Face-Off: The Battle for ‘Tort Reform' | Jackson Free Press | Jackson, MS

Face-Off: The Battle for ‘Tort Reform'

When Sen. Gloria Williamson walked up to the podium on the first day of the 2004 Extraordinary Session called by Gov. Haley Barbour, she had one goal. The senator from Neshoba County, a Democrat, wanted to convince the Senate—an assembly of mostly well-to-do Republican men lined up behind Barbour's mission to end "lawsuit abuse"—to do the right thing. She wanted to appeal to the human side of the chamber, to convince them to continue allowing Mississippians who had suffered horrendous disfigurement as a result of a defective product, negligence or an act of malpractice to collect "pain and suffering" damages.

In the chamber of "the Lords," where coats and ties are required, Williamson waved her hands a lot, wheedled and went straight for the aorta. Pain and suffering damages are usually only awarded in the most egregious cases, as when someone loses a limb or is scarred for life, Williamson said, and they are there precisely to force companies to be more careful, and to keep them from factoring in the legal costs of dangerous habits into their bottom lines and deciding it's worth a few life-long scars, or even deaths, to save a few bucks.

Williamson's impassioned speech worked. Barely. Some members of the chamber were visibly touched by her words, perhaps considering that limiting pain and suffering damages for cases of such extreme negligence seemed too cold and calculated. The chamber voted by one vote to exempt disfigurement from the Senate's overall bill, which was seeking to limit all pain-and-suffering damages—for both medical malpractice and general liability—to $250,000.

In the hallway afterward, Williamson was happy about her Pyrrhic victory. "Good things come from lawsuits," she said. "The pain and suffering is an important part. For them," she added about her conservative brethren, "to get in front of the podium and act like it's not a big deal, is not the truth." It is unconscionable, she said, to try to cap the value of the life of a child or a parent grossly burned or harmed.

But, she warned, there were lobbyists on behalf of industry—especially from drug companies—crawling the hallways and pouncing on any legislator who would dare question the need for damage caps. "Doctors are being used," she said. "It's not about people. It's about predictability." She predicted the Senate would vote to reconsider her amendment.

She was right.

DAMAGE CAPS OR BUST
The words "tort reform" mean different things to different people with different priorities. Barbour and his supporters in the Senate—a chamber he seems to have almost complete control over this session—say that the only "meaningful" result of negotiations to regulate the civil justice system would be $250,000 non-economic damage caps, meaning "pain and suffering," for both medical malpractice and business lawsuits. They want no exception for any injury, including lost limbs or maiming. Ideally, no one would collect more than $250,000, no matter how egregious the negligence or how faulty the product.

"The Senate's position from beginning to end is that caps have to be on the table," Sen. Charlie Ross, chairman of the Senate Judiciary A Committee, said in an interview. Ross said that last year's election of both Barbour and Lt. Gov. Amy Tuck are reason enough to put the caps into place. "The people of Mississippi want it," Ross said. "Elections matter."

Ross said the Senate will reject any bill that does not contain pain-and-suffering caps. The men who control tort legislation in the House: Speaker Billy McCoy and Judiciary A Committee Chairman Ed Blackmon—have, so far, refused to bring a bill containing caps to the House floor.

"I'm going to live up to my responsibility of being a gatekeeper," Blackmon said on Day 1. "If I let every piece of legislation out, and tell the House to vote on every bill, the speaker would ask me what the heck is wrong with me."

Blackmon—a trial lawyer—has the power to send to the House, or block, any bill approved by his committee. In the regular session, Blackmon said, he was willing to compromise and send to the House floor a menu of tort reforms that the business community says it wants and that do not cap the amount of pain-and-suffering damages victims can collect from a defendant that harmed them—a bill he says Barbour had told him and McCoy could work as a compromise this year. But, in the end, Barbour took that offer off the table, insisting that the House's bill include caps.

"I'm going to be much more resistant now," Blackmon said, adding earlier agreements were off in the special session.

'HOUSE-AS-ROADBLOCK'
As we go to press on Day 5 of the session, both sides have passed bills that support their stances—the House bill proposes tort reforms with no caps; the Senate offers additional tort reforms and includes caps—and both sides say they won't give in to the other. But, so far, Barbour's camp has dominated the mindshare, and the media, with the notion that it is the House that is wasting the taxpayers' money by not agreeing to "real" tort reform—even though Barbour was responsible for calling the special session after Blackmon refused to consider damage caps during the regular session.

The "House-As-Roadblock" theme has been trumpeted by mass media, including The Clarion-Ledger, which has had repeated editorials calling for non-economic damage caps: "Without such a cap, there is no tort reform," the paper wrote May 19, 2004. But there is very little reporting on why the caps are necessary and how they've worked elsewhere.

Indeed, this spin overlooks the dearth of actual evidence favoring caps, and it paints caps opponents with a broad "evil trial lawyer" brush. This narrative gives little, if any, credence to the idea that some opponents of caps might be out to protect consumer rights before anything else, and are willing to stand up to insurance companies, the U.S. Chamber of Commerce and its preferred lawmakers, even when they risk being targeted during their re-election by "lawsuit abuse" sound bites and big, big money.

BY ANY OTHER NAME
The House of Representatives—or the "House of the People," as its members like to call themselves—has presented a number of reforms to state tort law, all desired by businesses in the state, both in the regular session and in the special session. House Bill 4 includes provisions that limit the venue where a company or individual can be sued, in an attempt to stop "venue shopping," which is filing suit in jurisdictions that seem predisposed to render favorable verdicts. The bill also adds support for class-action lawsuits to the Mississippi code—such suits are easier and cheaper to defend than are multiple suits with many plaintiffs. The bill also shields property owners from liability when an injury is caused by a contractor on their property, and it provides for a pool of doctors who are granted limited liability if they have at least 35 percent of their patients in Medicaid or a similar program.

On the first day of the special session, the tension and the energy ran high in Blackmon's Judiciary A meeting. Because Democrats outflank Republicans in the House, they seemed a bit emboldened after being called back by Barbour only days after the regular session had ended on several notes of rancor. In addition to tort debates, the chambers had fought bitterly over voter ID, under-funding public education, and how to deal with mental health centers and juvenile justice lawsuits, while honoring Barbour's pledge not to raise a single tax or fee. Add to that the dressing-down they were getting in newspapers and on radio about not agreeing to "reasonable tort reform" (damage caps), and House Democrats were ready to rumble.

In his committee, Blackmon introduced House Bill 2—which included provisions the Senate would likely consider, along with some it would choke on. Indeed, the bill turned out to be downright populist in sections, actually calling for a rollback in medical malpractice rates to the amounts insurance companies charged on July 1, 2001, leaving conservative members of the committee nearly sputtering in disbelief that he would try such a thing.

Blackmon could not have thought that the bill had a snowball's chance in hell (a pointed cliché he used that day to a group of media to describe the chances of Barbour getting his damage caps) of going anywhere—but it did do something significant. It brought the concept of "insurance reform" to what could be the last frontier for such a progressive idea: the Mississippi Legislature.

POPULIST UPRISING?
The House went into full session after dinner the night of Day 1, ready to take up Blackmon's bill. The session started out innnocently, with Blackmon stepping up to explain his bill, and rejecting an attempt by Rep. Thomas Reynolds, D-Charleston, to amend the bill to require that medical malpractice cases be screened by a medical review panel before going to a jury. (Opponents argue this panel will not work because the pool of doctors who will serve on the panel is too small, and thus will at least appear biased to victims.)

The roman candles starting spewing when Rep. Jamie Franks Jr., a young Tupelo man, introduced an amendment to delete the word "malpractice" from the insurance rollback. He wanted all insurance rates rolled back to 2001 levels.

"If you want to help people of this state, and you want to reduce insurance costs, here's your chance!" he boomed into the microphone. Franks said that, in 2003, insurance companies enjoyed a 1,000 percent increase in profits and reported profits of nearly $30 billion. "Insurance companies are charging way too much; this is our opportunity to get control. … We need consumer protection so that insurance companies quit gouging the people of the state of Mississippi."

Franks' burst of emotion left some members of the House staring in disbelief. Rep. Jim C. Barnett, a GOP physician from Brookhaven, practically barked out his response to the whipper-snapper. "You believe the Supreme Court would allow this to stand?" he yelled.

Rep. James Simpson, R-Pass Christian, was next: "This kind of foolishness is making us look so bad." Even some Democrats were speechless. "I'm not in favor of passing silly laws," said Rep. Cecil Brown, D-Hinds.

The dropped jaws only seemed to encourage Franks. "Here's what I think," he preached from the pulpit. "We've been kicked around and cussed for not dealing with (tort reform) … when the real problem we have is insurance." Rep. Steve Holland, D-Plantersville, waved a cane with an American flag taped to the end during Franks' sermon, as conservatives moaned and booed.

Rep. Jim Evans, D-Hinds, rushed to get Franks' back. "The greatest foolishness is why we are here," he started. "To think that these (voter ID and tort reform) are the biggest issues facing the state of Mississippi! We're here tonight because of insurance companies. This gentleman"—he waved toward Franks—"is right on the pulse of the problem." He compared the special-interest backers of damage caps to the "money-changers Jesus talked about," adding, "Clearly, it is not silly for this gentleman to offer this amendment."

The amendent died that night, as did Blackmon's bill—based somewhat on a procedural blooper: He had kept language from an earlier bill that set fees in one of the provisions of the bill; Because the bill had new fees attached to it, it needed a three-fifths vote rather than a simple majority; late that night, it died 52-63.

Still, two of the unlikeliest words had reached the floor of the Mississippi Legislature: "insurance reform." And they may be settling in for a while.

THE CALIFORNIA MYTH
Celeste Foster O'Keefe, an ad agency owner from Ocean Springs, has a beef with insurance companies. Her 11-year-old son was born with a "port wine stain," a birthmark caused by abnormal blood cells, that over time can cause permanent disfigurement. The condition, which insurance companies consider "cosmetic," has cost her more than $250,000 to treat.

O'Keefe attended the opening days of the special session with large posters of her son's worsening condition in tow. She came to demand that legislators consider insurance reform, to wrest control away from an industry that made billions in profits in 2003, even as insurance rates skyrocketed across the board. "Ask your legislator why insurance companies can decide how much your life or injury is worth but a jury of your neighbors cannot?" exhorts a four-color flyer she designed.

Her argument is quite simple: If you are going to even consider regulating the consumer and legal side of medical malpractice lawsuits, then you ought to rein in the insurance companies. They are, after all, the ones charging the exorbitant rates.

Independent analyses of "lawsuit abuse" bear O'Keefe out. In 2003, the General Accounting Office—Congress' non-partisan research division—found that high medical malpractice rates are due to a variety of factors that include lawsuit payouts, but that largely hinge on the investment and business practices of the insurance companies themselves. During the boom-time Clinton years, for instance, insurance companies speculated loosely in the stock market, and lost a lot of money like everyone else. Now they feel they have to make up those losses on the backs of consumers.

It has also proved to be a myth that if states (or the federal government, as the Bush administration wants) give insurance companies their damage caps, the insurance companies would be so grateful that they start lowering insurance premiums. In fact, in states where caps have been put into place, insurance rates have not gone down.

At the Capitol, it is routine to hear an industry lobbyist say that rates will fall once low-enough caps are in place. On the first day of the session, a medical lobbyist told us that, of course, medical malpractice damage caps would lower insurance rates in Mississippi; "Look at California. Rates fell there after they capped damages," she said. She referred by name to "MICRA," the 1975 Medical Injury Compensation Reform Act that limited medical malpractice "pain and suffering" awards to $250,000 in California.

But rates did not fall after MICRA passed. Much as has happened in Mississippi since the $500,000 damage caps were passed in 2002, insurance rates in California went up considerably—peaking at 450 percent higher—as insurance companies exercised their prerogative to try to capitalize financially off, on the one hand, lawsuit limits and, on the other, the ability to keep raising rates as they pleased.

This went on until 1988, when California voters passed Proposition 103, "The Insurance Rate Reduction and Reform Act," by referendum, populist reform that immediately rolled back all insurance rates, repealed the insurance companies' antitrust exemption, and created strict controls and oversight for insurance companies (and the Supreme Court didn't flinch).

Today, California has incredibly low payouts for medical malpractice, and it also has low medical-malpractice rates. It has an infrastructure that regulates the profits an insurance company can make in California; even CEO salaries are subject to review.

In recent months, there's been increasing pressure in the California to exempt certain medical malpractice cases from the caps, partly because the $250,000 hasn't been raised in nearly 30 years (if adjusted for inflation, the 1975 California cap would be nearly $900,000) and partly because certain cases of negligence under managed care and 24-hour supervised care have caused the California Supreme Court to allow punitive damage caps to be waived in some malpractice cases.

THE CASE FOR CAPS
On Friday, Gloria Williamson was proved correct. Her amendment to exempt disfigurement from damage caps was reconsidered, and struck down rather ceremoniously.

Williamson did, though, give yet another impassioned speech: "I ask you all not to do this." She even tried hitting below the belt, so to speak, to bring her disfigurement message home: "I can think of a few other parts of your body you wouldn't want taken off," she said.

Her pleading message, however, although backed up by a handful of other senators (as many conservative senators joked among themselves and ignored the podium) fell on deaf ears. Sen. Ross was focused on his "predictability" goal for businesses, rejecting an exemption for disfigurement because "we need a cap without holes in it."

Sen. John Horhn, D-Jackson, chided his brethren, saying "It is a bill for corporations. Corporations do not vote for us; people do."

Caps proponents such as Ross, however, argue that the people will reap the benefits of the damage caps because the state will be more competitive economically. A primary reason proponents give for supporting general-liability caps in Mississippi is the fact that some other states have already done it. While, in general, the tort reform debate in the country is about medical malpractice—which Mississippi addressed in its 2002 special session with a $500,000 cap on non-economic damages—some states, in particular Texas, have also passed limits on caps for cases that do not involve medical malpractice.

When asked, Ross did not point to any evidence that the caps will increase jobs in the state. Ross, instead, rifled through papers on his desk, finding a letter he said was from the Texas Department of Insurance commissioner. Since Texas voters approved a constitutional amendment that allows for $250,000 medical malpractice caps in 2003, the commissioner wrote according to Ross, 10 insurance carriers had "taken concrete steps to enter the marketplace." Ross said: "Common sense tells you that you put predictability in the system, it'll make it easier for insurance companies."

Leland Speed, executive director of the Mississippi Development Authority, suggested that the state could have tort reform without caps, but that it would affect "Mississippi's ability to compete" with states such as Texas that recently have enacted caps. He read to us from a letter, recounting the story of a company that had been "so badly treated" by the Mississippi judicial system during a foreclosure deal that they were going to cancel plans for a new retail development. "We don't want to be red-lined," Speed said.

Most other states do not have caps on non-economic damages for general liability, although limits have been placed on punitive damages for general liability cases in many states, including Mississippi. In fact, a current Senate bill would impose more limits on punitive damages in Mississippi civil cases, limiting them to between 1 and 2 percent of the net worth of a company found guilty of injuring customers.

Another reason given by proponents, including Barbour in a press conference Monday, is simply that Mississippians want tort reform. A study conducted at the behest of Mississippians for Economic Progress, a pro-tort reform group, found that "85 percent of Mississippians believe the number of lawsuits in the state's courts is a serious problem," and "83 percent of those interviewed believe that small companies pay the price for excessive lawsuits, not just big corporations."

The survey did not specifically ask the pool of "likely" Mississippi voters whether they support caps on non-economic damages or anything about the particular bills facing the Legislature, and the leading nature of some of the questions in the survey make it appear to be a push-polling tool to put pressure on the House to pass caps. That said, Mississippians do appear to have been primed for action by the Legislature, and the poll might reflect a general mood—perhaps promulgated by superficial media coverage.

IS INSURANCE REFORM NEXT?
As we go to press Monday, it is anybody's guess what will happen next. The House passed another version of Blackmon's bill, this time without the fees attached and without the insurance-rate rollbacks. That bill was defeated by the Senate, and the Senate Judiciary A committee used a "strike all" amendment to replace House Bill 4 with the contents of House Bill 3, a Republican-written bill (with its oft-touted 60 co-sponsors) that includes most of the Senate's provisions and the $1 million "hard" cap. (Non-economic damages are capped at $500,000 or five times the medical costs to the injured party, whichever is greater. The bill does not change the $500,000 cap on medical malpractice, except that it no longer exempts disfigurement.) The new bill passed in the Senate, and was returned to the House.

But, regardless of what happens with the damage caps, there are signs that insurance reform is not dead. Franks said Monday that he is determined to keep the idea alive and, in fact, called a press conference for the next day to bring together a diverse roster of groups—including the NAACP and the AARP, he said—to back up his call for meaningful insurance reform in the state. "We need to look for balance," he said. "We've got to take care of our folks and not just big business."

In fact, by Monday, the pro-caps contingent was a bit less cocksure about their agenda—and even seemed to be reacting to being linked to "big business." On the floor of the Senate, President Pro Tem Travis Little complained that he was hearing that the Senate was just trying to protect big business. "Let me tell you who big business is," he said. "They employ your constituents."

Sen. Bennie Turner, D-West Point, said he believes the state has "serious problems" with the medical malpractice climate, more so than business liability. But, he said, "where we begin to differ is how we got in the predicament we're in and, more important, how to get out. … I'm not aware of a single instance in any jurisdiction in the United States of America where the implementation of caps made a single bit of difference. The highest premiums are in states with caps."

A defeated-but-determined Gloria Williamson again tried to appeal to her fellow senators. "We've talked about tort reform for many, many, many years. Will we ever foresee that part of the problem belongs with the insurance industry, that it needs reform? Or will we just keep taking away people's rights?"
This story will be updated daily as the special session continues.

Previous Comments

ID
77702
Comment

Clarion-Ledger editorial today: "Without a cap or limit on non-economic damages, there is no real tort reform. But in assessing risks, the public must be protected, too, against wrongful actions or willful disregard by business and industry." OK, at least now they're mentioning the public. About time. Then, if you read on, the editorial team over there starts to articulate its reasoning: "That's because non-economic damages ó after all the economic losses, potential earnings, costs of medical care, etc., have been paid ó really have no objective value. It's the emotional appeal that decides the award, so that's where the risk for business, and insurance, is involved. It can be a jackpot." Hearing the editorial board explain why it is in Barbour's pocket on this issue isa good step--so far they've just been hurling sound bites on an unsuspecting public--but their reasoning is simplistic and flawed as we talk about in our package of stories this week. That is, it is precisely the unpredictability of the amounts of the damages -- to seriously injured people, remember -- that encourages companies not to factor in a certain amount of serious injury of deaths into their bottom line (remember the Ford Pinto case, for instance). But, it is nice to at least hear some sort of reasoning from The Clarion-Ledger on their editorial proclamations about why we need to to accept $250,000 caps on pain and suffering.

Author
DonnaLadd
Date
2004-05-26T11:52:12-06:00

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