Tort reform: A new approach Proponents claim consumers lose in current environment By Phil Zinkewicz
Tort reform—two words that have been on the Christmas wish list for big business every year for decades, and two words that have struck fear in the hearts of plaintiffs’ attorneys for just as long. Moreover, those two words have generated industry and political debates, articles and analyses in myriad publications around the world, fodder for radio and television talk shows as well as lawyers’ commercials—and, without too much of a stretch of the imagination, one day those words might be the title of a Broadway musical. Those of us who have observed the insurance industry for more years than we can count are able to recite the arguments on tort reform—pro and con—in our sleep. Plaintiffs’ attorneys contend that tort reform measures currently being considered by Congress or at the state level would take away an individual’s right to sue. They further argue that putting caps on pain and suffering awards would be detrimental to their clients’ well-being and that the elimination of punitive damage awards would allow big businesses to escape punishment for their alleged misdeeds. Those who favor tort reform—the insurance industry, manufacturers and pharmaceutical firms, among other segments of society—argue that the tort liability system is out of control and has been for some time. They say that the current system creates huge, sometimes unconscionable fees for attorneys, provides windfalls for claimants, and discourages product development in many industries, harming the economy. Although the arguments on both sides may have some substance, the fact is that tort reform still remains an unresolved issue on both the state and federal levels. Coming on the scene is an organization called the American Justice Partnership (AJP) that is taking a new approach toward pushing for tort reform. The AJP’s message to consumers is that the current tort system not only harms consumers in the pocketbook, but also cheats consumers out of having much-needed pharmaceutical products available to them and sometimes takes away their jobs. To get its message across, AJP has amassed the business and political clout of some 60 leading national and state organizations to coordinate the fight for tort reform. The AJP was launched in early 2005 when National Association of Manufacturers (NAM) President and former Governor of Michigan John Engler announced that Dan Pero, former chief of staff to Governor Engler, would lead the partnership. They were joined by Mississippi Governor Haley Barbour, a leading proponent of state legal reform, who successfully led a reform effort in his state. In addition to NAM, national members of AJP include: the American Enterprise Institute Liability Project, the American Tort Reform Association, the American Legislative Exchange Council, the Center for Individual Freedom, the Center for Legal Policy, the Council for Citizens Against Government Waste, the Pacific Research Institute, and the Federalist Society for Law and Public Policy Studies. Recently joining AJP is the American Association of Managing General Agents. On the state level, AJP boasts such members as the Business Council of Alabama; the Civil Justice Association of California; the Silicon Valley Citizens Against Lawsuit Abuse; and Chambers of Commerce in Florida, Georgia, Kansas, Michigan, Ohio, South Carolina, West Virginia, and more. In announcing Pero’s appointment, Governor Engler said: “As a governor, I saw first hand how an out-of-control, unpredictable legal climate can negatively impact the economic vitality of just about every segment of state commerce, hurting job creation and the well-being of families. The average American family of four pays a ‘litigation tax’ of more than $3,300 a year in higher prices for the products they buy, insurance rates and health care costs. As president of the NAM, I’ve traveled across this country to meet with business leaders and job providers who have shared their concerns about a legal system run amok. The story is always the same: frivolous lawsuits, venue abuse, and jackpot justice are strangling job growth, undermining economic development and creating a climate that threatens business everywhere, large and small. We aggressively pursued change in Michigan during my 12 years as governor and succeeded in passing sweeping reforms to a legal climate that was once hostile to business. Today, Michigan is a better place to start a business or find a doctor because of the many legal reforms we were able to enact.” Addressing changes to the tort system in his state, Mississippi Governor Barbour said: “Mississippi had the worst lawsuit abuse in the country. It was hurting health care and reducing job creation. Working together with the legislature, in which Democrats have majorities in both houses, we enacted the most comprehensive tort reform bill in the country. We’ve put an end to lawsuit abuse in Mississippi.” Rough Notes spoke with Steven B. Hantler, assistant general counsel for DaimlerChrysler Corp. and chairman of the AJP, to find out what he sees is in store for the new partnership. “We have brought together a diverse group of organizations and associations, on both the national and state levels, who have in common a dedication to reforming the current tort litigation system,” Hantler said. “Let’s get one thing straight,” he added. “We are not trying to eliminate lawsuits or take away people’s right to sue. To the contrary, we believe that plaintiffs who are seriously injured, for whatever reason, should receive 100% of their losses—medical, wages and pain and suffering. We just don’t think that they should get a windfall judgment.” Hantler said that “the people” are the real victims of lawsuit abuse, not just because of the “litigation tax” they pay, but because lawsuit abuse has resulted in the loss of products and services and sometimes even loss of jobs. He pointed out that Bernie Marcus, who founded Home Depot in 1978, has said publicly that he could not have started the company in today’s legal climate. “Look at the pharmaceutical industry,” Hantler said. “There are two drug companies that had been researching a drug that would prevent HIV from being transmitted from a mother to a baby. They have suspended that research for fear of unlimited liability. I know of a drug company that has produced a drug that can reverse Alzheimer’s disease. But the company is discontinuing its research because of our legal system. There are drugs that are available in other countries that we can’t get here.” Hantler referred specifically to the pharmaceutical manufacturer Merck & Co. and litigation over painkiller Vioxx, which Merck voluntarily withdrew from the market. “I’m not sure Vioxx should have been taken off the shelves. Studies show that the drug can adversely affect the heart in large doses over a period of time if not used properly. But if properly used, it can help relieve pain in arthritis sufferers without the dangerous side effects.” The AJP chairman said that Merck recently appeared to even the score with plaintiffs who have been suing it over Vioxx. The first trial, in Texas, notoriously ended with a $253 million award to the widow of a triathlete who died after he took Vioxx, even though there was no evidence that the drug was responsible for his death. However, in a second Vioxx trial in New Jersey, the jury ruled in Merck’s favor. Still, some 6,400 additional suits have been filed. “And the opposing outcomes in the first two cases illustrate that the outcomes of the rest of them remain anyone’s guess,” said Hantler. “Recently, Merck announced that it was closing some plants and laying off some 7,000 hard-working people for reasons that included litigation costs relating to Vioxx. So, we’re saying that people are the victims of lawsuit abuse—people who must pay more for a product or service, people who don’t have the drugs available to help them to fight off disease, and people who are put out of work.” Rough Notes asked Hantler why the AJP has chosen to seek tort reform on the state rather than the federal level. “We’re not against tort reform on a federal level, but the complexities involved make it more difficult, and dollar for dollar we have been achieving more results at the state level,” said Hantler. “Ten years ago, Congress passed the Securities Reform Act, intended to reduce the number of securities lawsuits. But, since then, there have been more securities lawsuits than ever before. So that’s why we are keeping our focus on reform at the state level. Of course, it is difficult at the state level because a significant number of state legislators are trial lawyers. Very often they will block a piece of legislation that is beneficial to their constituents because of their own self interests. That’s why we have to communicate better to the public so that they will pressure their legislators to effect meaningful tort reforms.” * For more information: |
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