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Report states Midland benefits from lawsuit reform
by Courtney Bacalso
Midland Reporter-Telegram
By Courtney Bacalso
Staff Writer
Since 1995, the state of Texas has been at the forefront of lawsuit reform aimed at preventing abusive tort cases. And its successes have benefited Midland by the creation of 1,624 jobs and $340 million in annual spending, according to a report released Wednesday.
Waco-based company The Perryman Group states in its report the legislative changes to tort cases resulted in about 8.5 percent of the economic growth of Texas.
"For a decade, the integrity of hundreds were threatened by the culture of corruption and meritless lawsuits perpetrated by injury lawsuit attorneys," said the group's president and founder Ray Perryman, a nationally recognized economic and financial analyst. "This discouraged people from making investments and it led to so many harms in so many places."
One of the first tort cases to put Texas under the spectrum happened in the 1980s. Pennzoil wanted to purchase three-sevenths of the Getty Oil Co. stocks for $3.9 billion. While the board of directors approved the purchase, solicitation for higher offers continued by Getty investment bankers and attorneys. Soon after, Texaco announced it had bought all of Getty stock for $10 billion - prompting Pennzoil to file a tort lawsuit against Texaco for interfering with the previous contract.
A Texas jury decided Texaco owed Pennzoil $10.5 billion in punitive and real damages -- forcing the company to file bankruptcy.
"It may be necessary to file a suit," said Joe Feagan, a Midland lawsuit reform advocate. "But it's not right to sue businesses for amounts that would put them out of business or file bankruptcy. At that point, it doesn't become fair."
Legislation enacted since 1995 include limiting punitive damages, reforming joint and several liability, and restricted venue shopping -- where groups seek out a decision setting where grievances about policy or policy proposals can be aired.
Other industries that have been impacted by changes include the medical industry. Prior to changes, a slew of malpractice cases and awards forced insurance companies to increase medical insurance premiums for doctors in the state, the report states.
This led to a shortage of nurses and doctors in the area because high-risk specialists left the state because of the liabilities, Perryman said.
"But reforms made in 2003 changed that," he added.
Legislation placed $750,000 limit on non-economic damages and required a unanimous jury verdict regarding punitive damages. It also allowed defendants to appeal lawsuits and prevented them from being forced into settlements, the report states.
As a result of the reforms, the Texas Hospital Association saw a 70 percent reduction in the number of lawsuits in 2004, according to the study.
And doctors saw medical liability insurance rates reduce between 21 to 50 percent.
"And it continues to decline 'til this day," Perryman said. "There have been nearly 2,000 doctors and physicians who have returned to the state as a result of that."
Regional impact
(spending in billions)
Annual economic Jobs created
Midland $0.34 1,624
Odessa $0.34 1,467
Houston $39.14 152,905
San Antonio $7.88 39,068
El Paso $2.02 9,251
Source: The Perryman Group
Staff Writer
Since 1995, the state of Texas has been at the forefront of lawsuit reform aimed at preventing abusive tort cases. And its successes have benefited Midland by the creation of 1,624 jobs and $340 million in annual spending, according to a report released Wednesday.
Waco-based company The Perryman Group states in its report the legislative changes to tort cases resulted in about 8.5 percent of the economic growth of Texas.
"For a decade, the integrity of hundreds were threatened by the culture of corruption and meritless lawsuits perpetrated by injury lawsuit attorneys," said the group's president and founder Ray Perryman, a nationally recognized economic and financial analyst. "This discouraged people from making investments and it led to so many harms in so many places."
One of the first tort cases to put Texas under the spectrum happened in the 1980s. Pennzoil wanted to purchase three-sevenths of the Getty Oil Co. stocks for $3.9 billion. While the board of directors approved the purchase, solicitation for higher offers continued by Getty investment bankers and attorneys. Soon after, Texaco announced it had bought all of Getty stock for $10 billion - prompting Pennzoil to file a tort lawsuit against Texaco for interfering with the previous contract.
A Texas jury decided Texaco owed Pennzoil $10.5 billion in punitive and real damages -- forcing the company to file bankruptcy.
"It may be necessary to file a suit," said Joe Feagan, a Midland lawsuit reform advocate. "But it's not right to sue businesses for amounts that would put them out of business or file bankruptcy. At that point, it doesn't become fair."
Legislation enacted since 1995 include limiting punitive damages, reforming joint and several liability, and restricted venue shopping -- where groups seek out a decision setting where grievances about policy or policy proposals can be aired.
Other industries that have been impacted by changes include the medical industry. Prior to changes, a slew of malpractice cases and awards forced insurance companies to increase medical insurance premiums for doctors in the state, the report states.
This led to a shortage of nurses and doctors in the area because high-risk specialists left the state because of the liabilities, Perryman said.
"But reforms made in 2003 changed that," he added.
Legislation placed $750,000 limit on non-economic damages and required a unanimous jury verdict regarding punitive damages. It also allowed defendants to appeal lawsuits and prevented them from being forced into settlements, the report states.
As a result of the reforms, the Texas Hospital Association saw a 70 percent reduction in the number of lawsuits in 2004, according to the study.
And doctors saw medical liability insurance rates reduce between 21 to 50 percent.
"And it continues to decline 'til this day," Perryman said. "There have been nearly 2,000 doctors and physicians who have returned to the state as a result of that."
Regional impact
(spending in billions)
Annual economic Jobs created
Midland $0.34 1,624
Odessa $0.34 1,467
Houston $39.14 152,905
San Antonio $7.88 39,068
El Paso $2.02 9,251
Source: The Perryman Group
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Stu Pidasso wrote on May 1, 2008 10:19 AM: