Taking aim at frivolous lawsuits, Texas caps pain and suffering damages in medical malpractice cases
The American Lawyer and Corporate Counsel
It's a Friday morning in July, and Houston plaintiffs lawyer Richard Mithoff has joined attorneys and nurses in his firm for a weekly status conference. Mithoff & Jacks is one of the top plaintiffs firms in Texas. It specializes in medical malpractice cases, and it doesn't lack for business. In a typical year, the firm is solicited by roughly 750 people, mainly patients who feel that they have been wronged by doctors. Today, in an hour-long meeting, Mithoff listens as his colleagues describe 21 prospective clients. It is a nonstop parade of woe. There is a woman who had an artery punctured during an operation to remove a kidney stone, an infant who suffered a shoulder injury at birth, and a middle-aged woman who claims to be bowel incontinent following a hemorrhoidectomy.
Mithoff & Jacks hunts for big game -- cases involving at least $1 million in damages -- and most of the cases described today fall short of the mark. The lawyers think that the woman with the punctured artery is a victim of malpractice, but her injuries are too minimal to warrant suit. "Why couldn't she be more injured?" one lawyer asks with morbid humor.
Another prospective client, who suffered a heart attack during a botched bypass surgery, is recovering and has returned to work. "Quite frankly," says Mithoff, "if malpractice is committed and a person recovers, there is not much of a case." The firm will likely end up accepting only one or two of the cases discussed today.
And so it goes with Texas's top malpractice lawyers, who seem to spend much of their day fending off business. Malpractice cases are so costly and risky that many plaintiffs lawyers steer clear of them unless they involve hefty damages and clear liability. Malpractice lawyers as the models of restraint? It's a hard image to swallow given the starkly different impression of malpractice lawyers that has emerged in Texas. Politicians, pushing for tort reform, have routinely portrayed plaintiffs lawyers as craven opportunists, willing to sue innocent doctors for a quick buck.
In a March speech, for example, Texas governor Rick Perry swiped at plaintiffs lawyers. "Because of frivolous lawsuits," he said, "doctors are practicing defensive medicine." That same month, Texas state representative Joe Nixon said, "frivolous lawsuits ... are driving doctors out of business and forcing companies to shut their doors."
This rhetoric has hit its mark. In June, the Texas legislature passed House Bill 4, a tort reform measure sponsored by Nixon and signed into law by Perry. It provides that malpractice plaintiffs can recover no more than $250,000 in noneconomic, or pain-and-suffering, damages at trial. In rare instances, this damage cap can expand to $750,000 if more than one hospital is at fault. It is, perhaps, the most far-reaching tort reform legislation ever in the state, and the Texas malpractice bar -- including many defense lawyers -- is incensed.
"H.B. 4 is total bullshit," says a prominent Austin defense lawyer, who would only speak on background, because he specializes in representing hospitals. "The jury system [already] works well."
The new damage cap in Texas took effect Sept. 1. It is likely to be challenged in court on the alleged grounds that it violates the Texas constitution's "open courts" provision, which guarantees open access to state courts to seek redress for wrongs. In anticipation of such a challenge, the cap's supporters staged a successful Sept. 13 statewide ballot initiative that amended the constitution to allow the legislature to limit liability in malpractice cases.
Whether or not the Texas damage cap reduces malpractice premiums, as its supporters promise, the widespread claim that the state is awash in frivolous litigation is due for reappraisal. A close look at the malpractice litigation business suggests that plaintiffs lawyers generally exercise caution in deciding when to sue. Indeed, to spend time with the Texas malpractice bar is to wonder whether too few suits are filed against doctors.
"There is no legitimacy to claims that there are a flood of lawsuits being filed in medical malpractice," says Dan Lambe, the executive director of Texas Watch, an Austin-based consumer advocacy organization. Lambe blames the insurance industry for pushing the notion that malpractice litigation has run amok. But, he adds, it's not surprising that such a claim has gained traction. "Attorneys," Lambe points out, "are not the most popular people." Whoever is to blame, litigation has been driving Texas doctors out of the state, say the supporters of damage caps. "We needed to do something to ensure that doctors stay in Texas," says R. Brent Cooper, a Dallas defense lawyer who helped draft House Bill 4.
It is mid-July in Houston, about one month after House Bill 4 was signed into law. Plaintiffs lawyer Jim Perdue, Jr., is bogged down in what he calls the summer of his discontent. Perdue is under a tight deadline; if he spots a promising malpractice claim, he must file it before the damage cap takes effect in September.
On this day, like every day, there are many people seeking Perdue's help. The blond, blue-eyed 34-year-old is a well-known commodity; his father and boss, Jim Perdue, Sr., the founder of The Perdue Law Firm, has been practicing malpractice law since the early 1970s. About 1,500 prospective clients call the five-lawyer Perdue firm every year. Most of these callers are referred by other lawyers too inexperienced or cash-strapped to handle a malpractice claim.
On average, the Perdue firm signs up only 10 to 15 plaintiffs per year, which means that it turns away roughly 99 out of 100 prospective clients. Like most top malpractice firms, the Perdue firm has a staff of nurses and paralegals whose primary job is to weed out cases. "Fifty percent of the time here is spent figuring out what is a case and what isn't a case," says Perdue, Jr., who estimates that his firm spends $100,000 a year screening cases. The young lawyer handles much of this case-screening dirty work himself. "It's the most frustrating part of my job," he says, "that I spend very little time actually practicing law."
This July morning Perdue is busy not practicing law. He returns a cold call from a woman who says that her mother went to a Houston hospital earlier in the year to have a wound treated. The mother was 65 with a history of high blood pressure and an enlarged heart. While in the hospital, she suffered kidney failure, went into cardiac arrest, and died. The caller is despondent. She believes that the hospital could have prevented her mother's death, and she accuses the doctors of brusqueness. She says, for example, that the doctors did not listen when her mother complained that her respirator was uncomfortable.
The call lasts nearly an hour, and Perdue listens patiently before telling the caller that he can't handle the case. He says that it's possible that the patient's underlying medical problems led to her cardiac arrest. As for the rude treatment, Perdue is unimpressed. "I see a lot of insensitive doctors," he tells the woman, "but that is not the stuff of lawsuits."
After the call, Perdue explains that he needs clear liability and major damages -- i.e., in excess of $500,000 -- before he'll agree to take a case. Put another way, he says that he follows the "Jesus Christ" rule. "When you hear a [prospective] client's story, do you say, 'Jesus Christ, how did that happen?'" If so, you have a case, he says.
Jack McGehee uses a slightly different filter. The Houston plaintiffs lawyer focuses exclusively on malpractice cases that involve either death or catastrophic injury. He is even more selective than Perdue. He says that he receives about 3,000 calls a year from prospective clients. Only about 10 of the callers will become full-fledged clients. "We can't take a case unless we can articulate over $1 million in settlement," says McGehee. Practically the only cases that meet his threshold, he adds, are ones involving babies born with brain damage. These plaintiffs often suffer from severe paralysis and require many years of extensive medical treatment, which means that their damages at trial can be in the multimillions.
Like many other malpractice lawyers, McGehee has developed certain cold and ruthless rules of thumb. He generally refuses, for example, to handle back surgeries gone bad. The damages usually aren't severe enough, he explains, and orthopedics is a fairly inexact science, which makes proving negligence difficult. McGehee and other plaintiffs lawyers also shy away from breast cancer cases. Often, for example, women call McGehee to complain about a physician's failure to diagnose their breast cancer. But he says that unless he can clearly establish that a diagnosis was so delayed that it will likely lead to a woman's death, there is not enough at stake to file suit.
McGehee and other lawyers in the state have now become even more selective. Previously, for example, McGehee says he would occasionally handle death cases involving non-working mothers. These sorts of cases do not rack up major economic damages; the victims did not work, so the plaintiffs can't sue for lost wages, and since they died, the plaintiffs can't recover damages for future medical expenses. But now that noneconomic damages are capped at $250,000, McGehee says, "I can no longer take a [case involving a deceased] soccer mom with three young kids."
Across Texas, the story is the same: experienced medical malpractice lawyers are turning down many more cases than they accept. This selectivity is a matter of pure economics. A malpractice case is, in essence, a battle of experts, and top experts, according to lawyers, charge at least $500 per hour. The fees, fronted by the plaintiffs firm, quickly add up. In a case involving a baby born with brain damage, plaintiffs lawyers say they often must hire 10 experts, including an obstetrician, a pediatric neurologist, a neonatologist and a neuroradiologist. The toll for such an army of experts can exceed $250,000, according to several plaintiffs lawyers. Even in routine malpractice cases, plaintiffs lawyers say they can easily spend $100,000 to take a case to trial. Plaintiffs attorneys risk squandering their entire investment if they lose, since they work on contingency, usually collecting a third of any recovery.
"You can't stay in business if you are pushing bad cases," says Austin plaintiffs attorney Ryan Krebs.
This is not to say, of course, that marginal malpractice cases are never filed. Not all plaintiffs lawyers, after all, are equally choosy in deciding when to file suit. The top plaintiffs lawyers in the state, for example, regularly refer cases that they reject to lesser plaintiffs lawyers who are seemingly only too happy to handle these sloppy seconds. Thomas Cotten, president of the Texas Medical Liability Trust, the state's largest malpractice carrier, says that his company wins 90 percent of malpractice trials -- proof positive that many unmerited cases are filed, he says. Plaintiffs lawyers acknowledge that they lose much more often than they win at trial, but that, they say, is because the most serious malpractice cases invariably settle. "The strong cases don't get tried," says Dallas plaintiffs lawyer James Girards. "The defense does a good job of making the bad cases go away."
Because so many malpractice suits end in confidential settlements, it is impossible to arrive at a comprehensive win-loss record for patients and doctors in Texas malpractice suits. It is equally impossible to gauge precisely what percentage of malpractice suits are spurious. But the anecdotal evidence suggests that most plaintiffs don't bother to sue doctors unless they have a claim of at least arguable validity. "I don't see a problem with a lot of frivolous lawsuits being filed," says Larry Thompson, a longtime malpractice defense lawyer at Houston's Lorance & Thompson. "My experience is that the plaintiffs attorneys we see repeatedly are very careful [in deciding what cases to bring]," says Robert Roby, a Dallas malpractice defense attorney and president of The Texas Association of Defense Counsel, Inc. "[Plaintiffs lawyers] won't invest their money when they think liability is difficult [to prove]."
This may be the case, but plaintiffs lawyers still lost the public relations battle that preceded House Bill 4. Like many plaintiffs lawyers, Mithoff is still bitter about the legislation, especially the rhetoric used to drum up support for it. Even if frivolous litigation were a problem, he says, the damage cap does nothing to address it. The cap, he says, is aimed merely at punishing legitimate plaintiffs, who survive motions to dismiss and emerge victorious at trial. "Frivolous lawsuits shouldn't be settled for $250,000; they should be dismissed and the [plaintiffs] lawyer should be sanctioned," says Mithoff. "The idea that caps have anything to do with frivolous lawsuits is itself a frivolous notion."
But the "f-word" isn't going away any time soon. Plaintiffs lawyers across the state report that prospective jurors now routinely complain about frivolous lawsuits. Texas has long had a jury contingent that sees lawyers in a negative light. But that contingent has swelled recently, say plaintiffs lawyers, thanks to the publicity blitz about attorneys driving doctors out of business. "Juries have been brainwashed," says Austin malpractice lawyer Mark Mueller.
If juror attitudes have truly been transformed, the tort reformers have scored a victory even bigger than damage caps.