, , , , , ,

What is this “tort” thing? Why does it need reforming? And why in Oklahoma do we keep seeing this issue every few years – didn’t this get taken care of already?  And why should you care?

Last answer first.  Everyone will be affected by this year’s tort reform, no matter where they are on the economic scale.  If you are a doctor, a hospital, an insurance company or a manufacturer, you will care a lot more, because you will be more directly affected.  But let’s get into why you will care.  What does it do?

“IT”  is actually “they” – there were three different and fairly major bills that were passed and will take effect November 1. The biggest is House Bill 2128, which does most of the headline-grabbing, because it features a $350,000 “cap” on what we layers call “non-economic damages”, and what most of the rest of the country calls “pain and suffering”.  Where did this cap figure come from, you ask?  Basically thin air – the legislators  just thought it sounded good.  There is also a mechanism for lifting the cap for claims based “on negligence” where both the Judge AND the jury find clear and convincing evidence that a Defendant’s acts were:

i.  In reckless disregard of rights of others

ii. grossly negligent

iii. fraudulent

iv. intentional or with malice

“That seems pretty fair to me”, you might say. “What’s the problem?”.  And, as with all legislation, there are indeed some problems – and some very serious ones at that.  First, none of the types of actions that would allow the cap to be lifted are generally insurable, so if and when a  cap is lifted, the insurance company that is providing coverage for a given liability would then be off the hook (or certainly have an argument that it should be), and any business or individual will have to pay these amounts themselves.  Note that this would apply not just to the part of the award above the cap, but to the entire award.  So a business could be left to hang, exposed to a large judgment without the benefit of insurance protection.

Problem number 2: this does not allow for the lifting of the cap on claims based on any theory other than negligence.  This includes, for example, claims based on a product liability theory which are not based on negligence.  So, there will be a cap on non-economic damages incurred in a product liability claim, but there will be no way to lift that cap.

Problem number 3:  The bill provides that the Judge AND Jury BOTH have to make findings of one of those categories.  What if the judge finds one category, and the jury finds another? Or what if a judge finds one category and the jury doesn’t?  A quandary indeed.

Problem number 4:  Subsection B (which houses the cap-lifting requirements) “shall be applied in a jury trial only after the trier of fact has made its factual findings and determinations as to the amount of the plaintiff’s damages”.  That’s all well and good, but how will this work with claims of punitive damages (the wordings for which are somewhat similar to wording of the standards noted above, but are not the same)?  A jury won’t be able to determine the amounts of actual damages until it has been sent out and has decided the above questions.  Then, if it does find one of the categories, it then has to decide the amount of actual damages to award.  But the fun does not stop there – after it makes one of the findings above, the jury has to be sent back out to decide whether or not to award punitive damages, under seemingly similar (but technically different)  set of criteria, setting the stage for nearly-unavoidable jury confusion.

And as if those problems were not enough, the bill also says the jury will answer “special interrogatories” (the form and wording for which was of course not supplied).  There go years of appeals on that question alone. And lastly, these restrictions do not apply to wrongful death actions (which are governed by 12 O.S. 1053).  So if you’re going to be negligent, apparently you’re economically better off not killing somebody in the process.

The next bit of reform is found in Senate Bill 862.   This bill eliminates the doctrine of joint and several liability, which (in some form) had basically provided that if you were hurt and it was the fault of more than one person or entity, you could collect everything from either of them, regardless of which was most at fault.  However under this new bill, you only pay for your own share of the damages.  This has its own interesting ramifications — it provides that in a claim based on fault, you are responsible for only your percentage of fault.  But again – this applies ONLY to actions based on fault.  Note that product liability claims are not based on fault.  Therefore the law will continue to be that even a product is found to be only if 1% responsible for an injury, the manufacturer will pay 100% of the damages. Not exactly music to the ears of a manufacturer.

Last, and perhaps most confusingly, Senate Bill 865 provides that the jury shall be instructed that awards are not taxable. This was designed to prevent a jury from awarding more in damages to cover what they thought would be taxes.  One big problem is that the IRS has already decided that punitive damage awards ARE taxable.  Thus judges are in the unenviable position of being ordered by law to instruct that damage awards are not taxable, when in fact part of such an award may be.  (Appellate lawyers, start your engines.)   Frankly I’m not sure how much of a problem this was, but it sure is one now.

The Bottom Line?

First, the apparent winners here appear to be insurance companies, doctors, hospitals and larger business that are typically involved in larger-damage and injury cases.  Manufacturers seem to have lost big (being shut out of the application of the new “joint and several liability” bill), but also have won something, as there will be a hard cap on non-economic damages they can look forward to.

Second, these bills will have no effect on “nuisance” or “frivolous” lawsuits, which are almost always relatively small and thus will not approach the cap limitations.

Third, those who have little economic damage but serious pain and suffering will be undercompensated (for example: anyone with little or no income and a brain injury/paralysis – housewife or senior citizen).

Note that these bills will be attacked in the courts on several fronts, including constitutionality (likely on separation of powers, don’t equally apply to all types of cases, etc.).  The failure to account for product liability claims in the severability of responsibility will be a problem as well, as will be the procedure for lifting the cap as it meshes with the punitive damages statute.  The latter will befuddle judges statewide, and it will be interesting to see how such a procedure develops as well as how it is handled by the appellate courts.

One thing we can all look forward with certainty is years of appeals on several issues, as noted above.  And of course to a truckload of personal injury cases being filed on or before October 31.