Canadian Underwriter

US insurers dismayed by failure of class action reform

October 27, 2003   by Canadian Underwriter

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With the “Class Action Fairness Act” back on the shelf, US insurers are lamenting the narrow vote that saw the federal legislation defeated. In a vote of 59-39 (one vote shy of the 60 required), Republican senators were unable to end the Democratic filibuster on the bill, thus shelving class action reform until the new year at least.
Insurers have been pushing for the reforms, which would limit the payout in class action cases and consolidate large interstate class actions in the federal courts. The bill would also add judicial review of non-cash settlements to ensure victims are being treated fairly.
The National Association of Mutual Insurance Companies (NAMIC) expressed its disappointment at the Senate’s inability to end debate and vote on the bill. “The Class Action Fairness Act is a balanced, sensible bill that addresses the worst abuses of the class action process and rationalizes class action procedures, while preserving plaintiffs’ legal rights and providing additional protections for consumers,” says Marliss A. Browder, NAMIC’s federal affairs representative.
The Alliance of American Insurers (AAI) was similarly dismayed, but says the closeness of the vote is cause for optimism. “The American public is growing weary of the continued abuse of the class action system and is making its voice heard,” says Kenneth Schloman, Washington counsel for the AAI. “The public’s message to our nation’s leadership is to put a stop to civil actions that do little to achieve justice but do much to enrich a few.”
The NAIC says it too will continue to fight for class action reform.
The bill had already made it through the House and President George W. Bush had expressed his intention to sign it into law. The president added his disapproval of those senators blocking the bill. “Those who are serious about bringing an end to frivolous lawsuits in this nation and protecting the rights of those who are wrongfully injured should strongly support this legislation,” he says. “I am eager to sign it [the bill], our economy needs it, and I urge those senators who stand in the way to let the will of the people be heard.”

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