Jury's Vioxx award: not so Texas-sized after all
States move to cap damages in lawsuits, but such limits squeeze the most needy, some critics say.
HOUSTON — After Texas jurors found that Merck had intentionally withheld the risks associated with its heart drug, Vioxx, they awarded Carol Ernst a whopping $229 million in punitive damages.
The size of the award sent shudders through the drug industry, because Merck faces more than 4,200 other Vioxx-related lawsuits in the United States alone. But under a Texas law that caps punitive damages, Ms. Ernst, the winning plaintiff, will see no more than $1.65 million - less than 1 percent of the original award.
The Vioxx case, which drew national attention for its implications for drugmakers, is also an early and visible example of what happens when states limit the amounts juries award. Ever since it enacted tort reform two years ago, Texas has initiated the latest push in a controversial movement that is gathering steam around the country.
"There has been a tremendous amount of momentum at the state level ever since the enactment of Texas' statute, which was the biggest and most comprehensive legal reform bill in recent time," says Lisa Rickard, president of the US Chamber Institute for Legal Reform in Washington.
Mississippi and Ohio passed comprehensive tort reform bills similar to Texas in 2004, as did Georgia, Missouri, and South Carolina in 2005.
Also this year, Florida tackled questionable asbestos and silica lawsuits by passing standards on what constituted injury. West Virginia passed incremental insurance reforms.
This Friday, Illinois's new caps on damages in medical malpractice lawsuits take effect. The new law also increases oversight of the insurance industry.
In Texas, the legislation dramatically changed the litigation landscape for class-action suits and product-liability and medical malpractice cases.
For instance, the number of medical malpractice suits filed here has plummeted, leading to a significant reduction in insurance rates for most doctors, tort reform advocates say. Doctors insured with Texas Mutual Liability Trust, the state's largest medical liability carrier, have seen a 17 percent reduction in their premiums in the past two years.
"In general, the hope is that these reforms will bring predictability and stability to the legal system," says Gretchen Schaefer, a spokeswoman for the American Tort Reform Association in Washington. "And specifically in Texas, these reforms have had a positive impact on the state's economy and job growth, the cost of medical liability and access to healthcare. We should expect to see similar results in other states that have enacted similar reforms."
But plaintiffs' lawyers say there is plenty of evidence that those most in need of help - children, stay-at-home parents, and the elderly - are being punished by these tort reforms.
Fred Hagans, for instance, used to file 10 to 15 medical malpractice lawsuits per year, until the new reforms were put in place two years ago.
Since that time, he has filed only one, and that one was only because he thought it was "the right thing to do" - not because he thinks it will financially benefit his clients or his law office.
"It's a money loser for us," Mr. Hagans says.
Medical malpractice suits used to represent roughly 30 percent of his caseload; now, it's down to 1 percent, he says. Similar declines are being reported in lawyers' offices across the state.
Tort reform "has essentially eliminated medical malpractice cases in this state," he says.
With a $250,000 cap on non- economic damages, the Houston lawyer says that after paying $150,000 in fees to experts and another $50,000 to take the case to trial, these cases no longer make economic sense.
"The intent of this law was to eliminate frivolous litigation, but the caps don't affect frivolous litigation," says Hagans. "So you're capping the people who need the help the most."
Other critics add that the reforms have taken power out of jurors' hands and driven some lawyers out of business.
Texas was so serious about cutting the number of medical malpractice lawsuits that it became the first state in the nation to rewrite its constitution to limit these damages after voters approved the amendment two years ago.
The concern was that the bill would be struck down as unconstitutional by the state Supreme Court, as a similar bill was in 1998 when President Bush was governor here.
In Illinois, where new medical malpractice caps take effect later this week, some activists have already said they will challenge the caps in court.
Since taking office, Mr. Bush has also pushed for federal tort reforms. He began his second term traveling to several cities to promote his ideas, and in February signed the Class Action Fairness Act.
The law aims to keep lawyers from filing class-action lawsuits in states with the most sympathetic laws.
It also attempts to force cases with plaintiffs in multiple states into federal courts, where large damage awards are less common.
The president has also backed the creation of an asbestos fund, which would be paid for by companies facing asbestos litigation and their insurers, in an effort to end the flood of asbestos-injury lawsuits.
The bill to create such a fund is still working its way through the Senate, and supporters expect it will be passed in October when Congress reconvenes.
Medical malpractice reform is another important goal for Bush. It got nowhere this session.
"But we don't see it as going away," says Ms. Rickard. "This year was a bellwether year for both state and federal reforms."