A Banner Year For State Tort Reforms

Monday, August 1, 2011 - 01:00

Last November's elections produced sweeping political changes in many state legislatures and governors' mansions. Designed in most cases with an eye on improving states' economic prospects, resulting legislation this year included more positive civil justice reforms - at least 40 new laws - than in any other year in recent memory. In alphabetical order of the states, here is an abbreviated list of highlights among those important achievements:

Alabama: For starters, the Yellowhammer State changed the rate of interest on judgments from 12 percent to 7.5 percent. Prior to the enactment of S.B. 207, a defendant who lost a lawsuit and chose to appeal had to begin paying 12 percent post-judgment interest on the amount the court or jury awarded the plaintiff, creating a significant financial deterrent to appealing an unjust verdict.

The state also prohibited "forum shopping" of wrongful death actions (S.B. 212), adopted the Daubert standard for admitting scientific expert testimony (S.B. 187), and protected innocent sellers from products liability litigation (S.B. 184). This innocent seller protection law does allow, however, the naming of a retailer or distributor in a claim when the manufacturer of a product is unknown and reasonable discovery is needed to identify the manufacturer so the suit can then proceed against the manufacturer.

Arizona: With enactment of S.B. 1212, the Grand Canyon State limited appeal bonds to the lesser of the total amount of damages awarded (excluding punitive damages), 50 percent of the appellant's net worth, or $25 million.

Arizona also barred state agencies and officials from entering into contingency fee contracts with a private sector attorney unless the state attorney general first makes a written determination that the contingency fee representation is both cost-effective and in the public interest (H.B. 2423). The contract must be posted on the attorney general's website for at least 365 days, and the legislation limits the amount of aggregate contingency fees that the attorney may receive to no more than 25 percent of any recovery less than $10 million, 20 percent of any recovery between $10 million and $15 million, 15 percent of any recovery between $15 million and $20 million, 10 percent of any recovery between $20 million and $25 million, and 5 percent of any recovery greater than $25 million.

Florida: Having become notorious for auto accident litigation, the Sunshine State fell short of passing related anti-fraud legislation. But it succeeded in repealing its antiquated crashworthiness doctrine in cases brought against automobile manufacturers for alleged vehicle malfunctions in accidents (S.B. 142). Under the new law, defendants will be allowed to present evidence of the plaintiffs' impairment and liability, and juries can apportion responsibility accordingly.

Florida also passed sinkhole reform legislation (S.B. 408), limiting lawsuits and losses for property insurers stemming from sinkhole claims, while allowing policyholders with legitimate claims to be compensated.

And in addition to judgment interest rate reform (H.B. 567), Florida undertook significant medical liability reform (H.B. 479) that, among other things, requires an M.D., D.O., or D.D.S. licensed in another state to obtain an expert witness certificate before providing expert testimony in Florida.

The new medical liability law also gives state boards of Medicine, Osteopathic Medicine, and Dentistry the specific authority to discipline any expert witness, both those licensed in state and those with an expert witness certificate, who provides deceptive or fraudulent expert witness testimony. And expert witnesses who submit pre-suit verified medical opinions are no longer immune from discipline. Florida's new medical liability statute also creates a new pre-suit form, the "authorization for release of protected health information." This will make it easier for a physician to obtain the plaintiff's full healthcare information in a malpractice suit.

Volunteer team physicians are immunized against lawsuits arising out of the rendering of care at school athletic events, and both the Board of Medicine and the Board of Osteopathic Medicine are required to create a standard informed consent form that sets forth the recognized risks related to cataract surgery to preclude "adverse incident" claims involving recognized specific risks.

Indiana: With enactment of S.B. 214, the Hoosier State now requires the attorney general to make certain determinations before entering into a contingency fee contract with a private attorney, and requires the attorney general to publish certain information concerning contingency fee contracts on the attorney general's website.

Kentucky: Some in the Bluegrass State called H.B. 382 an anti-ambulance chaser bill because it now prohibits, during the first 30 days after a motor vehicle accident, any person from directly soliciting or knowingly permitting another person to directly solicit an individual, or relative of an individual, involved in a motor vehicle accident for the provision of any service related to the accident.

Missouri: The Show Me State will now preclude its attorney general from entering into contingency fee contracts with private attorneys unless she/he shows the public written findings that justify such contracts (S.B. 59, Sections 34.376, 34.378, and 34.380). The new law requires the AG to seek written proposals from private attorneys and ultimately choose the lowest priced and best bid. A private attorney representing the state on a contingency fee basis must now maintain expense records for at least four years after the contract terminates, and the AG's office must respond to public requests for these records under the sunshine law. Similarly, the AG's office must post certain information about contingency fee arrangements on its website and prepare an annual report on the use of contingency fee contracts.

North Carolina: Though Gov. Beverly Perdue (D) vetoed a medical liability reform bill that would have limited awards for noneconomic damages to $500,000, Tar Heel State lawmakers nonetheless managed to win the governor's signature on H.B. 542, a package of other significant tort reforms including a requirement that juries be given complete and accurate information about medical bills, requirements for expert witness testimony that are consistent with federal court standards and those of most other states, deterrence of frivolous lawsuits, encouragement for parties in small cases to negotiate reasonable settlements, and codification of state common law to make clear that landowners are not liable for harm to trespassers on their property.

North Dakota: Peace Garden State lawmakers also saw fit to codify the immunization of landowners from trespassers' claims (H.B. 1452). The bill does include exceptions when a landowner knows of a trespasser's presence or in certain instances involving child trespassers.

Oklahoma: For the second year in a row, Sooner State legislators acted on an ambitious tort reform agenda, which included class action reform (S.B. 704) that adopts Iqbal/Twombly language and adds a new requirement that petitions for class certification contain factual allegations sufficient to demonstrate a plausible claim for relief.

H.B. 2023 rationalizes procedures for unpaid medical bills in personal injury cases, while H.B. 2128 reduces from $400,000 to $350,000 the limit on awards for noneconomic damages arising from claims of bodily injury, with exceptions cases involving gross negligence, reckless disregard, intentional actions or malicious conduct.

Additionally, Oklahoma eliminated joint and several liability (S.B. 862), except when the state is the plaintiff. Similarly, it also codified common law that immunizes landowners from trespassers' injury claims, except under very narrow circumstances when the state brings the lawsuit (S.B. 494).

S.B. 865 requires jury instructions in civil cases to note that no part of a damages award for personal injury or wrongful death is subject to federal or state income taxes. And H.B. 2024 requires a court, upon request of a party, to order that medical, healthcare, or custodial services awarded in an action be paid in whole or in part in periodic payments rather than a lump sum. Also, upon request of a party, the court may order that future damages other than medical, healthcare, or custodial services awarded in a healthcare liability action be paid in whole or in part in periodic payments rather than a lump-sum when the present value of the award equals or exceeds $100,000.

Oregon: H.B. 3034 makes jury service less onerous for citizens who must take leave from work to serve. H.B. 2217 disallows the award of punitive damages against professional counselors or licensed marriage and family therapists if they were acting in the scope of their practice. And H.B. 2312 eliminates liability for charitable corporations when providing eyeglasses, hearing aids or other medical devices without charge.

Pennsylvania: With election of pro-tort-reform Gov. Tom Corbett (R), Keystone State lawmakers were emboldened to push through long-overdue joint and several liability reform (S.B. 1131). It bars the application of the rule of joint and several liability in the recovery of all damages, except when a defendant is found liable for: 1) intentional fraud or tort, 2) more than 60 percent of total liability, 3) environmental hazards, or 4) drunk driving.

South Carolina: Palmetto State legislators passed a useful package of modest reforms (H. 3775) that limits punitive damages; limits the amount a defendant can be required to pay to pursue an appeal to $25 million for businesses with 50 or more employees and gross revenue of over $5 million, and $1 million for all other entities; revises downward the statute of repose for construction cases; requires the attorney general to approve civil actions by circuit solicitors; and requires disclosure of insurance policy limits for personal auto policies in accident cases.

Tennessee: The Volunteer State also passed a significant package of civil justice reforms (H.B. 2008/S.B. 1522) that, among other things, limits venue shopping; lowers the maximum amount a defendant can be required to pay to appeal a decision from $75 million to $25 million, never exceeding 125 percent of the judgment; limits noneconomic damages to $750,000 per occurrence in medical liability actions, and to $1 million if the injury or loss is catastrophic in nature; limits punitive damages to two times compensatory damages or $500,000, whichever is greater; prohibits the award of punitive damages against innocent sellers of products and drug or device manufacturers when the product was manufactured in accordance with relevant federal law; provides for interlocutory appeal of class certifications; prohibits class actions under the consumer fraud statute while reforming that statute; and makes other changes to the consumer fraud statute.

Texas: With their Rangers currently the hottest team in baseball (as of press time), Lone Star State legislators and Gov. Rick Perry (R) hit another home run with tort reforms.

Though often referenced as "loser pays," H.B. 274 can more accurately be described as an "early offer" measure. It has several parts, and space here is limited. But, among other things, it directs the Texas Supreme Court to promulgate a new rule of civil procedure to provide for the dismissal of cases that have no basis in law or fact, and it otherwise will "promote the prompt, efficient, and cost-effective resolution of civil actions."

Like reforms passed in other states and noted above, S.B. 1160 codifies traditional common law rules with respect to the duty a landowner owes to a trespasser and prevents courts from adopting the new radical standard recommended in the Restatement of Torts (third).

S.B. 1716 is an anti-barratry law that allows a client to bring an action to void any contract for legal services that was procured as a result of barratry by attorneys or other persons. The client is entitled to receive all fees and damages paid to that person under any voided contract, actual damages caused by the prohibited conduct and reasonable attorney's fees, and the attorney at fault shall pay a civil penalty of $5,000.

Wisconsin: Though union protesters drew national media attention to the Badger State in late winter with their opposition to civil service reforms, Gov. Scott Walker (R) signed S.B. 1, a comprehensive civil justice reform package, into law weeks earlier.

Among other things, the new law requires proof of a "reasonable alternative design" to an allegedly defective product's design, moving Wisconsin away from the broad "consumer expectation" test. It also adopts the Daubert standards for expert testimony in Wisconsin courts, assuring that such testimony is based on sufficient facts or data and is the product of reliable principles and methods.

S.B. 1 also limits punitive damages to $200,000 or two times compensatory damages, whichever is greater, and it thankfully overturns the Wisconsin Supreme Court's 2005 decision in Thomas v. Mallet, which adopted the deeply flawed "risk contribution" theory in cases involving lead-based paint. (Wisconsin was the only state in the country to have adopted this theory.)

Other issues addressed in the bill include sanctions on frivolous lawsuits and limits on noneconomic damages for long-term care providers.

Defensive Efforts

Last month on these pages I wrote about the growing lawsuit loan industry and the threats it poses to our civil justice system. Unfortunately, no state legislation outlawing or regulating lawsuit loans was enacted this year, but bills to legitimize and normalize them were beaten back or stalled in at least eight states - Alabama, Arkansas, Indiana, Kentucky, Maryland, Nevada, New York and Tennessee.

Encouraging news from New York suggests that, even in a plaintiffs' lawyer-dominated statehouse, there's little desire to carry political water for lawsuit lenders, and the business community is hopeful it can soon muster the votes for legislation banning such lenders. Those with influence in Albany should support that effort.

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.

Please email the author at tjoyce@atra.org with questions about this article.