Press Release from the Tennessee Center for Policy Research, March 24, 2011:
Balance, Predictability Recurring Themes of Lawsuit Abuse Reform Hearing
NASHVILLE, TN – A prevailing theme of predictability and balance seemed to repeat itself during the first public hearing on Governor Haslam’s lawsuit abuse reform package held on Wednesday by the House Judiciary Subcommittee.
While no vote was taken, a packed room that spilled into the hallways of Legislative Plaza indicated strong interest for and against reform in Tennessee’s civil justice system. A significant majority of those in attendance were sporting “More Jobs, Fewer Lawsuits” stickers in favor of reform. From lawyers to business professionals to actors, at least a dozen spoke on the topic.
“The reality is that government is unable to create jobs,” said Herbert Slatery, legal counsel to the Governor, in his opening statement. “However, we can foster an environment to attract new businesses to Tennessee. We know that decision makers for locations, expansions and investments consider factors like taxes, site suitability and risk of litigation.”
Among the highlights of Tennessee Civil Justice Act of 2011 were:
- Dozens of counties in Tennessee suffer from high unemployment rates from 15 to 23%.
- Tennessee has steadily fallen down the list of “good” states in which to do business – from 10 to 22.
- Compensatory damages are designed to make the plaintiff whole. There are no proposed caps for economic damages; there is a proposed $750,000 per injury for non-economic damages, which are competitive with neighboring states.
- Punitive damages are to punish and deter; the legislation also proposes a cap on these damages.
Several businesses owners testified at the hearing, including service providers and a construction official whose industry is currently experiencing 22% unemployment rates. All agreed that the purpose of lawsuit abuse reform is to provide greater predictability in the civil justice system and quantification of risk, which will in turn lead to job growth throughout the state.
Former State Sen. Charlie Ross of Mississippi gave a before-and-after look of lawsuit abuse reform in his state, which he argued was the “salvation of the medical community” and led to more job and economic growth, while still preserving citizens’ access to the civil justice system.
Before lawsuit abuse reform:
- Medical malpractice rates were increasing 25% a year.
- Businesses were crossing state lines to relocate.
- No large employers were considering Mississippi as a place to do business.
After lawsuit abuse reform:
- Medical malpractice rates were 60% less than the exorbitant rates of 2004.
- Property/casualty rates decreased.
- Physicians started relocating to the state.
- Toyota was among several giant employers that considered the state for manufacturing locations.
Sen. Ross concluded by urging Tennessee lawmakers to enact reform before Tennessee becomes a judicial hellhole like his state, saying that “Mississippi waited until the house was burning before calling the fire department.”
“We were very pleased with this first hearing. As we’ve said from the beginning, our goal is to educate Tennesseans about the need for and benefits of lawsuit abuse reform, and nearly everyone agreed that a balanced and fair system would be best for our state,” said Justin Owen, president of the Tennessee Center for Policy Research.
The House Judiciary Subcommittee is expected to vote on the governor’s legislation next Wednesday, March 30.
The Tennessee Center for Policy Research is an independent, nonprofit, and nonpartisan think tank committed to achieving a freer, more prosperous Tennessee. Through research and advocacy, the Center promotes policy solutions grounded in the principles of free markets, individual liberty, and limited government. For more information, visit www.tennesseepolicy.org .