Tort Deform

How big business turned the Texas House into a puppet show

During the lengthy House floor debate on the omnibus civil justice legislation last month, Democrats referred to the House gallery—where the three amigos of tort reform, Dick Weekley, Leo Linbeck, and Dick Trabulsi were perched (along with the Speaker’s wife)—as the “owner’s box.” It struck many at the Capitol as an accurate assessment of who really ran the Texas House while it passed House Bill 4 and its companion constitutional amendment, House Joint Resolution 3. Together, the two bills will cap noneconomic jury awards in medical malpractice suits at $250,000, pave the way for future caps, and impose a host of other restrictions on civil liability cases. The folks in the owner’s box represent Texans for Lawsuit Reform (TLR) and its top donors. They helped engineer the Republican takeover of the House last fall that handed Rep. Tom Craddick (R-Midland) his long-sought speakership. In return, Craddick and the House leadership went to extraordinary lengths to pass the tort reformers’ dream legislative package almost untouched. As the three founders of Texans for Lawsuit Reform watched from the gallery, Craddick overruled one point of order after another, and 88 Republicans robotically scuttled nearly 70 Democratic amendments in an impressive display of legislative force and heavy-handed politics. The true beneficiaries of all this legislative turmoil will be TLR and its supporters, not coincidentally, the very people who wrote the bill, and the heaviest hitters in some of the state’s most lawsuit-prone industries.

Beginning with the 1996 elections, the Houston-based TLR PAC spent millions in highly organized attempts to overthrow former Speaker Pete Laney (D-Hale Center) and install Craddick. In 2002, it finally succeeded, joining with the Tom DeLay-spawned Texans for a Republican Majority and the Texas Association of Business to help elect 27 Republican freshmen. (The coalition’s efforts are currently the focus of a Travis County grand jury investigation examining possible election law and income tax violations.) Buying the Texas House didn’t come cheap, unless one factors in future business savings. According to campaign contribution records, TLR’s political action committee gave more than $1.8 million to candidates in 2002. Its top donors separately contributed several million more. (In contrast, the opposition Texas Trial Lawyers Association contributed $559,500 to the Democratic Party of Texas and individual candidates in 2002. Individual trial lawyers personally contributed to campaigns as well.) The TLR PAC shoveled money to the campaigns of 23 of the 27 winning freshmen Republicans in House races, totaling more than $331,000. That included huge donations in three key races: $97,000 to Ken Mercer (R-San Antonio) in the week before the November election; more than $71,000 to Martha Wong (R-Houston); and $60,000 to Mike “Tuffy” Hamilton (R-Mauriceville), according to Texas Ethics Commission filings. Only one freshman Democrat, Timoteo Garza (D-Eagle Pass), received TLR funds, a $5,000 nod. (Garza voted for the constitutional amendment.)

All this is in addition to huge individual contributions by major supporters of TLR. Tort reformer Bob Perry of the Houston-based construction outfit Perry Homes, for example, gave more than $2.2 million during the past two years alone, including $100,000 to Rick Perry, $10,000 to Craddick and a staggering $945,000 to the Republican Party of Texas. In the last two years, Bob Perry also chipped in $115,000 to TLR. Harlan Crow, scion of a Dallas-based construction enterprise and a former board member of the conservative American Enterprise Institute, has given TLR $300,000 since 2000 and another $85,000 to the Republican Party. TLR co-founder Dick Weekley, in addition to donating hundreds of thousands of dollars to TLR’s PAC, personally has contributed more than $100,000 to Republican candidates since 2001, and gave $25,000 to the conservative Texas Civil Justice League PAC in 2002.

Did Crow, Weekley, and Perry put up that kind of money simply for the civic good? Public filings indicate that David Weekley Homes, run by brothers Dick and David Weekley, has been named a defendant in 10 civil suits in Harris County alone since the start of 2002. Two recent cases involved personal injury claims and four others cited violations of Texas’ Deceptive Trade Practices Act. Not to be outdone, Crow has been named in 16 civil suits since 1986. But Bob Perry’s Perry Homes takes the civil litigation blue ribbon, having been sued more than 60 times in the past 15 years, according to a search of court records.

A number of major corporations as well stand to benefit directly from provisions of HB 4 and its constitutional amendment HJR 3. The most blatant example is the so-called “Dick Cheney” amendment, which would make it easier for companies to elude asbestos lawsuits. The amendment, a collaboration between Rep. Will Hartnett (R-Dallas) and Rep. Joe Nixon (R-Houston), seems drafted specifically for Cheney’s former employer, Houston-based Halliburton. One of Halliburton’s main subsidiaries, Dresser Industries, has already paid millions in asbestos liability it absorbed from a company it bought in 1967. The Cheney amendment would limit successor liability so that the maximum Halliburton and Dresser would be forced to pay in asbestos claims would equal the value of the company Dresser bought back in 1967. Dresser has already paid that amount in settlements, effectively ending its asbestos liability. Last November, Halliburton indicated it was ready to settle nearly 300,000 current and future asbestos suits for a payout of $4 billion. But a month later, Halliburton backed away from the settlement offer. Plaintiffs’ attorneys believe the company is awaiting the outcome of tort reform at the Lege. If the Cheney amendment is enacted, Halliburton wouldn’t have to pay the $4 billion settlement, or any other asbestos damages, and victims would be flat out of luck. Honeywell is another company with significant asbestos liability and likely to save billions from HB 4. Many of these companies purchased smaller firms on the cheap, discounted because of liability concerns. Now, if that liability is lifted, the buyers will reap a major windfall.

Pharmaceutical and insurance industries, both large backers of TLR, would also gain handsomely from HB 4. The pharmaceutical companies in particular would save substantial sums under an HB 4 provision restricting product liability. Essentially, this section of the bill grants a company immunity from a lawsuit if its product gains government approval. So, for example, patients who suffer unforeseen consequences from a new heart medication would have great difficulty suing the drug company if the Food and Drug Administration (FDA) had approved the medication. Even the FDA itself recommended against this approach in written comments in 1997, noting that it cannot guarantee the safety of approved devices. “Accordingly, compliance with general FDA requirements should not broadly preempt State common law remedies, which provide an important (and frequently the only) mechanism for persons to seek redress for injuries resulting from defective medical devices,” the agency stated.

Dick Trabulsi, a TLR co-founder, said this section wouldn’t close the courtroom door to victims of corporate negligence. He argues HB 4 specifically states that if attorneys can prove negligence by a company, the restrictions wouldn’t apply. “A company couldn’t know something was harmful and get away with it,” he said. When asked if TLR’s copious campaign contributions and its equally voluminous court docket meant HB 4 was a bonanza for the lawsuit-prone, Trabulsi said his group is simply following through on the victory TLR won in the fall election. “We’ve been persistent about this for 10 years,” he said. “It’s not a windfall when the candidate you backed openly won. The people of Texas want this. There’s a huge mandate for it. We openly support pro-tort reform candidates from both parties. We play for big stakes, and we play fair, and we play to win.”

And it’s clear exactly who won when this legislation was rammed through the House.

Plaintiff Lament

BY JAKE BERNSTEIN

It’s another of life’s great ironies over which future historians will no doubt puzzle: How can it be that the Texas trial lawyers are among the best in the nation at representing plaintiffs before juries, yet ineffective when it comes to defending themselves in the court of public opinion?

Public interest groups and some Democratic representatives were asking themselves that very question after HB 4—hereafter known as the Trial Lawyers Extinction Act—passed out of the Texas House. If the House’s version were to become law, this radical refashioning of Texas’ civil justice system would force many practicing lawyers to either change their specialties or close up shop. Republicans hope it will defund the Democratic Party, which takes large amounts of trial lawyer cash. More significantly, the legislation also pokes giant holes in the last line of defense ordinary Texans have against the predations of powerful corporate interests.

Given the seriousness of the situation, one would expect that the Texas Trial Lawyers Association (TTLA) would finance and execute publicity campaigns in key voting districts to inform Texans of what was at stake. That hundreds of victims served by trial lawyers would be brought to the Capitol to tell their human interest stories to legislators and the media. TTLA would facilitate the creation of a massive coalition of all those harmed by the legislation to stop it. And every representative who had received support from the TTLA in the past would know in their hearts that a vote for the legislation would carry consequences for their political future. None of the above occurred. When asked how he would describe TTLA’s efforts to defeat HB 4 and HJR 3 in the House, Rep. Garnet Coleman (D-Houston) termed it as “loosy-goosey.”

Some argue that trial lawyers are so maligned after more than a decade of largely unanswered attacks that there is little they can do. TTLA representatives themselves are full of reasons, some more valid than others, for how they find themselves in their present situation. They blame others and they complain about being outgunned. For starters, they never had high hopes for the bill that would come out of the House. In some respects redistricting had already decided that issue. And it was clear the jury was rigged when Speaker Craddick opted to flout long-standing House rules to push the measure through. “We have known from the get-go that the Senate is where the fight is,” says one.

Tommy Townsend, TTLA executive director, says the group asked for help from other organizations only to be rebuffed. “We even went to the national level to ask for more activity from children’s groups, elderly groups, and women’s organizations and we got no response,” says Townsend.

But unlike most advocacy organizations, the trial lawyers have the funds to support their activities. “There were people ready to take the message but there wasn’t any money,” explains one director of a progressive nonprofit.

Ralph Nader, who has watched the Texas trial lawyers get hammered since the worker’s comp battle of 1989, is scathing in his assessment. “They are allowing what they built up for 50 years to be destroyed because they won’t organize,” he says. “They can’t mount a campaign to help the future wounded.”

The TTLA insists that their members’ money cannot compete with the likes of billion-dollar pharmaceutical companies and the U.S. Chamber of Commerce. Part of the problem, say observers, is that the Texas trial lawyers are made up of individualists, mavericks who make their living by gambling on cases based on contingency fees. Without a dominant leader, they are hard to mobilize. “They all agree that they should spend money but they want somebody else to spend it,” believes Nader.

TTLA also says it’s hard to convince the public to be concerned about a possible accident down the road. By the same token, progressive policy groups are busy putting out more immediate fires. “Imagining yourself being paralyzed by a defective vehicle is not a high priority of worry,” notes Willie Chapman, a TTLA spokesman, especially in a time of severe budget cuts and a radical Republican revolution. Critics are not convinced. “This issue was made for soccer moms,” says one frustrated consultant. “It’s about keeping kids safe.”

TTLA representatives also credit Republicans with successfully hijacking doctors’ concerns over medical malpractice insurance. Doctors from around the state pressed their representatives to support the bills. There are 38,000 doctors and only 3,000 TTLA members.

Townsend insists that the defeat will change the group’s electoral strategy. “We are going to have to become more issue oriented,” he says. “If we can’t count on Democrats we are going to have to count on people who will help us on our issues. If that means we become more bipartisan, so be it.”

The TTLA executive director also puts a positive spin on the House debate. The group provided support to Democratic representatives in the writing of amendments to fix the bill. The debate over the amendments dragged on for six days. “Frankly, we feel pretty damn good at being at a point where there are about 45 days in the session and still no bill has reached the governor’s desk,” he says. “It gave time for the media to focus on really how far reaching this proposal was.”

Different Roads: A Tale of Two Freshmen

BY JAKE BERNSTEIN

There are probably more commonalties between Rep. Patrick Rose (D-Dripping Springs) and Rep. John Mabry (D-Waco) than differences. Both belong to a dwindling group of Anglo Democrats at a time when newspaper stories are written about them as if they are an exotic and endangered species. Both survived hard-fought election campaigns in Republican majority districts where the election turned on the foibles of an opponent. Both are highly intelligent, motivated, and detail oriented. Their offices are even next door to each other. And so, it’s not surprising that during the debate over House Bill 4 and House Joint Resolution 3, both Rose and Mabry distinguished themselves by offering key amendments. Yet it is there that their paths dramatically diverged. Rose actively supported tort reform. Mabry actively opposed it. The motivation behind why each man chose his position and what repercussions their stance may bring come election time is the subject of widespread speculation throughout the Capitol. But their stories also reveal as much about the changing fortunes of the House as they do about the representatives’ individual decisions.

Capitol wags believe Patrick Rose’s fate was sealed the day committee assignments were announced. It was no coincidence that Rose was named to the civil practices committee, they say. Given his position, he faced two bad scenarios: He could oppose the tort reform package, arguing strenuously that it should be separated from the medical malpractice measures, and then fight it on the floor. If he chose that approach, it would mean that the Republican leadership would likely kill all his bills. Come election time, front groups like the Texas Association of Business (TAB) would gleefully drench his d
strict in advertisements accusing him of being anti-doc
or, anti-business, and ineffective.

Or, as he in fact chose, he could back tort reform, and in exchange push an amendment that would provide for some rollback in insurance rates. (Republicans need some rate reduction simply to prove to voters that tort reform works.) Such a strategy might win the allegiance of the small business community across his district, which voted 57 percent Republican in the last statewide election. Under this scenario, the TAB still probably will come after him. Democrats in his district, angered by his position—including an 86 percent voting record against amendments to moderate the bill—might very well mount a primary challenge. The possibility of two costly campaigns could take a toll. His high profile support of tort reform—particularly of the constitutional amendment—also rules out the likelihood of any trial lawyer money for his campaign. Since Republicans needed 100 representatives to pass HJR 3, it was the only place where a Democratic vote really counted. Given the right candidate, the trial lawyers might even give money to his opponents in the primary or general election.

Rose says he is proud that his efforts will provide for at least a 15 percent drop in insurance rates. The amendment is contingent on either voters passing the change to the constitution mandated by HJR 3 or the state supreme court upholding damage caps. It also gives the state insurance commissioner new powers to hold annual rate hearings and make insurance company information more readily available. All told, Rose hopes rates could fall more than 25 percent. He dismisses critics who argue that the rollback is insignificant given how much rates have grown in recent years. Rose casts the debate as a battle between two wealthy interests with himself in the role of defender of the little guy caught in between them. It remains to be seen what goodies Rose might get in appropriations for his district. And although he voted for the Republicans’ punitive budget, he vows to be a leader in the fight against vouchers. “I will always be a Democrat and I will also always be in the middle of the spectrum,” he says.

John Mabry fought tenaciously against the bill and went down in defeat alongside his fellow Democrats. He offered an amendment to HB 4 that would have stripped out a provision that afforded only defendants (and not plaintiffs) the right to make a settlement offer in a case. Another Mabry amendment would have deleted a passage that forbids attorneys from informing a jury when the conduct underlying a plaintiff’s claim is also a criminal act under the Penal Code.

There are two reasons insiders give for John Mabry’s actions during the tort reform debate. For starters they note that he is a trial lawyer. His very livelihood is at stake. They also note the composition of his district—it’s 67.2 percent Republican. The argument goes: John Mabry will be defeated by a Republican in the next election regardless of what he does, so he has nothing to lose.

Mabry, of course, doesn’t see it that way. His experience as a trial lawyer proved crucial to understanding HB 4’s full intent. “A great deal of HB 4 is so technical that it takes a lawyer to realize how damaging it is to the rights of citizens,” he says.

He is also unconvinced that his district will reject him for his stance. “People said I couldn’t win the last time,” he notes. “There are always going to be naysayers because of the numbers. But my election proved that the people of McLennan County are conscientious and pay attention to who their candidates are.”

During the debate, it was clear that Mabry took pleasure from the opportunity to challenge the Republican leadership on a bill so bad that almost every single newspaper in the state editorialized against it. “I don’t think it’s good public policy for the state of Texas,” he says. “If it hurts me politically, so be it.”

Will the Senate Save Us

BY DAVE MANN

The omnibus civil justice bill, House Bill 4, and its sidekick constitutional amendment, House Joint Resolution 3, landed in the Senate in early April as a foul-smelling piece of legislative refuse no one wanted to touch. Few senators would comment on the record about tort reform after watching with horror the train-wreck House debate the previous week. As one senate staffer put it, “We just want to get through this without making fools of ourselves like they did in the House.”

The hope in most Senate offices was that State Affairs Committee Chair and former Lt. Gov. Bill Ratliff would fix the bills and spare the Senate the House’s fate. In Ratliff, one of the Lege’s most senior and highly regarded members, their hopes seemed well placed. While he refused to reseparate the tort and medical malpractice sections (those provisions originally were filed as separate bills), Ratliff promised and then delivered a deliberate, open, and thoughtful committee debate on HB 4—exactly what didn’t occur in the House.

On April 7, the first day of testimony, Ratliff’s committee spent nearly eight hours discussing HB 4’s first two articles, more time than the House Civil Practices Committee had devoted to the entire 21-article bill. Ratliff methodically plowed through HB 4 article by article, allowing representatives of Texans for Lawsuit Reform, the group that wrote the bill, and critics from the Texas Trial Lawyers Association to conduct a real debate. The chairman sat expressionless throughout the first four days of testimony, asking pointed questions that invariably gouged holes in both sides’ arguments. His statesmanship was clearly appreciated. Nearly every tort reform opponent who testified thanked the committee profusely for a legitimate chance to challenge the bill’s provisions. Typical of these sentiments were those of Reggie James of Consumers Union, who paused in the middle of his testimony on Article 1 to say, “I really do appreciate all the questions members have been asking, because it shows are trying to get to the bottom of this, unlike my experience in the other chamber.” It was a sad comment on the tone of the session that tort reform critics were so grateful simply to have someone listen.

In past sessions, it fell to the Democratic House to keep a leash on the more conservative Senate. Now the positions are reversed. Not that the Senate’s any more progressive, mind you, just that the House is much more radical. Nowhere is this more true than on tort “reform.” The bare-knuckled tactics that Texans for Lawsuit Reform and its supporters employed so successfully in the House, where the Republican leadership and Speaker Tom Craddick (R-Midland) ascended to power thanks in large part to TLR money, won’t get them far in the Senate. Because senators have larger districts and more diverse constituencies, it’s harder to threaten them with electoral defeat based on a single issue or a single vote. Moreover, Senators aren’t likely to sell their votes for a $5 million medical center, as the leadership allegedly offered several Democrats in the House. Perhaps more important, Lt. Gov. David Dewhurst isn’t nearly as close to TLR as is Craddick; in fact, TLR gave money to both Dewhurst and his Democratic opponent John Sharp.

TLR’s biggest Senate allies are Todd Staples (R-Palestine), Troy Fraser (R-Horseshoe Bay), and Tommy Williams (R-The Woodlands). Staples likely will lead the Senate tort reform charge. He’s vice chair of State Affairs and has received nearly $500,000 in campaign funds from TLR in the last two election cycles, according to Texas Ethics Commission filings. Fraser’s presence on State Affairs gives TLR two staunch allies on the committee. But the rest of the committee members, including Republicans Robert Duncan (Lubbock) and Chris Harris (Arlington), have been less than enthused about HB 4 during hearings. After just a week of testimony on the bill, Senate sources said, the committee was poised to strip or significantly alter the most criticized sections of HB 4. Targets included the provisions aimed at reducing class action suits, the section allowing defendants more easily to change where a trial is held and before what judge, and the so-called “loser pays” clause, which would force even victorious plaintiffs sometimes to pay the other side’s legal fees.

Even when a stripped-down HB 4 passes out of committee, Republicans must siphon two Democratic votes just to get the bill to the floor. Ken Armbrister (D-Victoria) seems one likely candidate. The other was thought to be Eddie Lucio (D-Brownsville), who supported tort reform measures in 1995 and 1997. But Lucio, one of the few senators willing to speak on the record about tort reform, said in early April that he wouldn’t support the bill unless Ratliff trimmed it significantly. He said he backs medical malpractice reform provisions but termed the rest of the bill as “overreaching,” and vowed he would vote for any floor amendment that would split medical malpractice from the tort reform measures. ” I don’t like us addressing Dick Cheney’s problems here in Texas,” he said, referring to the so-called “Dick Cheney” amendment of HB 4 that would absolve the vice president’s former employer, Halliburton, of asbestos liability.

HB 4 likely won’t reach the Senate floor before the last week in April. If the Senate alters the bill, as seems likely, HB 4 would then move to a House-Senate conference committee. Dewhurst would appoint the Senate conference representatives. Ratliff, as Senate sponsor, would head the group, which must also include at least two members of State Affairs. While HB 4 seems headed for conference, several sources said the constitutional amendment, HJR 3, will have trouble passing the Senate at all. HJR 3, which facilitates adding future caps on any civil damage awards with little public input, needs a two-thirds vote to pass. That isn’t assured. If a constitutional amendment doesn’t pass, it can’t be considered again this session, according to Senate rules. In this session of Democratic despair, the torpedoing of HJR 3, and the passage of a hobbled HB 4 appears the best case scenario for Democrats.

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