(Note: This is an unedited version of a story written for Sunday’s News Sentinel.)
Bill Haslam says Tennessee needs to become more friendly toward business while Fred Thompson says that the centerpiece of his plans for doing so would unnecessarily make the state more hostile to human suffering.
Going by arguments presented to state legislators, that seems the gist of the clash between Republican Haslam, elected governor last year, and Republican Thompson, elected to the U.S. Senate twice in the 1990s, over the Tennessee Civil Justice Act of 2011.
The proposed new law, HB2008, would impose a new and comprehensive set of restrictions on lawsuits for injuries and deaths caused by negligence or wrongful actions.
“Folks, we’re about to kill a mouse with a bazooka here,” said Thompson, a lawyer, actor and 2008 Republican presidential candidate retained by the Tennessee Association of Justice for an undisclosed fee to lobby against the bill.
Thompson and others opposing the bill related to legislators horrific stories of people victimized by seemingly callous disregard for human life. Tennessee’s present system of civil justice already has ample restrictions in place against abuses that have plagued other states and, as Thompson said, “If it ain’t broke, don’t fix it.”
There is an armada of lobbyists and influential groups joining Haslam in pushing for passage of the bill, which expected to face its first vote this week. Three organizations have been set up to present legislators and the public with the proposition that “lawsuit abuse” and “jackpot justice” are moving into Tennessee, deterring business investment and frightening doctors and other health care professionals.
One of the tort reform advocacy groups, Tennesseans for Economic Growth, presented lawmakers with “economic study” asserting that approval of Haslam’s bill would create 122,422 new jobs and $16.2 billion in “additional economic output” in the state over the next 10 years over what would occur without passage. Thompson said the group paid $100,000 for the study and depicted it as meaningless propaganda.
Herbert Slaterly, a veteran Knoxville lawyer now serving as the governor’s legal counsel, served as point man for proponents of the in last week’s legislative hearings.
He said the governor believes “government in and of itself is unable to create jobs,” as evidenced by the federal government’s stimulus package having “absolutely no effect” and therefore state government’s role in job creation is to “foster an environment that encourages employers to consider Tennessee.”
One important factor in employer decisions, he said, is “litigation risk” and Tennessee, as compared to other states, is now in a “precarious position” on that front.
“Businesses want to be able to identify and calculate risk,” he said. “Our response is largely silence.”
The Tennessee Civil Justice Act, Slatery said, provides that response.
Key provisions of the bill, similar to a Mississippi law enacted in 2008 that has been cited by Haslam as a model, include:
–As introduced, the bill would impose a $750,000 “per occurrence” limit on “non-economic damages,” as opposed to “compensatory damages” which reimburse the victim for medical expenses and direct financial losses. Non-economic damages include such things as pain and suffering, disfigurement or loss of the ability to have children.
An amendment prepared by Slatery for filing this week changes the “per occurrence” to “per injured plaintiff.” The amendment also raises the cap to $1.25 million in “instances of a spinal cord injury resulting in paraplegia, hemiplegia, or quadriplegia, amputation, substantial burns and the death of a parent leaving minor children. It also says the limit won’t apply if the defendant’s acts constitute a felony or if he or she was intoxicated at the time.
-Punitive damages, designed to punish the wrongdoer for malicious, intentional or fraudlent acts, would be limited to twice the amount of compensatory damagers or $500,000, whichever is less.
-Tennessee’s Consumer Protection Act, which provides that an injured party can receive up to three times actual damagers for “unfair or deceptive” trade practices, is modified in several ways. The bill declares that the act cannot be used in cases of securities fraud or in class action lawsuits.
–An “innocent seller” of a product could not be held responsible for damages it causes, provided the individual or firm’s only role was sale of the product received from a legitimate manufacturer or producer.
There are several other defendant-friendly provisions, such as reduction of the bond a company must post to appeal a judgment after losing in a trial court, restrictions on the filing of class action lawsuits in general and new limitations on where a lawsuit can be filed.
Charles Ross, a Mississippi lawyer who as a state senator sponsored a 2008 tort reform law pushed by Mississippi Gov. Haley Barbour, told lawmakers his state was “a judicial hellhole” before passage of the act and that the business climate has improved dramatically since.
“We waited until the house was burning before we called the fire department,” Ross said. “It would have been a lot better if we’d called when we smelled smoke.”
Tennessee is now in the smoke-smelling stage, he said, and should get tort reform in place before reaching a crisis.
Rep. Mike Stewart, D-Nashville, noted that a 2010 ranking of states on litigation risk by the U.S. Chamber of Commerce put Mississippi at 49th and Tennessee at 10th. Ross said the low Mississippi rating, based on the opinions of surveyed business executives, was likely due to recollections of the state’s pre-reform situation.
A Pacific Research Group “tort liability index,” touted by backers of the bill, shows Tennessee dropping form the ninth most “job friendly” state in 208 to 22nd in 2010. Mississippi ranked fifth.
Proponents of the bill note that most other Southeastern states already have limits on non-economic damages or punitive damages. Only Kentucky stands with Tennessee in having no limitations on either
But Thompson said that only Mississippi has a non-economic damage cap as broad as proposed for Tennessee. In all other states, the cap covers only medical malpractice cases and does not provide a blanket shield to all businesses and industry.
Tennessee in 2008 enacted a law that requires a plaintiff in medical malpractice cases to have a case certified as raising a valid question before it can proceed. Opponents of the bill note that filings of malpractice lawsuits have declined 40 percent since then.
Objective data on the number of high-dollar lawsuits in Tennessee is somewhat limited, mostly because most cases are settled out-of-court and terms of the settlement are kept confidential. The state Administrative Office of the Courts says there were 14 judgments for $1 million or more statewide in the 2009-10 fiscal year, and between nine and 15 per year in the previous five years.
Thompson acknowledged that most of his fellow Republicans, who hold solid majorities in the legislature, automatically say, “Aw, tort reform? Count me in.” But he said opposing a bill such as Haslam’s plan is consistent with conservative principles.
Caps on damages, he said, are an infringement on rights under the 7th amendment to the U.S. Constitution, guaranteeing a right of trial by jury in civil cases. Tennesseans trust juries to decide life and death in capital punishment caes, he said, and they should be trusted to decide damages as well instead of having politicians do so.
“What if they told you, ‘Yeah, you’ve got a second amendment right, but you can only own one gun?,” Thompson said.
Haslam and Republican legislative leaders uniformly say they respect and admire Thompson, but his lobbying against the bill does not change their pro-tort reform perspective.
“He is one of my political heroes and it’s an honor to have him testify,” said House Speaker Beth Harwell. “But I fall on the side of tort reform… At this point in time, my preference is to stay with the bill as it is.”
“I love Fred and I’m glad that he’s taking the trial lawyers’ money,” said Lt. Gov. Ron Ramsey. “But he is not going to change one single vote.”
Thompson said he considers himself a friend and fan of Haslam and other Republican leaders and is not being disrespectful.
“You’re not much of a friend if you can’t disagree… and point out how you think it could be better,” he said.