Texas Legislature Fails to Pass Legislation Aimed at Curbing Nuclear Verdicts

By Caitlin E. Bratt

Texas Senate Bill 30 (a.k.a. the “Curbing Nuclear Verdicts Bill”), which had previously passed through the Texas Senate, failed to be enacted into law, as it was still under review by the Texas House Committee when the legislative term came to an end. Unsuccessful Texas Senate Bill 30 proposed placing restrictions on settlements involving personal injury litigation cases and capping injured Plaintiffs’ medical expense claims.

While this article does not exhaustively address all of the objectives of Texas Senate Bill 30, one of the main purposes of the Bill was to reduce existing noneconomic damage categories, such as physical disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life and injury to reputation, grouping those, instead, into only two broader categories: mental/emotional anguish and physical pain/suffering. The Bill intended to reduce the number of categories by which juries can award non-economic damages to injured Plaintiffs, in turn lowering non-economic damage awards.

One of the Second major objectives of the bill related to inflated medical expenses. Currently, Texas law allows injured Plaintiffs to recover the actual amount paid for their healthcare services (i.e. “Paid – Incurred”), but under the House’s proposed version of the bill, juries would be allowed to consider evidence such as the amount insurance companies and non-third parties paid for the same medical service in the geographical region. Admissibility of evidence of a Plaintiff’s use of health insurance has long since been a faux pas in Texas personal injury litigation under the “Collateral Source Rule”. Yet, in recent years, Texas caselaw has been leaning towards the admissibility of Medicare and Medicaid rates and/or the reimbursement rates of other private health insurance carriers, when relevant to the issues of the specific personal injury litigation matter, such as excessive billing by a medical prover (such as those accepting Letters of Protection) or a Plaintiff that had, but failed to use, private health insurance in an attempt to increase their economic damages. Pivotal cases regarding the admissibility of reimbursement rates in personal injury matters include but are not limited to, In Re North Cypress Medical Center Operating Co., Ltd. and In Re K&L Auto Crushers, LLC. Future similar bills, if again proposed and passed, could make the admissibility of governmental and private health insurance reimbursement rates the standard in Texas personal injury litigation cases.

This unsuccessful Bill was similar to laws passed by legislature in Georgia and Florida, which are intended to curb the rise in “nuclear” verdicts (i.e., verdicts over $10 million). Nuclear verdicts tend to increase insurance premiums and litigation costs, which, in turn, have negative effects on business, the economy and our clients. We will continue to monitor the progress of future similar bills, as these types of bills would have considerable effects on injury litigation for Clausen Miller’s clients and their insurers if passed.

Sources:

Texas Legislature Online – 89(R) History for SB 30

In Re North Cypress Medical Center Operating Co., Ltd., 559 S.W.3d 128 (Tex. 2018)

In Re K&L Auto Crushers, LLC and Thomas Gothard, Jr., 627 S.W.3d 239 (Tex. 2021)