Lawsuit Limits Could Squelch Valid Claims Consumer Groups Say Big Corporations Would Benefit Most

If the House of Representatives has its way, people like the Florida man whose doctor mistakenly amputated the wrong foot would get no more than $250,000 for their pain and suffering.

And if House-passed legislation had been in effect in 1989, Exxon would have faced $861 million in punitive damages instead of the $5 billion it was ordered to pay for fouling Alaska’s southern coast.

Three bills approved by the House last week would overhaul the civil justice system and curb what corporate lobbyists contend are frivolous lawsuits that hobble American business.

But trial lawyers and consumer groups say the measures would squelch valid lawsuits and leave many Americans without compensation for their injuries.

A major fight looms in the Senate.

Most awards for punitive damages and medical malpractice pain and suffering are for less than $250,000. Thus, legal experts say the limits in the House bills would affect a relatively small number of cases involving serious harm.

But the House proposals would make the legal system more predictable by reining in the “occasional runaway verdict,” says University of Virginia law professor Kenneth Abraham.

The major provisions would:

Pre-empt state laws by limiting punitive damages in virtually all state and federal lawsuits to $250,000 or three times the victim’s economic damage, whichever is greater. Punitive damages aim to punish and deter harmful conduct.

Limit awards for non-economic damage, such as pain and suffering, caused by medical malpractice to $250,000 nationwide. There still would be no limit on economic damages, such as medical bills and lost wages.

Make it harder for consumers to win product liability lawsuits in state and federal courts by giving businesses several new defenses.

Encourage out-of-court settlements in many federal lawsuits by requiring parties to pay at least part of the other side’s legal fees if they refuse a settlement and get less through a trial.

Make it harder for people to win securities fraud lawsuits and require losing parties who filed frivolous claims to pay the winner’s legal fees. If the House bills were law now, there would be a $250,000 cap on any payment for Willie King’s pain and suffering. Doctors amputated his left foot last month in Tampa, Fla., instead of his right foot that had gangrene caused by diabetes.

Exxon could be ordered to pay no more than $861 million in punitive damages, or three times the $287 million in compensatory damages it was ordered to pay to Alaska commercial fishermen last year.

A limit on punitive damages would have its greatest effect on cases where the defendant is a large corporation, said Stephen Daniels, a researcher for the American Bar Foundation.

“You have to be able to give an award that they’ll pay attention to,” he said. “Otherwise, it’s just the cost of doing business.”

Daniels added that a $250,000 limit on punitive damages “may have the unintended consequence of pulling more modest punitive damage awards up” because it could become a target for plaintiffs’ lawyers.

Brian Ostrom, a researcher for the National Center for State Courts, said the median award for medical malpractice after a jury trial is about $200,000, including all types of damages.

The provision aimed at encouraging settlements also would not affect a large number of cases, Ostrom said. Only about 2 percent of lawsuits alleging injury come to trial; most are dropped or settled out of court.

Chief justices of state Supreme courts object to the whole idea of imposing federal standards for civil lawsuits which until now have been controlled by state laws.

“These are matters that ought to be left to the states to determine,” said Stanley Feldman, chief justice of the Arizona Supreme Court. The House plan “imposes a uniform standard on all states regardless of whether people in that state agree or don’t agree.”

Connecticut Supreme Court Chief Justice Ellen Ash Peters said federal standards would make state lawsuits more complicated to decide because state courts would be asked to interpret what Congress meant.