The Daily Journal, March 2, 2007

From football to lawmaking, Texans think everything they do is bigger and better. They even boast that their capitol is taller than the one in Washington, D.C. But when it came to fixing their civil-justice system, Texans looked to California for how to do it right.

In Texas, doctors were being sued out of business, leaving the state with 25 percent fewer doctors for the population than the other states, a crisis situation. Texans went to California to learn from the laws that the state passed in 1975 — in the middle of its own medical-liability crisis — to protect doctors from frivolous lawsuits.

Texas lawmakers saw that California’s Medical Injury Compensation Reform Act was working. California doctors were paying half to one-fourth of the medical-malpractice insurance premiums that doctors in Texas were paying. And the Golden State was blessed with more doctors. In 2003, Texas followed California’s lead and passed sweeping medical-malpractice reforms. Since then, these reforms have had tremendous success in eliminating frivolous lawsuits, lowering the cost of practicing medicine and increasing access to health care. Physicians are applying to practice medicine in record numbers, and the state has more applicants than it can process, particularly in the high-risk fields of obstetrics, neurosurgery, emergency care and orthopedic surgery.

Following that success, in 2005 Texas adopted sweeping reforms to address the asbestos litigation crisis. Several hundred thousand people in the United States have claimed they are ill from exposure to asbestos. Although the vast majority will never be sick or impaired, some workers have contracted severe illnesses, such as mesothelioma, a deadly incurable cancer. Smokers exposed to asbestos are more susceptible to lung cancer.

But the other 90 percent of claimants, estimated to be 650,000 so far, usually allege that they have asbestosis, which shows up as small scars on an X-ray but generally poses little or no impairment — not even shortness of breath. As a result of the multitude of claims, the frivolous, unimpaired claimants were siphoning settlement dollars away from those who were truly sick.

Texas lawmakers responded with a multidistrict litigation court to have consistent pretrial rulings, imposed medical criteria on nonmalignant claims and required each person’s claim to stand on its own merits. The state created standards for medical experts and required greater scrutiny of medical evidence. Combined, these and other related changes punctured the unimpaired-lawsuit bubble.

Through the years before the reforms, Texas’s court system processed 100,000 unimpaired plaintiffs, many of whom never lived in Texas. Since the 2005 reforms, 50,000 unimpaired individual claims have been put on hold until those plaintiffs can provide objective medical evidence to support their lawsuits. Not surprisingly, the unimpaired plaintiffs are unwilling to expose the weakness of their claims and are not filing the required independent medical reports to substantiate their claims and move their cases to trial.

Amazingly, as a result of the collapse of the unimpaired asbestosis docket in Texas, Lone Star State lawyers are moving cases, law offices and, in some instances, their entire practices to California. The Golden State has not adopted a multidistrict litigation procedure or new laws to deal with unimpaired claimants in mass tort litigation, making it desirable for relocation.

This has created an opportunity in California to continue the pursuit of litigation on behalf of people who have been exposed to asbestos but are uninjured or unimpaired. The cost in Texas for maintaining this type of litigious environment for years was enormous. Local courts were clogged, and nationally, 70 companies declared bankruptcy, in large part because of the cases filed in Texas.

Though California is one of the favored venues for unimpaired asbestosis claims, it should not feel alone. Arkansas, Massachusetts, New York, Oklahoma and Virginia also have seen big jumps in their unimpaired asbestos dockets. Fine lawyers are expected to locate the most favorable venue for their clients. But a favorable venue for unimpaired claimants is not fair for those who are dying from cancer and are justly entitled to full compensation.

It is unjust to people who are truly suffering from exposure to asbestos to have their damage awards reduced and resolution delayed by the thousands of claims made by those who are not ill and have no medically objective evidence of impairment. It is unjust for financially solvent defendants to bear a greater share of liability caused by the bankruptcy of their co-defendants. And it is unjust to shift the costs of the unimpaired docket to consumers through higher prices of products made by those defendants still standing.

Before 2005, when Texas had as many as 14,000 unimpaired claimants file suit per year, the judicial system did a poor job of establishing justice for those who were really sick. The system used for the resolution of civil disputes is not designed for examining the efficacy of the judicial system itself. That job must be done legislatively, as California did for its doctors in 1975 and as Texas has most recently done.

Texas has drawn key lessons from California, but lessons also could be learned from the Lone Star State. Unless Californians follow Texas’ lead in unimpaired asbestos litigation, they can look for the next gold rush at their local courthouse.

 Joe Nixon is senior fellow in civil justice studies at California-based Pacific Research Institute and former state legislator in the Texas House of Representatives (1994-2006).