Tort reform advocacy group details economic impact

by Lynne W. Jeter

Published: June 14,2004

When the Mississippi Board of Bar Admissions released a report showing that more than half the applicants who took the Mississippi Bar Examination in February were already licensed to practice law in other states, the data suggested to many that the Magnolia State remains a good place to file lawsuits.

Last month, Mississippians for Economic Progress (MFEP) released an impact study of lawsuit abuse in Mississippi, asserting a need for change in the state’s legal climate and a public opinion survey released May 24 pointed to Mississippi voters’ desire for state lawmakers to pass comprehensive tort reform.

When House Bill 13, already adopted by the Senate, passed the House 75-39 on June 3, it was heralded as a long-awaited compromise bill on tort reform. The bill, which would take effect Sept. 1, retains a $500,000 cap on pain-and-suffering damages in medical malpractice cases and places a $1 million cap in all other cases. The bill did not include exceptions the House wanted for cases involving third-degree burns, blindness or loss of reproductive capabilities.

“The Perryman Report clearly showed legislators that losses would continue to grow if the climate did not change,” said MFEP director Steve Browning.

Lance Stevens, past president of the Mississippi Trial Lawyers Association, called the report “a biased, non-scientific study, which advocates the closing of every courthouse door.”

A few findings

Key findings of “The Potential Impact of Proposed Judicial Reforms on Economic Activity in Mississippi,” prepared for MFEP by The Perryman Group of Waco, Texas:

• Mississippi has a judicial system that is widely believed to be imbalanced and, in fact, is considered one of the worst in the nation.

• The result of the existing legal framework is an inefficient and ineffective use of the state’s scarce economic resources. The costs of the good and services purchased by consumers are increasing while productivity is reduced. Challenges persist in providing adequate and affordable healthcare, and the legal climate is a deterrent to economic development. Losses are increasing over time, as Mississippi’s relative competitive disadvantage is magnified.

• Assuming that no significant reforms occur through 2009…it is estimated that Mississippi will lose $1.09 billion in annual total expenditures; $562 million in annual gross state product; $326.4 million in annual personal income; $141.7 million in annual retail sales; and 10,707 permanent jobs.

• Again assuming that no significant reforms occur through 2009, consumer losses are estimated at $419.9 million in annual cost increases from higher inflation ($381 per household), $709.9 million in reduced annual personal income ($644 per household), and $426 million in decreased consumer spending per year ($386 per household). The study also said to expect substantially diminished job prospects, notable changes in healthcare access and costs and a less efficient judicial system to compensate for legitimate losses.

• These losses will become even more pronounced in the future. In 2003 dollars, the cost to the typical Mississippi household, in terms of higher prices and lower personal income, may be viewed as equivalent to a $1,025 “tort tax” by 2009. The “tax” compared with Alabama totals $1,988 per household.

“The Perryman Report was a follow-up to one done in 2002, and we wanted an update — or for them to confirm — that our state’s legal system is draining money from everyday Mississippians,” said Browning. “The ‘tort tax,’ for example, shows what each Mississippi household will pay as a result of the cumulative impacts of lawsuit abuse, from the moment an idea is first conceived and manufactured until the consumer pays the retail price.”

The report also noted that the current tort system would result in reduced innovation.

“Bringing good paying, high-tech jobs starts with healthy communities,” said Browning. “If our state’s legal system unfairly treats job creators in the healthcare industry, for example, then ultimately our communities are in jeopardy. If OB-GYN specialists, for example, are too afraid of lawsuit abuse and high medical malpractice insurance rates as a result of lawsuit abuse, the climate erodes the bloodline for new and better jobs, including high tech. College graduates and innovators of high technology will not be encouraged to locate in Mississippi.”

Because state lawmakers in Alabama recently enacted a comprehensive tort reform package, the costs to Mississippi will continue to rise, placing the state at a disadvantage when recruiting industry.

“Personal injury law firms in Alabama are requiring their new hires straight out of law school to first sit for the Mississippi Bar exam before they can become full-time attorneys,” said Browning. “That’s because lawsuit abuse is no longer as profitable in Alabama as it once was, while it remains profitable in Mississippi.”

“Any strategy that doesn’t incorporate both the state Supreme Court and the Legislature is hollow,” said Browning. “You have to attack lawsuit abuse from both angles.”

On May 24, Gov. Haley Barbour pledged his support of the Public Opinion Survey, conducted by Alexandria, Va.-based Public Opinion Strategies. The consulting firm interviewed more than 500 Mississippi voters May 18-20, indicated strong support for more comprehensive tort reform. Key findings included:

• A majority of every region, race and political affiliation in Mississippi stated that lawmakers should take action now to end lawsuit abuse.

• 85% of all Mississippians believe the number of lawsuits in Mississippi’s courts is a serious problem.

• 70% recognize that the state’s lawsuit system is among the worst in the nation.

• 83% believe that small corporations, not only large corporations, pay the price for excessive lawsuits.

• 78% say that personal injury attorneys benefit most from the current legal climate in Mississippi.

Contact MBJ contributing writer Lynne W. Jeter at mbj@thewritingdesk.com.

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