IS REFORM POSSIBLE?
Efforts to contain Trial Lawyers, Inc. continue.
Since 1975, lawsuits have cost the U.S. economy almost $3 trillion (see chart on next page), and the tab keeps rising. Is there anything that can stem the growth of Trial Lawyers, Inc.? Unfortunately, change won’t be easy: the huge fees the lawsuit industry now accumulates not only have served as capital for new litigious ventures but also have made Trial Lawyers, Inc. the most powerful lobbying group and political funder in America.
Nevertheless, the Bush administra-tion has set its sights on a series of tort reforms targeting the core busi-ness lines for Trial Lawyers, Inc.—class actions, asbestos, and medical mal-practice (see box). At the state level, various lawmakers have advanced legislation to control skyrocketing noneconomic- and punitive-damages verdicts and to modify rules that permit some defendants to assume a share of damages grossly disproportionate to their share of liability. And other in-dustries have begun to challenge Trial Lawyers, Inc.’s historical grip on state judicial elections.
Many judges, too, see the need to rein in the lawsuit industry’s worst ex-cesses. In its landmark Campbell v. State Farm decision in April, the Supreme Court put a constitutional limit on a jury’s ability to set punitive damages at an extreme multiple of actual dam-ages. And while courts have tradi-tionally been reluctant to enforce state codes of ethics prohibiting excessive fees, judges may finally be cracking down in the wake of the outrageous tobacco settlements: New York State judge Nicholas Figueroa recently threw out as excessive a $1.3 billion claim by the Castano group for work allegedly done on the California tobacco settlement.
Only time will tell whether these promising steps signal an end to the worst abuses of America’s lawsuit culture, or whether they are anoma-lies bucking the trend of the litigation industry’s continuing growth. Will the public come to acknowledge the threat posed by the litigation industry’s size, influence, and lack of transparency? Will policymakers and judges have the foresight and will to act in the public interest? One thing is certain: our nation’s future economic health depends on affirmative answers to these questions—on Americans standing up to the rapa-cious behemoth that is Trial Lawyers, Inc.
KEY FEDERAL REFORM INITIATIVES
The fight for class action reform has been a largely uphill battle, since tightening down on one state’s “magnet court” merely sends Trial Lawyers, Inc. scrambling for another favorable venue. For instance, after Alabama’s infamous tort system was finally reformed in 1999, the lawsuit industry simply relocated to Illinois, Mississippi, and West Virginia.
The Class Action Fairness Act currently pending before Congress seeks to address this issue of venue shopping by removing to federal court any large national class action cases. At the time this publication went to press, the Senate was expected to take up the bill imminently; passage of the act could be the critical first step in containing the class action menace.
The key players in Washington continue to haggle over potential solutions to the asbestos mess. Although no workable legislation has yet emerged, the outlines of reform include establishing a “trust fund” to pay asbestos claimants, setting defined medical standards for asbestos claims, and addressing the problems of forum shopping and legal fees. Since sup-port for asbestos reform is broad, the outlook for reform of some kind remains hopeful. Asbestos litigation reform would add certainty to the marketplace and could save billions of dollars.  The downside is that a multi-year trust fund might serve both to legitimate spurious claims and to provide a sizable, definite funding stream for yet more ventures by Trial Lawyers, Inc.
On July 9, Democrats in the Senate voted unanimously to defeat President Bush’s proposed medical liability reform, the HEALTH Act of 2003 (Senators Jeffords [I-VT], Graham [R-SC], and Shelby [R-AL] also voted against the bill). The HEALTH Act would cap noneconomic damages in medical malpractice suits at $250,000, establish time limits for bringing malpractice suits, and preclude “double-dipping” by allowing judges to apprise juries of other payments plaintiffs have already received for their injuries. Despite the setback in the Senate, the beat for medical mal-practice reform goes on, at the state as well as the federal level.
GETTY IMAGES/ARTHUR TILLEY
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207. See President’s Remarks at Madison Cent. High Sch., Madison, Miss., Call-ing for Medical Liability Reform and Worker Pension Protection, WEEKLY COMP. PRES. DOC. 1301 (Aug. 7, 2002); see also Sharon Theimer, Lobbies Push for Consumer Lawsuit Limits, ASSOC. PRESS, Dec. 6, 2002.
208. See David Dial et al., Tort Excess: The Necessity for Reform from a Policy, Legal and Risk Management Perspective, White Paper 12-14 (on file with Manhattan Institute).
209. See Robert Lenzner & Matthew Miller, Buying Justice, FORBES, July 21, 2003, at 64.
210. See generally 123 S. Ct. at 1513-1526.
211. See Excessive Legal Fees, supra note 25, at ii-iii.
212. See Decision of Interest: Brown & Williamson v. Stanley M. Chesley, N.Y.L.J., Oct. 2, 2002, at 18 (reprinting Justice Figueroa’s decision).
213. See American Tort Reform Association, Alabama Reforms, available at http://www.atra.org/states/index.php.
214. See Beisner & Miller, supra note 52, at 159-60.
215. See H.R. 1115, 108th Cong. (2003); S. 274, 108th Cong. (2003); see also Copland, supra note 14, at A16.
216. See Dial et al., supra note 208, at 12.
217. See id.; http://www.asbestossolution.org (coalition supporting enactment of federal asbestos litigation reform); Woellert, supra note 70; see also S. 1125, S. 413, 108th Cong. (2003); H.R. 1586, H.R. 1737, 108th Cong. (2003).
218. See Jim Drinkard, Dems Defeat Bill to Curb Awards in Malpractice Suits, USA TODAY (July 9, 2003), available at http://www.usatoday.com/news/washington/2003-07-09-malpractice_x.htm.
219. See H.R. 5, 108th Cong. (2003); S. 607, 108th Cong. (2003).
220. Many state reformers, like President Bush, are modeling proposed reforms after a 1975 California law that capped punitive damages at $250,000 and slapped limits on lawyers’ contingency fees. See California’s Medical Injury Compensation Reform Act of 1975 (“MICRA”). In California today, there are 1.9 malpractice payments per 100 physicians, compared with 2.3 nationwide. Similarly, malpractice premiums in that state have gone up at a smaller fraction of the rate seen elsewhere—by 168% since 1976, compared with an average 500% hike nationwide. See OFF. OF THE ASST. SECY. FOR PLANNING & EVALUATION, U.S. DEPT. OF HEALTH & HUMAN SERVS., UPDATE ON THE MEDICAL LITIGATION CRISIS: NOT THE RESULT OF THE “INSURANCE CYCLE,” Sept. 25, 2002, available at http://aspe.hhs.gov/daltcp/reports/mlupd2.htm.