Tort Reform in the Magnolia State

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Tort Reform in the Magnolia State
| published July 22, 2014 |

By Earl Perkins
Thursday Review features editor

Imagine a place in this country where those planning on having a baby were fleeing a state, knowing there would be no doctors available to provide services or perform delivery. That place would be Mississippi a decade ago, according to the Clarion-Ledger in Jackson.

This scenario is unconscionable, and that's why we're nearing the 10th anniversary of the state's 2004 tort reform, which placed limits on lawsuits. Both sides are still arguing the outcome and fallout, with supporters claiming the changes provided stability for doctors and businesses, while opponents say citizens' rights are limited. No matter what your perspective, the change in law altered Mississippi politics forever.

“Hospitals were closing maternity wards,” said former Republican Gov. Haley Barbour, who championed changing the law. “There was a health care crisis. There was a gigantic number of liability lawsuits, and insurance premiums had skyrocketed for doctors and hospitals. … Every small business in Mississippi was one lawsuit away from bankruptcy. Businesses would not consider coming to Mississippi because of lawsuit abuse.”

The state became a lawsuit haven in the aught years, with sympathetic juries and judges handing out huge awards with little regard toward future ramifications or where the funds were coming from. Medical, insurance, business and political forces banded together seeking lawsuit reform. Following bitter political infighting, round one was passed by the state Legislature in 2002, but proponents felt changes were inadequate. Tort reform became a key platform in Barbour's first run for governor in 2003.

The 2004 reforms made Mississippi one of the first states in the nation to cap non-economic and punitive damages. The Legislature changed venue and joint liability rules, along with passing provisions to protect landowners and "innocent sellers." Changing the law had its desired effect, with statistics showing large drops in lawsuits and doctors' insurance premiums, and in tort cases filed—3500 in 2012, versus more than 10,600 in 2002.

State Rep. David Baria, former president of the state trial lawyers association, said the courts were capable of mandating changes and enforcing existing rules. He also claimed the plaintiffs' bar was willing to negotiate changes, but instead powerful interests forced legal changes. Baria says the tort reform measures focused on politics, while setting caps that prevent those wronged from receiving fair compensation. The changes allow businesses to take an "actuarial approach," which obviously reduces medical malpractice lawsuits. He also stated that few attorneys will now consider taking those cases, although many patients are harmed through negligence.

“If you’re an insurance company or large corporation, tort reform was a raging success, but not so much if you’re someone who’s been injured,” he said. "It wasn’t about frivolous lawsuits and did nothing whatsoever to stop frivolous lawsuits.

"This was about the largest lawsuits.…Barbour pitched more tort reform as needed to promote economic development…if you track the number of jobs, we’ve seen a net loss. Look at them any way you want, tort reform was not positive on job creation.”

Barbour and other tort reform groups, including the Mississippi Economic Council and the state Medical Association, held a May 14 conference in Jackson celebrating tort reform passage's 10-year anniversary. He claims the changes created businesses and jobs in Mississippi, including a Toyota plant.

“Toyota said publicly—wrote a letter to me, the lieutenant governor and the speaker of the House—that they would not consider Mississippi as long as we had that kind of lawsuit abuse,” Barbour said. “The tort reform law that the Legislature passed and I signed into law does not prevent anyone from filing a lawsuit. Not one person loses the right to sue. But it sets rules that level the playing field.”

Public records show Jefferson County, nationally known as a lawsuit haven in 2004, "had more plaintiffs in mass tort lawsuits than the entire population of the county, and virtually none of those were from Mississippi,” he said. “We had a pharmacy in Jefferson County that would get sued in every one of those fen-phen (diet drug) cases, and they had to close. Nobody ever got a judgment against the owner, but she had to close or go broke winning lawsuits.

“Medical liability insurance premiums have fallen more than 60 percent, with most of that drop in the first three or four years. The number of medical liability suits filed against doctors dropped by more than 90 percent in one year.”

Large companies now weigh the cost of fixing problems, versus what they see as limited punitive or pain-and-suffering damages. Businesses are willing to gamble on going to trial because of caps, so negotiations begin at zero instead of reasonable amounts for obvious damages, according to Baria.

“Doctors have always won about 90 percent of their cases,” he said. "...most lawyers who might have looked at taking med-mal cases before won’t even look at them...just refer them to the few who still do.” The contentious debate continues over whether the changes have helped or hurt Mississippi, but other states are studying similar changes in lawsuit reform.

“Sharkey-Issaquena (Community Hospital in Rolling Fork), a county-owned hospital, had closed the emergency room because they couldn’t pay the liability insurance premiums,” Barbour said. “Doctors had quit delivering babies, had quit doing certain kinds of surgeries. There was at the time only one neurosurgeon between Jackson and Memphis who would do emergency surgery. People were having to drive an hour for someone having a baby, and bad things can happen in an hour.”

Tort reform may well have helped improve medical services, but state politics have forever changed as outside groups spent millions of dollars either fighting or electing judges to sway opinions. The victory strengthened Republicans, while weakening the Democratic power base—primarily anchored by plaintiff’s lawyers.

“The plaintiff’s lawyers were very, very, very powerful,” Barbour said. "And a lot of people thought since this was the worst state for lawsuit abuse that it would be impossible to overcome those people who were getting fabulously wealthy off it. But we did. The grassroots won.”

Baria says the movement wasn’t grassroots, but “a coordinated, multi-year campaign, well planned and well designed and well-funded,” noting the reforms were sought “to keep trial lawyers from becoming wealthy and contributing to Democratic candidates.”

“It’s pretty easy to demonize trial lawyers,” Baria said, “and unfortunately, the injured people we deal with don’t have a lot of power and influence. People dislike all trial lawyers, except for their own.”

The '04 reform bill clearly helped Mississippi Republicans, passing 78-39 in the House, but more than 20 Democrats also voted for the legislation.

I don’t single it out as a principal reason (for Republicans taking over the state House), but it was consistent with legislation that was passed that helped Republicans make gains over the next two elections,” Barbour said. Bringing massive changes to civil litigation in the state, the 2004 Tort Reform Act was passed 10 years ago, noted primarily for four sections that stand out.

There would be caps on damages, with the law limiting non-economic (pain-and-suffering) damages to $500,000 on medical liability cases and $1 million in other civil cases. Caps on punitive damages were also reduced for defendants, based on their net worth.

The changes also eliminated joint lawsuits and several types of liability, which limited damages defendants might face to the fraction they were considered at fault. The legislation created stricter rules for establishing venue, or where a case might be brought and tried; i.e. doctors may only be sued in their home county. The final cornerstone of the bill added protection to "innocent sellers" of products, and protected property owners from liability.

Several groups issued reports concerning the effects of the state's tort reform, highlighted by the Medical Assurance Company of Mississippi. The state's medical liability insurer covers approximately 75 percent of doctors, noting that premium rates have plummeted. A typical doctor premium was $4,000 in 1999 and peaked at $10,000 in 2004, but fell to $4,000 by 2009 and presently rests at $3,500.