Lawsuit reform is happening this year, and it’s going to be big
Gov. Brian Kemp has apparently run out of patience and is demanding the Legislature pass meaningful tort reform. At a recent press conference, he called on lawmakers to do it this legislation session, and if they don’t, he threatened to call a special session to get it done. This is the equivalent of a teacher telling you to do your coursework, because if you don’t, you’ll land in summer school where an instructor will hover over you until it is done. Nobody wants that.
During the press conference, Kemp laid out an ambitious laundry list of reforms that Sen. John F. Kennedy, R-Macon, formally introduced shortly thereafter, and they look to broadly revise civil law, provide balance between plaintiffs and defendants and protect consumers. By all metrics, it looks like this is the year for substantive lawsuit reform to happen. What ultimately passes is unclear, but something almost certainly will and not a minute too soon.
The American Tort Reform Foundation has regularly ranked Georgia as one of the country’s number one “judicial hellholes,” and it is easy to see why. “Lawsuit abuse and excessive tort costs wipe out billions of dollars of economic activity annually. Georgia residents pay a ‘tort tax’ of $1,213.80 and 123,900 jobs are lost each year,” the tort reform outfit reported. “If Georgia enacted specific reforms targeting lawsuit abuse, the state would increase its gross product by $13.1 billion.”
These aren’t some unsubstantiated data points either. Georgia’s Office of the Commissioner of Insurance and Safety Fire also conducted an in-depth study of lawsuit abuse’s impact in Georgia. The findings were sobering, especially as it pertains to the insurance industry. Claims, claim payouts and legal involvement have been skyrocketing in Georgia. Put simply, as more and more Georgians decide to file various forms of lawsuits—some frivolous and some legitimate—the insurance industry is bearing the financial brunt of the broken legal system. In order to stay afloat, they must pass the costs onto consumers in a phenomenon called “social inflation.”
Kemp and myriad lawmakers understand this, and they hope to address many of the policy levers that have allowed Georgia’s tort system to become the country’s most dysfunctional. The legislative package aims to reform far more than can be included on these pages, but there are several sections within the bills that—if ratified—will serve as a boon to Georgians.
Some of the reforms are unsurprising, and I have been writing about the desperate need to address them for years, including eliminating the seatbelt gag rule, reforming premises liability and eliminating anchoring. Gov. Kemp evidently views these as critically important too.
For those who aren’t familiar, the current seatbelt gag rule prohibits juries from considering whether a plaintiff wore a seatbelt during a car accident when apportioning damages, which is important information for juries to contemplate; our current premises liability framework allows business owners to be held liable for injuries that do not happen on their property; and anchoring permits plaintiff attorneys to plant seeds for inflated verdicts in jurors’ minds—encouraging them to hand down unprecedented verdicts. As it is, Georgia has been home to numerous nuclear verdicts—payouts of over $10 million.
Beyond these endeavors, lawmakers seek to provide greater transparency in the questionable—but legal—system known as third party litigation financing. It allows financiers to invest in lawsuits in exchange for a large cut of the judgement. This promotes lawsuits and drives up costs in the process. However, Kemp is looking to ban foreign adversaries from funding these suits and mandate that third party litigation financiers and their partners be more transparent and publicly disclose their activities.
Two of Kemp’s other efforts seem innocuous, but will certainly generate ample opposition. The tort reform package includes a provision “putting an end to the practice of plaintiffs dismissing a case and [refiling] in or “cherry pick” a more favorable jurisdiction to them after the defense has already racked up the cost of preparing and beginning the trial,” according to the governor’s fact sheet.
The other measure would also require plaintiffs “to only seek damages in the amount actually paid (or will be paid in the future) for a medical bill, rather than the inflated amount that is currently introduced in evidence.” These seem like common sense reforms.
The Legislature seems poised to deliver a major overhaul to the tort system and provide fairness and balance in the process. The result could be a seismic shift in Georgia—limiting frivolous lawsuits, shortening their length, curtailing obscene payouts and reducing the so-called tort tax—and it won’t deprive plaintiffs the justice that they deserve.
Yet, if for some reason lawmakers fail to deliver, expect Kemp to send them to the proverbial summer school and hover over them until they finish the job.