files a declaration that the settlement procedure allowed by this chapter is available in the action. If there is more than one defendant, the settlement procedure allowed by this chapter is available only in relation to the defendant that filed the declaration and to the parties that make or receive offers of settlement in relation to that defendant. (d) This chapter does not limit or affect the ability of any person to: (1) make an offer to settle or compromise a claim that does not comply with this chapter; or (2) offer to settle or compromise a claim to which this chapter does not apply. (e) An offer to settle or compromise that is not made under this chapter or an offer to settle or compromise made in an action to which this chapter does not apply does not entitle the offering party to recover litigation costs under this chapter. Sec MAKING SETTLEMENT OFFER. A settlement offer must: (1) be in writing; (2) state that it is made under this chapter; (3) state the terms by which the claims may be settled; (4) state a deadline by which the settlement offer must be accepted; and (5) be served on all parties to whom the settlement offer is made. Sec AWARDING LITIGATION COSTS. (a) If a settlement offer is made and rejected and the judgment to be rendered will be significantly less favorable to the rejecting party than was the settlement offer, the offering party shall recover litigation costs from the rejecting party. (b) A judgment will be significantly less favorable to the rejecting party than is the settlement offer if: (1) the rejecting party is a claimant and the award will be less than 80 percent of the rejected offer; or (2) the rejecting party is a defendant and the award will be more than 120 percent of the rejected offer. (c) The litigation costs that may be recovered by the offering party under this section are limited to those litigation costs incurred by the offering party after the date the rejecting party rejected the settlement offer. (d) The litigation costs that may be awarded under this chapter may not be greater than an amount computed by: (1) determining the sum of: (A) 50 percent of the economic damages to be awarded to the claimant in the judgment; (B) 100 percent of the noneconomic damages to be awarded to the claimant in the judgment; and (C) 100 percent of the exemplary or additional damages to be awarded to the claimant in the judgment; and (2) subtracting from the amount determined under Subdivision (1) the amount of any statutory or contractual liens in connection with the occurrences or incidents giving rise to the claim. (e) If a claimant or defendant is entitled to recover fees and costs under another law, that claimant or defendant may not recover litigation costs in addition to the fees and costs recoverable under the other law.

9 Vol. 212, No. 4, April 2011 Stewart et al Discussion 467.e4 (f) If a claimant or defendant is entitled to recover fees and costs under another law, the court must not include fees and costs incurred by that claimant or defendant after the date of rejection of the settlement offer when calculating the amount of the judgment to be rendered under Subsection (a). (g) If litigation costs are to be awarded against a claimant, those litigation costs shall be awarded to the defendant in the judgment as an offset against the claimant s recovery from that defendant. Sec SUPREME COURT TO MAKE RULES. (a) The supreme court shall promulgate rules implementing this chapter. The rules must be limited to settlement offers made under this chapter. The rules must be in effect on January 1, (b) The rules promulgated by the supreme court must provide: (1) the date by which a defendant or defendants must file the declaration required by Section (c); (2) the date before which a party may not make a settlement offer; (3) the date after which a party may not make a settlement offer; and (4) procedures for: (A) making an initial settlement offer; (B) making successive settlement offers; (C) withdrawing a settlement offer; (D) accepting a settlement offer; (E) rejecting a settlement offer; and (F) modifying the deadline for making, withdrawing, accepting, or rejecting a settlement offer. (c) The rules promulgated by the supreme court must address actions in which there are multiple parties and must provide that if the offering party joins another party or designates a responsible third party after making the settlement offer, the party to whom the settlement offer was made may declare the offer void. (d) The rules promulgated by the supreme court may: (1) designate other actions to which the settlement procedure of this chapter does not apply; and (2) address other matters considered necessary by the supreme court to the implementation of this chapter. SECTION The changes in law provided by this article apply only to an action filed on or after January 1, ARTICLE 3. VENUE; FORUM NON CONVENIENS SECTION Section (c), Government Code, is amended to read as follows: (c) The supreme court may consider the adoption of rules relating to: (1) nonbinding time standards for pleading, discovery, motions, and dispositions; (2) nonbinding dismissal of inactive cases from dockets, if the dismissal is warranted; (3) attorney s accountability for and incentives to avoid delay and to meet time standards; (4) penalties for filing frivolous motions; (5) firm trial dates; (6) restrictive devices on discovery; (7) a uniform dockets policy; (8) formalization of settlement conferences or settlement programs; (9) standards for selection and management of nonjudicial personnel; and (10) transfer of related cases for consolidated or coordinated pretrial proceedings. SECTION Chapter 74, Government Code, is amended by adding Subchapter H to read as follows: SUBCHAPTER H. JUDICIAL PANEL ON MULTI- DISTRICT LITIGATION Sec JUDICIAL PANEL ON MULTIDIS- TRICT LITIGATION. (a) The judicial panel on multidistrict litigation consists of five members designated from time to time by the chief justice of the supreme court. The members of the panel must be active court of appeals justices or administrative judges. (b) The concurrence of three panel members is necessary to any action by the panel. Sec TRANSFER OF CASES BY PANEL. Notwithstanding any other law to the contrary, the judicial panel on multidistrict litigation may transfer civil actions involving one or more common q uestions of fact pending in the same or different constitutional courts, county courts at law, probate courts, or district courts to any district court for consolidated or coordinated pretrial proceedings, including summary judgment or other dispositive motions, but not for trial on the merits. A transfer may be made by the judicial panel on multidistrict litigation on its determination that the transfer will: (1) be for the convenience of the parties and witnesses; and (2) promote the just and efficient conduct of the actions. Sec OPERATION; RULES.

10 467.e5 Stewart et al Discussion J Am Coll Surg (a) The judicial panel on multidistrict litigation must operate according to rules of practice and procedure adopted by the supreme court under Section The rules adopted by the supreme court must: (1) allow the panel to transfer related civil actions for consolidated or coordinated pretrial proceedings; (2) allow transfer of civil actions only on the panel s written finding that transfer is for the convenience of the parties and witnesses and will promote the just and efficient conduct of the actions; (3) require the remand of transferred actions to the transferor court for trial on the merits; and (4) provide for appellate review of certain or all panel orders by extraordinary writ. (b) The panel may prescribe additional rules for the conduct of its business not inconsistent with the law or rules adopted by the supreme court. Sec AUTHORITY TO PRESIDE. Notwithstanding any other law to the contrary, a judge who is qualified and authorized by law to preside in the court to which an action is transferred under this subchapter may preside over the transferred action as if the transferred action were originally filed in the transferor court. SECTION Section , Civil Practice and Remedies Code, is amended to read as follows: Sec MULTIPLE PLAINTIFFS AND INTER- VENING PLAINTIFFS. (a) In a suit in which there is more than one plaintiff, whether the plaintiffs are included by joinder, by intervention, because the lawsuit was begun by more than one plaintiff, or otherwise, each plaintiff must, independently of every other plaintiff, establish proper venue. If a plaintiff cannot independently establish proper venue, that plaintiff s part of the suit, including all of that plaintiff s claims and causes of action, must be transferred to a county of proper venue or dismissed, as is appropriate, unless that plaintiff, independently of every other plaintiff, establishes that: (1) joinder of that plaintiff or intervention in the suit by that plaintiff is proper under the Texas Rules of Civil Procedure; (2) maintaining venue as to that plaintiff in the county of suit does not unfairly prejudice another party to the suit; (3) there is an essential need to have that plaintiff s claim tried in the county in which the suit is pending; and (4) the county in which the suit is pending is a fair and convenient venue for that plaintiff and all persons against whom the suit is brought. (b) An interlocutory appeal may be taken of a trial court s determination under Subsection (a) that: (1) a plaintiff did or did not independently establish proper venue; or (2) a plaintiff that did not independently establish proper venue did or did not establish the items prescribed by Subsections (a)(1)-(4) (c) An interlocutory appeal permitted by Subsection (b) must be taken to the court of appeals district in which the trial court is located under the procedures established for interlocutory appeals. The appeal may be taken by a party that is affected by the trial court s determination under Subsection (a). The court of appeals shall: (1) determine whether the trial court s order is proper based on an independent determination from the record and not under either an abuse of discretion or substantial evidence standard; and (2) render judgment not later than the 120th day after the date the appeal is perfected. (d) An interlocutory appeal under Subsection (b) has the effect of staying the commencement of trial in the trial court pending resolution of the appeal. SECTION Section (b), Civil Practice and Remedies Code, is amended to read as follows: (b) If a court of this state, on written motion of a party, finds that in the interest of justice and for the convenience of the parties a claim or action to which this section applies would be more properly heard in a forum outside this state, the court shall decline to exercise jurisdiction under the doctrine of forum non conveniens and shall stay or dismiss the claim or action. In determining whether to grant a motion to stay or dismiss an action under the doctrine of forum non conveniens, the court may consider whether: (1) an alternate forum exists in which the claim or action may be tried; (2) the alternate forum provides an adequate remedy; (3) maintenance of the claim or action in the courts of this state would work a substantial injustice to the moving party; (4) the alternate forum, as a result of the submission of the parties or otherwise, can exercise jurisdiction over all the defendants properly joined to the plaintiff s claim; (5) the balance of the private interests of the parties and the public interest of the state predominate in favor

11 Vol. 212, No. 4, April 2011 Stewart et al Discussion 467.e6 of the claim or action being brought in an alternate forum; and (6) the stay or dismissal would not result in unreasonable duplication or proliferation of litigation. SECTION Section 5A, Texas Probate Code, is amended by adding Subsection (f) to read as follows: (f) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section , Civil Practice and Remedies Code. SECTION Section 5B, Texas Probate Code, is amended to read as follows: Sec. 5B. TRANSFER OF PROCEEDING. (a) A judge of a statutory probate court, on the motion of a party to the action or on the motion of a person interested in an estate, may transfer to his court from a district, county, or statutory court a cause of action appertaining to or incident to an estate pending in the statutory probate court or a cause of action in which a personal representative of an estate pending in the statutory probate court is a party and may consolidate the transferred cause of action with the other proceedings in the statutory probate court relating to that estate. (b) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section , Civil Practice and Remedies Code. SECTION Section 607, Texas Probate Code, is amended by adding Subsection (e) to read as follows: (e) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section , Civil Practice and Remedies Code. SECTION Section (a), Health and Safety Code, is amended to read as follows: (a) The board may sue and be sued. A health care liability claim, as defined by Section , Civil Practice and Remedies Code, may be brought against the district only in the county in which the district is established. SECTION Sections (a) and , Civil Practice and Remedies Code, are repealed. ARTICLE 4. PROPORTIONATE RESPONSIBILITY AND DESIGNATION OF RESPONSIBLE PARTIES SECTION Section (a), Civil Practice and Remedies Code, is amended to read as follows: (a) This chapter applies to: (1) any cause of action based on tort in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought; or (2) any action brought under the Deceptive Trade Practices-Consumer Protection Act (Subchapter E, Chapter 17, Business & Commerce Code) in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought. SECTION Section , Civil Practice and Remedies Code, is amended to read as follows: Sec DETERMINATION OF PERCENTAGE OF RESPONSIBILITY. (a) The trier of fact, as to each cause of action asserted, shall determine the percentage of responsibility, stated in whole numbers, for the following persons with respect to each person s causing or contributing to cause in any way the harm for which recovery of damages is sought, whether by negligent act or omission, by any defective or unreasonably dangerous product, by other conduct or activity that violates an applicable legal standard, or by any combination of these: (1) each claimant; (2) each defendant; (3) each settling person; and (4) each responsible third party who has been designated under Section (b) This section does not allow a submission to the jury of a question regarding conduct by any person without sufficient evidence to support the submission. SECTION The heading to Section , Civil Practice and Remedies Code, is amended to read as follows: Sec DESIGNATION OF RESPONSIBLE THIRD PARTY. SECTION Section , Civil Practice and Remedies Code, is amended by amending Subsections (a), (b), and (e) and adding Subsections (f)-(l) to read as follows: (a) A defendant may seek to designate a person as a responsible third party by filing a motion for leave to designate that person as a responsible third party. The motion must be filed on or before the 60th day before the trial date unless the court finds good cause to allow the motion to be filed at a later date.