July 30 to August 3, 2005
Mobile, July 30-August 3, 2005
October 7, 2005
The Human Services and Public Safety Committee convened on Monday, August 1, for a program session and on Tuesday, August 2, for a business session during the 59th SLC Annual Meeting. The Committee also participated in a Technical Tour at the University of South Alabama, which hosted a workshop on telemedicine. The following is a summary of the speaker presentations and Committee activities.
Monday, August 1
I. Tort Reform in the Southern States
Senator Charlie Ross – Mississippi
Kenneth Suggs – President, Association of Trial Lawyers of America, Washington, D.C.
Brenda Nichols Harper – Vice President and General Counsel, West Virginia Chamber of Commerce
Tort reform encompasses a number of different facets of civil justice. From the abolishment of joint liability to changes in how class action lawsuits are initiated, states have enacted legislation in recent years designed to alter long-standing rules in the realm of the tort system. This discussion featured both sides of the tort reform debate, demonstrating how changes to the legal system have been made, and asking whether states have gone too far in this regard.
Senator Ross’ Presentation
Senator Ross began his presentation by outlining Mississippi’s legal system before tort reform was passed in 2004. At that point, seven jurisdictions in the state had been labeled as “judicial hellholes,” with out-of-state plaintiffs frequently winning lawsuits in state courts. He attributed the increasing price of insurance to this judicial situation, with rates for doctors increasing 20 percent in 2004. Many carriers even withdrew from the state altogether, leading to an exodus of doctors from the state as well. Senator Ross mentioned that negative perceptions of the state may have led to a lack of economic development.
According to Senator Ross, tort reform went into effect in Mississippi September 2004 on all lawsuits filed after that date. One of the hallmarks of the new legislation is the new predictability of the judicial system. Senator Ross stated that the new law makes simpler the predictability of whom can be sued, how much can be recovered and where one can sue. Regarding venue, or where a plaintiff may sue, Mississippi allowed out-of-state plaintiffs to sue in districts without minimal contacts. With the new legislation, Mississippi residents may sue in the district where they live, and out-of-state residents are barred from bringing suit in some cases.
Regarding medical malpractice, patients may now only sue where the negligent procedure occurred. Before, someone undergoing an operation in one jurisdiction could sue in a different jurisdiction.
Concerning class action suits, the new legislation requires venue to be established independently for each plaintiff. Once established, common issues of fact and law must be shown as well in order to bring suit in that venue.
Senator Ross then divided damages into economic and non-economic categories. Tort reform damages did not affect economic damages, such as lost wages, at all. However, according to Senator Ross, non-economic damages such as loss of consortium and pain and suffering are entirely unpredictable, so the Legislature placed a $500,000 cap on non-economic medical awards. Limits on punitive damages were enacted as well based on the percentage of the defendant’s net worth.
Senator Ross then mentioned product liability cases in which merchants could be sued for simply selling a defective product since he/she was technically in the chain of distribution. Plaintiffs’ attorneys no longer have this option since suing the innocent seller was used mainly to give plaintiffs access to state court (and perceived higher recoveries) rather than federal court.
Concerning joint and several liability, Senator Ross added that defendants who are minimally at fault no longer will be held accountable for more than their percentage of fault. A defendant who is found to be 5 percent at fault will only pay 5 percent of the plaintiff’s recovery.
Moving to jury reform, Mississippi passed the Jury Patriot Act, which allows someone called for jury duty to opt out once. However, to do so, that person must notify the clerk of a date on which he/she will be able to serve.
Senator Ross then turned his attention to how Mississippi passed tort reform. He said a general consensus that reforms needed to take place developed over a four-year period beginning in 2000. Second, legislators did not want to introduce any legislation that did not make sense. Third, proposed legislation had to make sense to non-lawyers. Finally, the state’s 2003 elections resulted in momentum for tort reform.
Senator Ross attributed the passage of tort reform legislation to the adoption of lower insurance premiums and the return of some insurance carriers. He believes there has also been a change in the mindset of the elected judiciary. Finally, he commented that Mississippi now allows defendants a fair hearing while still ensuring that plaintiffs receive a full recovery of economic damages and a reasonable recovery of non-economic damages.
Mr. Sugg’s Presentation
Mr. Suggs began by attributing the sudden interest in tort reform to lobbying by the medical community. Calling the Committee’s attention to a report concerning the 15 largest medical malpractice insurers, covering the period from 2000 to 2004, Mr. Suggs suggested that legislators have been fooled by doctors and insurance companies. Using documents filed by the companies themselves, the report compared the following: premiums earned in those years to payouts in those years; premiums to ultimate payouts; and, finally, growth in surplus. In this period, payouts increased 5.7 percent while premiums increased 120 percent. In fact, in 2004 the leading medical malpractice insurance carriers earned three times as much in premiums as they paid out in claims. In other words, according to Mr. Suggs, no malpractice insurance crisis existed. In addition, premiums are expected to increase 120 percent while projected losses (known in insurance parlance as incurred losses) reach only 25 percent. Furthermore, stocks of medical malpractice insurance carriers have outperformed the Dow Jones average by as much as 109 percent from 2002 to 2005.
Mr. Suggs refuted evidence that insurance premiums have increased disproportionately in states which have not passed damages caps. In fact, according to Mr. Suggs, states without caps saw an 18 percent increase in average liability premiums among internists, general surgeons and obstetricians. On the other hand, these premiums increased by almost 35 percent in states recently passing such caps. Mr. Suggs then recounted the story of an elderly woman who, because of a cap on recovery in her state, was unable to recover a reasonable amount when paralyzed by a resident’s malpractice
Citing the values of the American tort system, Mr. Suggs spoke of the affirmation of human dignity and the sanctity of human life; the promotion of accountability and responsibility; the encouragement of local control; and relief by society of unfair burdens. He mentioned that proponents of tort reform often focus on frivolous lawsuits, which, according to Mr. Suggs, should be thrown out of court precisely because they are frivolous.
Summing up, Mr. Suggs opined that the values of the tort system are conservative values shared by most Southerners. Smaller government is embodied in trial by a jury of peers, and the court system promotes the fair allocation of society’s burdens. Considering whether trial lawyers make a positive difference, Mr. Suggs then recounted some facts which run counter to insurance industry claims. According to the Institute of Medicine, medical error kills 98,000 Americans annually. As a result of the threat of suit, deaths from errors in one field, anesthesia, have fallen from one in every 10,000 cases to one in every 200,000.
Ms. Nichols Harper’s Presentation
Ms. Harper noted that states which have yet to enact tort reform will face difficulty attracting new industry, which balks at locating in states in which plaintiffs are perceived to receive favorable treatment. The American Tort Reform Association rated the entire state of West Virginia a “judicial hellhole” in 2004, spurring change from the Legislature. For example, the state’s worker’s compensation costs per covered employee dwarfed that of its neighbors.
Ms. Harper attributed West Virginia’s successful tort reform, adopted during the 2005 legislative session, to the following factors: a balanced, courageous Legislature, gubernatorial leadership, a united lobbying effort from the medical and business communities, and support from the public. Between 2001 and 2003, a crisis situation arose, according to Ms. Harper, with doctors leaving the state. As a result, the Legislature passed the West Virginia Medical Professional Liability Act which placed caps on non-economic damages, limited liability to the extent of fault, allowed awards to be reduced by collateral sources, and eliminated third-party claims.
Major civil justice reform followed in 2003 and 2004, including SB 213, which limits access to courts to individuals who reside or are injured there. Worker’s compensation reform passed as well. New legislation created a long-term plan to manage multi-billion dollar debt, and privatization to eventually take place.
Finally, in 2005, West Virginia tackled tort reform, with adjustments in joint and several liability taking center stage. If a defendant is 10 percent or less at fault, purely several liability reigns. If he/she is between 11 percent and 30 percent at fault, there is several liability with reallocation. However, if the wrongdoer is 31 percent or more at fault, he is jointly liable. This applies to cases filed after July 1, 2005. The new rules do not apply to intentional torts, instances of conspiracy, or the negligent or willful unlawful emission, disposal or spillage of a toxic or hazardous substance. Reforms also repeal third-party causes of action, referring them to the insurance commission. Furthermore, consumers may not file suit against vendors without first giving written notice of their complaint and allowing 10 days for the seller to solve the problem. The consumer has 10 days to accept or reject the seller’s proposal, and the loser pays the court costs. Ms. Harper also added that physicians’ condolences may not be held against them in a court of law.
Finally, Ms. Harper noted that, as a result, doctors are returning to West Virginia and claims are down 50 percent.
Discussion ensued among the participants, with questions touching on joint and several liability and the plaintiff’s right to a full recovery.
II. Closing Comments
Chairman Prezioso thanked the speakers for their informative presentations and adjourned the meeting with no further discussion.
Tuesday, August 2
I. The Spread of Methamphetamine
in the South: States Fight Back
Representative John Nance - Oklahoma
The past decade has seen the eastward spread of this highly addictive drug across the entire Southern region. This session explored how SLC states have countered the threat of methamphetamine through legislation influenced by Oklahoma’s 2004 law, as well as what can be done in the future to limit this scourge.
Methamphetamine reached Oklahoma sooner than most other SLC states. After a long battle with the drug, the state enacted legislation in 2004 restricting the sale of one of the active ingredients in meth, pseudoephedrine, which is readily available in over-the-counter cold and allergy medications.
Representative John Nance, who sponsored House Bill 2176, the legislation responsible for a sea change in the war against methamphetamine, began his presentation to the Committee with some background information. Oklahoma experienced a 12,000 percent increase in the number of seized meth labs from 1994 to 2003, with the passage of multiple laws having little effect on the production and consumption of the narcotic. However, HB 2176 placed pseudoephedrine on Schedule V of the Controlled Substance Act, meaning consumers could no longer simply take such medication off the pharmacy shelves.
Representative Nance commented on how easily meth can be manufactured, showing a slide of a container filled with easily moveable ingredients. It continues to be produced by low-level dealers and by the users themselves.
Oklahoma held legislative hearings on methamphetamine labs in the fall of 2003, bringing together law enforcement agents, prosecutors, treatment providers and legislators. The participants found that the spread of meth labs had become an epidemic. Although the majority of the labs remained small, capable of producing less than one ounce of the narcotic, the lion’s share of crimes committed under the influence of meth were based on addiction rather than economics. As a result, Oklahoma’s Legislature passed HB 2176, which placed pseudoephedrine on Schedule V of the Controlled Substances Act. This applies to any product with any measurable amount of the restricted substance, but exempts most liquids, liquid caps or gel caps. Such substances may only be sold in pharmacies. Consumers need no prescription, but they must show photo identification and sign a log when purchasing pseudoephedrine products.
Representative Nance added that HB 2176 also contains bond provisions. Those arrested for manufacturing meth must appear before a magistrate. At the hearing, if the state proves that the individual either manufactured meth or used it illegally, there is a rebuttable presumption that no conditions of release ensure the safety of the community. Therefore, the individual remains in state custody. In any case, the state seized more than 1,200 meth labs in the years 2002 and 2003. As a result, the Legislature pressed on with HB 2176 in order to curb the spiraling numbers of meth labs while affecting consumers as little as possible.
Representative Nance then reported that in a six-month period in 2002, sales of pseudoephedrine dwarfed sales of Coca-Cola products at convenience stores across the state, reaching almost $70,000 worth of medication at one store, compared to roughly $2,500 for the soft drink. However, since the passage of the bill in the spring of 2004, seizures of meth labs have dropped sharply, from 121 in January 2004 to eight in May 2005. Of note, only three counties reported meth lab seizures in June 2005.
The passage of HB 2176 has had a far-reaching effect across the country, noted Representative Nance. In addition to Oklahoma, 19 other states have passed similar laws limiting access to pseudoephedrine, and 10 more have expressed interest in passing such legislation. Thirteen additional states are in the process of passing similar laws. Of the SLC states, Alabama, Arkansas, Florida, Kentucky, Mississippi, Missouri, Tennessee, Texas and West Virginia have already followed Oklahoma’s lead, while Louisiana, North Carolina and Virginia have legislation in process.
Representative Nance then turned his attention to the ancillary issue of drug courts. Retention rates in Oklahoma drug courts have reached 83 percent, with national rates hovering between 67 percent and 71 percent. Representative Nance believes that drug courts are integral to re-introducing drug offenders to productive lives as an alternative to prison. Re-arrest rates for released inmates reach almost 68 percent, while only 19 percent of drug court graduates end up as recidivists, with drug court graduates also increasing their income by more than 53 percent from entry to graduation. Drug court graduates also tend to keep their children in their homes, easing the strain on the foster care system. Overall, according to Representative Nance, the cost of sending drug offenders to prison (based on a sample of more than 2,000 participants) reaches $90 million, while the costs of sending them to drug court equals only $25 million.
In fiscal year 2006, Oklahoma will dramatically expand its drug court program. The Legislature has appropriated an additional $8 million for the program, bringing the drug court budget to a total of $12.2 million. With this appropriation, Oklahoma now leads the nation in drug court funding per capita, and expected savings from the additional 3,229 offenders is $38 million in the first year with dramatically better outcomes than incarceration.
With this good news, Representative Nance ended his presentation. Members of the Committee also shared news from their states regarding the fight against methamphetamine, with members from Alabama, North Carolina and West Virginia all reporting that their states had been influenced by the Oklahoma legislation.
II. Election of Officers
Nominating Committee chairman Representative Joe E. Brown of South Carolina joined fellow members Senator Randy Laverty of Arkansas and Representative Bill Thigpen of Alabama in forwarding to the full Committee the Nominating Committee’s recommendation of the election of Representative George Flaggs, Jr., of Mississippi and Representative John Arnold of Kentucky as Chairman and Vice Chairman, respectively. Both were elected by acclamation.
III. Closing Comments
Chairman Prezioso thanked Representative Nance for his informative presentation, congratulated the new officers, and adjourned the meeting with no further discussion.
Tuesday, August 2
I. University of South Alabama Telemedicine Workshop The University of South Alabama hosted a workshop on telemedicine, an emerging field within the healthcare domain. The University contracted with the Medicaid program in Alabama to collect data on a patient’s health condition and prescription drug needs. The program allows for easier transfer of medical records to doctors and patients by allowing access to the program over the Internet. Through interaction with local experts, committee members experienced first-hand how seniors and rural citizens benefit from this new technology.
Southern Legislative Conference 59th Annual Meeting
Human Services & Public Safety Committee
July 30 – August 3, 2005
Senator Bradley Byrne
Representative Howard Sanderford
Representative William Thigpen
Representative Jack Williams
Jim Mercer, GlaxoSmithKline
Patrick McWhorter, McWhorter Group, Inc.
Representative Frank Glidewell
Senator Randy Laverty
Representative Bill Pritchard
Representative Robbie Wills
Ann Cornwell, Senate
Leo Hauser, Pfizer
Debbie Hayes, Sanofi-Aventis
Tom Parker, American Petroleum Institute, Southern Region
June Dewetering, Interparlimentary Group
District of Columbia
Kenneth Suggs, Association of Trial Lawyers of America
Senator Don Balfour
Senator Ronnie Chance
Representative Sharon Cooper
Senator Jack Hill
Representative Howard Maxwell
Todd Edwards, Association of County Commissioners of Georgia
Angie Fiese, Senate Research Office
Ken Fern, Southern Legislative Conference
Randi Greene, American Diabetes Association
Josh Young, American Chemistry Council
Allen McGlynn, State Farm Insurance
Representative John Arnold
Senator Walter Blevins
Representative Hubert Collins
Representative Bob DeWeese
Representative Jim Gooch
Representative Derrick Graham
Senator Ernie Harris
Representative Harry Moberly
Representative Russ Mobley
Senator Jerry Rhoads
Representative Steve Riggs
Senator Ken Winters
Representative Brent Yonts
Herb Bowling, Department of Criminal Justice Training
Keon Chi, The Council of State Governments
Prentice Harvey, Public Policy Associates
Harland Hatter, Office of the Senate President
Nancy Hublar, Beverly Enterprises, Inc.
Robert Jenkins, Legislative Research Commission
Stephanie Kirtley, Legislative Research Commission
Steve Lynn, Justice and Public Safety Cabinet
DeeAnn Mansfield, Legislative Research Commission
Kevin Mason, Legislative Research Commission
Lyla McGowan-Pryor, Heritage Council
Mark Mitchell, Legislative Research Commission
Rachel Phelps, Government Strategies
Senator Diana Bajoie
Representative Willie Hunter
Mary Beth Chevalier, Exxon Mobil
Malcolm Hood, Conoco Phillips
Jessica Monroe, Johnson and Johnson
Senator Lisa Gladden
Senator Verna Jones
Delegate Pauline Menes
Representative George Flaggs
Representative Jamie Franks
Senator Hillman Frazier
Representative David Gibbs
Representative Steve Holland
Representative Bill Miles
Senator Charlie Ross
Representative Sara Thomas
Representative Percy Watson
Representative Charles Young
Camille Young, Watkins, Ludlam et al.
Representative Phil Haire
Cindy Snyder, GlaxoSmithKline
Bob Straniere, Pfizer
Bill Bowers, AstraZeneca Pharmaceuticals
Representative John Nance
Pat Cannon, Wyeth Pharmaceuticals
Representative Joe Brown
Representative John L. Scott
Representative Karen Garrett
Jon Grayson, Hospital Corporation of America
Jimmie McCurdy, Office of Legislative Budget Analysis
Charlie Sorrells, Eastman Chemical Company
Senator Emmett Hanger
Laurie Smalling, Wal-Mart
Claudia Tucker, Medco Health Solutions
Delegate Marshall Long
Senator Joseph Minard
Senator Roman W. Prezioso
Jeff Johnson, Senate
Nelson Robinson, Compensation Strategies
Marion W. Shiflet, Nationwide Insurance
Brenda Nichols Harper, West Virginia Chamber of Commerce