Tort Reform

[guido911]

It's baaaack and more sweeping than ever. $400k cap on non-economic damages, need for expert in all professional negligence actions, limitations on joint and several liability, "cheeseburger bill" prohibiting "you made me fat" lawsuits, and my personal favorite, modification of the summary judgment standard to pattern the federal standard (the triplets coming to Oklahoma?). There is much much more than these but matters in the package that is plainly pro-defendant.

Countdown to Cannon's head exploding 3...2...1

[nathanm]

Countdown to Cannon's head exploding 3...2...1

His isn't the only one that will be exploding.

I like how they threw in one good thing to try to make the whole pile of smile smell better. The sad part is that there is actually a need to prevent people from suing McDonald's for selling them unhealthy food.

I feel the same way about that as I did the tobacco lawsuits. A bunch of crap. If people know an activity is risky and choose to engage in it anyway, they have only themselves to blame when the risk becomes reality.

The $400k punitive damage cap is utterly ridiculous. Way to make it impossible for courts to remedy bad behavior.

[Conan71]

I'm kind of mixed on the issue of punitive damage limits.  It's artificial enrichment which costs all of us as insurance premium payers.  Our liability insurance rates are asinine where I work, and many of our customers require us to carry three times the liability limit we used to even four years ago. 

At some point we really do need to take a look at how much of a deterrent large punitive damage awards are.  Usually, they end up with disclaimers like: "caution, coffee is hot" or "this sleeping medication will make you drowsy".

I don't believe punitive awards are any more a deterrent to corporate negligence than the death penalty is for murder.  This is especially so when you have negligent consumers abusing consumer products then suing the company to compensate them for their own stupidity.  I'm sorry, but using tort action for a lottery payoff cheats the rest of the rate-payers.  If the company winds up paying all economic damages, $400K is a reasonable cap on a punitive award.

Everyone put yourself in the shoes of the defendant and think if you really want to personally pay out after someone sues you gratuitously for an extra $2mm over the $100K in actual damages you did to them.  I doubt anyone on here would care to be that defendant and would be really wishing there were caps in place, assuming you had the cash to make such a settlement.

[guido911]

The $400k punitive damage cap is utterly ridiculous. Way to make it impossible for courts to remedy bad behavior.

The $400k cap was for non-economic damages (i.e. pain and suffering, embarassment, etc.). I did not see a proposed cap on punitive damages, I could be wrong. I forgot to add that this cap is not implicated where a plaintiff files a wrongful death lawsuit and there are some exceptions where the jury makes special findings. As for punitive damages, our state statute governing such awards is in my opinion unconstitutional in light of Philip Morris, USA v. Williams, 127 S.Ct. 1057, 166 L.Ed.2d 940 (2007). Several federal judges agree as I have been able to get these damage claims dismissed on  those grounds.

[custosnox]

His isn't the only one that will be exploding.

I like how they threw in one good thing to try to make the whole pile of smile smell better. The sad part is that there is actually a need to prevent people from suing McDonald's for selling them unhealthy food.

I feel the same way about that as I did the tobacco lawsuits. A bunch of crap. If people know an activity is risky and choose to engage in it anyway, they have only themselves to blame when the risk becomes reality.

The $400k punitive damage cap is utterly ridiculous. Way to make it impossible for courts to remedy bad behavior.

The suing Micky dee's for the "I ate so I'm fat" thing is over the hill.  However, I think there was a genuine cause with the tobacco suits.  Maybe not as much as they got, but a suit.  I say this because I started smoking when I was 11, and just recently quit.  What I knew about what smoking would do to me back then amounted to a hill of beans.  Quiting once I found out was an undertaking that was paramount to monumental.  No, I won't be suing, but I think the tobacco companies should be held responsible to a degree.

[nathanm]

Everyone put yourself in the shoes of the defendant and think if you really want to personally pay out after someone sues you gratuitously for an extra $2mm over the $100K in actual damages you did to them.  I doubt anyone on here would care to be that defendant and would be really wishing there were caps in place, assuming you had the cash to make such a settlement.

Put yourselves in the shoes of a murderer/rapist/whatever. Would you really want to go to jail for 25 to life? I doubt anyone on here would care to be that defendant.

In a system where the negligent parties are by design released from liability, there has to be some mechanism to punish wrongdoing. Cash awards are the best mechanism we have at the moment. Removing them without replacing them with something else is folly.

Generally speaking, large cash awards are a deterrent to allowing safety issues in one's product to go on, at least when they are large enough to offset any possible savings from failing to fix the problem.

One reform I would like to see is the option of open ended compensatory damages in cases where ongoing medical treatment will be required. As it stands, the plaintiff just has to guesstimate the cost of all future medical treatment and once that's up, they are out of luck. They therefore have a strong incentive to overestimate as much as possible, which is unfair to the defendant.

I stand by my assertion that tobacco companies should not have been liable for the health effects in people who began smoking after the warnings became standard. If someone started smoking at 11, they have a case against whomever allowed them to purchase the cigarettes or gave them the cigarettes. Personally, I smoked for a little while when I was about that age, quit for a while, picked it up again when I was 17, quit again when I was in my early 20s and have smoked on occasion, but not regularly aside from a few couple of month long streaks since. I don't find it particularly difficult to go without.

[guido911]

In a system where the negligent parties are by design released from liability, there has to be some mechanism to punish wrongdoing. Cash awards are the best mechanism we have at the moment. Removing them without replacing them with something else is folly.

Fine, let's "punish" for the benefit of society a reckless or malicious defendant by popping them for punitive damages. Now, why should the plaintiff in that case get the money? Seriously, they have already been compensated or "made whole" by the verdict. If you are looking to protect society, have the punitive damage award placed in the state treasury for the benefit of society. Wait, we can't do that, the plaintiff's lawyer won't get his/her cut. Nevermind.

[Conan71]

Put yourselves in the shoes of a murderer/rapist/whatever. Would you really want to go to jail for 25 to life? I doubt anyone on here would care to be that defendant.

In a system where the negligent parties are by design released from liability, there has to be some mechanism to punish wrongdoing. Cash awards are the best mechanism we have at the moment. Removing them without replacing them with something else is folly.

Generally speaking, large cash awards are a deterrent to allowing safety issues in one's product to go on, at least when they are large enough to offset any possible savings from failing to fix the problem.

One reform I would like to see is the option of open ended compensatory damages in cases where ongoing medical treatment will be required. As it stands, the plaintiff just has to guesstimate the cost of all future medical treatment and once that's up, they are out of luck. They therefore have a strong incentive to overestimate as much as possible, which is unfair to the defendant.

I stand by my assertion that tobacco companies should not have been liable for the health effects in people who began smoking after the warnings became standard. If someone started smoking at 11, they have a case against whomever allowed them to purchase the cigarettes or gave them the cigarettes. Personally, I smoked for a little while when I was about that age, quit for a while, picked it up again when I was 17, quit again when I was in my early 20s and have smoked on occasion, but not regularly aside from a few couple of month long streaks since. I don't find it particularly difficult to go without.

"Generally speaking, large cash awards are a deterrent to allowing safety issues in one's product to go on, at least when they are large enough to offset any possible savings from failing to fix the problem.

I stand by my assertion that tobacco companies should not have been liable..."

That sounds like a total contradiction to me.  Tobacco companies still manufacture an inherently dangerous product.  What did they learn from large punitive awards?  Charge more for the product. 

A rapist or murder knows what the penalty is if they are caught, they do it anyhow.  Ergo, punitive damages or punitive action is not necessarily a good deterrent.  You are aware that a portion of your insurance premiums you pay for your auto and home help cover punitives for others, yes?  You are aware that your healthcare costs, whether paid out of pocket or by your insurance company, do reflect punitive malpractice awards as well, right?

[Conan71]

I wasn't aware from what Guido originally said was the "non-economic" damages.  Guido, you forgot "loss of consortium" as one of those.  A company my brother owned years back was sued for one of his drivers bumping a car in front of him at a stop light.  Literally a 5mph crash, no noticeable damage to either vehicle.  I think the suit was seeking about $100K total for some chiropractic care, time off work, and about $25K for loss of consortium for the "victim's" husband.  I won't reprint the crude comment my brother's attorney made about that, but use your imagination.

I think it was tossed or the insurance company settled for a nominal amount eventually. 

[Townsend]

about $25K for loss of consortium for the "victim's" husband. 

So they blamed the heavy days on the wreck.

"t'was unusable fer days yer honor"

[cannon_fodder]

Lets start by saying that a 2006 survey of all judges in Oklahoma found that 90% think there is not a litigation crisis of Oklahoma and weeping changes are not necessary.   The same judges said they have the tools they need to dispose of frivolous law suits.   No evidence was presented to the legislature in the 228 pages of this bill to support the notion that we have some great crisis.

How many on this forum have filed frivolous suits and been successful?  How many attorneys wants to waste their time (uncompensated) doing so?  We are solving a problem that is vastly over hyped.  The net effect would be a health care savings of 0.5% and no economic advantage.

For full disclosure, I am an attorney that probably does 65%+ Plaintiff's work.  Maybe half of that on contingency fees.  I'm not wed to contingency fee contracts or Plaintiffs work in any way (I'm just a salaried slave), but my perspective is probably a Plaintiff's perspective.  

FYI, here is the engrossed copy of the house bill:
http://webserver1.lsb.state.ok.us/2009-10bills/HB/HB1603_ENGR.RTF

I didn't read all 228 pages of it  and don't any of the people voting on it have either.



GUIDO:

1) Cap on non-economic damages:

Count the number of non-economic damages over $400K in Oklahoma in the last decade.  There will be very, very few.  Then go over those awards and find out in how many instances you think Oklahoma Citizens made a poor decision to grant the award.  This is an attempt to make an issue where there really is none in order to begin restricted jury awards against companies.  

Who does it help?  Citizens?  Victims?  

Nope, it only serves to help the person or corporations who a jury of Oklahoman's have decided is deserving of a judgment against them.  This law takes the power away from Oklahoma Citizens.  Under this law if a company knew a product was hazardous and sold it anyway, causing dozens of deaths, their civil penalty would be a $300,000 punitive award. That'll teach 'em!

By taking power away from Oklahoma citizens and revoking the major civil recourse for intentional actions this law will accomplish its goal of increasing corporate profits and limiting the availability of the courts to people who rely on contingency fee arrangements.  As it stands the court can restrict a demand for punitive damages up front, a jury can refuse to grant punitive damages, after a verdict the court can strip punitives, and the Defendant can appeal the award.

But Oklahoma judges, juries, and appellate courts are SO STUPID that we need a law telling us what makes sense.  Surely a lobbyist in OKC knows better than an Oklahoman sitting on a jury or a judge who followed the case.

And does this apply to bad faith litigation?  An insurance company makes a promise and you pay monthly to get coverage, then they just don't pay because it isn't profitable.  After hiring an attorney to get them to do what they should have done in the first place - you can't really have no recourse.  Surely that will keep them honest and paying claims.

2) Required Expert for Professional Negligence Actions

In other words in order to sue an attorney or a doctor you must first front $25,000 or the Courts are not available to you.  If a surgeon leaves a sponge in your butt (real case I have), the wrong limb is removed, or a prescription is accidentally administered to the wrong patient - I don't think an expert should really be required to file suit.  If an expert IS required to win the case, then why would the Defense want to mandate that the Plaintiff has to get one?  Why not just let them go to trial and lose?

Right . . . because the goal is to limit the number of cases filed against Doctors NOT to make sure that injured plaintiffs get a day in court.  Few firms can afford to front tens of thousands of dollars for experts in a medical malpractice case (euphemistically referred to as "professional negligence") and almost no injured parties can do so.  The cost for dueling experts easily climbs into that range, not too mention the extra time it takes for all parties involved.  Thus, most plaintiffs would be unable to afford it themselves and fewer firms would be able to take the case.

With the knowledge that most people can't afford to sue for medical negligence the industry is then free to dictate settlement terms or just refuse to settle as it sees fit.  It will certainly help achieve the goal of compensating victims of medical negligence less and restricting people from bringing suits in the first place.

3) Joint and Several Liability

I am not familiar enough with this proposal to speak intelligently.  In general if multiple parties contributed equally to cause an ill I don't care who I collect from.  If one party feels they are not as-guilty as another, they can sue each other to work it out.  If multiple parties shoot my plaintiff, he really doesn't care who's bullet cost him $100,000 in lost wages and medical bills and who's bullet cost him $50,000.  He just wants $150,000 and the bad actors can figure it out amongst themselves.

4) NO idea on the "Hamburger" section.  I have not heard of this and could not find it in the text of the measure.  My guess is it is more pandering and not needed.  These lawsuits are almost always thrown out by the court and if not, certainly we can trust a jury of our peers to make the determination.

When did we decide that juries and the courts were incompetent?

5) Guido, you failed to mention that it caps contingency fees at 33%.

First, this isn't really a restriction on plaintiffs attorneys, it is a reduction in contracting rights for every Oklahoman.  You, as a citizen of the stat of Oklahoma, can no longer sign the standard contingency fee contract for trial.  You've always been free to refuse, negotiate for a better rate, offer an hourly rate or go to a different attorney - but again the State has decided you are too stupid to contract on your own and will decide what decisions you should make.

Now, defense lawyers can still charge whatever they please and insurance firms can pay as much as they want to defend a lawsuit.  But how much a plaintiff can pay to prosecute a lawsuit is going to be capped.  A typical plaintiffs attorney would work for $225 an hour in lieu of their contingency fee while a typical defense firm is paid $350 per hour for attorney work.  Why is the state telling one party what is fair and allowing the other party to do whatever they want?

33% is the standard rate for a simple case before trial.  When suit is filed the fee generally goes up to 40% and often up to 45% for trial.  50% can be charged in some cases, generally where the attorney doesn't think they can win and doesn't want to take the case (it would be a hint to take the case elsewhere).  This is proportional to the amount of time invested in the case and the amount of risk assumed.  

A large PI firm has an average case valued around $15,000.  There is no way they could survive as a business if they took many cases to trial and were compensated $5,000 for that trial. After putting in hours in settlement talks and discovery a trial will easily add 10-20 hours of attorney time.  Then you risk losing at trial and eating hours and probably costs.  It simply wouldn't be worth it to risk my time for my clients case when I could take a quick settlement and save a ton of time.  Why would I want to present the case to a jury?

As a result the insurance company could offer you whatever they wanted, knowing that you are not likely to hire someone to look out for your interests.  Even if you did hire an attorney, at a cap of 33% the insurance company knows that you are not likely to take it to trial and clearly will negotiate with that knowledge in mind.  Again, this will definitely archive the desired goal of limiting payouts to Oklahomans.

6) Summary Judgment Rules

I am granted Summary Judgments not infrequently.  If there are no facts in dispute, the judge decides the law and the case is finished.    I guess I don't understand the problem with the current system.

Based on the rest of the bill, I can only assume that the proposed rule limits access to the courts, reduces recoveries, or takes the decision away from juries or judges.

7)  Jobs?

The advertisements for this bill make it sound like the real goal is to bring jobs to Oklahoma.  Having worked in industry and dealt with a crap ton of contracting for insurance from both sides and for rates for work performed in Oklahoma, Arkansas, Missouri and Kansas - I can attest that the rates for liability are very comparable and sometimes favorable in Oklahoma.  I have never heard of a company refusing to operate in Oklahoma because of liability insurance laws.

The problem is WORKERS COMPENSATION rates, which are frequently twice what our neighbors rates are.  And I would suggest that it is not reflected in attorney fees or awards in the state, but rather something in the operation of the system.

But the notion that restricting citizens rights in this proposed legislation will increase the availability of jobs is a total farce.
- - -

The entire bill does nothing but pander to Defense interests.  It doesn't do anything to help Oklahomans:  it reduces their potential recoveries, it will limit their access to attorneys, restricts their contracting rights, it takes decisions away from Oklahomans on juries, it reduces the roll of judges, and in almost every instance sets out to solve problems that 90% of the people in the know don't think are actually exist.  Why are companies afraid to allow plaintiffs in Oklahoma to face juries on an even playing field?

A big congratulations is in order for insurance lobbyists in Oklahoma City - other than them there are no winners in this legislation.  It's bad for plaintiffs lawyers, plaintiffs, defense lawyers, judges, juries, and victims.  But it serves the interests of people who are afraid a jury would find them liable to their victims.






Conan,

I think you are lacking a basic understaning of punitive damages.

Punitive damages don't really effect most insurance rates.  It is punishment for wrongdoing, it is not covered by many liability policies.  If an industrial fabricator intentionally built a heat exchanger or a boiler weak to save money and shipped it KNOWING it was dangerous, then you can get punitive damages.  If a car manufacturer knew a car was dangerous but a recall was to expensive.  If a doctor knew which arm to amputate but removed the wrong one simply out of spite.

Punitive damages work.  How many auto recalls are there now?  It is cheaper for car manufacturers to make sure their products are safe than it is for them to just kill a few hundred people.  It is cheaper for the boiler maker to pressure test vessel or over build them than it is to sell substandard products.  That is only true because of the risk of substantial lawsuits.

If a boiler made by Inserv or Baker Hughes explodes and kills a couple people they will not be out a significant amount of money to their bottom line.  If it is proven they KNEW these were dangerous and sold them anyway to increase profits, then they would be PUNISHED for their reckless profiteering by punitive damages and thus, the entire industry dissuaded from continued unsafe practices.  It disrupts the profit formula (risk of catastrophic failure x cost of each failure < savings from inadequate produce, then produce the inadequate product).

Also worth noting that the myth of huge punitive awards is just that, a myth.  I'm sure we could dig up a few examples that seem insane, and one or two of those would still seem outrages after the appeals.  But in general the punitive damage awards are in line with the actual damages (all states that I am aware of have a formula for what is reasonable) - which of itself can defeat the purpose of punitive damages.  But it negates your 20 times punitive award argument.  Most punitive damages are 1x at best, they are rarely sustained above 3x.  There are instances with nearly no economic damages but in which a deterrent is certainly called for.

And of course no defendant would want punitive damages assessed against them.  Just as no plaintiff wants to suffer conduct that shows a "wanton disregard for the rights of others to such an extent that the State of Oklahoma has an interest in assessing punitive damages."   We aren't talking about accidents here, we are talking about reckless or intentional conduct that deserves to be punished, not just required to get the victim back to par.

Furthermore, punitive damages are not perfectly analogous to criminal punishments.  Many crimes are not rational acts.  Rarely does a person sit down and consider murdering someone and decide it would be worth life in prison.  HOWEVER, business are rational actors.  A good business will consider possible economic and good will losses associate with a decision.  Hence, it can serve as a detriment.

And yes.  I know that I help pay punitive awards in many ways.  But I know that the punishment factor is much more important to the tortfeasor than to me.   Under your logic, why allow any rewards at all?  They all cost us money.  Just start eroding your rights to save money.

Overall medical malpractice insurance premium account for 2% of overall health care cost.  According to the CBO that cost could be cut by 25% if we eliminated punitive damages - or 0.5% savings in overall health care costs.  Given the implications (that there is no recourse to punish), it surely isn't worth eliminating more of my rights to save .5%.   In fact, there is a solid argument to suggest that the threat of punitive damages saves the system a lot more than .5% as procedures are implemented to make sure large awards against hospitals do not occur.

And finally, the proposed legislation does NOTHING to address the antidote you gave.   Suits can always be filed for something ridiculous, and the procedures are already in place to throw them out.  I wish judges would assess more costs and fees for bad behavior from both sides and the rules are there to do it.  But it really has nothing to do with the matter at hand.

Current primary punitive damage statute:
http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=71127



Truth be told, I'm not too worried.  We would probably just take far fewer contingency case (probably fewer civil cases altogether) and require plaintiffs to tender a retainer like a criminal case.  When a few bad cases came down under the new law people will be pissed and the pendulum will swing back the other way.  In general people realize when a law takes something away from them and in the long run they want it back.

[Townsend]

I did not read all of that.  Probably never will.

[cannon_fodder]

I did not read all of that.  Probably never will.

I bolder the executive summary for you.  Most of it was in response to Guido and Conan.  The super summary is:

Takes away rights from Oklahomans, who are too stupid to be trusted in juries or with contracting rights.  Oklahoma City knows better than a judge or jury in Tulsa anyway.  But good job insurance lobbyist.

And I thought 2 pages to cover a 228 page document was pretty good.

[Gold]

Good stuff, cf.  And you're right, punitives are left out of many insurance contracts, though the insurance companies still pay their counsel to defend them.

My question about punitive damages has to do with the fairness of awarding the Plaintiff and counsel the benefit of the punishment.  I think that's what compensatory damages are for.  Some states tax punitive damages; I think that's interesting.  Of course, if Plaintiff lawyers couldn't receive the benefit of those damages, they probably wouldn't ask for them.

I like the idea of lowering the standard on summary judgment, but I doubt it will do much in the end.  Many of our state trial judges are gun shy about these motions for some reason, so hopefully a new standard makes a difference, though I won't hold my breath.

[guido911]

Good stuff, cf.  And you're right, punitives are left out of many insurance contracts, though the insurance companies still pay their counsel to defend them.

My question about punitive damages has to do with the fairness of awarding the Plaintiff and counsel the benefit of the punishment.  I think that's what compensatory damages are for.  Some states tax punitive damages; I think that's interesting.  Of course, if Plaintiff lawyers couldn't receive the benefit of those damages, they probably wouldn't ask for them.

That's what I was saying above.