Tort reform enhances business attraction

One of these problems finally resolved is the way our legal system handles cases where citizens seek financial restitution for everything from vehicle accidents and property damage to faulty products and defamation.

In the past, our state held one of the most liberal records for huge financial settlements in these cases, known as torts. As a result, unscrupulous people looking for an easy get-rich-quick scheme filed many groundless claims and frivolous lawsuits.

Even legitimate cases often led to such astronomical settlements that employers being sued had to close their doors. Many businesses paid settlements just to avoid the cost and time of litigation, and to get these people off their backs.

As you can imagine, our liberal tort laws devastated many businesses. For example, physicians were leaving Missouri by the droves because of soaring malpractice insurance costs, which had been driven up by huge settlements. One Springfield gynecologist admits he stopped delivering babies when his medical malpractice insurance went up 82 percent in one year alone.

These rising malpractice premiums sent many of our best and brightest doctors to other places and kept many doctors from opening practices in our state. The United States Chamber of Commerce rated Missouri 41st in serious problems with medical liability.

Previous tort law also kept many other major employers from locating here. When employers consider where to locate, they compare the cost of doing business. While they were initially attracted to Missouri because of our central geographic location, favorable tax climate, highly skilled work force, and excellent quality of life, the costly litigation climate in our state was sending many of these employers elsewhere.

Why would they choose to come to a state where the company’s financial success might be jeopardized by costly litigation fees and financial settlements? That is why tort reform was critical to Missouri’s future.

One of the major improvements of our new tort reform law (HB 393) requires lawsuits to be filed in the counties where the alleged injury occurred.

In the past, plaintiffs and their attorneys had the freedom to shop around for a venue where juries have a history of giving generous settlements. As long as the plaintiff could draw some connection to the location and the defendant, the suit could be filed anyplace.

Usually, plaintiffs and their attorneys would try to have their cases tried in St. Louis or Kansas City, which have a reputation for higher jury awards. In fact, the American Tort Reform Association ranked St. Louis 11th in a national comparison conducted in 2002 and 2003 to examine the worst judicial environments for defendants. By eliminating venue shopping, this type of abuse will stop.

Tort reform also means a defendant must be found at least 51 percent responsible for the offense to share joint liability for paying damages, and then only actual damages, not punitive ones. Previously, a person with money who was at least 1 percent at fault could be held 100 percent responsible for the damages if a co-defendant was unable to pay.

This law allowed plaintiffs to go after defendants with deep pockets for damages that they, by rights, should not owe. Now defendants found less than 51 percent liable are only responsible for paying their proportion of damages.

This change makes our tort system more fair and equitable for everyone. The caps will particularly help with lowering malpractice premiums or pools that many hospitals and self-insured groups use to cover their claims.

Punitive damages are capped at $500,000, or five times the actual damage for the action, whichever is greater. Non-economic damages such as pain and suffering are capped at a flat $350,000. This cap level covers the total amount owed by all defendants.

Several reforms in the new law specifically address Missouri’s medical malpractice crisis. The court can now dismiss medical malpractice claims if plaintiffs fail to file appropriate affidavits from a health care provider or fail to use reasonable care.

The new law protects against disclosing peer review proceedings in medical liability cases. Civil immunity from damages is given to doctors who volunteer services. Benevolent gestures taken by medical providers to apologize for mistakes cannot be used as court evidence against them. The actual amount of paid medical expenses can be introduced into evidence, but not the amount billed.

Our new tort reform law, which goes into effect Aug. 28, makes major improvements in our business climate so we can attract the high-quality, high-paying, family-supporting jobs Missouri deserves.

Greg Steinhoff is director of the Missouri Department of Economic Development.