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Proposed Tort Reform Package Debated In House Subcommittee

A comprehensive tort reform bill that would impose caps on personal injury awards and punitive damages has drawn praise from proponents who say it’s needed to stop spiraling insurance rates — and criticism from a plaintiffs’ group that argues many of the bill’s measures are unfair and unworkable.

At issue is House Bill 3744, which came up for a public hearing last week before a House Judiciary subcommittee. In addition to a cap on noneconomic damages in civil actions, the bill would end joint liability in most cases and abolish the collateral source rule. Other measures would relax evidentiary rules on seatbelt nonuse and shorten the statute of repose for product defects.

According to its backers, the bill is needed because small businesses are feeling the pinch of increasing insurance premiums. Several measures would rewrite statutes or legislatively overrule judicial decisions that have hurt economic growth in South Carolina, they say.

“We want South Carolina’s laws to be fair to all of our citizens, and not be a hindrance to new companies looking to open business in the state,” said Assistant Majority Leader Bill Sandifer, R-Pickens-Oconee, at a press conference in March.

Senate Finance Chairman Hugh Leatherman, R-Florence, said inequities in the state’s liability laws were hindering medical professionals and businesses.

“Because companies and business professionals must pay higher liability insurance premiums and be overly cautious with their products and services, the cost of almost everything our citizens buy has risen,” Leatherman said. “Many physicians are leaving practice in South Carolina, limiting procedures and access to medical care.”

Columbia attorney Elbert S. Dorn, the chair of the Legislative Committee for the South Carolina Defense Trial Attorneys Association, said the tort reform initiative enjoyed broad public support.

“This is not being driven by insurance companies,” Dorn told Lawyers Weekly. “This has support from professionals, small businesses and companies that employ thousands of people in this state. My take on it is that the bill deals with measures that are more directed at fundamental fairness in the courtroom.

“We’re trying to shed some light, and give juries more information than what they have right now,” Dorn said. “Juries are deciding cases without knowing whether a plaintiff has already received workers’ compensation benefits. They don’t know whether people are wearing seatbelts when they’re in accidents. This bill would correct that. The jury should be able to hear all that kind of evidence and make a rational decision based on it.”

The bill has drawn opposition from the South Carolina Trial Lawyers Association. At the House subcommittee hearing, SCTLA president William H. Nicholson III called the bill “an unnecessary assault on the constitutional rights of South Carolinians.”

“Proponents of this bill have slapped together dozens of distinct legal issues to try to gain the support of a coalition,” Nicholson said. “Each of the 20 or more separate issues is an extreme change for South Carolina and demands scrutiny. To think this legislature would have to vote yes or no on so many distinct issues together, when each is independently important to the state, is ludicrous.”

Among the provisions in House Bill 3744:

  • Cap on non-economic damages. Under an amendment to S.C. Code Ann. Sect. 15-32-30, prevailing plaintiffs in all personal injury actions would face a cap of $250,000 on noneconomic damages.

    Noneconomic damages would be defined as “subjective, nonpecuniary damages arising from pain, suffering, inconvenience, physical impairment, disfigurement, mental anguish, emotional distress, loss of society and companionship, loss of consortium, injury to reputation, humiliation, other nonpecuniary damages, and any other theory of damages including, but not limited to, fear of loss, illness, or injury.”

  • Punitive damages cap. A cap would also be placed on punitive damages of three times the amount of compensatory damages or $250,000, “whichever is less.” That would mean punitives would always be capped at $250,000.

    Under Sect. 15-32-310, plaintiffs seeking punitive damages would have to show the presence of an aggravating factor such as fraud, malice or wilful conduct. Punitives could not be awarded based solely on vicarious liability.

    In suits against corporations, punitives could only be recovered “if the officers, directors, or managers of the corporation participated in or directed the conduct constituting the aggravating factor giving rise to the recovery of punitive damages with the specific intent to harm the claimant.”

    Nicholson told the subcommittee punitives could only be imposed when the defendant actually intended to harm the person seeking those damages,

    “In other words, in cases involving personal injury, only those guilty of criminal assault and battery could be liable for punitive damages, and no liability insurance policy would cover such damages,” he said.

    Dorn said limits on punitives were needed.

    “This is something that is necessitated by punitive damages awards that have gotten out of control, with no relation to the underlying conduct,” he said. “This bill still allows a jury or fact finder a lot of discretion in awarding actual damages. Punitive damages were never intended to reward a victim. They were merely a means of punishing a defendant for particular conduct. But unfortunately, they’ve been viewed as a way of awarding plaintiffs and their attorneys something on top of the actual damages. So this measure puts punitives back in perspective.”

  • Collateral source rule eliminated. Under the “Elimination of Double Recoveries Act,” the collateral source rule would effectively be abolished. The trial court would have to consider evidence of collateral source payments “which have already been made or which are substantially certain to be made to the claimant as compensation for the same damages sought in the suit.”

    The bill would also cut the interest rate on outstanding judgments from 12 percent to 6 percent a year.

    Said Nicholson, “That would mean that after a legitimate judgment, a defendant could appeal a case unnecessarily or simply delay payment on the judgment and only be subject to a 6 percent interest penalty. All debtors would be less motivated to pay their creditors.”

  • “Good Samaritan” act extended to some healthcare providers. Under an amendment to Sect. 15-1-310, a licensed health care provider who in good faith rendered free medical care to a person would not be liable for civil damages for personal injury resulting from any act or omission. An exception would exist for gross negligence and wilful or wanton misconduct, the bill states.
  • No liability for prescription drug used in accordance with FDA rules. Under an amendment to Sect. 15-1-315, a healthcare provider would not be liable to a patient or third party “for injuries sustained as a result of the ingestion of a prescription drug or use of a medical device that was prescribed by the healthcare provider in accordance with instructions approved by the United States Food and Drug Administration.…”
  • Nonuse of seatbelts admissible. An amendment to Sect. 56-5-6540(E), would make the nonuse of car safety belts and restraints “admissible as evidence in any civil action to prove contributory or comparative negligence, negligence per se, assumption of the risk, product misuse, damages, or any other matter considered relevant and admissible under the governing rules of evidence.”
  • Curing construction defects. Another section would establish procedures that would have to be followed before a homeowner could sue a contractor, subcontractor, supplier or designer for a home construction defect. Under a new Chapter 47 in Title 15, a claimant would have to serve written notice on the contractor of construction defects. The contractor would notify subs and suppliers, and they would get a chance to settle the claim, inspect the home or dispute the claim. Various steps and procedures would flow from those options.

    A related provision, Sect. 15-47-90(A), would ban someone from providing “anything of monetary value to a property manager of an association or to a member or officer of an executive board to induce the property manager, member, or officer to encourage or discourage the association to file a claim for damages arising from a construction defect.”

  • Statute of repose shortened for real property improvements, product defects. Under an amendment to Sect. 15-3-640, the statute of limitations would be shortened — from 13 years to six — on lawsuits to recover for defective improvements to real property.

    An amendment to Sect. 15-3-645 would also set a six-year statute of limitations for injuries arising from defective products. That limitations period would begin to run from the initial sale of the product.

    Said Nicholson, “The problem here is there are some construction defects that would not come up in the six-year period. We think 13 years is an appropriate time limit. For example, the crosswalk at Lowe’s Motor Speedway in Charlotte had been there for about five years. It was just because a certain number of people got on the crosswalk that it came down. It could have very easily come down at seven years or eight years.”

    Dorn said a clear repose period was needed in products liability cases.

    “I just defended a case where the product was sold in 1966,” he said. “The company I defended had not seen the product — they had sold the plant — and had not had any contact with the product for more than 15 years before an accident where a lady using the machine was hurt. There’s no limit under the current law, and there needs to be.”

  • New rules on several liability. A new Chapter 41 would eliminate joint liability among defendants in most instances by specifying that “in an action for personal injury, property damage, or wrongful death, the liability of each defendant for damages is several only and must not be joint.”

    Each defendant would be liable only for the amount of damages allocated to that defendant “in direct proportion to that defendant’s percentage of fault,” the bill states. A separate judgment would be rendered against the defendant for that amount.

    Also in assessing percentages of fault, “the trier of fact shall consider the fault of all persons who contributed to the alleged injury or death or damage to property, tangible or intangible, regardless of whether the person was, or could have been, named as a party to the suit,” the bill states.

    Joint liability could still be imposed “on all who consciously and deliberately pursue a common plan or design to commit a tortious act, or actively take part in it.”

  • Frivolous Civil Proceedings Sanctions Act. A rewrite of Sect. 15-36-10 would replace the current provisions with a law that would require attorneys to sign documents in civil actions, and to certify the filing was not frivolous or interposed for delay.

    Under the revisions, sanctions could be imposed “for filing a frivolous pleading, motion, or document and for making frivolous arguments,” or for filing a document in bad faith “whether or not there is good ground to support it.” Sanctions would include attorney’s fees, fines and “a directive of a nonmonetary nature designed to deter the person from bringing a future frivolous action or an action in bad faith.”

    Nicholson said the changes to Sect. 15-36-10 did not “add any remedy or sanction that is not already existing in our law.”

    “The proposal before you may make some people feel better because it includes the word ‘frivolous’ numerous times, but the new language does not allow the court to do any more than it can already do,” he said.

  • Venue changes. Amendments to Sect. 15-7-30 would change some venue rules. Under one proposal, civil actions against a resident individual defendant would have to be tried where the defendant resided or was domiciled. Actions against nonresident individuals would have to be tried where the cause of action arose or where the plaintiff resided, if the cause of action did not arise in South Carolina.

    Actions against domestic corporations would have to be tried where the company had its principal place of business or where the cause of action arose. Suits against foreign corporations or business entities would have to be tried either where that business had its principle place of business or where the cause of action arose. If neither of those rules applied, suit would be filed where the plaintiff resided.

    Said Dorn, “This about trying cases where they ought to be tried, not where a particular plaintiff’s lawyer resides. You have manufacturing facilities here in South Carolina that get sued in faraway counties that have no connection with an accident. That’s just not fair. They should face trial in a venue where the business is located or where the cause of action arose. This is a neutral measure that creates a rational basis between venue and the underlying claim.”

    Questions or comments may be directed to the writer at [email protected]

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