NJ Business Matters: The Blog of the CIANJ

Bad Science, Anti-Business Courts and Falling Competitiveness

The US Chamber of Commerce has released their annual rundown of the lawsuit climate throughout the states. New Jersey came in at number 35, a drop of nine spots from last year and this is the first time the Garden State has found itself outside the top 30.

A primary reason is the entrance of...how can we be polite?...junk science into the courtroom. As you might imagine, that junk science is used to justify lawsuit awards, often times against pharmaceutical companies. As our astute blog readers have already gathered, this has an impact on New Jersey's ability to compete and create jobs.

Chamber CEO Tom Donohue said at a morning press conference that lawyers offer a key perspective on the question of how much protection companies can expect to get from a fair and just court system.

"All the people we are asking are the people that represent people that spend a lot of money investing in states, creating jobs, moving companies," he said. "Risk consideration is becoming more and more significant in where money is put."

Sixty-three percent of respondents said a state's litigation environment is likely to affect important business decisions at their company, such as where to locate or do business.

Ever timely, we'll take this opportunity to promote our very first "Guest Blogger" here at NJ Business Matters. Marcus Rayner, Executive Director of the NJ Lawsuit Reform Alliance, will be joining us in a few weeks to blog about all-things tort reform.

Below is a one-minute interview with US Chamber CEO Tom Donohue on the nation's lawsuit climate.

The WaPo is Kinda, Sorta In Favor of Tort Reform

The Washington Post appears to be ever-so-slowly moving toward being ok with some measure of tort reform, and it only took a few criminal convictions of plaintiff attorneys.

Sure, they do a balancing act in the process, but the conclusion demonstrates the need to shine a light on the plaintiff bar's practices and to bring more balance to our system.

The truth is that there have always been and will always be voracious and ethically challenged lawyers, just as there have always been and will always be voracious and ethically challenged people in business. Both sets of scoundrels deserve to be punished. What is needed now is a sober discussion about how best to achieve a fairer, more balanced legal system through comprehensive tort reform. Such a system would not be lopsided but would shield businesses from legal blackmail, just as it would protect the rights of legitimate plaintiffs to win just compensation from negligent businesses that caused them real harm. Smart and ethical businesspeople and lawyers -- and, yes, there are many who fit the bill -- would be wise to start working together to craft such a fix.

Agreed, and that goes for New Jersey's tort system as well - ranked as the second most hostile to business by the Pacific Research Institute.

Trial Lawyers Try Again for Unlimited Damages

During the flurry of activity in the final days of the 212th legislature, both houses passed the trial-lawyer supported expansion of New Jersey's Wrongful Death Act. The bill would have made New Jersey one of only a few states to allow for unlimited damages for emotional grief, in addition to New Jersey's already expansive definition of economic loss.

CIANJ opposed the measure based largely on its impact on insurance premiums. Removing predictability from lawsuit awards makes it difficult to set premiums, and that could easily translate into higher costs for the state's businesses and governments.

Governor Corzine agreed and pocket-vetoed the measure, but as yesterday's New Jersey Law Journal (subscription required) notes, the trial-lawyers have worked to have the bill re-introduced. Oh by the way, they are still opposed to setting monetary caps, such as $250,000 for emotional grief.

The bill would amend the Wrongful Death Act to allow recovery for mental anguish, emotional pain and suffering, loss of society and loss of companionship. Those damages would be available to those entitled to intestate succession of the decedent's personal property, namely spouses, children and parents....

(Amos) Gern, of Roseland’s Starr Gern Davison & Rubin, says supporters of the bill will likely be amenable to language allowing judges to “review any verdicts rendered good or bad, high or low.”

But efforts to set caps, like the $250,000 ceiling proposed last year, will likely continue to be opposed, he says.

(State Senator Nicholas) Scutari agrees, saying, “I doubt it.”

Sadly, we're not surprised.

Abuse As AG?

Investors Business Daily captures the panic attack businesses would succumb to if the words "Attorney General Edwards" were ever uttered. Former Senator Edwards, who became wealthy as a trial lawyer, is rumored to be on the short list of potential AGs.

The editorial board's most salient point involves how much lawsuits already cost the US economy, and how much the "tort tax" has increased since trial lawyers got in the lobbying game,

The tort tax caused by trial lawyers — jury awards, defense expenses and administrative charges — already costs the U.S. economy roughly 2% of GDP each year, more than any other developed nation and large jump from the 0.6% of 1950....

Not every lawsuit is abusive nor is every trial lawyer a villain. Some do good and necessary work. But too many have turned the profession into a shakedown operation. They should be brought under control through reasonable tort reform, not given free rein by one of their own.

Malpractice Reforms Bring Balance to Healthcare System...In Ohio

Ohio's medical community is beginning to reap the benefits of tort reform legislation passed five years ago and is now seeing a reduction in the number of malpractice claims filed. From the Associated Press,

A new report says the number of medical malpractice claims in Ohio dropped 20 percent from 2005 to 2006.

The report released Tuesday by the Ohio Department of Insurance says there were 4,006 medical malpractice claims reported for 2006, compared with 5,051 for 2005.

The department attributed the drop to changes made by lawmakers five years ago as they tried to deal with growing concern about the number of claims and the size of jury verdicts.

Some of those changes included caps on the amount of money injured patients could receive for pain-and-suffering, and attempts to restrict so-called frivolous lawsuits against doctors.

It is working in Ohio and CIANJ is proud to work with its coalition partners to bring similar results to New Jersey. Fewer frivolous claims lowers insurance premiums, which means greater access to care.

Wrongful Death Bill (Pocket) Vetoed

The Governor's Office just issued a press statement announcing he has "pocket vetoed" the trial-lawyer supported expansion of New Jersey's Wrongful Death Act. We'll spare you the repetition of the reasons we opposed to the bill, such as higher insurance premiums, (sorry, couldn't help myself), but see previous posts here and here.

The Governor did not veto the legislation, he simply refused to sign it by today's noon deadline. The net result is the same: the bill will not become a law. In his statement, Governor Corzine noted about S-176,

Unfortunately, I do not believe that this bill in its current form strikes a fair balance that would avoid using a strict monetary valuation of a person’s life while also addressing the adverse effect of allowing unlimited and unpredictable damages.

Thanks are in order for the Governor, who recognized flaws in the bill and took appropriate action.

Update: Star-Ledger coverage is now available complete with a quote from CIANJ President John Galandak. Our press release on the issue is available here.

Wrongful Death Bill Still Sits on Gov's Desk; Trial Attorneys Fret

The Governor signed more than eighty pieces of legislation into law over the weekend, and nowhere on that list is the trial-lawyer supported expansion of the state's Wrongful Death Act. Any legislation not signed by noon tomorrow fails to become law.

The Association of Trial Lawyers of America (whose national organization recently decided to remove the words "trial lawyers" from their title, going instead with the PR friendly and superhero-like "American Association for Justice") staged a press conference this afternoon seeking the governor's signature.

Regular blog readers know this all by heart. Allowing for unlimited damages to be collected for emotional grief is going to drive insurance premiums higher because insurance companies will be forced to protect themselves from unlimited suit. That protection will most likely come from increasing cash reserves.

The bill (S-176) would also make NJ a destination for trial attorneys because we would be one of only eight states with such a system. 

Click here to check out CIANJ's Business Beat regarding the issue and here to e-mail the governor and express your concerns.

Star Ledger Urges Gov. To Reject Wrongful Death Bill

A bill expanding New Jersey's Wrongful Death Act sits on the Governor's desk and the Star-Ledger has now joined with the business community's position urging Governor Corzine not to sign it.

The bill would allow families of wrongful death victims to collect unlimited damages for emotional grief. Current law already allows damages for economic loss, including the loss of household services, counseling and advice. CIANJ has objected to the bill since its introduction on two grounds.

1. It will lead to higher medical malpractice and other insurance premiums. If insurance companies must protect themselves from a suit for an unlimited amount of money, they will need to increase their reserves to compensate. That means higher insurance and healthcare costs for us.
2. It will make NJ a destination state for plaintiff attorneys. The state's plaintiff-friendly system has already caused class action asbestos and pharmaceutical suits to be filed here. Out of state victims and their attorneys should not clog the courts while New Jerseyans with legitimate claims wait. Presently, only eight states allow for unlimited damages to be collected for Wrongful Death.

The Star-Ledger succinctly puts it,

Most states either don't allow compensation for emotional distress in wrongful death cases or cap the amount a family can receive. The New Jersey statute would allow unlimited compensation. That doesn't make sense.

Without a cap, the ability of insurance companies, hospitals and other employers to predict liability becomes more difficult, further hurting New Jersey's already shaky business climate. A cap between $250,000 to $500,000 at least would allow business some yardstick to anticipate litigation expenses.

Money cannot replace a loved one. Yet it is the way courts punish wrongdoing and provides a measure of compen sation to a family that has suf fered a tremendous loss. It is not and should not be akin to winning the lottery.

Coincidentally, S-176 was the lead story in CIANJ's e-newsletter. To read the Business Beat and contact the governor voicing your concerns, click here.

Rolling Out the Welcome Mat for Trial Lawyers

The major brouhaha in Trenton today will be over the proposed school funding formula (which CIANJ supports with amendments). However, a bill of great importance to NJ's business community and anyone that pays insurance will also be considered in the Senate Budget and Appropriations Committee.

S-176 would change New Jersey's Wrongful Death Act, allowing plaintiffs to sue for unlimited damages for emotional pain and suffering. Keep in mind, NJ already allows for suit to be brought not only for lost income, but for damages such as the monetary value of parental guidance and care provided by the victim to his or her dependents; the value of household services provided by the victim, and hospital, medical and funeral expenses. The system offers a certain degree of predictability when setting insurance rates and reserves, and that predictability is a necessary factor when businesses choose where to expand and locate.

To fundamentally alter that system and allow suits based on emotional grief would drive insurance premiums higher, as insurers would have to account for potentially being sued for unlimited damages, and place NJ’s Wrongful Death statute outside the mainstream thus making us a destination for plaintiffs’ attorneys.

Passage of S-176 would harm New Jersey’s competitiveness as only six states allow for the unlimited recovery of non-pecuniary damages, and none of those are direct competitors with us. Our state’s Wrongful Death Act has worked well, both compensating relatives of the victim and in protecting the business community from uncontrolled juries. We'll be down in Trenton to deliver that message today and help keep NJ from becoming a haven for trial lawyers.

To view a survey of business leaders' attitudes toward NJ's legal system and the way it is already driving prices higher for consumers, click here.

Shining a Light on the Plaintiff's Bar

The issue of tort reform is gaining relevance in New Jersey as trial lawyers try to use the foothold gained by mass asbestos and pharmaceutical litigation to make the Garden State a destination venue for their class action suits. Regular blog readers know CIANJ is of the position that a judicial system should serve the citizens living within the jurisdiction and not be clogged by out-of-state cases that choose NJ as a venue because of our plaintiff-friendly statutes.

Today's Examiner picks up on the theme of fraudulent lawsuits, calling on the Justice Department to investigate excesses of the Plaintiff's bar,

Imagine the national outcry if hundreds of Fortune 500 corporations were discovered to be routinely falsifying their tax returns in order to qualify for tax credits worth billions of dollars.

And what if it was further learned that some accounting firms specialized in preparing fraudulent profit and loss statements to deceive the government and that the same firms also provided “experts” to help the corporations prepare equally fake supporting documents?

Does anybody doubt that there would be a bipartisan demand in Congress that would force the president to take dramatic action to investigate the scandal, identify and prosecute those responsible and recommend new laws aimed at preventing such frauds from ever again being perpetrated?

No imagination is needed to recognize the ill wind of a genuine national scandal of epic proportions blowing through the nation’s court system. It is the scandal of a relatively few well-placed class-action liability lawyers and equally corrupted professionals from other fields using false damage claims to enrich themselves by generating billions of dollars in legal fees and administrative costs, compensatory damage payments and other court-ordered reparations.

As we said in our press conference with the New Jersey Lawsuit Reform Alliance last week, every dollar a company spends defending itself from a frivolous claim represents a dollar not spent making the products that keep us healthy and that make modern life possible.

Tort fraud has already cost us up to $30 billion in just the past 15 years. Certainly our friends on Capitol Hill will act with the same speed they did when investigating corporate scandals. I'm positive of it.

Higher Costs, Less Access to Health Care - Thanks, Trial Lawyers

This morning CIANJ President John Galandak joined the New Jersey Lawsuit Reform Alliance in unveiling a Rutgers poll gauging business professionals' attitudes toward NJ's legal climate.

A justice system should serve the citizens of its jurisdictions. Unfortunately, trial lawyers are headed for NJ to file their claims here because of our increasingly plaintiff-friendly courts. The net result for consumers is a jammed court system and higher prices for products, insurance and health care for us all.

The Executive Summary is available here. Some statistics we'd like to point out are:

• One-third of businesses interviewed have been sued in the past five years
• About 80% of employers have raised their prices because of lawsuits

Each dollar a company spends defending itself from junk science or a frivolous suit is a dollar not spent researching new medicine or creating the products that have made our modern lives possible. The legislature has the ability to act - and a good place to start would be to reject the trial lawyer led expansion of New Jersey's Wrongful Death Act. 

Trial Lawyers Bet Big In Atlantic County

The American Tort Reform Association has come out with its national list of "Judicial Hellholes" - jurisdictions that welcome trial lawyers through plaintiff-friendly venues which allow a host of frivolous cases through the door and dole out unjust award amounts. These cases consume the time and money of companies being sued and drive insurance, health care and product costs higher for virtually everyone.

The full report of the worst venues for business is available here. Coming in at Number 6 is Atlantic County:

6. ATLANTIC COUNTY,NEW JERSEY
Personal injury lawyers seem to have gained a monopoly in Atlantic County, a new addition to the Judicial Hellholes report. New Jersey is known for particularly plaintiff-friendly laws, admitting junk science in court and hosting lawsuits from all over the country against their state's own economic driver, the pharmaceutical industry. All these elements were on display in the Vioxx litigation in Atlantic County. There is also evidence that litigation fairness is deteriorating throughout the Garden State, leading to the formation of the New Jersey Lawsuit Reform Alliance in October 2007.

High profile issues such as class action abuse, pharma-ceutical liability, asbestos lawsuits and extraordinary awards often dominate headlines. But being cited as a Judicial Hellhole is nothing to celebrate. Litigation abuse ultimately hurts the people living in these jurisdictions the most nomic growth and access to health care, among other things.

You may remember the aforementioned Vioxx lawsuit from CIANJ's amicus brief which objected to a labor union joining as a plaintiff. While individuals may have been harmed in the case, the union as a whole was not - an opinion ultimately validated by the State Supreme Court.

The report also notes the formation of the New Jersey Lawsuit Reform Alliance (NJLRA), of which CIANJ is proud to be a member. In fact, tomorrow NJLRA will release a scientific survey on the attitudes of our members and the members of the NJ Chamber of Commerce toward the state's litigation climate. Funny how that timing works out, we know.

The boss will be down in Trenton speaking on behalf of our membership to the press gaggle and we'll make the full report available here later in the day.