Bryant supports Texas’ ‘loser pays’ rule
Published: December 6,2011
JACKSON — On the campaign trail for president, Texas Gov. Rick Perry has bragged his state’s new “loser pays” law goes a long way to telling “trial lawyers to get out of your state.”
Gov.-elect Phil Bryant has already expressed support for “loser pays.”
Bryant continues to monitor the effect of that change in Texas, said spokesman Mick Bullock.
“In a recent visit to the Texas Medical Center, the governor-elect heard about how this legislation has benefited health care professionals in that state,” Bullock said.
The insurer that provides malpractice coverage to almost half of Mississippi’s physicians doesn’t see any need for more tort reform, with lawsuits falling 73 percent in the last eight years.
“Loser pays” has been discussed in the past by lawmakers, and “it continues to be discussed,” said state Sen. Terry Burton, R-Newton.
With Republicans now in control of the House, Burton expects the appointment of a Judiciary Committee chairman who would be more open-minded with regard to changes in the tort law.
“There is the possibility something like that would pass, and certainly I think it would pass,” he said.
In Britain, Canada, Australia and other countries, the loser of a lawsuit pays the legal costs of the winner.
In the U.S., each party bears its own litigation costs in federal court and virtually all state courts.
Because large companies are involved typically in more than 100 lawsuits, “they can spread their risk of losing,” said Jeffrey Jackson, professor at Mississippi College School of Law. “If they have to pay in one case, there are a lot of other cases to make it up.”
The situation, however, is much different for individuals, he said.
“If you lose your right arm, you can only lose it once,” he said.
With “loser pays,” the injured party would be willing to settle for much less, he said.
“It puts much more risk on the individual,” Jackson
Mississippi lawmakers passed tort reform legislation in 2002 and again in 2004.
That same year, the Mississippi Supreme Court ruled in favor of Janssen Pharmaceutica, the maker of Propulsid, concluding the trial judge could not “join” cases from other jurisdictions to try the 56 cases at once.
Medical Assurance Company of Mississippi now insures 2,786 physicians. There are about 5,700 doctors licensed in Mississippi, with another 3,400 from out of state licensed to practice.
Litigation against MACM rose from 257 lawsuits in 2000 to 355 lawsuits the next year to nearly double that, 630, in 2002.
By 2005, that number had fallen to 159. The numbers declined to 109 in 2007 and has since risen slightly each year. In 2010, there were 173 lawsuits.
Obstetricians and gynecologists insured by MACM saw lawsuits spike at 95 in 2002. In 2010, they fell to 10, one of the lowest ever.
Not surprisingly, MACM President and CEO Mike Houpt said, “Our rates have gone down dramatically.”
The company’s medical malpractice premiums today are about half of what they were in 2005.
A doctor who would have paid $10,000 for a medical malpractice insurance premium in 2005 would now pay $5,201.
In addition to rate decreases, MACM has given doctors end-of-the-year refunds of between 15 percent and 25 percent six times since 2005.
“It would be hard for me to argue more tort reform is needed,” Houpt said. “We’re content with what we have.”
In 2009, MACM earned about $25 million in premiums, offset by about $15 million in losses, defense costs and expenses.
That gave MACM a $10 million profit, not including investment earnings or capital gains earned on premiums.
“In other words, for every dollar it took in premiums, it netted 40 cents,” said E. Farish Percy, professor for the University of Mississippi School of Law.
In 2009, all medical malpractice insurers took in about $85 million in premiums, offset by $31 million in losses, defense costs and expenses.
In 2010, those insurers took in about $81 million in premiums, offset by $48 million in losses, defense costs and expenses.
That means the industry as a whole is going to pay out 60 cents on every $1 earned in premiums, she said.
“I believe that the substantial underwriting gains indicated by these reports indicate that additional tort reform is not necessary given that insurers have recently earned a tremendous profit in Mississippi.”
A decade ago, the American Tort Reform Association called Mississippi a “poster child for lawsuit abuse.” Today no town from Mississippi is on the list of “judicial hellholes.”
Jackson said reducing the risks for companies means increasing the risks for those hurt.
Currently, verdicts are capped at $500,000 for noneconomic damages in medical malpractice lawsuits and $1 million for noneconomic damages in other litigation.
State Sen. Joey Fillingane, R-Sumrall, said those caps were a compromise at the time. With Republicans now in charge at the Legislature and in the governor’s office, he expects those caps to be on the table when lawmakers discuss tort reform.
While frivolous lawsuits do need to be curbed, he said, Republicans must also make sure the courthouse door remains open for everyone.
Jackson said if those caps are reduced, it would increase the risk for individuals — and could hurt lawyers seeking to represent them.
Already companies being sued have no incentives for settling for anything more than the cap amounts, he said.
The idea of each person getting his or her day in civil court is disappearing, he said.
“Now it’s like, ‘Tell me what you’ll give me, and I’ll go away.’”
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