Reprinted from Drug Discovery & Development, June 2004
We could see it coming. 2003 was a time for legislative action in Texas. Our pharmaceutical clients had long been the targets of "iffy" – but potentially dangerous and certainly very costly – lawsuits in Texas. We saw breast implant litigation drive one client to bankruptcy court. Another was shrink-wrapped into oblivion by the diet drug wars. And by 2003 our law firm was in the third year of hand-to-hand combat with some of Texas ' most able plaintiff's lawyers over just one pharmaceutical.
For at least the last 20 years, two counties in Texas had become affectionately known as the number 1 and number 2 litigation hell holes in the nation. The courts in those counties frequently set the nationwide pace for critical pretrial activities in mass tort litigation. Courts in those counties decide everything from who gets deposed and when, to what documents get produced and when, and finally to who gets to see those documents and when.
By 2003, the time was right for wringing some legislative reform from Texas ' historically liberal legislature. Texas had a governor, lieutenant governor, and house speaker who understood the need for reform. And even the one group critical to the bottom line of our pharma clients was screaming for legislative reforms: the doctors. Medical malpractice claims and insurance premiums were at an all time high. It was a critical opportunity for the pharmaceutical industry to join its natural ally in seeking reforms from the Texas legislature.
Smelling opportunity, we put on a full court press through four long months of the 2003 Texas legislative session (including the now infamous walkout of House Democrats to Ardmore, Oklahoma to avoid congressional redistricting). Teamed with a forward thinking pharmaceutical client, an able bodied lobbyist, and the sharpest of FDA regulatory counsel in Washington, we aimed to secure legislative reforms for the pharmaceutical industry and to advance the cause of our friends in the medical community.
And we were successful. In 2003, Texas, adopted a tough FDA warnings defense that will deter unmeritorious pharmaceutical and device litigation in Texas. Texas law now provides that there is a rebuttable presumption in all product liability cases that FDA approved warnings on medications and devices are adequate unless the plaintiff can establish one of the following:
- Required information was withheld by the pharmaceutical or device company from the FDA before or after pre-market approval which was causally related to the plaintiff's injury
- The medication or device has been ordered by the FDA to be withdrawn from the market,
- The manufacturer recommended, promoted, or advertised the medication or device for off label use and such use was causally related to the plaintiff's injury
- The manufacturer engaged in bribery that caused an inadequate warning to be approved, and such warning was causally connected to the plaintiff's injury
Combined with the new FDA warnings defense, the 2003 Texas legislature adopted other tort reforms that serve as examples for other states. Three are worth noting.
First, doctors and other healthcare providers are protected by a $250,000 non-economic damage cap for medical malpractice.. While this limitation has not been expanded to other areas, Texas did adopt a constitutional amendment empowering its legislature to limit all damages in all cases. Future legislatures will have to tackle how far to extend damage caps.
Second, Texas now has a multidistrict litigation procedure. This procedure reduces the risk that a court in a bad venue will control pretrial discovery and facilitates judicial coordination of pretrial proceedings in mass tort cases throughout the state. No longer will a renegade judge be able to hold a pharmaceutical company hostage with adverse pretrial rulings.
Third, unlike other states, class actions are no longer a business extortion instrument in Texas. The legislature made sure that Texas' highest court can now review all interim appeals of class action decisions. The legislature frustrated the pursuit of spurious class actions requiring that attorneys' fees be assessed on the Lodestar (hourly fee) method and not as a percentage of recovery. Also, attorneys' fees in cases settled with "coupons" for merchandise, discounts, or services must be proportional in cash and non-cash amounts to the recovery by the class members.
These legislative reforms make Texas a leader on tort reform. No longer will our pharmaceutical clients look at Texas as a litigation hell hole. They know the playing field for trying lawsuits has been made more level. On a more level field, the chances of a fair day in court are at least even. As lawyers defending these cases, we like the new odds.