THE TEXAS LEGISLATURE AND MEDICAL MALPRACTICE by *Max Sherman and **Michael L. Pate The "Findings and Purposes" of the Medical Liability and In- surance Improvement Act' set forth in detail the legislative concerns that led to the passage of the 1977 act on malpractice insurance. The legislature found that since 1972 the number of health care liability claims and the amount of claims paid had caused a serious public problem regarding the availability and affordability of adequate medical professional liability insurance. The statute provides an objective statement of the facts and philosophy that necessitated the act.2 However, the statement does not reflect the intensity of the opposing views that are synthesized in the "Findings and Pur- poses."' Because Texas does not have a good method for preserving legislative history, the purpose of this article is to outline the legisla- tive considerations involved in resolving some of the troublesome medical malpractice issues that were affected by the statute. 3 The medical malpractice controversy that confronted the 65th Texas Legislature was not a creature of the 1970's; the seed for the problem was planted in 1945, when the 46th Texas Legislature passed a statute authorizing control by the Board of Insurance Com- missioners over, "the business of casualty, fidelity, surety, and guar- anty insurance for the making and filing and approval or disap- proval of insurance rates."4 In Gibbs v. United States Guarantee Co. ,' the court clarified a grey area of insurance regulation by hold- ing that the State Board of Insurance Commissioners must pre- scribe statewide uniform rates rather than allow different rates for different insurers for the same risk. Because of this decision, insur- ance companies writing medical malpractice coverage were required to charge the same rate for health care risks. Uniform medical malpractice insurance rates were not satisfac- tory. Consequently, in 1955 the 54th Legislature removed medical * President, West Texas State University; B.A., Baylor University; LL.B., University of Texas, 1960. He is a former Texas State Senator of the 31st Senatorial District. ** Attorney, Austin, Texas. B.S., University of Texas at El Paso; J.D., University of Texas at Austin, 1976. 1. TEx. REV. CIv. STAT. ANN. art. 4590i (Vernon Supp. 1978-1979). 2. Id. § 1.02(13)(b). "tilt is the purpose of this Act to improve and modify the system by which health care liability claims are determined .... " 3. Many of the comments and observations in this article are based on notes contained in personal Senate files. The footnotes will not reflect this source because it would be unavail- able to the public. 4. 1945 Tax. GEN. LAWS, ch. 160, at 207. 5. 218 S.W.2d 522 (Tex. Civ. App.-Austin 1949, writ refd). TEXAS TECH LAW REVIEW [Vol. 10:339 malpractice insurance rating from the control of the Board of Insur- ance Commissioners.6 Medical malpractice insurance rates were determined in an unregulated market from 1955 until 1975. Because of the unregulated market, medical malpractice insur- ance rates increased so dramatically that the matter was considered a "problem" by the 64th Legislature.7 Several legislative approaches were offered at the 1975 session: 1. S.B. 635 proposed by Senator Ray Farabee included several modifications in the Texas tort system. This bill was supported by the Texas Medical Association (TMA), and opposed by the Texas Trial Lawyers Association (TTLA). The bill passed the Senate,' but two days before adjournment it failed to pass the House of Repre- sentatives by a one vote margin 2. S.B. 466 proposed by Senators A. R. Schwartz and Don Adams reversed the 1955 deregulation decision by the legislature and provided that medical liability insurance for physicians, po- diatrists, and hospitals was subject to Insurance Board regulation. The State Board of Insurance was given authority to establish rates for medical liability coverage and to gather data for statewide rating purposes. This bill passed and became law.'0 3. S.B. 491 proposed by Senator A.R. Schwartz established a Joint Underwriting Association to provide insurance coverage for Texas doctors and hospitals unable to obtain malpractice insurance. This measure created a temporary pool to insure availability of at least $300,000 in coverage to health care providers who could not obtain coverage through the normal voluntary market. The bill also created the eighteen-member Medical Professional Liability Study Commission to investigate the medical malpractice problem and to offer recommendations for permanent solutions by December 1, 1976. This bill passed and became law." S.B. 466 and S.B. 491 contained self-destruct provisions calling for the acts to expire on December 31, 1977. The Medical Professional Liability Study Commission, also known as the "Keeton Commission," was appointed.' 2 W. Page Kee- 6. 1955 TEX. GEN. LAWS, ch. 76, § 1, at 359. 7. See generally Lawsuits: A Growing Nightmare for Doctors and Patients, U.S. NEWS AND WoRLD REPor, Jan. 20, 1975, at 53. 8. Senate Bill 635 passed the Senate May 15, 1975, TEX. S.J. 1467 (1975). 9. Senate Bill 635 was defeated in the House on May 28, 1975. TEX. H.R.J. 4230 (1975). 10. 1975 Tex. GEN. LAWS, ch. 330, § 1, at 864. 11. TEX. INS. CODE ANN. art. 21.49-3 (Vernon 1975). 12. Members of the Medical Professional Liability Study Commission were: Robert G. Bezucha and W. A. Mizell (Texas Joint Underwriting Association appointees); William R. Cotner and David Hitt (Texas Hospital Association appointees); Dr. Milton V. Davis and Dr. 19791 TEXAS LEGISLATURE ton, former Dean of the University of Texas Law School, was elected Chairman. The Commission met eighteen times, and subcommit- tees of the Commission met an additional twenty-two times across the state to develop recommendations and policy statements. The Final Report was transmitted to the 65th Texas Legislature on De- cember 22, 1976, ' and provided the setting for the medical malprac- tice battle in the 65th Legislature. Governor Dolph Briscoe, in his address to the legislature on January 12, 1977, identified the medical malpractice insurance cri- sis as his top priority for legislative action in the health field. Gover- nor Briscoe summarized the problem: Older doctors are encouraged, if not forced, to retire prematurely because of high insurance rates and lack of availability of insur- ance (to protect doctors against damage claims for medical mal- practice). Many doctors in rural areas who occasionally perform surgical procedures as adjuncts to their general practice cannot afford the rates and have ceased the service. Care of indigents and emergency patients is threatened because of the high increase in insurance rates for doctors who traditionally have volunteered much of this service."1 The Governor recognized the strong conflict between the Texas Trial Lawyers Association and the Texas Medical Association, and warned: "It would be a disservice to the people of Texas if this controversy became nothing more than a bitter debate between pro- fessional men and women. I believe this legislature has the courage to make the right decision on this critical issue."'" E. Don Webb (Texas Medical Association appointees); Representative Robert E. Davis and Representative D. R. Uher (Speaker of the House appointees); Senator Kent Hance and Committee Chairman Dean W. Page Keeton (Lieutenant Governor's appointees); Harry Hubbard, Jr. and Charles G. Purnell (Governor's appointees); Mark Martin and George E. Pletcher (State Bar Association appointees); Robert L. Murphy (Texas Association of Insur- ance Agents representative); James K. Presnal (State Farm Insurance representative); Ed- ward A. Stowell (Allstate Insurance representative); and H. Hayes Tucker (Insurance Coun- selors of Texas representative). There were three membership changes on the Commission: Robert Bezucha replaced Landon Alexander; Senator Kent Hance replaced Senator Bob Gammage; and W. A. Mizell replaced George Reed. 13. TEXAS MEDICAL PROFESSIONAL LIABILITY STUDY COMMISSION, FINAL REPORT OF THE TEXAS MEDICAL PROFESSIONAL LIABILITY STUDY COMMISSION TO THE 65TH TEXAS LEGISLATURE (1976) [hereinafter referred to as FINAL REPORT.j 14. TEX. H.R.J. 111 (1977). 15. Id. TEXAS TECH LAW REVIEW [Vol. 10:339 The Governor's concerns were not overstated. Resolution of the conflicting positions was not easily achieved. However, the Gover- nor was also prophetic, because the legislature did reach a consen- sus, although on the last day of the session. THE 65TH LEGISLATURE The Medical Professional Liability Study Commission submit- ted proposals for eighteen pieces of legislation to the 65th Texas Legislature.'" Its Final Report had been approved by a unanimous vote of those members present at the final meeting on November 23, 1976."1 It was commonly assumed that doctors and the insurance in- dustry were in accord with the major recommendations.'8 However, on December 8, 1976, the TTLA publicly voiced opposition to the report.' Some of the more controversial recommendations which the TTLA opposed were: 1. to limit "pain and suffering" damages to $100,000; 2. to deduct other insurance benefits, such as hospitalization payments, from the amount that could be recovered from a physi- cian found to be liable for negligence; 3. to create medical screening panels to review malpractice claims prior to trial and to allow the expert panel's opinion to become evidence in a subsequent trial; 4. to impose a system of medical-legal arbitration of malpractice claims; and 5. to eliminate lump sum payments of malpractice damage awards exceeding $100,000 to recipients. The heart of the TTLA opposition was that the Commission recommendations "would have the effect of either placing the medi- cal community in a preferential position before the law or to infringe upon a citizen's right to equal protection before the law." 0 The contention was that the recommended changes seriously weakened 16. Ad Damnum Clause Bill, Arbitration Bill, Collateral Source Bill, Hospital Liabil- ity Bill, Insurance Bill, Itemized Damage Bill, J.U.A.