Insurance


According to a story in the Houston Chronical (also reported on in the New York Times), Texas tort reformers are at it again.  On the horizon in the Texas Legislature this year are several bad and unneeded “reforms”.  One law being proposed is called “loser pays”.  It is an old idea with a deceiving moniker.  The law, as proposed in a draft by Governor Perry, would make the person who brings the lawsuit pay for the expenses and attorney fees of the other party if they ultimately lose their lawsuit.  That might sound fair to some, but the law is one-sided.  The only time the loser pays is when the loser is the plaintiff.  If the loser is the defendant, which is the case in a majority of lawsuits filed, the defendant is not required to pay expenses and not required to pay the winner’s attorney fees.  Not anyone’s idea of fair.  But fairness is not the point.   

The law is being proposed as a measure to stop frivolous lawsuits.  In the Times article, a professor at the UT School of Law said no serious studies on frivolous lawsuits have found that frivolous lawsuits are a real problem.  If the law is a solution to a non-existent problem, why are taxpayer dollars being wasted on this issue.  It is time for the politicians to get back to work and quit raising the lawsuit boogeyman promoted by insurance and business interest.  These special interest groups raise this issue every couple of years to promote their goal of limiting their personal liability and ultimately to shirk their personal responsibility to average citizens.

“Loser pays” is a measure designed to put fear in the heart of the average person who wants to assert their right to seek justice and make a claim.  Any attorney the claimant consults with will be required to tell the claimant that if there is an unjust outcome and they lose the case, they will owe the defendant their attorneys fees.  Even when someone feels they are right, they will be reluctant to bring a suit, out of fear that an already bad situation could possibly be made worse.  This is the response business and insurance lobbyists are looking for in this measure.  But business and insurance interests will never have that same fear, because the proposal does not ask them to pay costs if the person who brings the suit is successful.

Texas is also looking at regulating attorney fees.  We all know that big businesses and insurance companies can hire any lawyer they want.  In fact many insurance companies have lawyers on their payroll.  A regular person sometimes can’t afford to hire an attorney.  Contingency fees make it possible for the little guy to get legal representation on par with what big businesses can afford. 

Texas legislators want to cap contingency fees at a low-level.  Free enterprise is the cry of every legislator who would push this kind of bill and no one is suggesting a cap on what insurers and big businesses pay their lawyers.  But it is ok to limit what kind of representation the little guy can receive, while encouraging the deep pockets that would obstruct access to the system.  Think what would happen if the NBA decreed that half of the teams can pay as much as they want for their players and put a cap on what the other teams could pay.  Not a fair system.  But fairness (justice) is not the goal.

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An editorial in the Oklahoman talks about a tort reform bill passed last year in Oklahoma.  The bill is of the sort contemplated by the article I talked about yesterday.  The 2009 reform bill passed in Oklahoma put a cap of $400,000 on non-economic damages, and was supposed to create a taxpayer financed indemnity fund so that the state could pay the amounts above the cap when the cap is waived. 

Like the article yesterday stated, reformers are looking to shift their burden, the burden of personal responsibility to the state and thus to the taxpayers.  The editorial states that if the taxpayers of Oklahoma don’t have $20 million to seed the fund with, then the law will not go into effect.  Big business must have some good lobbyists up in Joklahoma, becuase I can’t imagine how a legislator is going to explain this one to his constituents.

There is an article in the Detroit Free Press by Jim Marcinkowski titled “Tort Reform Made Simple” that does a good job of breaking down the workings of the legal system and what it is that tort reform seeks to do.

Marcinkowski explains the concept of tort law and the reform movement as follows: 1. Accident happens; 2. Injury does not go away; 3. The injury costs money (medical, lost wage, etc.); 4. Compensation – either the responsible party pays or the government pays; 5. Tort reform seeks to lower the costs of doing business by shifting the burden of these costs on to the public.  He summarizes the analysis by making the statement, “Tort reform is.. just another mechanism to increase private profit by socializing any cost or loss.”

Marcinkowski goes on to examine certain tort reform myths.  The article is well thought out and certainly worth a read.

Everyone’s favorite movie star/governor, the aptly titled “Governator”, has become the “Tort Reforminator” this week.  According to an article on Law.com, Governor Schwarzenegger signed a bill into law this week that prevents a victim  of negligence from suing someone who stops to help them at the scene of an accident, unless the tortfeasor’s actions at the scene rise to the level of gross negligence or recklessness.  The bill was pushed by the Civil Justice Association of California, a tort reform group whose members include Allstate, AIG, and State Farm (obviously a group that looks out for everyday people).

A member of one of the groups sponsoring the bill, Christine Spagnoli was quoted as saying: “The bar has been set higher…  People who do something and unintentionally cause additional harm aren’t going to be faced with having to be potentially sued.”  Christine then gives the following example to illustrate how the new bill works: if a drunk driver stops at an accident scene, puts a victim in his car and wrecks it, his actions could rise to gross negligence – he could be sued.  If a sober driver rescues someone from an accident scene and crashes into someone while racing to the hospital, they might not be liable under this new law.

The bill provides protection to insurance companies.  If the sober driver in scenario number two is driving like a maniac and hurts someone, the fact that he just rescued someone at another accident scene should not shield his insurance company from paying for his negligence.  This bill does not protect good samaritans, it protects the good samaritan’s insurance company and prevents the injured party from recovering from the insurance company to pay for their medical expenses.   Good job protecting “helpless” insurance companies like AIG, Herr Governator!

The Arkansas Supreme Court found two provisions of a 2003 tort reform bill known as the Civil Justice Reform Act unconstitutional, according to a story on arkansasnews.com.  In the case, Johnson v. Rockwell Automation Inc., a worker sustained severe injuries to his hand, when the safety switch on a starter bucket malfunctioned, and sued Rockwell, the designer of the bucket.

The two issues the court looked at were a provision that allowed jurors to assess fault to non-parties and a provision that abolished the collateral source rule.  The Court found that the legislature went too far in the tort reform bill and that these provisions violated separation of powers provisions of the state constitution. 

In the opinion, Justice Paul Danielson wrote the “(r)ules regarding pleading, practice and procedure are solely the responsibility of the court.”  Because rules regarding pleading, practice and procedure are solely the province of the judiciary, the legislature cannot pass laws in this area, without running afoul of the constitution.

In this case, the defendant wanted to introduce evidence that a non-party shared blame for the defect that caused the injury, which was admissible evidence under the new statute.  The court found that “(t)he nonparty-fault provision bypasses our ‘rules of pleading, practice and procedure’ by setting up a procedure to determine the fault of a nonparty and mandating the consideration of that nonparty’s fault in an effort to reduce a plaintiff’s recovery.”  The Court found that “(b)ecause the nonparty provision is procedural, it offends the principle of separation of powers.”

The collateral source rule is a common law doctrine which dates back to the 1800’s.  It says that evidence that a victim might be compensated for injuries from a source other than the defendant that caused the injury, is inadmissible.  For example, a car wreck victim might have health insurance which pays for some of their doctor bills. 

The reason the defendant cannot ask for a reduction in a case where health insurance pays a bill, is that the health insurer has a right to pay back from the plaintiff, for any money they pay out on the claim (subrogation right).  That means if a jury reduces the amount of an award by the amount the health insurer pays, then the health insurer gets pay back from the plaintiff for what it paid out, the plaintiff ends up under compensated for their injuries. 

The court stated “we have held that the rules of evidence are rules falling within this court’s domain.”  The statute restricts what evidence may be admitted at trial.  Because the statute creates a new rule regarding what evidence is admissible at trial, it violates the separation of powers provision of the state constitution. 

Collateral source and joint liability are two common targets in tort reform attacks in state legislatures.  Joint liability protects plaintiffs from being under compensated when there are multiple defendants and one of the defendants cannot pay their share.  The collateral source rule prevents the at fault party from getting away with paying less than the full amount they owe and short changing the victim.

According to a story on philly.com, a jury in Freehold, New Jersey found a truck driver liable for a traffic accident, where the trucker had no physical contact with the other vehicles in the accident.  The truck driver was stopped in traffic and Thurman Baker, the driver of the car involved in the accident, was in a parking lot, trying to enter the roadway.  The truck driver waved Baker’s car across the lanes of traffic, where the car was hit by a motorcycle traveling in the other lane of travel.

The trucker told an officer at the scene he waved for the driver to enter into the highway, the sign that it is clear to go, but then later changed his story.  The jury in the case awarded the victim $1.5million.  His injuries included a concussion, permanent damage to his arm and five cracked teeth.

According to the Chicago Tribune, a jury in Will County, Illinois awarded a $24 million verdict to the families of two people killed, as well as another person who was seriously injured, in a multiple car/eighteen wheeler crash in April 2004.  The verdict was rendered against C.H. Robinson Worldwide Trucking, a Minnesota trucking company, and the truck driver, DeAn Henry. 

A story on Chicagosuburbannews.comsaid that Joseph Sperl was on I-55 the day of the accident, slowing in traffic, when his car was hit by the tractor-trailer.  Mr. Sperl was killed in the accident.  The tractor-trailer also hit a car driven by Thomas Sanders, who lost his life in the accident.  Five other people were injured in the accident that day.

Henry, the driver of the tractor-trailer, subsequently plead guilty to charges of driving on a suspended license and falsifying her log book, in relation to the accident.  The $24 million verdict was the highest verdict in the past fifty years in Will County.

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