From the December 10, 2004 print edition of Memphis Business Journal

Courting reform: GOP plans renewed debate over torts

Rob Robertson

In the wake of the November elections, the potential for significant tort reform and malpractice reform -- a major policy objective of the Bush administration and the Republican Party -- is greater than ever, say area lawyers and lawmakers.


Up until now, reform efforts at the federal level have not been easy, even though Republicans control Congress and the presidency. In the past year Democrats in the Senate have managed to stall proposed legislation aimed at class action reform, reducing liability costs to asbestos manufacturers and medical malpractice reform.

However, after picking up four senate seats in the November elections to gain a commanding 55-45 majority, Republicans will be looking to take advantage of a smaller minority that will have to pick and choose its political battles much more carefully, says attorney John Ryder of the Memphis law firm Harris, Shelton, Dunlap, Cobb & Ryder.

"The current abuse of the legal system is a serious problem that affects professional liability insurance of all kinds, but most dramatically medical malpractice insurance," says Ryder, who just finished two terms as Tennessee's committeeman to the Republican National Committee. "Clearly with the enhanced Republican majorities in both houses of Congress, there is a greater likelihood that there will be a successful effort to reform our legal system by eliminating the potential for this type of abuse.

"In the last session of Congress with its 51-49 balance in the Senate, the Democrats could basically fight on every issue and bring the Senate to a stalemate," Ryder says. "With a 55-45 balance, they're not going to be able to do that; they cannot afford to be obstructionist about virtually every reform measure that the majority puts forward in the Senate."

Proponents of the tort system, like the Association of Trial Lawyers of America, argue that it deters accidents by combining compensation for victims with negligence, and they say the underwriting practices of the insurance industry, not the legal system, is to blame for gyrations in the cost and availability of insurance.

There are myriad studies that support both sides of the debate.

Weiss Ratings, an independent insurance-rating agency, found that between 1991 and 2002, states that enacted "tort reform" laws, specifically caps on non-economic damage awards, saw median doctors' malpractice insurance premiums rise 48% -- a greater increase than in states without caps.

Meanwhile, a Tillinghaust-Towers Perrin report claims the cost of the U.S. tort system has skyrocketed to more than $300 billion -- the most expensive in the industrialized world -- while returning less than $.50 on the dollar and less than $.25 for actual economic loss to claimants.

Still, with the larger Republican majority, some kind of tort reform at the federal level looks promising. At the state level, efforts are underway in Tennessee to revisit tort reform as neighboring states do the same.

The National Association of Mutual Insurance Companies (NAMIC ) recently fingered Tennessee for being among the states that have passed the fewest tort reform laws in recent years.


Republican State Sen. Mark Norris, chairman of the Tennessee Senate Judiciary Committee and an attorney at Armstrong Allen, is looking to change that. He has been a sponsor of the bulk of the tort reform legislation proposed in the most recent session of the general assembly.

Norris considers Tennessee a "pre-crisis state" when it comes to malpractice and tort reform.

"We're not in a crisis yet, but we are trending that way," he says. "It's not a static situation. If everything were perfect in Tennessee and all the states surrounding us changed their tort laws, it would have an impact here whether we liked it or not."

In Mississippi, where loopholes in joinder laws to class action suits filed in neighboring states have often been exploited in mass tort cases to spectacular -- and notorious -- effect, a 10-year battle over tort reform climaxed this summer with the passage of the Mississippi Tort Reform Act of 2004.

The legislation included venue reform, limits on non-economic damage awards to $500,000 for the medical industry and $1 million for general businesses, and capped punitive damages on a sliding scale based on the net worth of the defendant.

"Tort reform hasn't been a Republican or Democratic issue here," says Barry Ford, a former Mississippi trial judge who is now an attorney in the Jackson office of Memphis-based Baker Donelson. "It was started under (former Democratic state Gov. Ronnie) Musgrove, who got some reforms passed.

"When (current Republican Gov. Haley) Barbour came in, doctors were concerned about malpractice premiums being sky high and threatened to leave the state," Ford says. "They were able to cap the amount of damages that could be recovered with the hope that the changes would be beneficial to the entire state and attract more business, but it's too early to tell at this point."

The successful tort reform effort in Mississippi did not go unnoticed by Norris, who worries that such progress in Mississippi could spell trouble in Tennessee if lawmakers sit atop their laurels.

"If they cap recoveries in one state, doctors may be more willing to move to that state where they feel they have more protection," he says. "The theory is, in states with more restrictive tort laws, insurance premiums will be less. Conversely, Tennessee may become more attractive to lawyers trolling for more lucrative cases."

The combined effect of those two factors makes for a dynamic and potentially damaging situation for Tennessee, according to Norris.


"We're trying to get out in front of such a potential crisis," Norris says, "to see what may need to be done in Tennessee to reform our statutes and avoid the crises that have befallen these other states.

"At the end of the day it is all about access to affordable care," he says, "and it begins in the rural areas where doctors are less plentiful and could be the first to withdraw from practice."

Ryder says the argument about reforms limiting the rights of injured patients who are victims of medical negligence is a red herring.

"The truth is there will still be remedies but those remedies will be limited to economic damages," Ryder says. "Successful plaintiffs will in fact recover their actual pecuniary loss, but they won't be able to use the legal system like some kind of lottery. It will bring the legal system back to reality."