Thursday, August 14, 2003

Proposition 12

A fight is brewing in Texas legal circles. On the one side is "Save Texas Courts," a group dedicated to stopping the passage of "Proposition 12," a constitutional amendment on the Sept. 13 ballot. On the other side are those that fought to get that initiative on the ballot, and who are certain to start their own campaign. Based on the materials I have already seen, including the glossy mailer sent out by Save Texas Courts, I fear that the actual merits of the dispute are about to get lost in an ocean of rhetoric. Unfortunately, the real issue requires a bit of explanation, and cannot be boiled down to allegations of "saving courts" or "judicial activism."

I've been working on something related to Prop. 12 here in the office, and I wanted to have a place to dump the results of my own investigation. It's long, but (unlike every other thing written about Prop. 12 thus far) it's right. This is my own opinion, and not the opinion of my firm or anyone else I work with.

So here's the real deal:

1. The Open Courts Provision

Article I, section 13 of the Texas Constitution says:

"All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law."

This is a provision that derives directly from Magna Carta, and appears in nearly all of the state constitutions (but not the federal). As in the other states, the "open courts" provision has come to be seen as creating three different protections. In the early days of the Republic, had its most obvious meaning: government has to ensure that the courts stay open. Most memorably, it was used in 1932 to rebuff Gov. Sterling's outrageous attempt to declare martial law over the East Texas oilfields--the wildcatters' refusal to obey conservation laws was not an "insurrection" because the courts were open and available. The next logical step in the development of the "open courts" provision was a series of cases that decided whether various forms of filing fees were an impermissible restriction on the availability of the courts. It stretched the idea of an "open court" further, but didn't do violence to it.

But most recently, the "open courts" provision came to be understood as a protection of the right to sue. This flows naturally from the last clause, which explains that "every person for an injury done him ... shall have a remedy by due course of law." But this leads to some serious questioning about the proper role of the Texas Legislature and the nature of the law itself. Texas inherited the British common-law system, rather than the Spanish code system, which meant that "the law" was a series of principles that had been "discovered" by judges over hundreds of years. Judges didn' t believe that they were "passing laws"; rather, they were discovering the outlines of the "natural law" created by God and inherent in the entire Universe. This persistent search for the "natural" rules that should govern human society led to some basic principles that could be asserted in a court to resolve disputes between the common folk of England. Thus, it was the "common law," as opposed to the edicts of the King or the Acts of Parliament. For what it's worth, the process of "discovering" the common law stopped some time at the beginning of this century, and courts have more or less enforced the rules as they have been already established.

But how do the Acts of Parliament relate to the "common law"?

The Texas Supreme Court, like all other courts to address the issue, quickly established that the Texas Legislature, as the legislative body of the government, could add to the common law of Texas by passing its own laws and restrictions. The Legislature giveth, and the Legislature taketh away, so the Lege could also limit or destroy its own laws at its pleasure. But the "open courts" provision has to have some sort of meaning to justify its place in the Texas Bill of Rights, so the Court decided that the provision's protection of "redress for injury" means that the common law is protected against encroachment, at least to some ill-defined degree. Texas was in harmony with most American jurisprudence on this point. Thus, the Legislature has boundaries when it comes to the common law.

The Court soon held that the Legislature couldn't take away a person's right to sue entirely -- that is, the Legislature had to give an adequate alternative. Thus, workers' compensation took away a worker's right to sue for the negligence of his employer, but that was acceptable under the "open courts" provision because it gave back a no-fault compensation system. That made sense, because the loss of an entire cause of action was drastic.

But the lingering question was whether the Legislature could pass a law that merely limited the remedies available under the common law, without giving something in return. After all, the plaintiff would get the right to sue, and would get the right to receive damages -- which pretty much takes the literal terms of the Texas Constitution out of the picture. What would be the applicable standard in deciding whether some damages was "enough"
for the "open courts" provision?

As late as 1982, the Texas Supreme Court speculated that the Legislature could limit a common law remedy in two circumstances: (1) when it gave another remedy in return, as with workers' compensation, or (2) when the Legislature was reasonably acting to protect the health and welfare of Texas. This second alternative came from the U.S. Supreme Court's recognition that the states have the "police power"; that is, the state legislatures always have the power to pass laws that govern everyday life and provide for the health, welfare, morals, and education of their citizens, so long as those laws are reasonable and are aimed at a legitimate governmental goal. That is the purpose of a Legislature, and the very meaning of "legislative" power. Thus, the "police power" of the states has become a completely accepted part of all jurisprudence in America. But because the federal constitution doesn't have an "open courts" provision, there was no need to examine whether the "police power" allowed a legislature to modify the common law.

2. The Lucas Decision

In 1988, the issue finally came to a head in Texas in Lucas v. United States. The Legislature had responded to a perceived medical malpractice crisis by passing a law that capped damages in medical malpractice cases at $400,000 plus medical expenses. When the law was finally considered by the Texas Supreme Court, the Court divided and wrote a remarkable set of opinions. It's outside the scope of this post, but the Court in 1988 was considered by some to be bought-and-paid-for by the plaintiff's lawyers, a perception that may have been augmented by the Justices' willingness to accept all-expense-paid trips to Las Vegas paid by the plaintiff's bar. Others thought that the Court received a bad rap because they were more willing to stand up for the rights of people that had been grievously injured. At any rate, I don't think anyone would contest the assertion that the 1984-88 Supreme Court is persona non grata in Texas right now.

The Lucas majority held that the cap could not stand because it was "irrational" and thus violated the "open courts" provision. That is, the Legislature had no power to limit a remedy that existed in 1876 without offering an alternative in its place. The majority, shockingly, did not address the "police power" argument, but one can gather that they would have rejected that argument as well. Justice Kilgarlin's opinion suggests that it was "irrational" for the Legislature to have passed the cap. This was startling, because courts very seldom dare to say that the decision of the Legislature was "irrational" -- that is, an entire branch of government collectively lost its senses. But their reasoning has some interesting tones: the majority says it was wrong to put the burden of solving the medical malpractice crisis solely on those plaintiffs seeking in excess of $400,000. Thus, they indicated that some sort of compensation fund would be constitutional. The majority mentioned that Indiana had such a fund, though Indiana remains the only state to create one. (In Indiana, non-economic damage awards in excess of $1,250,000 are paid by the state.)

Two separate dissenting opinions were written, by Justice Raul Gonzalez and new Chief Justice Tom Phillips. The opinions are very similar: both would have applied the "police power" rule to state that the Legislature has the power to pass laws to respond to Texas's needs, regardless of whether the common law had allowed or disallowed it. In doing so, they argued that "the common law should not be elevated to constitutional stature" and emphasized the role of the Legislature as the source of lawmaking power. That is, the Legislature is the voice of the people, so if you don't like the laws passed by your own Legislature, then you should vote the bastards out. Though judges are elected in Texas, they are certainly not as dependent upon the whims of the populace as are the legislators--judicial elections are almost always down-ballot and ignored.

The result of Lucas was the principle that the Legislature could not limit or "cap" a remedy that was available in 1876, the year that we adopted the Texas Constitution. For those who had opposed the law, this was a vindication of Texans' most cherished rights against a clumsy governmental incursion. For those who had supported the law, the Court had "enshrined" the law of 1876 such that it could not be modified (even in times of crisis) by the people who were elected to write the laws.

3. What Does a Legislature Do?

Note that the phrase "judicial activism" or "legislating from the bench" does not help when describing what happened. The majority believed it was merely interpreting the plain terms of the Texas Constitution, and was ensuring that the Legislature did not go beyond its proper bounds. The dissent believed that the majority had intruded into the proper role of the Legislature by insisting that the Legislature didn't have the power to pass laws. To the majority, the dissent was acquiescing in a violation of the Constitution; to the dissent, the majority was acquiescing in a violation of the Constitution.

This brings us to the present problem. Another medical malpractice "crisis" has arisen, such that an overwhelming majority of the Legislature just passed a new cap on medical malpractice damages. There is no cap on "economic" damages such as medical expenses or lost wages, and there is no cap on punitive damages. But "non-economic" damages such as pain and suffering, loss of consortium, and mental anguish are capped at $250,000 for the doctors and an additional $250,000 for each of up to two hospitals, making a total cap of $750,000. The Legislature believed that this was justified by the fact that nearly all of the medical malpractice insurers have fled Texas, that there are 150 counties in Texas without an obstetrician, and by the fact that non-economic damage awards doubled in the last ten years. The argument is that these non-economic damage awards are raising rates to a level that has driven doctors out of Texas altogether. 24 states have passed such laws already.

The effect of this law is that juries will still hear medical malpractice cases, and will still be asked to award damages to the plaintiff if they find malpractice. But any award of non-economic damages above the cap will be disregarded. And the courts will still have their traditional role of reviewing jury damages. This role has been fairly limited in the past: they can review damages to determine if they are "supported by the evidence," and order a "remittitur" (refund) if they are not. The judge cannot directly order a reduction in the verdict; a "remittitur" says that the plaintiff must either accept the lesser amount or go through a completely new trial. The judge can order up to three new trials before the jury verdict must stand, so the "remittitur" power cannot be easily ignored. Some Texas judges are known to use the power generously to impose their own opinions on the case. That power remains undimmed by the medical malpractice law -- it merely means that the jury has no power to award damages above the cap.

But because of Lucas, that law may be thrown out in two or three years, when it would probably arrive at the Supreme Court. It's anybody's guess whether the current Court will follow Lucas or will reverse it; though the present Court is a great deal more supportive of tort reform, it is hard to overturn a case that was fairly recently decided. But that can happen -- just look at Lawrence v. Texas, which overruled the 1986 Bowers v. Hardwick.

The Legislature decided to solve this uncertainty by passing House Joint Resolution 3, which puts a constitutional amendment on the ballot (Prop. 12). Do not depend on any person's explanation of the meaning of this document -- read it yourself. The document has four parts. First, it immediately reiterates the Legislature's power to pass laws capping non-economic damages in medical malpractice cases, and supersedes all other provisions of the Constitution that would prevent the Legislature from doing so -- especially the open courts provision. Second, starting Jan. 1, 2005, the Legislature will be able to pass such caps in all cases, not merely medical malpractice. Third, the Legislature must pass such a law by a three-fifths majority in order to enact it. Fourth, the provision states the language that shall be used on the ballot.

There is some cause for consternation at the ballot language:

"The constitutional amendment concerning civil
lawsuits against doctors and health care providers, and other
actions, authorizing the legislature to determine limitations on
non-economic damages."

"And other actions" is a clumsy way of stating the second part of the amendment, which frees the Legislature to cap all non-economic damages starting in 2005. It seems somewhat sneaky, because that phrase has the effect of erasing the narrower "medical" portion of the previous clause. But you should also be aware that this aspect of the bill was well-discussed in the Legislature, and appears this way because the larger scope of the amendment was added after the previous debate about medical malpractice. You should decide for yourself if this is an attempt to "sneak something past" the voters.

You should also know that this is not the first time that an issue like this one has been resolved by amendment. In 1987, the voters approved Art. XI, Section 13 of the Texas Constitution, which allows the Legislature to decide whether certain functions of a municipality are "governmental" or "proprietary." This is significant because it determines whether a municipality can be sued for doing those functions. The Legislature had been held back by the common-law definitions of those terms, and the voters chose to allow the Legislature to overcome the common law and decide municipal liability for themselves. The Supreme Court held that the amendment superseded the open courts provision (the amendment said "notwithstanding any other provision of this Constitution") and gave that power to the Legislature. But it isn't clear whether the voters in 1987 knew the significance of what they were passing.

So, here's what I think it boils down to:

If you vote for Proposition 12:
1. The medical malpractice bill will definitely be constitutional.
2. Despite the common law, the Legislature will have the power to pass laws capping any non-economic damages at any amount -- absolutely any amount at all. Even $0. There will be no other provision of the Constitution to tell them otherwise, because this amendment grants power "notwithstanding any other provision of this Constitution." But consider also that only three-fifths of the Legislature could do such an act, and that the Legislature is accountable to the people.
3. As to any cause of action that has been capped, the jury will not be permitted to award non-economic damages above that cap. The courts have the same power to review the jury verdict as before.

If you vote against Proposition 12:
1. The medical malpractice bill may be constitutional, or may not, depending on what the Supreme Court decides.
2. If the Supreme Court reaffirms Lucas, juries will be able to award non-economic damages in excess of $250,000.
3. The "common law" may be affirmed as a central storehouse of rights that cannot be taken away from the people. But it may not.

So, with all that in mind, consider these questions:
1. Who gains from the amendment? Who loses?
2. Is it correct to say that a vote against Prop. 12 "Saves Texas Courts"?
3. Should the Legislature have the power to change the "common law," or did the "open courts" provision enshrine the common law as a "core of rights" that all Texans can look to?

Most of all, do not accept anyone else's answer to the above questions. Investigate. Decide for yourself.

Addendum, August 18

In the course of my research, I have made another discovery that caused me to delete a sentence from the above post. Despite what has been argued by Rep. Joe Nixon, "pain and suffering" damages were available at common law in 1876, for both physical and mental suffering. See Hays v. Houston G. N. R.R. Co., 46 Tex. 272 (1876); March v. Walker, 48 Tex. 372 (1877). So, under Lucas, the "open courts" provision definitely protects "non-economic damages." The question remains this: should the Legislature have the power to impose caps on non-economic damages?

 6:57 PM

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