Arkansas Supreme Court strikes "Tort Reform" constitutional amendment from ballot

[TomSlick]

The Arkansas Supreme Court today struck a proposed constitutional amendment passed by the GOP Legislature. The proposal would have capped damages for "non-economic" damages, punitive damages and limited attorney contingency fees. The real propose of the proposed amendment was to strip the power to make rules of procedure and evidence from the Supreme Court and give that power to the Legislature.

The Supreme Court did not address the merits of the proposed amendment. Instead the Court ruled the proposed amendment violated a requirement of the Arkansas Constitution that a proposed amendment can address only one issue. As described, the amendment addressed multiple issues. Nevertheless, the decision is a victory for the rights of individuals over big business and a loss for the GOP Legislature.

[KT2000]

1. Kochs

at work!

[TomSlick]

2. Clearly.

The Kochs and ALEC have bought themselves a nice little State Legislature in Arkansas.

[TexasTowelie]

3. Good news.

While I understand the need to have a cap on non-economic damages due to excessive jury awards, the caps that are being proposed are so low that it will discourage plaintiff attorneys from taking on new clients because they are on a contingency basis.

The myth of tort reform is that by capping damages it will result in a drastic savings in insurance premiums. The truth is that even insurance companies know that if fiction. One of the major medical professional liability insurers estimated that tort reform proposals will only reduce premiums by 3% - 4% at most.

Full disclosure: I was the tort reform statistician for the Department of Insurance for over a decade.

[Jim Lane]

4. This proposal was even worse than you say.

You write, "While I understand the need to have a cap on non-economic damages due to excessive jury awards...."

In every state that I know about, and presumably even Arkansas, jury awards are subject to review. In New York, at least, it's not uncommon for the trial judge to cut the award and enter judgment for a lesser amount, after which the appellate court cuts it even more.

Thus, focusing on "excessive jury awards" is a mistake. The correct question is whether there are excessive final judgments.

Are the insurance industry's spokesweasels correct in saying that companies are driven out of business by such judgments? One example they've pointed to is polio vaccine manufacturers. Some such companies were in fact driven out of business, after their defective vaccines caused polio. See, that's a good thing. The negligent companies folded and left the field to the companies that did their job competently. It shows that the tort system, without artificial caps on damages, is a necessary adjunct to a functioning free-market system.

I'll emulate your full disclosure: I'm a lawyer whose practice consists almost entirely of representing injured victims, many of them injured because of corporate malfeasance.

[TexasTowelie]

5. You are correct that jury awards are sometimes reduced by the judge,

then there are other judges that refuse to interfere with the belief that the court award will be lowered by appellate courts or in further settlement mediation.

However, I frequently saw cases where the jury awards were akin to winning the lottery not only for the injured party, but several family members also. I used to read the jury charges to verify that the statistical reports correctly allocated economic, non-economic, exemplary damages and interest and I'm sorry, but when I see an adult child awarded a million dollars for mental anguish when an injured parent also was awarded millions of dollars it doesn't seem reasonable. I think that most people will agree with that sentiment which is why the arbitrary caps receive support from the people.

I will also state that when Texas had a issue in medical professional liability insurance about 15 years ago it resulted in a crisis where doctors were avoiding the state because their premiums were too high and the state had a reputation of being bad for doctors. Even though I was opposed to the tort reforms that were adopted because I felt the limits were too low, the objective facts afterwards did show that there was an influx of doctors into the state. So the insurance industry statements that companies are driven out of business by such judgments does have some validity. Even if driving some bad actors out of business has positive public effects there will always be the unanswerable question of how many good actors decided to stay away?

Furthermore, what happens when a hospital is forced to shut down in a small town because of an excessive judgment? I live in a town where the hospital did shut down for 1.5 years (not related to any lawsuits)--there were certainly deaths that occurred because the patient had to be transported 30 miles away. There may have even been some deaths because both ambulances in town were making runs to the hospital out of town. The EMS service was forced to accelerate their purchase of two new ambulances at $160K each because of the wear and tear on the vehicles which is a cost to be paid by taxpayers over the next few years.

I also have an issue with how huge settlements affect public liability because of the burden it places on taxpayers. An example would be the $28M awarded to the Beatrice Six in Nebraska for wrongful imprisonment (see the Nebraska Group where I've posted a few articles over the past three years). While the group was wrongfully imprisoned and deserve to be compensated, where is the justice in the situation when it effectively handicaps the government for an entire county with budget cuts and terminated employees? What is the public interest of having a governmental entity that can't perform their mission?

I do believe in justice for those who are injured, but justice is a two-way street and it has to be fair for all parties in a civil lawsuit. If I was ever on a jury I would be more inclined to award a large amount against a corporation than a public entity, particularly if there is gross negligence or willful intent to not fix a product that is defective. However, neither plaintiff or defendant attorneys would allow me to be selected from a jury pool because I do have some idea about what an injury is actually worth and I do stand for justice. If you ever try a case in Texas you'll probably want to strike me from your list of prospective jurors because even though I might rule in the favor of your client I'm not interested in providing a windfall to either the plaintiffs or you as their attorney.

[TomSlick]

7. Please see my Reply 6, below.

You may be surprised to see a defense lawyer's perspective.

[TomSlick]

6. As a civil defense lawyer (representing people being sued),

I disagree there is any need for a cap on non-economic damages - at least not in Arkansas. There may be such a need in Texas but in my experience Arkansas juries are quite capable of setting reasonable damages. "Excessive jury awards" are few and far between in Arkansas. A damages cap is a determination - as a matter of law - that everyday people serving on juries are simply too stupid to set damages.

On the rare occasions in Arkansas that a jury awards an excessive verdict, it is subject to remittitur in which the judge puts the plaintiff to an election of either accepting a reduced amount set by the judge or there being a new trial. If, for some reason, a trial judge does not correct the rare excessive verdict, the case can be appealed.

You are correct that the lie that "tort reform" decreases insurance premium is just that - a lie. The lie is not told by insurance companies. Issue 1 was primarily being pushed by the nursing home industry who want to be able to allow old people die as a result of inadequate staffing without consequences and the trucking industry - that is big in Arkansas - who want to be able to have sleeping drivers kill people on the Interstate highways.

[TexasTowelie]

8. Jury verdicts are also subject to a remittitur in Texas.

That being said and since we also captured that information on the report forms, I believe that in over 1,000 jury verdicts and judgments that I read there were only two times that a remittitur was issued by a judge. It is far more likely that an appeal will be filed; however less than 10% of those appeals resulted in an appellate court decision and less than 1% of the jury verdicts advanced to where a decision was made by the Texas Supreme Court.

I think that the mix of industries in Texas vs. Arkansas might affect the need for damage caps also. Obviously the petrochemical industry dwarfs that of Arkansas and the claims against Lone Star Steel will probably continue until after I'm dead. There are also more product liability claims since manufacturing is more prominent in Texas than in Arkansas.

Now for the part of my response where I might appear crass or unsympathetic (which is also ridiculous since I've been the claimant in two auto accidents):

Texas has a similar situation as Arkansas regarding nursing homes with inadequate staffing. However, most juries also realize that those plaintiffs are also elderly so the amounts awarded for non-economic damages will tend to be smaller. The clients at nursing homes deal with the consequences of the injuries for a shorter period of time than the general population. The awards for loss of consortium and parental guidance will also be decreased compared to someone who is younger and will have to endure those injuries for longer.

The trucking industry claims should be similar in both states. I agree that there are companies that abuse the public by placing unsafe drivers out there. I definitely support exemplary damages being awarded in those court cases. The cap should be set at a level such that it is an effective deterrent, but I don't believe that a single court award should cause a company to go bankrupt. I don't know the cap amount that is appropriate for Arkansas or any other state, but I lean towards limiting the award to a percentage of gross receipts. Thus, if similar conduct is exhibited by that company then a series of those court awards should eliminate the repetitive bad actors. As far as non-economic damages are concerned, I think it is reasonable to question whether an award of $5 million for pain and suffering is justifiable for someone who literally survives only a few seconds after an accident and the family was awarded damages elsewhere in the jury charge. No amount of money is going to bring back that life.

As far as whether the people on juries are too stupid to make an appropriate award, I agree that they get it correct more often than not. Yet there were some jury awards that made me shake my head because the awards were absurd considering the age of the injured party, the circumstances leading to the injury, and the type of injuries involved. The jury awards from the Rio Grande Valley tended to be among the largest in Texas. I don't know whether that was because the juries were foolish or if they were extremely shrewd knowing that huge settlements from insurance companies would create a ripple effect in the community. The one thing that I do know is that the litigious environment and excessive court awards resulted in redlining for that region of the state which isn't good for anyone.

To the extent that companies do need some certainty as to the business environment within a state, I do understand why they want tort reforms. Those considerations also need to be taken in conjunction with the effect that it will have on other social programs. Tort reform should not be used to "socialize" costs from the private sector into the public sector. However, I do believe that reasonable damage caps can be set that are fair to both sides and that do not impose a burden on other parties not involved in the claim.