Civil Justice Reform - Organizations ATRA: A Prime Mover In Civil Justice Reform

Tuesday, November 1, 2005 - 01:00

The Editor interviews Sherman " Tiger" Joyce, President, American Tort Reform Association ("ATRA").

Editor: Tell us about ATRA.

Joyce: ATRA was founded in 1986 by the American Medical Association and the American Consulting Engineers Council to be a national leadership organization focusing on state legislative reform. We focus on a handful of key issues including punitive damages, joint liability, product liability, medical liability and others. We work closely with a network of state legal reform organizations in virtually every state in the country. We help them to set agendas, find new challenges and work to find new solutions. We also work with them in areas that are attendant to the issue of legal reform, whether it is through amicus briefs, public education, communications and even helping with efforts in the political arena. To the extent that it makes sense on a given situation, we work through the state reform organizations to advance a common agenda of reforming our legal system.

Editor: Is there a trend developing in the states to enact comprehensive reforms?

Joyce: There has been some success in recent years. We are very pleased with the success we have seen in some states where there had not been much activity such as South Carolina and Missouri. We have seen great strides in Texas which has a very strong history of enacting comprehensive reform and continues to address critical issues.

This year Ohio passed a comprehensive bill that will bring back some of the reforms that were taken away by the Ohio Supreme Court in the late 1990s. That was a terrific victory. Another of this year's victories was in Georgia. One of the greatest successes was in Mississippi which we had considered one of the worst "Judicial Hellholes ," in a report we issue annually that chronicles the worst litigation jurisdictions in the country. In 2003, Mississippi moved to the top of the list of reform-minded states, thanks to the leadership of Governor Barbour.

Editor: Has reform had a positive effect on economic development?

Joyce: Yes. Let me give you some examples. Texas, which has been at the cutting edge of reform, was recognized in Site Selection Magazine in 2004 for the largest number of job creation announcements. Governor Perry has credited his legal reform agenda as being one of the critical factors to Texas' success.

The benefits of reform have been seen in the medical area. Reform legislation stabilized access to healthcare in areas like Mississippi and Texas, where because of the liability system, lack of access to health care had reached crisis proportions. Reform enabled some insurance providers to return to Mississippi. These included Mass Mutual, St. Paul's, World Insurance and Equitable Life Insurance Company. If carriers are not willing to underwrite the risks of insuring physicians in a state then you know things are bad. And, Medical Assurance Company, which is a physician-owned carrier in Mississippi, did not raise its premiums in 2004. They had been rising 20 percent a year before the reforms. All of these are indicators of the stabilizing force that balanced legal reform can bring to a state - it has a direct and positive impact on economic development in a state.

Editor: I understand that conditions have also improved in Illinois, including in Madison County that topped the list of Judicial Hellholes for many years.

Joyce: We have seen positive signs coming out of Madison County. President Bush raised awareness of this issue when he visited Madison County this year and told the people there that he was standing in the worst litigation county in the country. He pointed out that the second worst was next door in St. Clair County.

We are also beginning to see the fruits of some of our reform efforts in Illinois on a statewide basis. One of the most significant accomplishments was the election of Lloyd Karmeier to the Illinois Supreme Court. That Court has now recognized that some of the decisions coming out of the southern part of the state need careful review. For example, the Court unanimously decertified a class in the State Farm v. Avery case. The plaintiffs in that case sued State Farm for breach of its contract to repair cars damaged in accidents because the insurer authorized the use of less expensive after market parts to repair cars damaged in an accident. The Illinois Supreme Court decertified the class because it included plaintiffs who did not have standing to file suit in an Illinois court because the events that gave rise to their claims had taken place in other states and there was no connection with Illinois. The Illinois Supreme Court decision sent a powerful message that the process of certifying these types of cases without any rationale will not be tolerated. That is a good indicator for continuing positive reforms in that state.

Editor: What do you see coming down the road both positive and negative?

Joyce: One issue that we are focusing on is appeal bond reform. Companies that have been involved in litigation with large awards know very well how difficult this can be. Sometimes bonding a judgment so that an appeal can be brought is difficult, particularly where the award is so large and the equities are on the side of mounting a vigorous appeal. Not having the capacity or ability to post the bond will prevent that appeal from taking place. We want to make sure that defendants have a fair opportunity to appeal. This is why we have supported the model legislation drafted by the American Legislative Exchange Counsel (ALEC) which would limit the amount needed for an appeal bond.

The whole issue of state attorneys general continues to be very prominent for us. The process by which plaintiffs' lawyers become agents for governmental entities needs to be handled in a way that ensures that it is done in the open to avoid abuses. A handful of states have adopted legislation based on the Private Attorney Retention Sunshine Act which was also drafted by ALEC, but we want to push it further and see it adopted more widely. Under this legislation, a state entity would have to hold open and competitive bids. Also for contracts where the bid is over $1 million, there would be legislative oversight to maintain arm's length negotiations and to ensure that competent attorneys are selected.

Another emerging issue is the transformation of tort claims into claims under state consumer protection laws. A senior lawyer for a company recently mentioned to me that they are in a situation where they could win a product liability case but be liable under a state consumer protection law under the same set of circumstances. We want to make sure that these laws are not used as vehicles for excessive litigation.

Editor: Have there been any developments on the medical monitoring front?

Joyce: Medical monitoring is an issue that is of great concern to us. The Michigan Supreme Court in Henry v. Dow Chemical recognized that the law as it stands today does not allow for a separate cause of action for medical monitoring. Individuals need to prove they have suffered an injury and the fear of injury alone is not enough. ATRA, the National Association of Manufacturers and the U.S. Chamber of Commerce submitted an amicus brief in that case.

Editor: Tell us about the Ferdon v. Wisconsin Patients Compensation Fund decision in Wisconsin that rejected limitations on damages for medical malpractice liability.

Joyce: That was decided this summer and is troubling for two reasons. First, it continues a series of decisions where a state court has completely overruled the prerogative of a state legislature. ATRA General Counsel Victor Schwartz has demonstrated through his research that there have been more than 90 cases of judicial nullification of state tort reform laws. Second, the Wisconsin Supreme Court based its decision on a finding that there was no rational basis for the legislature to limit noneconomic damages. The Court stated that the limits on damages were not rationally related to the legislature's goals of limiting malpractice premiums, providing adequate compensation for victims and keeping the Wisconsin Patients Compensation Fund's assessment levels at a low rate.

Editor: Is the decision of the trial court in the Vioxx litigation of concern?

Joyce: There were many problems with the Texas trial court's decision in that case. For instance, the decision clearly involved the use of junk science. Many commentators on this case have pointed out that the plaintiff did not produce sufficient evidence to link her spouse's death with the use of Vioxx. The judge also failed to allow the appropriate type of expert evidence into the case. Another mistake was that the judge allowed the defendant's alleged business practices to be put on trial. The plaintiff was able to draw attention away from the lack of evidence on causation by questioning the defendant's business practices. Even more significantly at the outset in the initial filing, the plaintiffs named one of the company's many researchers as a defendant to keep the case out of the federal courts. The researcher was eventually dismissed from the case. The behavior of the judge in this case is typical of a Judicial Hellhole environment.

Editor: There have also been some favorable developments in Texas trial courts. Tell us about Judge Janis Graham Jack's decision to sanction plaintiffs counsel for abusive practices in the Silica cases?

Joyce: One of the significant problems with our judicial system is the failure in many instances of judges to police their court houses to ensure that the appropriate evidence is admitted or excluded. Also, they need to ensure that frivolous cases are quickly dismissed rather than to allow them to play out. What Judge Jack did in the cases in her courthouse is exactly what a judge should do. They should get control over and police the proceedings.

Editor: Is ATRA also promoting reform at the federal level?

Joyce: The Lawsuit Abuse Reduction Act is the first one that I would mention because it is a complement to the Class Action Fairness Act which President Bush signed into law this year. The Class Action Fairness Act permits removal of interstate class actions involving more than 100 individuals to the federal courts. However, cases involving fewer than 100 people were still relegated to state courts which are in some cases Judicial Hellholes.

To address some of the problems encountered in state courts, Representative Lamar Smith from Texas introduced HR-420, the Lawsuit Abuse Reduction Act. We expect that it will be considered in the near future. First, it reinstates mandatory sanctions for the filing of frivolous claims. That would apply in federal and state cases involving interstate commerce. Second, the law addresses litigation tourism. One of the key characteristics of what we have characterized as Judicial Hellholes is that courts will entertain cases that do not involve that jurisdiction. Frequently, the claim did not arise there, the plaintiff does not reside there and the defendant does not have a principal place of business there. ATRA is chairing the 300-member coalition of business organizations in Washington working to achieve its enactment. Next year, we are optimistic about passage in the House, but the Senate is likely to prove more challenging.

Other federal proposals include asbestos reform. The proposal has been reported out of the Senate judiciary committee and is a very complex administrative alternative to litigation. There continues to be continued discussions and efforts to find support among the different business constituencies. The question is how to reform the system.

The final area is medical liability reform. There should be a national law modeled on California's Medical Compensation Reform Act. This has been an issue in Congress for years. There is strong support in the House, and a majority of support in the Senate.

Editor: How can corporate counsel help you achieve the goals that you mentioned during this interview?

Joyce: Corporate counsel and the companies they represent have an opportunity to participate with ATRA and our affiliated state allies. The scope of that participation has a direct bearing on our success and the success of the state organization. We succeed when we demonstrate that there is a breadth of support across all different segments of our society, whether it is through the corporate community, health care community, small business, professional societies and even some nonprofit organizations. We depend on financial support and support from leaders who allow us to demonstrate a broad and diverse community of interest that supports legal reform. That has been a key to our success.

Editor: How can our readers get more information about ATRA's activities and how they can participate through their companies?

Joyce: They can contact us through our Web site www.atra.org, or they can call (202) 682-1163. My staff and I are very accessible. We are a membership organization and ask our members to pay a minimum amount of dues, although we sometimes have special projects where we look to the members for support. We have a lot of loyal and generous supporters, but we can always use additional support from new members.