In 2003, Texas became the twenty-sixth state to cap non-economic awards for pain and suffering-type damages in health care lawsuits. Voters were then asked to adopt a constitutional amendment-Proposition 12-in order to assure the legality of the caps. The measure passed by a scant two percent, meaning the cap was immediately protected from court challenges.

The 1991 Texas worker's compensation reform bill withstood four years of constitutional challenges before employers finally began to receive the rate relief they so desperately sought. Some feared the states recently passed medical liability reforms would suffer the same protracted legal battles if Proposition 12 did not pass.

Supporters and opponents spent more than $17 million in the battle over putting limits on medical malpractice awards, making Proposition 12 the most expensive campaign ever on a state constitutional question.

With Proposition 12, voters amended the state constitution to give the Legislature the authority to set damage caps in health care lawsuits. The capped number can be as high as $750,000 and changes depending upon the variety of defendants in a suit. Physicians are capped at $250,000 exposure for non-economic damages. Hospitals have a $250,000 cap and an additional $250,000 non-economic damage cap applies if a second, unrelated hospital or health care institution is named in the suit. Past and future medical bills, lost wages, custodial care and prejudgment interest remain uncapped.