Law changes help Missouri business

The new laws, according to state legislators, were intended to make the state more appealing for businesses by lowering the cap on certain types of damages in tort cases and limiting the venues where tort cases can be tried.

Frank Evans, managing member of the Springfield office of Lathrop & Gage, said the changes in rules regarding location are significant. According to the new rules, trials can only be held in the county where the incident took place or, if the incident was outside the state, in the county where the defendant’s registered agent is located.

These changes, Evans said, make it imperative for companies to have their registered agent in a nearby location.

The previous law stated that a company could be sued in any county in which it did business, so some plaintiffs were apt to take their cases to metropolitan areas where juries were more likely to find in the plaintiff’s favor and hand out large monetary awards.

“You could have a small company based in some other part of the state defending a case filed in St. Louis City court. Certainly (companies) ought to have their registered agent in the same county where their principal place of business is, as opposed to having it with one of the corporate registration sites in a metropolitan area,” Evans said.

Also, those large awards are less likely under the new law due to the caps on “noneconomic” awards – damages that don’t have a direct correlation to financial burdens, such as lost wages or additional medical bills, caused by the incident in question.

One of the industries affected most by the changes is the medical profession.

Dr. John Mihalevich, president of the Greene County Medical Society, said the American Medical Association had in 2005 listed Missouri as one of 12 “malpractice crisis states,” meaning malpractice premiums made it difficult to recruit and retain physicians in the state.

Average malpractice premiums increased 124 percent from 2000 to 2004 according to statistics from the Missouri Department of Insurance, due in part to the possibility of large awards in civil cases.

C.C. Swarens, executive vice president of Missouri State Medical Association, said that although it’s still too early to predict all the effects of the reform, insurance costs are already beginning to fall in line.

“We have seen some slight movement from the professional liability carriers that had almost stopped writing policies in the state,” Swarens said. “They’re renewing efforts to grow their market share in the state. Any time you have competition coming back into the state, of course that’s going to be good for everyone concerned.”

Attorney Evans said the reforms are having the intended effect: businesses will look more favorably on the Show-Me State.

“I think it’s fair to say that this law certainly makes Missouri more attractive to business than it was before the law was passed,” Evans said.

“And it puts us at least on something close to par with other states that have enacted these reforms.”