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Tort Reform Bill Passes Senate

The Senate delivered for Gov. Bill Haslam on one of his primary legislative objectives Thursday, passing a tort reform measure that includes caps on non-economic damages in jury awards.

The vote was 21-12, with Sen. Mike Faulk, R-Church Hill, the only Republican voting against it. Faulk explained that he is a conservative and that that means believing in personal responsibility and less government, so he could not support legislating the change in the judicial system.

The measure, HB2008, still needs another trip through the House because of a minor Senate amendment before it goes to the governor, but there was a celebratory spirit among the Republican leadership and the Haslam administration outside the Senate chamber after the vote.

The bill is the second major legislative victory for Haslam, following his successful initiative on tenure reform for teachers. The House passed the tort reform bill earlier this week 72-24.

The legislation has been characterized as a jobs bill, with proponents saying it will help create an environment that would be attractive to businesses looking to relocate or expand in the state. It has been difficult to pin down lawmakers on how many jobs might be created because of tort reform.

“I believe this legislation will be an important piece of the puzzle — the mosaic as it were — that will make Tennessee more attractive for new and expanded business. I do sincerely believe that,” Sen. Mark Norris, R-Collierville, the Senate majority leader who carried the bill for Haslam, said after the vote.

“How many jobs? Nobody can say. There’s no crystal ball for that. We’ve joined the majority of states in the nation that have put a number of these reforms in place. At least on the global scale we can remain competitive.”

The Senate used well over three hours of debate before the vote. Norris and Sen. Brian Kelsey, R-Germantown, did most of the talking for the bill, while Sen. Roy Herron, D-Dresden, and Sen. Andy Berke, D-Chattanooga, made most of the arguments against it.

Herron was especially passionate, suggesting that caps on non-economic damages on someone who has been harmed for life could be calculated to be less than what lawmakers get in their per diem serving in the Legislature.

As advocates for the bill told individual stories related to the bill, Berke called the bill “legislation by anecdote,” which Norris said was not the case. Kelsey argued that the bill could bring certainty and predictability into the system of awards in civil suits.

The bill caps non-economic damages at $750,000. It does not cap economic damages. It also caps punitive damages at $500,000 or two times the amount of compensatory damages, whichever is greater — although those caps would not apply in cases where the defendant’s act resulted in a felony conviction, or if records in the case have been intentionally falsified or concealed, or if the defendant was under the influence of alcohol or drugs during the act.

Another key element of the bill is the establishment of a cap of $1 million in cases that are considered to be “catastrophic” in nature. That figure had been the point of adjustments throughout the legislative process. One Democratic amendment offered Thursday would have raised the caps on non-economic damages to $1.25 million and catastrophic damages at $2.25 million but was defeated.

The bill spells out which conditions are to be considered catastrophic, including spinal cord injury resulting in paraplegia or quadriplegia; amputation of two hands, two feet or one of each; third-degree burns over 40 percent or more of the body as a whole or third-degree burns on 40 percent or more of the face; or the wrongful death of a parent leaving a surviving minor child or children for whom the deceased parent had custody.

Several other attempts by Democrats to alter the bill failed, including one that would have tied caps to increases in the consumer price index and one that would have added brain damage to the list of conditions spelled out in the catastrophic category.

Herbert Slatery, Haslam’s legal counsel, said the administration seeks a better environment for businesses.

“As the governor said, the long-term impact hopefully will be to create a more predictable structure in which businesses can quantify what the risk is going to be,” Slatery said after the vote. “It’s one really important factor in how they decide to expand in Tennessee or relocate in Tennessee. It’s just a very, very important factor.

“I think that kind of structure and predictability will allow them to assume what we really want them to assume, and that’s the risk of placing capital in the marketplace. If they will invest their capital and sign guarantees and things like that to expand their businesses, and take the business risk without having to worry so much about the legal side of it, at least they will know what the risk is — more now than they did. Then they will expand and relocate, we hope.”

Deputy Gov. Claude Ramsey was also in the hallway outside the Senate chamber following the vote.

Slatery’s presence in the hall was noticeable for the absence of former U.S. Sen Fred Thompson, who had been a high-profile lobbyist against the measure. Thompson was in Washington on Thursday, where he joined a group advocating for a totally different type of reform — creating a popular vote tally to determine the outcome of a presidential election.

Thompson was named a national “co-champion” of the National Popular Vote campaign, saying in a formal statement, “This is an idea whose time has come.”

Democrats had lawyerly spokesmen, however, in Herron and Berke, among others, against tort reform in Tennessee.

“Those who have done the worst will pay less of a price,” Herron said after the vote. “Those who have been hurt the most will pay more of a price.”

Herron is still looking for the problem that brought on the legislation.

“When you look and see where Tennessee ranks in terms of site selection and business rankings, we’re right at the top of the list, right now, already,” Herron said.

Norris emphasized the need to compete with other states.

“Competitiveness is important. But holding the system together and improving it along the way are also important, and I think these changes will do that,” Norris said.

“And if they don’t we’ll revisit them and fix them.”

Norris was asked what he would say to a victim who had been seriously wronged.

“That if there were not caps in damages there might be no system from which they could recover at all,” he said.

As the debate went long in the Senate, stacks of pizza were delivered to the lawmakers, with a list of other items on the calendar creating a work session that ran close to six hours. Lt. Gov. Ron Ramsey, R-Blountville, made special mention of the length of debate on tort reform.

“It was an excellent debate,” Ramsey told the members. “That was four hours we spent on one bill, but it deserved four hours.”

Said Slatery, Haslam’s counsel, “I thought it was a very valuable exercise and was well-evaluated.

“I was proud of how the system worked.”

Ramsey: Keeping Non-Economic Damages Cap at $750K Preferable

Lt. Gov. Ron Ramsey said this week he believes Republicans in the Senate prefer the original version of Gov. Bill Haslam’s tort reform bill, and that the legislation will likely move through the Senate simultaneously with that in the House.

Ramsey said he anticipates Senate activity on the bill next week. He said his prediction would be that the Senate would adopt part of the governor’s bill, but not the current House version as amended.

“I think the majority of our caucus likes the governor’s original bill without the amendment,” Ramsey told reporters. “I think the bill to begin with was a compromise.”

A subcommittee of the House Judiciary Committee on Wednesday passed a version of the tort reform measure, which is one of the main legislative efforts on Haslam’s agenda, and it is headed to the full House Judiciary Committee on Tuesday.

The thrust of the legislation, HB2008/SB1522, is to put caps on monetary awards for victims in civil suits. Haslam says the caps will create a more stable business climate for the state. He believes the bill will help create jobs, his top priority as governor.

Ramsey also sees the bill as a way to help create jobs, but he has refused to speculate on a specific number of jobs that could come from the action.

Haslam originally offered a proposal that put caps on non-economic damages in such lawsuits at $750,000. But the legislation immediately became the subject of negotiations behind the scenes among various parties involved.

The administration offered a subsequent version of the legislation that would raise the cap in “catastrophic” cases to $1.25 million. But by the time the subcommittee took up the bill Wednesday, the $1.25 million had been reduced to $1 million.

Herbert Slatery, Haslam’s legal counsel, attributed the changing figures to “the legislative process.”

The $1 million would apply to the most severe cases, such as those that involve amputations or spinal cord injuries that leave victims with paralysis. The $750,000 cap remains in the bill for most cases, and Ramsey’s comments suggest the Senate would like to keep the $750,000 in all cases, as Haslam first proposed.

Advocates for reform say there should be some level of predictability of how big awards could be in cases where victims are harmed. Opponents say such figures should be left to the judicial system, and that legislated caps significantly take away the opportunity for justice in such cases.

The issue has become a matter of emotional appeal, with opponents of the caps offering examples of people who have suffered serious losses. Testimony in committee hearings has included people affected by such cases.

Opponents of the bill have used the star power and persuasiveness of actor and former U.S. Sen. Fred Thompson to head the lobbying effort against the bill. Thompson has appeared before lawmakers but did not address the subcommittee on Wednesday.

Haslam has emphasized that caps will not apply in cases where intentional misconduct comes into play.

The bill includes caps on punitive damages that are two times the amount of compensatory damages in a case, or $500,000, whichever is greater.

It is possible other amendments will be offered on the legislation.

“On any kind of issue, you can argue extremes on both sides,” Ramsey said. “You kind of look at what’s reality in real life, and I think that’s what we’re doing.”

The legislation defines “catastrophic loss or injury” as cases that involve spinal cord injury resulting in paraplegia or quadriplegia; amputation of two hands, two feet or one of each; third-degree burns over 40 percent or more of the body as a whole or third-degree burns up to 40 percent or more of the face; or wrongful death of a parent leaving a surviving minor child or children for whom the deceased parent had lawful rights of custody or visitation.