Civil Justice Reform - Law Firms Ohio Tort Reform. A Roadmap For Success?

Tuesday, February 1, 2005 - 01:00

The Ohio General Assembly has struggled with the tort beast for nearly 30 years, since the Medical Malpractice Crisis of the late 1970s when many professional insurance carriers suddenly stopped writing malpractice insurance for surgeons and obstetricians.

On January 6, 2005, however, Governor Bob Taft signed into law Amended Substitute Senate Bill 80 ("S.B. 80") - Ohio's most recent attempt to unravel this proverbial Gordian knot.1 S.B. 80 is a comprehensive bill that attempts to balance the interests of both plaintiffs and defendants. It also attempts to bolster Ohio's economic competitiveness by eliminating what some legislators believed were frivolous personal injury lawsuits and checking conditions that have lead to skyrocketing liability insurance costs.

The Long HistoryOf Ohio Tort Reform

The Ohio General Assembly first tackled tort reform in 1975. That law capped noneconomic (pain and suffering) damages in medical malpractice cases. Sixteen years later, however, the Ohio Supreme Court, in a 5-1 decision, overturned the 1975 law as unconstitutional.2 The Court found the caps violated the Ohio due process clause because the caps were arbitrary - they did not bear any relation to malpractice insurance rates.

Then, in 1985, as a result of the cancellation of 4th of July fireworks celebrations throughout rural Ohio towns (mostly the result of the inability of local governments to obtain affordable liability insurance coverage), former long-serving Ohio House Speaker Vern Riffe began hearings on comprehensive tort and insurance reform legislation. He pushed the legislation through the General Assembly, but it was vetoed by then Governor Dick Celeste. Not dissuaded, Riffe had the legislation reintroduced in 1987 as H.B. 1, rammed it through again, and dared the Governor to veto it, while the biennial appropriations act was pending in the House. Celeste signed the bill, which drastically rewrote the tort law in Ohio. The Supreme Court, however, steadily reversed the law over the next decade.

As a result of these reversals, in 1997 the General Assembly passed a more comprehensive tort reform bill, which included non-economic damage caps in all tort cases. Again the Ohio Supreme Court (this time in a 4-3 decision) declared the law unconstitutional.3 The Court sharply criticized the General Assembly for passing a bill that included numerical caps after the Supreme Court had already declared them to be unconstitutional.

The Court also rejected the other portions of the 1997 omnibus bill - including caps on contingency fees, caps on punitive damages, and a statute of repose for certain actions - stating that they violated the Ohio Constitution's Due Process, Separation of Powers, and Single Subject Clauses.

Ohio's Latest Tort Reform Bill

This time around, however, has been different. S.B. 80 reflects a more sound understanding of why the previous bills were declared unconstitutional. Moreover, the composition of the Ohio Supreme Court has changed significantly since the last tort reform bill was passed. In an attempt to make the limits on non-economic damages more rationally based, S.B. 80 now divides these damage awards into two categories - catastrophic and non-catastrophic damages.4

If a plaintiff has suffered catastrophic damages, S.B. 80 does not limit the amount of noneconomic damages that the plaintiff may receive. Instead, it creates a new post-judgment review mechanism that permits a defendant to challenge the award as excessive. S.B. 80 also prohibits the submission of certain types of evidence to the jury in the damages phase (including the defendants' alleged wrongdoing, wealth, or other evidence that is otherwise designed to punish the defendant's conduct).

On the other hand, if the case is ordinary ( i.e. , if the plaintiff has only suffered noncatastrophic damages), S.B. 80 limits noneconomic damages to the greater of $250,000, or three times economic loss up to $350,000 with a maximum of $500,000 per occurrence.

S.B. 80 also places restrictions on the amount of punitive damages that a plaintiff can be awarded and prohibits multiple punitive damage awards.5 Under the new law, if a plaintiff requests punitive damages, the defendant may then request a bifurcated trial with a consideration of compensatory damages first. Only if the jury awards compensatory damages would the trial then move to a consideration of punitive damages.

If the jury decides to award punitive damages from a large employer (greater than 100 full-time nonmanufacturing employees or 500 manufacturing employees), then the recovery will be capped at two times the amount of compensatory damages. Punitive jury awards against small employers or individuals, however, will be limited to the lesser of two times compensatory damages, 10% of the employer's or individual's net worth, or $350,000. No matter the size of the defendant, punitive damages usually will be awarded against a defendant only once for the same act or conduct.

Changes To CompositionOf The Court

Some of these provisions are similar or identical to the provisions that the Ohio Supreme Court declared unconstitutional in 1997. Currently, however, only two justices who struck down the prior tort reform bill still sit on the Supreme Court (Justices Alice Robie Resnick and Paul Pfeiffer). The other two justices, who were in the 1997 majority (Justices Andrew Douglas and Francis Sweeney), have retired and have been replaced by justices who are considered pro-business (Justices Maureen O'Connor and Judith Ann Lanzinger). As a result, legal and legislative practioners believe that these provisions will likely be upheld as constitutional, as they have in other states.6

Other Notable Provisions In S.B. 80

S.B. 80 also contains a number of other significant reforms to the Ohio tort system. The most important changes include:

Statutes of Repose. S.B. 80 establishes a 10-year statute of repose for both product liability claims against manufacturers or suppliers of products (period normally begins to run once the product is placed into the stream of commerce) and construction-related claims (period runs from the date of substantial completion of the project).7

Borrowing Statute. S.B. 80 also creates a "borrowing statute" for purposes of a statute of limitations and bars a plaintiff from bringing a claim in Ohio if the plaintiff's claim is time-barred in his/her own state.8

Amendment to Statutory Design Defect Torts and Abrogation of Common Law Design Defect Actions. The new law also eliminates common law negligent design actions and the consumer expectation test as a stand-alone test for statutory design defect causes of action. In its place, S.B. 80 creates an additional factor, which requires a "reasonable alternative design" analysis, to be considered in the risk-utility test.9

Obesity Provisions. S.B. 80 provides immunity from civil damages to food manufacturers, sellers, and trade associations for claims resulting from a person's obesity or weight gain or any health condition related to obesity, weight gain, or cumulative consumption.10

Successor Liability Immunity. The new law also limits the successor asbestos-related liabilities of certain corporations.11

Collateral Source Rule Modification. S.B. 80 additionally allows a jury to hear evidence about collateral benefits in all tort actions (if the plaintiff has received compensation for his/her injuries from sources other than the defendant, although it won't apply to life/disability insurance policies purchased by the plaintiff or the plaintiff's employer).12

Agricultural Immunities. S.B 80 provides immunity for owners, lessees, and renters of premises that are open to the public for "Pick Your Own" agricultural produce.13

Recreational Trail Immunities. This law also provides that property owners with land adjacent to recreational trails do not owe a duty to users of those recreational trails to keep the trails safe. S.B 80 amends Ohio law to provide immunity for private property owners for injuries suffered by recreational trail users.14

Evidence of Non-use of a Seatbelt. Finally, S.B. 80 allows evidence of non-use of a seatbelt to be introduced in tort actions for the purpose of reducing noneconomic damage awards.15

Conclusion

What will be the result of the Ohio General Assembly's latest attempt to tame the tort beast? Because the changes to the General Assembly's most recent bill and to the composition of the Ohio Supreme Court, the General Assembly should at last win this long-fought battle.

1 The 125th General Assembly has also passed a host of other tort reform bills, which have since become law. E.g., Sub. H.B. 342 (eff. Sept. 1, 2004) (establishing requirements for certain silica claims); Am. Sub. H.B. 292 (eff. Sept. 2, 2004) (establishing requirements for asbestos-related lawsuits); H.B. 316 (signed Dec. 30, 2004) (providing cable and television operators immunity forcertain torts); H.B. 298 (signed Jan. 6, 2005) (amending the standards for intentional torts in workers compensation claims). The 124th General Assembly also successfully enacted S.B. 281 (signed Jan. 10, 2003), dealing with medical malpractice reform.
2 Morris v. Savoy (1991), 61 Ohio St.3d 684, 690-91.
3 State ex rel. Ohio Academy of Trial Lawyers v. Sheward ( 1999), 86 Ohio St.3d 451. The 124th4 General Assembly, however, passed legislation reviving tort law to the pre -Sheward state. See S.B. 108 (eff. July 6, 2001).
4 O.R.C. 2315.18.
5 O.R.C. 2315.21.
6 "According to the National Association of Mutual Insurance Companies, 19 states have punitive damage caps and 23 have non-economic damage caps." Editorial, Enact Legal Reforms, then Move on , Cincinnati Enquirer, at C8 (Dec. 8, 2004).
7 O.R.C. 2305.10 and O.R.C. 2305.131.
8 O.R.C. 2305.03.
9 O.R.C. 2307.75 and O.R.C.2307.71.
10 O.R.C. 2305.36.
11 O.R.C. 2307.97.
12 O.R.C. 2315.20.
13 O.R.C. 901.52.
14 O.R.C. 1519.07 and O.R.C. 1533.18.
15 O.R.C. 4513.263.

Richard D. Schuster is a Partner in the Columbus, Ohio office of Vorys, Sater, Seymour and Pease LLP, one of the nation's leading asbestos defense firms. As chairman of the firm's Toxic Tort Litigation practice group and as an expert in asbestos litigation, Mr. Schuster recently helped Ohio law-makers draft landmark asbestos and silica reform legislation and portions of S.B. 80. Thomas R. Winters is also a Partner in Vorys's Columbus office. He represents businesses and trade associations on legislative matters at the national, state, local and administrative agency levels.

Please call the authors at (614) 464-6400 or via email at rdschuster@vssp.com or trwinters@vssp.com.