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Image courtesy of the Center for Justice and Democracy at New York Law School, www.centerjd.org.

It’s near impossible these days to not hear something about tort reform. Insurance companies, corporations, Republicans and the defense bar all argue that tort reform is a “salve for seemingly every economic ill” as a colleague of mine wrote. We’ve seen, time and time again, that tort reform doesn’t deliver on what it promises (lower insurance premiums, increased physician supply, etc.). In some instances, tort reform actually limits access to the legal system for those who are injured.

Proponents of this ill-conceived “reform” cite frivolous lawsuits and an overly litigious plaintiffs’ bar for large awards in personal injury cases. Damages caps, another component of tort reform, work to limit the amount that an injured party can be awarded. My colleague’s article touches on these artificial caps, as well as other means for dealing with frivolous lawsuits (Federal Rules of Evidence 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, anyone?).

So, why won’t tort reform just die, already?

It’s all about the Benjamins, my friends. Money, money, money. The defense bar and its clients hate parting with it and, yes, there are some plaintiffs who seem to make a career out of filing personal injury suits. These plaintiffs are, fortunately, not the majority. Until the focus is shifted from greed (on both sides) to justice, we will likely keep seeing tort reform rearing its ugly – and ultimately useless – head.

Which brings us to Jefferson City, Missouri and yet another attempt at tort reform. Two bills were recently voted out of committee, meaning they will be sent to the state House of Representatives for debate and decision. One bill, Rep. Joe Don McGaugh’s collateral source rule bill and the other, Rep. Kevin Corlew’s bill asking the legislature to adopt the Daubert standard for expert witnesses, were both recommended by a 9 – 3 vote in the House Special Committee on Litigation Reform.

The collateral source rule deals with the admissibility of evidence in injury cases and where special damages are sought. Examples of special damages include loss of earnings and medical expenses arising from the original injury. When dealing with the rule from the plaintiff’s perspective, the collateral source rule deals with the costs of medical procedures. The rule, from the defendant’s perspective, deals with the amount, if any, the plaintiff was paid by insurance companies (their own or the defendant’s).

The way the rule works in Missouri right now allows juries to hear the two ends of the monetary spectrum and award an amount somewhere between those two figures.

The goal of Rep. McGaugh’s bill is to limit this evidence, from the plaintiff’s perspective, to the actual amount of money that has already been paid for medical expenses and the actual costs of procedures, not the amount that hospitals would like to be paid. Basically, if your insurance company has an agreement with a given hospital that it will pay $1,000 for XYZ procedure and the hospital accepts that amount, that amount is what the jury would be allowed to hear, not the hospital’s full price for the same procedure. Notice, if you will that Rep. McGaugh seemingly isn’t all that concerned with limiting what the jury can hear about plaintiff compensation from insurance companies. No, advocates of tort reform really only want to limit plaintiff’s evidence; yet, they all believe this is a fair and balanced policy.

Image courtesy of www.kansascity.legalexaminer.com.
Image courtesy of www.kansascity.legalexaminer.com.

The Daubert standard, stemming from the 1993 U.S. Supreme Court case Daubert v. Merrell Dow Pharmaceuticals, is the currently accepted standard for expert testimony in federal court as well as all but four states (Missouri, Nevada, North Dakota and Virginia). Daubert essentially provides that expert testimony must be based on sound scientific evidence obtained via the scientific method. It also gives trial judges more discretion in determining whether an expert’s testimony meets that requirement and is, thus, admissible.

Note: Whole books have been written on both the collateral source rule and the Daubert standard. Covering each in great detail is far beyond the scope of what can be accomplished in a blog post. Any questions on how these two doctrines could affect a case should be addressed to your attorney.

In Missouri, the admission of expert testimony is governed by statute, specifically 490.065, which states in part: “In any civil action, if scientific, technical or other specialized knowledge will assist the trier of fact [judge or jury] to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.” In other words, only the expert’s qualifications are considered, not the method by which they formed their opinion or testimony.

This is the third time Rep. Corlew has put the bill before his colleagues.

Why are these two tort reform bills such hot-button issues for Missouri? Depending on who you ask – the plaintiffs’ bar or the defense bar – Missouri is either a litigator’s Shangri-La or a “judicial hellhole,” respectively. Many plaintiffs’ attorneys file in Missouri whenever it’s appropriate as a venue (it isn’t always, and judges are dismissing cases over which they don’t have jurisdiction due to the venue issue). They do this because Missouri tends to be, for lack of a better way of putting it, quite plaintiff-friendly, in terms of courts and juries.

Of course, that is precisely why the defense bar, among other critics, refer to Missouri as a “judicial hellhole.” Rep. Corlew said, “My goal is to make our courts as favorable as possible to all parties whether you’re a corporate defendant or a plaintiff. Right now we have one group, corporate defendants, that in survey after survey, rate us as having some of the worst courts in America. We need to improve that.”

To repeat: “…we have one group, corporate defendants…” that doesn’t like the judicial climate in the Show Me state. Yet, his goal is to make the system fair for all parties. I don’t see any mention of injured plaintiffs, do you? If one wants to revamp the system to provide more balance for both parties, one cannot focus solely on one party only.

That’s not surprising, given that Rep. Corlew and Missouri’s businesses have supported tort reform for years, basing that support in part on surveys like the one by the American Tort Reform Association. This survey referred to the state – and the city of St. Louis, specifically – as “judicial hellholes.” Rep. Corlew states that his bill is needed if Missouri is going to be a state that doesn’t discourage business from setting up shop there. Again, the focus is on business and not innocent people who are often injured by the negligent acts of said businesses.

Even the U.S. Chamber of Commerce is putting in its two cents. The Chamber, through its Institute for Legal Reform, has an ad campaign trying to convince people that changes need to be made to make the state more attractive to businesses. According to the Institute’s president, Lisa A. Rickard, “Missouri’s poor litigation environment benefits trial lawyers at the expense of small businesses and consumers. Fortunately, the state legislature now has a chance to put jobs and justice first.”

What are proponents of the change in the collateral source rule saying?

The Missouri Organization of Defense Lawyers’ Dana Frese believes the change will eliminate confusion and protect defendants from paying too much in personal injury cases.

Rep. McGaugh said, “The way the law is written now, certain portions are used to land a windfall. We don’t want to see a windfall, we want to see people made whole.” This is a worthy goal, to be sure. Limiting access to the justice system via tort reform is certainly not going to accomplish it, though.

The two bills have their opponents, too. One is Jay Benson, president of the Missouri Association of Trial Attorneys (MATA). Mr. Benson’s opinion of adopting the Daubert standard is that “What we have right now as far as the system of what a jury gets to hear… it’s a system we understand and a system that keeps garbage away from the jury. He feels that the bill is “a solution without a problem.”

His opinion of the collateral source rule change is not much better. “If there is a windfall, who should get it: The person who worked hard to pay those insurance premiums or… the person who crossed the centerline and hit our client head-on?”

Another MATA member, attorney Ken Barnes, spoke out against adopting Daubert stating that the standard places too much discretion in the hands of the judges. His contention was that, under Daubert, judges often allow fact witnesses to offer opinions. Fact witnesses are not experts and are only permitted to testify regarding what they actually saw or experienced.

Mr. Barnes said, “On the same floor of the same building, they apply this rule differently.” He further argued that adopting Daubert would only increase the state’s expenses due to more litigation and both parties to a case challenging each other’s’ experts.

It’s expected that the two bills will be debated on the House floor before the end of January.

If passed, the bills’ impact on injured parties filing suits in Missouri – St. Louis, specifically – could be great. There are currently hundreds of pending cases, including multi-district litigations (MDLs), in St. Louis courts.

Sources:

Collateral source, Daubert standard bills voted out of committee
Collateral source, expert witness standard bills heard in special committee

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