The Question of Tort Reform / Insurance Industry Sees Economic Development; Legislators View It as Insurance Industry Issue
Tipton, David, THE JOURNAL RECORD
Reform of the state's civil justice system has been a controversial issue for the past few legislative sessions, yet there appears to be some lack of communication or understanding between legislators and the insurance industry.
Judging by the way the hearings on the subject have concluded and the questions that have been asked of insurance officials, it is apparent some state lawmakers regard tort reform basically as an insurance issue.
But those in the insurance business believe tort reform is an economic development issue.
"I think tort reform is one of the most significant economic development issues facing the state," said Robert Medley, president of Medley Gunter Rosenhamer, a property and casualty firm in Oklahoma City.
Jerry Johns, president of Southwestern Insurance Information Service Inc., a public information group which represents property and casualty firms in Texas and Oklahoma, believes the role of insurers in this issue is to provide the information legislators need to make their decisions.
"It is not our place as insurance people to encourage tort reform," said Johns. "We are there simply to answer questions."
Perhaps the reason some legislators view tort reform as an insurance issue is because the insurers are about the only people who speak on the subject. While officials with the Oklahoma City Chamber of Commerce and Oklahoma State Chamber of Commerce and Industry did address the legislative hearings held on tort reform this year, insurance representatives were still far and away the majority of those attending the hearings.
In the Senate Judiciary Committee meetings this year in which tort reform was discussed, information provided by such firms as AEtna Casualty and Surety Co. and the St. Paul Property and Liability Insurance revealed tort reform would have no effect on insurance rates of those companies.
Moreover, legislators were frustrated in their attempts to uncover from insurance representatives information on what impact tort reform has made in the other states which have passed it.
According to Johns, however, as other states have passed major tort reform issues only in the last two to three years, it remains too early to tell what the impact those laws will have.
For example, Kansas passed a law which requires a separate trial on the issue of punitive damages, damages sought in the event a defendant has shown a disregard for public safety.
In Texas, awards of punitive damages were capped at the greater of either $200,000 or four times the cost of the actual damages. In addition, Texas legislators changed its laws on joint and several liability, where a defendant only minimally responsible for an injury or damage might have to pay the full amount. The modification in Texas was that defendants found to be liable for 20 percent or less of an injury or damage are severally liable.
Texas also passed a products liability law which pertains exclusively to the prescription drug industry.
Here's a breakdown of other forms of tort reform passed by other states, mostly in 1986, according to information from the Insurance Information Institute:
- Cap on non-economic damages, such as pain and suffering and mental anguish - Colorado passed a $250,000 cap, while states such as Utah and Michigan passed a $250,000 cap which applies to medical malpractice suits only.
- Frivolous suits and defenses - laws to reduce the number of frivolous suits filed were passed in such states as Connecticut, Florida, Illinois, New York and North Carolina.
- Dram shop liability, limiting the liablity of sellers of liquor, was passed in such states as Tennessee, Louisiana, Arizona and Colorado. …