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With Signing of Lawsuit Damage Limits, Haslam Caps Legislative Priority List

Gov. Bill Haslam effectively cleaned his plate of his first legislative package as governor Thursday, signing a tort reform bill that has been touted as a way to create a better climate for jobs in Tennessee.

Haslam signed the bill in a formal setting at the Capitol, making it a clean sweep on his personal legislative agenda. Haslam had previously signed three education reform bills, one at the Capitol on teacher tenure changes, one in Memphis on charter schools Wednesday and one in Murfreesboro last week on his plan to apply Hope scholarships toward classes taken in summer school.

Haslam offered no jobs package of legislation per se, stating from the start that he did not think the state could legislate new jobs — a point with which Democrats took great issue. But the closest measure to a jobs bill was Haslam’s tort reform effort, which met forceful opposition, foremost among trial lawyers who employed lawyer/actor Fred Thompson to do their high-profile lobbying on the issue.

The bill passed 21-12 in the Senate and 72-24 in the House in a Legislature with a heavy Republican majority in each chamber. The Legislature adjourned May 21, but a strong contingent of key Republican lawmakers joined the governor for the signing ceremony on Thursday.

“This was obviously one of our key pieces of legislation,” Haslam told reporters after the ceremony. “I honestly think this will help encourage a better business environment.

“I think we did it in a way that protects victims’ rights but also sets up a predictable landscape for business, and that was our goal all along.”

One interest group, the free-market Tennessee Center for Policy Research, had estimated 30,000 jobs a year could be created with tort reform, translating into 577 jobs a week. Throughout the legislative session, however, it became difficult to get lawmakers or other proponents to put a number on potential job creation. Haslam refused to do so on Thursday. But Haslam said that growth would be genuine.

“I’ve seen supporters of this had a number that they thought it would create. I don’t know how you quantify it. But I do think it’s real,” Haslam said.

The law, formally the “Tennessee Civil Justice Act,” places a cap of $750,000 on non-economic damages in civil cases, although it creates exceptions in cases that involve intentional misconduct, destruction of records or activity under the influence of drugs and alcohol. That cap is extended to $1 million in catastrophic cases, which the law specifies as paraplegia, quadriplegia, amputation, substantial burns or the wrongful death of a parent leaving minor children.

The law places a cap on punitive damages at two times the compensatory damages or $500,000, whichever is greater.

Opponents of the bill had insisted that such decisions should be left in the hands of juries. People who had settled cases that involved severe personal suffering had been brought in to legislative hearings to help make the case against the bill. Thompson in particular had given stirring testimony about the need to leave such decisions in the hands of jurors.

Haslam made special mention Thursday of his legal counsel, Herbert Slatery, and his work on the matter.

“People on both sides of the issue were giving him a strong piece of their mind,” Haslam said of Slatery. “But he kept coming back to ‘What’s the right thing to do?'”

Sen. Brian Kelsey, R-Germantown, said Thursday he had seen seven years as a legislator waiting for the day to come when such a bill would be signed. Sen. Mark Norris, R-Collierville, said it was more like 10.

“Ten years is the length of time we’ve toiled in this vineyard to bring true tort reform to the state of Tennessee,” Norris said. “It wasn’t until Governor Haslam came along with his vision and his focus that we were able to get it across the line.”

The law is particularly welcome in the medical profession.

“For the doctors in the state, this has been a long time coming,” said Don Alexander, CEO of the Tennessee Medical Association. “They need stability in their practices, when the largest expense is their professional liability. Now they know how to at least gauge and know exactly what to set aside to pay. They can limit their coverage a little bit more.

“This is going to make an environment in Tennnessee much more attractive to doctors to come to Tennessee.”

Alexander said that previously doctors who were trained in the state would leave the state because of a liability environment that has been “kind of toxic.”

With tort reform and education legislation completed, Haslam is likely to draw more attention now to his efforts to combat unemployment more directly.

Now that steps have been made ostensibly to create a better climate for business, the issue of job growth will get more scrutiny under the first-year governor. Haslam has made job growth in the state his top priority and has said his legislative agenda was designed for that purpose. Nevertheless, further discussion of education reforms is also expected, including issues of school calendars and the length of school days.

Mike Morrow is a correspondent for TNReport.com, an independent nonprofit news organization supported by readers like you.

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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.”