Tort Reformers Look to Score in States after Washington Strikes Out

Last fall at a University of Virginia Law School forum on tort reform, some of the nation’s top tort experts agreed there were no easy answers on how to solve the nation’s longstanding love-hate relationship with torts, but they did suggest that reforms at the state level might be the best way to discourage frivolous lawsuits.

The current nature of politics in Washington appears to validate their suggestion. Last month’s failure of the U.S. Senate to pass narrow medical malpractice reform feeds into the strategies of those who have been focusing on tort reform efforts at the state level.

While Washington stalls, the price being paid for inaction is rising. According to Tillinghast, current costs of the tort system translate into $809 per U.S. citizen. Asbestos claims are the single largest factor in the rise, contributing $11 billion in tort costs. Tillinghast predicts 6 percent to 11 percent increases annually over the next several years.

Outlining the issues in tort arena
The UVA Law School panel was moderated by law professor Robert Saylor, and featured UVA law professor Jeffrey O’Connell, the “father of no-fault insurance;” Sam Witt, former general counsel of R.J. Reynolds Tobacco and special counsel to RJR Nabisco for product liability legislative efforts; former Louisiana state Rep. Chuck McMains, author of his state’s tort reform package; and Richard Glasser, an expert on asbestos injury law.

“Everybody up here has been worried about tort reform since 1985,” Saylor said at the forum, outlining several issues for the panel to weigh. “Is there something amiss about the law of torts? Should we be changing the law with federal legislation or more intensive state legislation? … Do we have the right people applying that law? … Can juries handle the most complicated cases? … How comfortable are we as a matter of political science and theory with letting judges do more? How do you feel about judges taking over more of these cases in elected-judge states where 98 percent of the campaign contributions are coming from political parties?”

Glasser, who litigates for asbestos plaintiffs, stressed that he did not want national legislation to interfere with individual states’ laws. “I really don’t think that the national problem is a Virginia problem,” he said. “I think there are societal problems, but I have great confidence in the system … Be cautious about throwing out the baby with the water.”
Panelists pointed out that juries in one state often decide the fate of defendants and plaintiffs from another. Polk County, Mississippi has more plaintiffs than residents, Witt said. “There is a perception that the plaintiff is going to fare better in certain jurisdictions,” hence plaintiffs’ lawyers file suit in those areas.

McMains said Louisiana was able to reduce the number of lawsuits filed in the state by cleaning up state class-action laws; they began the process in 1996 and now have a miniscule number of such cases. He pointed out that Alabama has seen a similar turnaround because of the election of some new judges, and because the business community became more politically involved in judges’ campaigns. “Where they do get engaged, you can see significant changes,” he said.

The American Medical Association (AMA), the American Tort Reform Association (ATRA), the American Legislative Exchange Council (ALEC), and the National Association of Mutual Insurance Companies (NAMIC) are among the groups engaged in the tort reform effort in the states.

Medical malpractice is the leading battleground in the state tort wars. Dr. Donald Palmisano, the current AMA president, told United Press International recently that his organization is going to be “relentless” in pursuing malpractice legislation. The doctors would prefer federal legislation but will do whatever they can to get states to act.

The AMA has bombarded states with data showing medical malpractice suits add $60 billion to $108 billion per year to the cost of healthcare in the U.S. In states without malpractice laws, physicians’ malpractice premiums jumped between 30 percent and 75 percent in 2001, according to the AMA.

While 24 states including California, Maryland, Massachusetts and Virginia have laws that limit damage payments in malpractice cases, the AMA has designated crisis states where it says caps are needed: Arkansas, Connecticut, Florida, Georgia, Illinois, Kentucky, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington, Nevada, West Virginia, and Wyoming.

Last month AMA representatives lobbied in Connecticut, which does not have a malpractice cap and where the AMA said recent jury awards have included verdicts of up to $20 million.

Trial lawyers who oppose tort reform are quick to point to several studies that show malpractice caps do not guarantee lower insurance premiums for physicians. A Congressional Budget Office study released in January found that many factors affect insurance premiums, including malpractice payouts, rising costs overall and lower financial investments. A General Accounting Office study in August 2003 did not discount that there is a problem but found “many of the reported provider actions taken in response to malpractice pressures were not substantiated or did not widely affect access to health care.”

But the AMA and other groups are pushing ahead in the states over the trial lawyers’ protests.

So how are states doing?
Early this year, NAMIC, in cooperation with ATRA of which it is a member, compiled a report on states’ legislative efforts to reform the civil justice system. According to the study’s author, Peter Bisbecos, NAMIC director of legal and regulatory affairs, a total of 174 tort reform laws have been enacted by states in recent years. The majority of laws passed address five key areas of tort reform: joint and several liability (35 states), collateral source rules and product liability (25 states each), non-economic damages (21 states), and punitive damages (18 states).

The least commonly enacted tort reform measures are those that address common sense scientific evidence (1 state), intrastate forum shopping (2 states), jury service requirements (3 states), government contracts with private attorneys (5 states), and class action (7 states). In 2003, new tort reform laws addressing appeal bonds, private attorney retention, class actions, the collateral source rule, intrastate forum shopping and jury service were enacted in 15 states.

Tort reform bills introduced in 16 states during 2003 addressing joint and several liability, product liability, punitive damages, and prejudgment interest rates will be carried over for further consideration in 2004. States that have passed the most tort reform laws include: Colorado (9), Texas (8), Louisiana and Florida (7), North Dakota, Georgia and Michigan (6), Alaska, Arkansas, Idaho, Missouri, Montana, and Ohio (5). States that have passed the fewest tort reform laws: Illinois, Delaware, Maryland, Massachusetts, Pennsylvania, Rhode Island, Tennessee, Vermont, and Wyoming, one each, and South Carolina with none.

NAMIC broke down its state progress report by tort categories. Some of the highlights of this report are excerpted below:

Class action reform
To date, seven states (Alabama, Colorado, Florida, Georgia, Louisiana, Ohio, and Texas) have enacted reform of their class action laws. Colorado (HB 1027), Georgia (HB 792) and Texas (HB 4) passed new laws in 2003 establishing tighter regulatory standards for approval of class actions.

Collateral source rule reform

Collateral source payments occur whenever a plaintiff receives compensation or benefits from a party not involved with the litigation to compensate for the damages the plaintiff sustained. The Collateral Source Rule bars defendants from introducing evidence to show that a plaintiff has received collateral source. Twenty-five states have passed laws to allow consideration of collateral source payments: Alabama, Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, North Dakota, Ohio, Oklahoma, and Oregon. In New Jersey, a new law was enacted in 2003 (SB 63) to apply its existing collateral source provisions to its newly created Special Auto Insurance Policy. In South Carolina, HB 3744, which allows for evidence of collateral source payments, is carried over for further consideration in 2004.

Joint and several liability reform
The theory of Joint and Several Liability allows that each defendant is responsible for the entire amount of damages that a plaintiff is seeking, regardless of their relative degree of responsibility for the damages involved. This has come to be known as the “deep pocket” rule. Thirty-five states have enacted reforms to their joint and several liability laws: Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming. Other joint and several liability reform bills that were introduced in 2003 will carry over for further consideration in 2004. Related legislation will carry forward in Iowa (SB 344), Minnesota (HB 75), Rhode Island (SB 239), South Carolina (HB 3744), and Washington (SB 5728.)

Non-economic damage reform
Non-economic damages include things that do not involve a cash loss and, therefore, have no precise cash value such as pain and suffering, emotional distress and loss of consortium or companionship. It is very difficult for juries to assign a dollar value to these losses. Twenty-one states (Alaska, California, Colorado, Florida, Hawaii, Idaho, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Texas, Utah, West Virginia, and Wisconsin) have established statutory limitations, ranging from $250,000 to $600,000, on the amount of non-economic damages that can be awarded.

Product liability reform
The use of the standard of absolute liability in product liability actions is intended to encourage accident prevention by holding manufacturers liable for injuries attributed to their products. The standard of absolute liability unfairly penalizes all manufacturers for any injuries sustained relative to the use of their products. Twenty-five states have enacted product liability reform measures in recent years. They include California, Colorado, Delaware, Florida, Georgia, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Missouri, Montana, New Hampshire, New Mexico, New Jersey, North Carolina, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah, and Washington. Product liability reform legislation introduced in Iowa (SB 344), Massachusetts (HB 2103), New York (SB 2944), and Ohio (SB 80) in 2003 will carry forward for further consideration in 2004.

Punitive damage reform
Punitive damages were developed as a way to punish defendants found to have acted maliciously. It is meant as a deterrent to future harmful actions. However, punitive damage awards have become an almost routine aspect of most civil litigation. ATRA wants states to rein in punitive damage. So far, 18 states (Alabama, Alaska, Arkansas, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Kansas, Montana, Nevada, New Jersey, North Carolina, North Dakota, Oklahoma, Texas, and Virginia) have enacted punitive damage reform legislation. In addition, punitive damage reform bills introduced in Iowa (SB 344), New York (AB 4476), and South Carolina (HB 3166 and HB 3744) in 2003 will carry over for further consideration in 2004.

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