U.S. litigation reform discussions heat up

Litigation is taking center stage south of the border with ongoing discussions on tort reform, medical malpractice liability and even the never-ending asbestos issue.
This week, a joint Senate committee is hearing testimony on a proposal to tackle the spiraling cost of medical malpractice insurance. The House of Representatives has introduced a bill to cap jury awards in med-mal cases for non-economic loss (i.e. pain and suffering type awards) at $250,000 or twice the economic award. Such a cap is already in place in California. A Senate bill, on the other hand, seeks to put tougher regulations on pricing by med-mal insurers.
In a press conference this week, Alliance of American Insurers (AAI) president Rodger Lawson expressed support for the House bill, along with representatives of the Physician Insurers Association of America and the Insurance Information Institute (III). The III estimates med-mal insurers pay out $1.60 in claims for every premium dollar collected.
Lawson notes that between 60-70% of med-mal coverage is written outside of the traditional insurance industry, by companies owned by or affiliated with state medical societies. Past crises in the med-mal market led many insurers to withdraw completely. “Any objective analysis will demonstrate that physicians and hospitals have themselves been trying to manage this situation as best they can, but they too have reached a fork in the road.”
Other insurance companies are impacted because of rising premiums leading to rising health care costs in other lines. “All lines of insurance that have a medical cost component are impacted.”
On the class action front, legislation proposed to put class actions above a $2 million ceiling into federal district courts is receiving support from both insurers and lawyers. The AAI and National Association of Mutual Insurance Companies (NAMIC) have both expressed support for “The Class Action Fairness Act of 2003” (S.274) introduced last week in the U.S. Senate. “S. 274 would serve to restore balance to the class action system, reduce litigation expenses, curb frivolous class action suits, and provide additional protection to consumers,” says Monte Ward, vice president of federal affairs for NAMIC. “Not only does the current system expose defendant corporations to the possible bias of a local jury against out-of-state corporations, it often results in contrived settlements that richly reward the named plaintiffs and their attorneys while leaving other class members with worthless coupons.”
The bill includes a bill of rights for class action defendants with judicial scrutiny of non-cash settlements and protection against loss for class members.
The class action bill has gained the support of the American Bar Association (ABA), as has a proposal to limit asbestos claims. The ABA is supporting the establishment of medical criteria for claims for non-malignant asbestos-related disease such claims have increasingly become the basis for asbestos suits, rather than the traditional claims by people who attribute cancer to asbestos exposure. A recent report from Standard & Poor’s suggests such cases will become even more proliferate in the next few years. The U.S. Senate Judiciary Committee is expected to hold hearings on asbestos litigation in early March.