By Lucas Johnson
NASHVILLE, Tenn. — A measure to cap payouts for medical malpractice and other civil cases is good for business in Tennessee, said Gov. Bill Haslam, who signed the bill Thursday.
The law places a $750,000 cap on non-economic damages such as pain and suffering. The cap will be raised to $1 million in cases involving serious spinal cord injuries, severe burns or the death of a parent of minor children.
Punitive damages are capped at twice the amount of compensatory damages or $500,000, whichever is greater.
“We wanted to make sure we did everything we could to protect victims’ rights, but also have a predictable playing field for businesses,” said the Republican governor.
Valerie Nagoshiner, acting director of the National Federation of Independent Business in Tennessee, said the law should help.
“Small businesses are especially vulnerable to frivolous lawsuits,” Nagoshiner said in a release. “It’s hard enough for them to defend themselves against even the weakest of claims, but one outrageous jury award or one frivolous lawsuit can be the difference between a small, family-owned business staying open or closing for good.”
Critics say the law weakens company accountability. They say juries should decide damages.
“Everyone should be held accountable when they make a mistake,” said Democratic Sen. Andy Berke of Chattanooga. “All our jury system does is ensure that we have a fair way to judge that. Unfortunately, too often in our society we are seeing personal responsibility and accountability go by the wayside.”
Mary Mancini, executive director of Tennessee Citizen Action, agreed.
“Damage awards act as a deterrent and make large corporations think twice about repeating egregious acts that can lead to abuse, neglect, and death,” she said. “This bill takes away the right of victims to have their full day in court and the right of juries to hold accountable responsible parties as they see fit.”
Although the legislation has passed, one issue is still under discussion: bodily injury.
The original House version sought to lift the $750,000 cap on non-economic damages if the defendant caused the injury while committing a felony.
But the chamber agreed to Senate language to lift the cap only if the defendant is found to have intended to cause bodily injury.
Republican Rep. Dennis Vance of Savannah, the main sponsor of the House version, said Thursday that he’s filed legislation for next year to adopt the House standard.
“I fully anticipate that being one of the first things we do when we get back in session,” he said.
Also Thursday, Haslam signed the state’s $30.8 billion spending plan for the fiscal year that begins July 1. It includes $71 million for disaster relief from recent storms and flooding, and a 1.6 percent raise for state employees, their first pay increase in four years.
News release from the governor’s office:
NASHVILLE – Tennessee Gov. Bill Haslam signed today the Tennessee Civil Justice Act in the Old Supreme Court Chamber on the first floor of the State Capitol. The legislation offers businesses predictability and a way to quantify risk as they decide where to locate.
The bill was part of the governor’s legislative jobs package, which also included education reform legislation and was ultimately focused on Haslam’s first priority: making Tennessee the No. 1 location in the Southeast for high quality jobs.
Tennessee offers an attractive business climate to companies looking to relocate or expand. It is a right-to-work state with no personal income tax and with this legislation, now gives businesses a clearer picture when it comes to tort liability and litigation risk.
“Business recruitment is incredibly competitive , and Tennessee is not only competing against other states but against foreign countries as we go out and market ourselves as the best place for business,” Haslam said. “This tort reform legislation will help us attract and retain jobs by offering businesses more predictability and a way to quantify risk.”
House Majority Leader Gerald McCormick (R-Chattanooga) and Rep. Vance Dennis (R-Savannah) led the House version of the legislation, and Senate Majority Leader Mark Norris (R-Memphis), Sen. Brian Kelsey (R-Collierville) and Sen. Doug Overbey (R-Maryville) guided it in the state Senate. The bill received bipartisan support in both houses of the General Assembly.
The Tennessee Civil Justice Act:
Clarifies and defines the venue where a business can be sued;
Places a $750,000 cap on non-economic damages, except in instances of intentional misconduct, records destruction, or conduct under influence of drugs or alcohol;
Raises the cap to $1 million on non-economic damages for catastrophic losses resulting in paraplegia, quadriplegia, amputation, substantial burns or the wrongful death of a parent leaving minor children;
And places a cap on punitive damages of two times the compensatory damages or $500,000, whichever is greater, except in instances of intentional misconduct, records destruction, or conduct under influence of drugs or alcohol.
Tennessee was one of two states in the 12-state Southeast region without caps on punitive damages, and this act continues the state’s history of responsible changes to its tort system.