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Jan 03, 2005
by Mark Silva, Washington Bureau
Bush's tort reform efforts to start at 'judicial hellhole';
Speech in an Illinois county infamous for litigation will begin push to cap damage awards in lawsuitsWASHINGTON -- President Bush's campaign to rearrange the American courtroom starts Wednesday with a speech in southern Illinois' Madison County, dubbed by allies in this fight as the nation's No. 1 "judicial hellhole."
The president's planned appearance in Collinsville, in a county across the Mississippi River from St. Louis that is infamous for its volume of lawsuits, will serve as the first public spotlight in Bush's bid for congressional approval of limits on the size of damage awards won in court.
"The president's focus on it is one of those things that would crystallize the issue and be a catalyst for a solution," said Tom Long, chairman of Madison County's First Community Bank of Godfrey.
Bush, promising to press the new Congress for passage of limits, blames the growing costs of what he believes is runaway litigation for a litany of ills.
"I intend to make this a priority issue, as I stand before Congress, when I give the State of the Union," Bush said at a recent White House conference on the economy.
This is one of several areas--along with Social Security, taxes, immigration and energy--in which Bush plans to make a strong push in his second term to leave a lasting impression on the domestic landscape.
Analysts believe Bush must accomplish his goals relatively early in his new term.
The case for change
Bush and an alliance of business leaders and Republican lawmakers maintainthat the soaring cost of liability insurance is forcing physicians--especially those in such high-risk work as delivering babies--to abandon their practices.
They also contend that the cost of frivolous lawsuits prevents companies from hiring more people and launching ventures.
In short, they say, the cost of battle in America's courtrooms is a damper on the economy.
"The broken liability system is a major crisis for patients and physicians throughout the nation," said Dr. Donald Palmisano, a New Orleans surgeon and past president of the American Medical Association. "We are concerned that this system is melting down."
But a politically influential network of trial lawyers that tends to align itself with Democrats is fighting Bush's bid, saying it would hurt ordinary people who suffer at the hands of negligent but powerful doctors and companies. The lawyers have fought losing battles, however, in many states that already have enacted liability limits.
An alliance of consumer groups contends that Bush's campaign for liability reform is simply a bailout for the business community. The groups call the notion of a litigation crisis illusory, and argue that insurance companies boost their premiums not because of damage awards, but to make up for profits they are not making in the stock market.
"At the end of the day, [legal reform] is a way to take money from people's pockets," said Doug Heller, director of the California-based Foundation for Taxpayer & Consumer Rights.
"This discussion is really all about what people are responsible for when they harm others and what kind of compensation people have access to when they are harmed," Heller said.
Bush will make his pitch on three fronts:
- Limiting the amount of money, possibly to $250,000, that victims of medical malpractice can win for such "non-economic" damages as pain and suffering.
- Restricting the scope of class-action suits in which lawyers corral large groups of people to sue a company over a harmful product.
- Curbing lawsuits against makers and sellers of asbestos-filled products. Such litigation has become a cottage industry in its own right, forcing some businesses into bankruptcy.
The Republican-controlled House already has voted twice to limit the amount of damages that victims of medical malpractice can win, shifting the debate to a new Senate that convenes with 55 Republicans, four more than it had in 2004.
"We believe we are going to get medical liability reform," the AMA's Palmisano said. "It's one day away in the U.S. Senate. That's the day when a busload of children overturns in a community and there are no neurosurgeons to help them. We're losing our doctors."
Rachel Weintraub, assistant general counsel for the Consumer Federation of America, said: "Certainly, we are very aware of the problems that doctors are facing with rising insurance rates, but the solution is not capping medical malpractice damages. The solution is reforming the institution of insurance."
The AMA, however, argues that skyrocketing premiums for medical liability insurance--$200,000 a year and more for doctors in high-risk specialties--are forcing physicians to curtail services, retire early or pull up stakes and move to states with lower premiums.
The Congressional Budget Office attributes the problem of rising liability insurance costs to several factors.
Premiums for physicians nationwide rose by 15 percent between 2000 and 2002, according to a January 2004 CBO report. Since 1993, premiums for all physicians have increased by about 25 percent.
Growing claims are partly to blame, the CBO found, with the average payment for a medical malpractice claim rising "fairly steadily" since 1986, from $95,000 to $320,000 in 2002. But insurers also have been forced to raise premiums to offset reduced investment income.
Insurers maintain that unreasonable costs of litigation have been a problem for years. It may be easier to absorb those costs when the stock market is flush, they say, but the problem resurfaces when profits are leaner.
'Not just abstract cost'
It's ultimately consumers who pay the price for increased litigation, said Sean McBride, spokesman for the U.S. Chamber of Commerce Institute for Legal Reform.
"It's not just an abstract cost to business," said McBride, pegging the price at $809 a year for each American. "It's costing consumers higher prices on just about everything they are purchasing."
The U.S. Chamber says the defense and payment of liability claims drains about $230 billion a year from the American economy. The system is "bilking" small businesses of $88 billion a year, it maintains.
The insurance industry, however, wants to curtail damage awards but opposes a mandatory rollback in rates as part of federal reform. Such rollbacks have been ordered and carried out in many states where limits have been enacted, but the insurance industry has argued that liability reform is likely to lead to lower premiums.
"We have not promised price reductions with tort reform," said Dennis Kelly, an American Insurance Association spokesman. "We want tort reform to create a more balanced legal system that is more equitable for all parties."
Trial lawyers dispute the notion that huge jury awards are driving the high costs of health care. They argue that less than 2 percent of all health care spending is traced to the cost of litigation, a statistic supported by the CBO.
They also note that headline-grabbing, multimillion-dollar jury awards often are overturned or trimmed on appeal.
The lawyers also defend the fees they collect--attorneys typically get one-third of any damage award, collecting only if their clients win--as the necessary cost of going to battle with deep-pocketed opponents.
Trial lawyers' work helps keep doctors and corporations honest, said Bob Montgomery, a lawyer in West Palm Beach, Fla., and member of the Inner Circle of Advocates, a national network of 100 trial attorneys who have won multimillion-dollar verdicts.
"This business about frivolous lawsuits is the biggest bunch of bull I've seen in a long time," said Montgomery, who was a lead attorney in Florida's successful 1990s lawsuit against cigarette makers, which won the Sunshine State billions of dollars.
So-called frivolous lawsuits have played out most dramatically in courthouses where plaintiffs' attorneys have found favorable judges and juries.
That includes Madison County, where 953 lawsuits were filed over asbestos and 106 class-action lawsuits were filed in 2003. Last year filings were down to 464 over asbestos and 71 class actions, yet the county's court system still handles far more such cases than any other system of its size.
Last year's dip in filings may be the start of a trend. A lawyer who made asbestos litigation a billion-dollar business in Madison County recently left his St. Louis-area law firm, which has scaled back its filings in the county. And Madison County Circuit Judge Daniel Stack has started dismissing out-of-state asbestos suits, complaining that the cases were making the county a "cash cow."
For two years, Madison has been dubbed the No. 1 "judicial hellhole" by the American Tort Reform Association, a coalition of businesses and trade associations advocating limits on liability awards.
"It is the epitome of the abuse of the civil justice system," Gretchen Schaefer, the tort reform association's spokeswoman, said of Madison County.
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