Musings on Economic Freedom from the Texas Public Policy Foundation's Center for Economic Freedom

Civil justice systems fill an important role in society, allowing parties to settle their disputes without violence and without the government turning a civil dispute into a criminal matter.

A well-functioning civil justice system should dispense justice, i.e., to right wrongs as best possible. While a civil justice system can't turn back the clocks and undo harm, it can compensate the injured for any economic harm that they have incurred and punish those who have harmed others, as well as provide a financial deterrent to those who might consider doing wrong.

For too many years, this was not the case with the Texas civil justice system. Instead, the system was known nationally as one where justice was for sale, and awards too often had little correlation to actual harm.

Today, however, things are different. It's been almost a decade since Texas began taking major steps to restore justice to our system. In 2003, the Texas Legislature passed comprehensive reforms, including the capping of non-economic damages in medical malpractice cases. Reforms affecting asbestos and silica cases followed in 2005, and have continued up to the present, with "loser pays" in 2011 being the most recent. An excellent history of the earlier reforms can be found in our publication, A History of Lawsuit Reform in Texas, by former state representative Joe Nixon.

The results of the civil justice reform have been outstanding. For instance:

  • According to the Texas Medical Board records, we've picked up 1,271 New York physicians since September 2003, when Texas voters approved the Proposition 12 medical-liability reforms. Overall, our state has nearly 26,000 more physicians than the 33,000 in practice pre-Prop 12. The vast majority moved from other states.
  • We have seen $7 billion of investment in new medical infrastructure and $1.2 billion of additional charity medical care in the past two years alone while increasing the number of Texans with health insurance by almost 500,000.
  • Eighty-five thousand Texas "asbestosis" claimants' cases are on administrative hold because they cannot provide a simple required medical report from a qualified physician stating that the plaintiff actually has some type of physical impairment.

Yet not everyone is satisfied with these results. A new study by Texas Watch circuitously attacks tort reform by claiming the Texas Supreme Court has been "corporatized," evidenced by the fact it has ruled in favor of corporate or governmental defendants 74 percent of the time in cases brought by "individuals, patients, policyholders, and small business owners."

Of course, the purpose of a court, including the Texas Supreme Court, is not to rule in favor of plaintiffs against defendants, or vice versa. Instead, it is to apply the law to the matter before it, which usually means accurately construing statutes as written by the Legislature, unless a statute is unconstitutional or is silent on an issue.

Assigning categories to parties to determine which group wins more often explains nothing about whether a case was properly decided. The only way in a particular case to determine if justice was properly dispensed and the Court properly construed the law is to look at the facts of the case.

In fact, a finding that the courts often rule in favor of defendants could just as well be interpreted as showing that the last decade of tort reform in Texas is working as designed. In this scenario, ruling in favor of defendants means the Supreme Court has simply been doing its job of properly construing laws that were written by the Legislature to eliminate frivolous lawsuits from the system.

The fact that two opposite conclusions could be drawn from such a statistical analysis shows that it is essentially meaningless.

A look at the facts provides better insight into what the Supreme Court is doing. The Court's 2009 Entergy decision is a great example of following the law. It decided that the law treats owners and general contractors in the same way, and has done so since 1917. Not only the law backs up the Court on this case: the Texas Legislature has now had two opportunities to express its disagreement by overturning the Court's decision, but has not done so.

In addition, four recent Supreme Court decisions show that individuals often win in controversial cases when pitted against businesses or government: Barbara Robinson, v. Crown Cork & Seal Company, Inc.; Texas Rice Land Partners and Mike Latta, v. Denbury Green Pipeline-Texas, LLC; City of Dallas v. Heather Stewart; and Del Lago Partners v. Bradley Smith.

Individuals won in all these cases even though the Supreme Court used a variety approaches in applying the law: construing statutes as written, questioning the constitutionality of statutes, and taking a common law approach where the statute was silent.

It is understandable that many plaintiff's lawyers are not happy with the results of the last decade, and thus continue efforts to undermine the reforms. But the truth is clear: tort reform is working in Texas. And all Texans-consumers, sellers, employees, and employers, along with the Texas economy, are benefitting.