Rampant "Litigation Legislation" (Except Southeast) Threatens Recovery

Tuesday, March 31, 2009 - 00:00

Tiger Joyce

American Tort ReformAssociation (ATRA)

Last month in this publication I offered a big-picture outline of the personal injury bar's well-coordinated, well- financed and multi-pronged approach to lobbying both Congress and state legislatures for passage of a multitude of bills designed to roll back the reasonable tort reforms of recent years and otherwise expand liability and increase the number of lawsuits.

This month, as the legislative season further develops and dramatic showdowns begin to shape up in many statehouses, I'll focus on several pieces of particularly troubling "litigation legislation" and invite readers to join the American Tort Reform Association in working to educate lawmakers about the threats these bills pose both to civil justice and economic recovery.

Southeast

It's no secret that the Sunbelt states of the Southeast have been attracting employers to the U.S. and jobs away from the Rustbelt states of the Northeast and Midwest for decades. State tort reform laws in this region have significantly improved the litigation climate, continuing and strengthening the trend.

With occasional exceptions, lawmakers and governors in the Southeast seem to understand that what's good for the litigation industry tends to be bad for everyone else. As lawsuits surge and plaintiffs' attorneys get rich, the rest of a state's economy typically suffers ( see Illinois, Rhode Island and West Virginia, among others). But when statutes help to achieve a balanced system, a state's economy tends to expand and add jobs as employers feel more comfortable setting up shop ( see Mississippi and Texas, among others).

The occasional exceptions noted above are exemplified by a handful of problem bills now afoot in Florida, South Carolina and Virginia.

Lawmakers in Tallahassee are considering an anti-arbitration bill with a focus on nursing home contracts. Observers there consider the bill to be something of a trial lawyer's nose under the tent, sniffing out opportunities to expand their anti-arbitration (pro-lawsuit) campaign into other areas of the law in coming legislative sessions.

Legislators in both Columbia and Richmond are considering extensions of their respective statutes of repose, and Palmetto State lawmakers are also entertaining an expansion of liability with respect to false claims.

On the high side in the Southeast, Georgia Gov. Sonny Perdue (R) had proposed comprehensive tort reforms at the outset of the legislative season. Though some of the governor's proposals have since been watered down by lawmakers loyal to the trial bar benefactors, he has nonetheless moved the debate in the right direction in the Peach State.

Mid-Atlantic

Maryland and its largest city, Baltimore, have long been home to aggressive plaintiffs' lawyers, and their influence in Annapolis, the state capital, appears as strong as ever (see "Judicial Hellholes" 2008/2009 report, pp. 22-23).

Maryland H.B. 304 and its companion, S.B. 272, comprise an expansion of false claims liability entitled the "Maryland False Health Claims Act of 2009." A similar bill nearly passed last year. And H.B. 797 would expand the state's Consumer Protection Act by authorizing the award of statutory damages and treble damages.

New England

After nine years of costly litigation, Rhode Island's Supreme Court finally slapped down the brazen attempt by two activist state attorneys general and their political patrons at a major out-of-state personal injury law firm to target former makers of lead paint with a contortion of public nuisance law. Nevertheless, the Ocean State's anti-business reputation now precedes it, and, not coincidentally, it suffers the highest unemployment rate in the nation.

Despite this harsh economic reality, there remains at least one lawmaker in Providence who feels more loyalty to trial lawyers than to his out-of-work constituents. How else can one explain H.B. 5738 and H.B. 5739? Both bills are sponsored by state Rep. David Caprio (D), and both would substantially expand the wrongful death statute to allow for punitive damages. Just what Rhode Island needs: greater incentives for plaintiffs' lawyers to file more lawsuits.

Legislators in Maine are considering an anti-arbitration bill similar to what has been proposed in Congress, and statute of limitations extensions are in play in Connecticut and Vermont.

Midwest

Though state capitals in the Pacific Northwest arguably host the highest concentration of economy-sapping "tort deform" legislation this year (see more below), the Midwest is not far behind. Even as erosion of their once dominant manufacturing sector continues, policymakers in the recession-scarred Midwest still don't seem to get it. Astonishingly enough, many lawmakers and governors in this region inexplicably seem to see an increase in liability and lawsuits as a means to greater prosperity.

For example, Iowa's S.F. 178 would create a private right of action under the state's consumer protection law.Sadly, successful passage would make Iowa the last holdout state in the country to adopt such a lawsuit-promoting provision. The bill includes vague definitions of fraud and lacks a requirement to prove intent, and thus spells trouble for the Hawkeye State's small businesses, in particular.

Moving north to Minnesota, H.F. 417 is a bill that's sure to encourage more lawsuits against insurance companies. In addition to allowing for breach of contract damages plus 12 percent interest per year from the time of the original claim, the bill permits the insured to recover attorney fees, other litigation costs and court costs.

In neighboring Wisconsin, Gov. Jim Doyle (D) has included provisions in his state budget bill, A.B. 75, that seek to re-institute joint and several liability for defendants found to be less than 51 percent at fault, as long as that defendant's fault is equal to or more than the plaintiff's. The bill would eliminate from existing law provisions that: consider persons acting in concert, compare the negligence of the person seeking recovery to that of each person who was separately negligent, limits the liability of a person who was less than 51 percent negligent to that person's actual percentage of the total negligence, and holds jointly and severally liable a person whose causal negligence is 51 percent or more.

Instead, Gov. Doyle's bill allows an injured person to recover damages if that person's negligence is not greater than the combined negligence of all of the persons against whom recovery is sought. The bill also provides that any person whose causal negligence is equal to or greater than the causal negligence of the person seeking recovery is jointly and severally liable for the damages awarded to the person seeking recovery.

Next door in increasingly litigious and economically devastated Michigan, H.B. 4316 would repeal the state's FDA preemption defense for pharmaceutical companies. H.B. 4317 would make H.B. 4316 retroactive to 1996. And H.B. 4318 seeks to repeal the regulatory compliance carve-out in the state Consumer Protection Act by explicitly including "legal pharmaceutical product[s]" in the definition of goods subject to the Michigan CPA, and by making actionable under the act a manufacturer's or producer's failure "to accurately represent the risks involved in the intended use of a prescription or over-the-counter drug . . . or medication . . . ."

The Michigan House passed these three bills last year and is expected to pass them again. If final passage is to be prevented, senators in Lansing will have to be educated about the bills' collective threat to economic growth and the future development of life-saving medications.

Pacific Northwest

At press time, Oregon's S.B. 311 was scheduled for a key hearing on March 25. The bill would incrementally increase state and local government tort liabilities by 33 percent through 2014. The bill would make no distinction between economic and noneconomic damages. Taxpayers may want to take a closer look at this one and phone their legislators.

In neighboring Washington, S.B. 5531 passed the Senate (28-17) on March 6 and has moved to the House Judiciary Committee. This ominous legislation would raise damages available for violations of the state's Consumer Protection Act (CPA) from $10,000 to $50,000.The legislation also would allow a private CPA claim to advance without proving the public interest element (the Hangman Ridge standard), and it allows claims when a defendant's action merely "had the capacity" to, but did not necessarily, harm the public. This bill also provides that all actions brought by the state attorney general are presumed to involve an act or practice injurious to the public harm, creating a new level of liability.

Though currently stalled in Olympia, S.B. 5964 represents a massive expansion of liability for manufacturers. This bill would impose a retroactive duty to have investigated and warned decades ago about the hazards of products they never manufactured or sold. It would unfairly create liability for injuries resulting from conduct occurring as early as the 1940s and for products designed, manufactured and sold by others. This bill would apply to builders of aircraft, ships and homes into which asbestos-containing products were incorporated after the original manufacturing construction. The bill is a transparent effort to sidestep two state Supreme Court decisions which held that makers of non-hazardous component parts, such as pipes or valves, have no duty to warn ultimate users about asbestos products made by others and attached to the components later.

West

The litigation lobby is, as always, pressing a full legislative agenda in California. But since the legislature in California sits year-round and is consumed with revised budget deficits at the moment, I'll conclude with a brief look at problem bills in Texas and Utah.

Tort reformers have had much success in Texas in the past decade as the economy has grown and an influx of doctors from high-litigation states have made healthcare more accessible, particularly for rural residents. But the trial lawyers are on the war path and sense a political opportunity to roll back some of those reforms.

Observers in Austin say S.B. 1123 would gut important asbestos and silica litigation reform enacted in 2005. S.B. 496 is False Claims Act legislation that allows private plaintiffs to file qui tam lawsuits in the name of the state, reversing legal reforms passed in the last three legislative sessions. It also turns good faith disputes over contracts into false claims actions, and it allows false claims for alleged Medicaid fraud with no limits or legislative oversight on this authority. Last but not least, S.B. 222 is yet another anti-arbitration bill.

Finally, in Salt Lake City, H.B. 294 would expand wrongful death damages to include pain and suffering, loss of enjoyment, and other impossible-to-quantify damages suffered by the deceased prior to death.

Defending Tort Reform

ATRA will continue to track litigation industry legislation in all statehouses and alert tort reformers of the need to defend against it. For up-to-date information about specific bills and the latest from the statehouses in which they're moving, visit ATRA's recently dedicated specialized Web site, www.DefendingTortReform.com. Please work with ATRA so that we can keep up the good fight at the federal level, too.

Tiger Joyce is President of the American Tort Reform Association, based in Washington, D.C. He can be reached at (202) 682-1163 or through the organization's primary website, www.atra.org.