Tort reform: What’s at stake?

For national organizations taking the temperature of state tort climates, Missouri is both a hotspot and sore spot.

The Show-Me State placed fourth worst in the nation on the American Tort Reform Association’s annual “Judicial Hellholes” report released Dec. 17. Those findings followed similar sentiments months earlier in the U.S. Chamber of Commerce’s Institute for Legal Reform’s Lawsuit Climate Survey, which pegged Missouri No. 42 – having steadily declined from No. 31 in 2008.

Both studies claim unfair practices in the state’s judiciary system governing impartiality, the use of scientific evidence – and in the case of the hellholes report, unreasonable monetary awards – that give plaintiffs an advantage when seeking damages.

Business advocacy groups, such as the National Federation of Independent Business, say changes are needed to address the perceived imbalance in the scales of civil justice. NFIB Missouri Director Brad Jones said while the term “hellhole” is subjective, the reasoning behind it is sound.

“What it ultimately comes down to is if you’re on the defense side, do you have a fair shake in some of these cases?” he said

However, some attorneys believe ATRA’s report is nothing but baseless assertions. If the state’s civil justice system needs any changes, personal injury attorney Steve Garner said it’s less breaks for businesses and their insurance companies, which he identifies as being the real force in calling for reform.

“They’re doing what insurance companies do; they want to limit their exposure but they’re doing it by slandering the Missouri justice system,” the Strong Garner Bauer PC attorney said of the fiery moniker. “It’s an arbitrary statement that has no basis in fact.”

Judges and witnesses
One of the factors earning Missouri’s No. 4 rank is the Missouri Plan. It’s a method for selecting members of the Appellate Judicial Commission dating back to 1940 that Garner said was enacted as a nonpartisan alternative to avoid undue influence from campaign contributors on judicial elections.

Under the plan, a seven-member committee is created from three arenas: three lawyers elected by The Missouri Bar, three residents selected by the sitting governor and the chief justice of the Missouri Supreme Court. The commission appoints judges to fill vacancies in the rosters of the state’s highest court and the Missouri Court of Appeals.

The ATRA report claims Gov. Jay Nixon’s selections are partisan toward appointing judges who rule in favor of plaintiffs. Jones said while the Missouri Plan is ripe for reform, he’s skeptical the system will change.

“In an area where the governor has three choices, he should have three choices of people who will uphold the Missouri Constitution, and be down the middle of the road on that,” Jones said. “It isn’t fair for us to ask anything of the judiciary other than to be fair and impartial.”

Another factor in the report is a “lax standard” for qualifying and allowing expert witnesses. Reform advocates seek stricter guidelines for determining expert witnesses and allowing judges more ability to affirm those decisions similar to the Daubert standard established by U.S. Supreme Court cases tried in the 1990s, and currently used by the federal government and some states. Missouri isn’t one of them, and Garner said that’s with good reason.

“It’s an absolute disaster,” Garner said of Daubert. “It’s a financial war to make litigation so expensive for the individual that if they go to trial and win they’re spending most of that money in out-of-pocket expenses. It removes some cases from even being tried because you have a $100,000 entry claim and go through a process of spending $5,000 to $10,000 for every expert you call.

“The state standard is not lax by any means. (Daubert) just wastes a ton of judicial time and resources our courts don’t have.”

Sen. Mike Parson, R-Bolivar, sponsored Senate Bill 591, which would adopt a version of the Daubert standard in Missouri. The bill received first-round approval from the Senate Jan. 20 and, pending a final vote there, will be sent to the House for consideration. Parson disagrees the method is costly and argued it as a necessary step to establish a level playing field.

“I think what will happen is once you are qualified as an expert witness in one or two courtrooms, per se, you won’t have to go through that process all the time,” he said. “It raises the bar for whoever is going to say they’re an expert. I don’t think you want someone – on the defense or the plaintiff side – who goes up there, is paid X amount of dollars and will say what that side wants to be said.”

Capping damages
Capping damages in civil trials remains a point of contention between reformers and those who say a limitation on monetary awards circumvents the state constitution and the jury’s responsibility to mete out an appropriate verdict.

“It doesn’t make any sense to me,” Garner said of the push for limiting damages awarded. “Nobody can envision themselves being catastrophically injured by someone else’s product or a doctor that makes an error, but if you can, would you want your damages arbitrarily capped? I think everybody would say they don’t want that.”

In 2012, the Missouri Supreme Court ruled caps for noneconomic damages in medical malpractice cases were unconstitutional. In May 2015, Nixon approved SB 239 to reinstate the caps at $400,000 for personal injury cases and $700,000 for catastrophic injury and wrongful death suits.

“Before we had the caps, we had a major crisis,” Jones said. “Rural doctors had medical malpractice insurance costs going through the roof, and they were paying with their feet because they were leaving.”

Along the same lines, ATRA’s report points to a July Missouri Court of Appeals decision awarding $2 million in punitive damages to the plaintiff in Ellison v. O’Reilly Automotive Stores Inc., stating the award was unreasonable because it was 10 times higher than the compensatory damages of $200,000 and exceeded a single-digit ratio limit suggested by U.S. Supreme Court cases.

Jones said for small businesses, the possibility of going to court and the costs incurred far outweigh the considerations of winning or losing a case when paying excessive damages could mean closing its doors. While Garner feels that under the current law the risk of insolvency is placed on victims, Jones said mitigating the risk for businesses will depend on passing legislation. Another Parson-sponsored bill, SB 736, would establish joint and severable liability for defendants in tort cases.

“Currently, if you’re a little over 50 percent at fault, and the other person doesn’t have insurance or the ability to pay, then you’re hit for the entire amount,” Parson said. “This would basically limit you to what the court has found you to be guilty of, or responsible for.”