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Talkin’ Tort Reform

Part one in a new Cash & Candor series on Issue 1.

by Caleb Talley

Two competing casino measures could be headed to the November ballot. And if one or both are okayed by the Arkansas Attorney General (and not tossed out by the courts), Arkansans are likely to be inundated with advertisements from those for and against. As pointed out last weekend by the Associated Press’s Andrew DeMillo, these measures are likely to dominate the airwaves.

The casino measures are also likely to dominate the public conversation in Arkansas. Expanding gambling is polarizing. It’s sexy. It sells. And that means issues like tort reform (Issue 1), which in comparison is not sexy at all, will fall by the wayside when it comes to coffee shop conversations and dinner table debates.

It’s unclear whether or not that will be a bad thing for supporters of Issue 1. There’s a lot of money being spent by those in support of and opposed to tort reform. And they’ve got a heavty purse, too.

In 2016, when a similar casino measure was raised, more than $2 million was spent on advertising, only to have the entire issue struck from the ballot by the Arkansas Supreme Court. As of late January, those in support and opposition of Issue 1 had raised a collective $1.8 million. That number is sure to have already increased.

Issue 1 might not be as sexy as any casino measure, but it’s way more important, and possibly even more controversial if you break it down into its parts. It’s likely to be the most important decision Arkansas voters will make in 2018.

But before we dive into the merits of Issue 1, or the lack thereof, let’s first understand exactly what Issue 1 is.

Issue 1 is the result of Senate Joint Resolution 8, sponsored by Sen. Missy Irvin in the 2017 regular legislative session. The resolution had a whopping 69 co-sponsors in the House and Senate, passing both chambers with votes of 66 to 30 and 21 to 10, respectively.

If passed by the voters, Issue 1 would limit punitive damages (which serve to punish wrongdoing) to $500,000 or three times compensatory – whichever is greater. It would also limit non-economic damage (pain and suffering) awards to $500,000. Issue 1 would limit attorney contingency fees to one-third of the judgement, and would allow the state legislature to change the Arkansas Supreme Courts’ on rules of pleading, practice and procedure.

Issue 1 has broad support among a number of powerful organizations throughout the state, led by Arkansans for Jobs and Justice, the Arkansas Trucking Association, the Arkansas Medical Society and the Arkansas Health Care Association, among others.

Supporters cite savings in liability premiums for doctors, nursing home owners, small businesses, etc. Texas is often lifted up as a shining example of the success of tort reform, where the number of incoming doctors has been said to have outpaced the state’s population growth.

“Issue 1 is important for Arkansas’ ability to grow jobs and recruit doctors to care for our communities,” said Carl Vogelpohl, of Arkansans for Jobs and Justice. “Arkansas is surrounded by states that have reformed their civil justice system and we directly compete with those states for economic development… Studies have shown direct benefits that lawsuit reform can have on job creation and growth of our state’s economy as well as the impact that a state’s civil justice system has on job creators when the decide where to grow jobs and states where they want to relocate or grow.”

And Vogelpohl is right. Tort reform can be a vehicle for growth and larger profit margins, primarily in health care-related fields. Because that’s where most of the lawsuits are coming from. After all, medical mistakes are the third leading killer in the United States, behind only heart disease and cancer. Tort reform states, like Texas, are seeing their number of doctors increase, demonstrating strong recruitment.

Reports out of Texas show that the state has gained a significant number of healthcare professionals in the years since the passage of tort reform. The number of malpractice lawsuits had been dramatically reduced. Payouts were lower.  Hospitals, doctors, nursing homes – they all saved money.

But that doesn’t mean Issue 1 is without a strong, well-funded opposition with just as many valid points in their argument against sweeping tort reform.

It’s not common that you have trial lawyers locking arms with pastors on a matter of public policy. And it’s even rarer to see pastors taking on the health care industry and the chamber of commerce. But that’s exactly what’s happening in response to Issue 1.

The conservative Christian Family Council is leading the fight against Issue 1, and they’re joined by the Liberty Defense Network, Protect AR Families and plenty more. They’re raising as much, if not more, money to counter the message of Issue 1 supporters and measure some of their statistics.

Tort reform is often touted as a way of reducing direct and indirect costs to the health care industry. An indirect cost that is often cited is that of “defensive medicine,” when providers take unnecessary and costly steps that may not benefit the patient but reduce the likelihood that the provider will be sued. With tort reform in place, as the argument is often made, doctors are less likely to waste time and money practicing “defensive medicine.”

That’s great. Except for the fact that there’s a significant amount of evidence that shows defensive medicine accounts for, at best, 2 to 3 percent of health care costs. If costs attributed to defensive medicine are small, then savings from tort reform in regard to defensive medicine will also be small.

Thankfully, supporters of tort reform in Arkansas aren’t relying on savings tied to defensive medicine as justification of Issue 1. They are, in large part, citing the significant number of new doctors in Texas as a positive result of tort reform. Former Texas governor Rick Perry often touted those figures on the campaign trail, back when he was vying for the presidency.

Perry bragged on more than one occasion that since tort reform was passed in his state in 2003, more than 30,000 doctors have moved to Texas to practice medicine. Pulitzer Prize-winning fact-checking bureau PolitiFact rated Perry’s claim “false.”

As pointed out by PolitiFact, Perry’s claim relies on data from the Texas Medical Association. The physician trade group counts the number of medical licenses issued in Texas – but not all of them practice in Texas. According to numbers from the Texas Medical Board, the number of licenses issued to doctors to who actually worked in the state was closer to 12,700. That means roughly 40 percent of the doctors receiving licenses in Texas where actually leaving the state to practice.

But that’s still a good number of new doctors. From 2002 (the year before tort reform was passed in Texas) to 2011, the number of doctors in the state increased by roughly 24 percent. During that same span of time, the state’s overall population increased by 20 percent. While some attribute growth in the Lone Star state to tort reform, others credit the absence of an income tax, the lowest sales tax and the fewest overall local-level taxes.

And then compare post-reform figures to the pre-reform years. In analyzing Perry’s claim, PolitiFact found that the growth of doctors actually increased at a faster rate prior to the passage of tort reform. In the nine years before tort reform, the number of doctors in Texas grew twice as fast as the population.

Doctors like tort reform. But in the end, they’re going where the people are.

If you want to compare Arkansas hospitals with those of our neighbors, also consider the fact that, since 2013, Texas has shuttered at least 18 rural hospitals. Arkansas hospitals aren’t doing half bad.

Last summer, Washington Regional in Northwest Arkansas announced a $44 million expansion. Arkansas Children’s recently finished an expansion. Mercy Hospital has spent more than $247 million on several expansions in 2017 through 2019. Once struggling rural hospitals like Baxter Regional in Mountain Home and Bradley County Medical in Warren are thriving.

If we’re comparing to our neighbors, a case study by Arkansas Center for Health Improvement found that a health care system with locations in Missouri and Arkansas reduced its Springfield staff by 97 employees, while increasing staff in Gravette by 198. Between 2013 and 2015, Baptist Memorial reduced staff in all but one of its Mississippi and Tennessee hospitals. During the same period of time, its Jonesboro hospital increased staff by 250. Both Mississippi and Tennessee are tort reform states.

Tort reform does drive down medical malpractice insurance premiums and helps to reduce the number of malpractice suits brought against doctors and hospitals, allowing them to save money that may or may not translate to reduced costs for patients. And while health care professionals stand to keep more money in their pockets as a result of tort reform, evidence that suggests reform is directly tied to recruitment and retention is refutable.

Tort reform does present an opportunity to help businesses reduce some costs, as well. We’ll explore that soon.

There is, however, copious amounts of evidence that shows that while some health care and business leaders profit from tort reform, there are real victims of such a measure. Those who stand to lose the most are the elderly. Despite this fact, nursing home lobby groups are spending by the boatload to see tort reform implemented in Arkansas. We’ll explore that in another Cash & Candor, too.


In Cash & Candor, Arkansas Money & Politics / AY Magazine Editor Caleb Talley aims to shoot it straight when it comes to business and politics in and around the Natural State. Talley comes to AMP by way of the Arkansas Delta, where he called balls and strikes at the Forrest City Times-Herald. He can be contacted by email at ctalley@aymag.com. Read more Cash & Candor here

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