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In June 2003, Governor Rick Perry signed new medical malpractice legislation which severely restricts the rights of patients to recover damages in a medical malpractice lawsuit.

The new law places a cap on non-economic damages of $250,000 per claimant, regardless of the number of physicians involved in the case. It also places a $250,000 cap on non-economic damages against a single health care institution (hospital) and a $500,000 cap on all health-care institutions combined.

This means that if two or more hospitals have committed malpractice, the most any one hospital is responsible for paying is $250,000 and the most a claimant can recover is $500,000 regardless of the number of hospitals involved.

Cases that involve medical malpractice which results in a wrongful death have a cap of $500,000 per claimant. However, this cap is tied to the consumer price index (CPI), at the numbers as they existed in 1977. Any increase or decrease in that CPI requires that the award be increased or decreased accordingly. This makes the cap adjust for inflationary increases.

None of the caps listed above apply to the recovery of economic damages such as medical bills. A claimant can still recover the total amount of provable out of pocket damages associated with a medical malpractice claim.

A claimant may also recover punitive or exemplary damages in a medical malpractice lawsuit if the facts and findings of the judge or jury warrant recovery of such damages.

However, these damages are also limited to a) either two times the amount of economic damages plus an amount equal to non-economic damages (not to exceed $750,000) or b)$200,000, whichever is greater. These caps on exemplary or punitive damages do not apply in cases of certain felonies, including concealment or fradulent destruction of written records.