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Changes on Hill bode ill for trial lawyers

Tort laws likely to be overhauled

- The Washington Times - Wednesday, December 15, 2010

The nation's trial lawyer bar, one corner of corporate America firmly in the Democratic Party base, will soon be addressing a far less sympathetic jury on Capitol Hill.

Republicans poised to take control of the U.S. House and state governments across the country next month are sending clear messages that an overhaul of the nation's tort and liability laws is a top priority, forcing trial lawyers to find ways to preserve a legal system that has allowed lucrative liability and class-action lawsuits to flourish.

The American Association for Justice (AAJ), the powerful lobby formerly known as the Association of Trial Lawyers of America, is warning its members of tough times ahead.

"Opponents of the tort system have gained more power in the new Congress," AAJ officials wrote in a recent alert to members. "This new clout means all of our issues will be under attack. Denying rights to the innocent victims of medical negligence is certain to be the first order of business when the 112th Congress convenes."

Corporate lobbies and business interests of all stripes are scrambling to adjust to November's political revolution, which gave the GOP control of the House, an expanded minority in the Senate, and gains in governor's mansions and state legislatures across the country.

A look at corporate giving patterns reveals the extent of the trial lawyers' ties to the Democratic Party.

According to the Center for Responsive Politics, the AAJ was by far the top contributor to political campaigns among legal industry interests in the 2009-10 cycle, with 97 percent of its $2.56 million in campaign cash going to Democrats. The AAJ also spent almost $3 million on lobbying in 2010 - more than three times the amount spent by the next biggest legal interest, the American Bar Association.

One big change for the trial lawyers will be the power shift in Congress. While Democrats retain control of the White House and the Senate, several strong Republican critics of the nation's tort system will be in positions of authority.

Among the new GOP power brokers is Rep. Lamar Smith of Texas, the incoming chairman of the House Judiciary Committee and a strong believer that liability lawsuits are major contributors to escalating health care costs.

Mr. Smith is making tort reform one of his top five priorities, after failing last year to get approval of GOP-backed legislation that supporters say would have saved Americans an estimated $54 billion in medical malpractice lawsuit damages. Republicans pushed to attach tort reform to President Obama's signature health care legislation, only to be repulsed by the Democratic majority.

"I continue to support such reform," said Mr. Smith, who will model his efforts after those in Texas and other states. An overhaul of the nation's tort law system would "help American families struggling with health care costs and protect medical personnel who are overburdened by the high cost of malpractice insurance."

Sen. Charles E. Grassley of Iowa, in line to be the senior Republican on the Senate Judiciary Committee, also is expected to pursue tort reform.

Mr. Grassley, who easily won election to a sixth term in November, has led numerous oversight investigations and helped pass the Class Action Fairness Act of 2005 - a major Bush administration law designed to make it more difficult to bring class-action lawsuits in "plaintiff-friendly" state courts.

In the votes for passage, all but one House Republican supported the measure, while all of the 26 dissenting votes in the Senate were cast by Democrats.

A Grassley staffer said the senator is focused on tax issues in the lame-duck session of Congress and has yet to lay out an agenda for the coming year, but tort reform "obviously has been an interest of his."

Tiger Joyce, president of the Washington-based American Tort Reform Association, said the trial lawyers group still has support from congressional Democrats who survived the midterm elections, but he thinks industry lobbyists will shift their "liability expansion" efforts toward "friends throughout the executive branch."

Mr. Joyce noted that the group has started a campaign through the Treasury Department to get a tax break that will allow trial lawyers to deduct costs advanced to clients immediately. Repeated attempts to persuade Congress to enact the tax break, valued at an estimated $1.6 billion over 10 years, have failed.

Mr. Joyce said the Obama administration has given a sympathetic ear to trial lawyer concerns about "pre-emption" - by which federal law, considered less friendly to plaintiff interests, supersedes state law. The White House in 2009 issued an executive memorandum instructing federal agencies to avoid the practice and to review cases over the past decade in which their position has supported pre-emption.

Leading business groups attacked the memorandum, while the AAJ immediately praised it.

The memo "overturned actions by Bush administration bureaucrats who were influenced by powerful, well-connected corporations who wanted to re-write and re-interpret congressional legislation, undermine the constitutional system of checks and balances ... and compromise laws designed to give Americans basic rights to hold wrongdoers accountable," the AAJ said in a statement at the time.

The Supreme Court is scheduled this session to hear at least three cases related to pre-emption. "This is a very big issue," Mr. Joyce told The Washington Times.

With power still divided on Capitol Hill, the trial lawyer bar may have more worries in the states, where Republicans won a slew of governorships and took over control of about 55 state legislative bodies.

Among some pitched legal battles in the coming months will be a case in Texas, where more than 14,000 doctors opened practices after the state enacted tort reform to limit the amount of damages that could be awarded for pain and suffering, Mr. Smith said.

In Florida, Republicans already control the state House and next month will have the Senate majority. Republican Rick Scott, who will be sworn in as governor, is a strong supporter of tort reform who campaigned on overhauling the state's legal system.

A high-ranking state Republican said Mr. Scott has given state GOP legislators full support to pursue such reform. "Tort reform is a state game," he added.

Trial lawyer groups say they are ready for the challenge.

"We've been here before, with Republicans controlling the legislature and the governor's office," said Debra Henley, executive director of the Florida Justice Association. "Industry and big business have always wanted to further restrict the rights of consumers. Now, at a period of record profits, they want to shift the costs of their wrongdoings ... and they see this as the right time."

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