How New Tort Reforms May Affect You

Lawmakers in Texas have launched an all-out war against plaintiffs. Texas House Bill 274 (HB274), also dubbed the "loser pays" bill, passed the House despite the fact that it blatantly favored defendants in lawsuits. Luckily, the Senate toned down the bill to reflect the compromise that had been reached between tort reform advocates and trial lawyers.

Governor Rick Perry has made tort reform a priority this legislative session. He even designated the proposed tort reform bills as emergency legislation.

This latest round of tort reform is a continuation of the legislation passed back in 2003 that requires a plaintiff to receive a verdict of at least 80 percent the value of the defendant's settlement offer to avoid paying the defendant's attorney's fees. If a plaintiff wins his case, but he receives less than 80 percent the value of the settlement offer, he is required to pay the legal fees of the defendant, starting from the date he refused the settlement offer. However, any legal fees past the amount of the judgment in the plaintiff's favor are not required to be paid. In other words, the amount of legal fees and costs a plaintiff would have to pay is capped.

The original version of HB274 would have done away with the current legal fee limitation and left defendants free to collect fees from the plaintiff's personal assets. So, under the House version, a plaintiff's bank account, home, or other investments would have been fair game for defendants looking to collect reimbursement for legal fees. The Senate's version of the bill explicitly rejects this provision and leaves the cap on attorney's fees in place.

The two main groups in support for and in opposition of tort reform finally came together after much compromise to pass the Senate's version of the bill. Texans for Lawsuit Reform did not get the limits on lawsuits they had expected, while the Texas Trial Lawyers Association worked hard to ensure plaintiff's rights were not completely destroyed by the latest found of attempted reforms.

The Senate bill also includes a pre-trial provision, which holds that either party will be able to move to dismiss a lawsuit if it thinks the suit is frivolous. The judge has 45 days to rule on the motion. If the judge finds that the suit is frivolous, the loser of the motion will be forced to pay the court costs and the other party's attorney's fees. Along these same lines, the bill directs the Texas Supreme Court to develop rules that allow judges to dismiss cases that are meritless.

Another change the Senate's version adds is an award of fees and costs to be paid by the defendant to the plaintiff if the jury awards the plaintiff more than 120 percent of the settlement offer made by the defendant.

Finally, civil claims of less than $100,000 will be expedited and subjected to limited discovery costs to create a more streamlined process for handling the claims. Family law claims will not be affected by the new tort reform law when it passes, and the government will be exempted under the law.

Proponents of tort reform include large corporations, insurance companies, and doctors who fear medical malpractice suits. They stand to benefit the most from this bill because it will force personal injury plaintiffs and small business owners, among others, to take settlement offers that are not necessarily fair, instead of going through a lawsuit that puts a possible jury award at risk.

Texas Watch, a citizen advocacy group, argues that this bill is unconstitutional because the founders rejected the loser pays framework when drafting the Constitution. Loser pays is traditionally found in the British legal system and has been largely rejected in our legal system because of the unfair way in which it handles lawsuits.

One notable failure of the loser pays system was in Florida. The Florida legislature enacted a loser pays law, but after finding the law was disfavored by its citizens, the Legislature repealed it. Today, only a handful of states have a loser pays law or other similar laws.

Even groups like the Texas Association of Defense Counsel (TADC) have spoken out against this extreme form of tort reform, arguing that at some point the legislature will have swung the pendulum so far in one direction that the legal justice system will no longer be fair. Although defendants stand to benefit from the reform, defense attorneys worry that these continually restrictive reforms will eventually break the civil justice system.

Now that the Senate has revised the bill, it will go back to the House for revisions that reflect a bill both houses will support. The House has promised to keep the currently agreed-upon provisions essentially the same.

Governor Perry is expected to sign the bill into law as soon as the House revisions are made. Despite concessions made by tort reform advocates though, plaintiffs could still stand to lose more than a lawsuit.

Don't hesitate to contact Kay Van Wey at (800)489-5082 for a free, no obligation consultation.

Van Wey Law serves:

The entire state of Texas, including Dallas, Plano, Frisco, McKinney, Fort Worth, Austin, Houston, and San Antonio

The entire state of Oklahoma, including Tulsa and Oklahoma City

Chicago, Illinois and surrounding areas

The entire United States for health care fraud, “pill mill” cases, and dangerous pharmaceutical products