WASHINGTON, July 13 (UPI) -- Lawsuit abuse is a serious problem in this country. It denies access to medicine. It discourages doctors from continuing in their profession. It causes good products to be removed from the market. It unreasonably drives up costs of other products. Lawsuit abuse can be a major problem for large businesses; it can be devastating for small businesses.
There are two principal causes of lawsuit abuse. Both are addressed in important new legislation recently introduced by Rep. Lamar Smith, R-Texas, the Lawsuit Abuse Reduction Act of 2004.
The first major cause of lawsuit abuse that is especially troublesome for small business is frivolous claims. Frivolous claims have no basis in either fact or law. But they are costly. A recent survey by the nation's largest small business group, the National Federation of Independent Business, indicates that liability costs rank second only to health insurance.
One could imagine that those who bring frivolous claims would suffer some adverse consequences, but they do not. A lawyer can file a claim against a restaurant, even though his client never dined there. A lawyer can file a claim against a school where his "client" was not really a victim, but actually caused chaos that led to his injury. A lawyer can file a claim under absurd theories, such as a claim against a theatre for "emotional harm" because the management ran out of tickets. Lawyers who do this know that there will be no penalty, and there may be an award of damages, of which they will get one-third.
Why would anyone pay off a frivolous claim? Because -- and personal injury lawyers who abuse the system know this -- the cost of defending claims might be greater than paying the settlement. Frivolous claims would not be settled if lawyers who brought them would have to pay the legal costs of the defendant.
At one point, that was the law in the United States, but in 1993, a committee of judges weakened the frivolous claim rule, and gave judges broad discretion about whether to penalize an individual who brought a frivolous claim. Another modification of the rule also allowed personal injury lawyers to play, "heads I win, tails you lose" -- they had three weeks to withdraw a frivolous claim, and they would pay no penalty.
Tough laws against frivolous claims were modified because some believed that they discouraged legitimate claims. Nevertheless, 80 percent of the judges who enforced the rule thought that was not the case. It has now been more than a decade since the frivolous claim rule was weakened. That decade has clearly shown the adverse consequences of "no pain, all gain," weak frivolous claim rules.
The Lawsuit Abuse Reduction Act would restore strict sanctions against lawyers who brought frivolous claims: it would stop "legal extortion." Since many state procedure rules follow changes in federal law, similar protections for state cases would follow.
The Lawsuit Abuse Reduction Act also addresses the second major cause of lawsuit abuse: nationwide forum shopping to places referred to as "Judicial Hellholes" by the American Tort Reform Association. Unusually candid personal injury lawyers call judicial hellholes "magic jurisdictions," where the scales of justice tilt against defendants. Judicial hellholes act as magnets for frivolous claims. More cases are filed in one Mississippi town than its entire population; there are more asbestos claims filed in the rural community of Madison County, Ill., than in large cities such as New York.
Some judges will even allow a lawsuit against any company, as long as it does "some" business in the state, creating the draw for "litigation tourists," who never lived or worked in the jurisdiction, and have nothing to do with the place other than to sue there.
"Litigation tourists" provide no benefit when they visit. They pay no taxes, and only clog a local community's courts. The Lawsuit Abuse Reduction Act would put an end to this rampant forum shopping. It focuses on a vital need for interstate commerce. It makes clear that people can bring lawsuits where appropriate, namely, where they live, where they were hurt or exposed to a product, or where the defendant has its principal place of business and no other place.
--
(Victor E. Schwartz is general counsel and Cary Silverman is co-counsel to the American Tort Reform Association, an organization dedicated to tort and liability reform through public education and the enactment of legislation.)
--
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
