Tort reform not just about lawyers

*First appeared in the May 7 edition of the Laurel Chronicle

“Every small business is one lawsuit away from bankruptcy,” proclaimed then-gubernatorial candidate Haley Barbour on the 2003 campaign trail. Promising “more and better jobs” by eliminating Mississippi’s position as a judicial hellhole, Barbour’s message of tort reform resonated with voters.

In 2003, I of course had no idea what a tort was. A dessert, maybe? It sounded delicious. Desserts weren’t often in need of “reform,” so I did some digging. Here’s what I found.

Jackpot justice had developed a niche in Mississippi. Our legal climate was scaring off potential employers and threatening the livelihood of existing businesses. As more lawsuits were filed, fewer doctors stayed in the state. Medical facilities were shuttering their doors due to rising insurance costs. In the Delta, one hospital even closed its emergency room because the county government couldn’t pay its medical liability bills.

Frivolous lawsuits had given Mississippi’s economic and healthcare climate a black-eye at a time when the state could least afford it. In 2003, the state was in debt, and jobs were being lost at an alarming pace. Without aggressive action to reform the state’s civil justice laws, Mississippi’s future hung in the balance.

These were the high stakes of the governor’s race in 2003, so in looking back it’s easy to understand why voters were passionate about the issue. Gov. Barbour kept his promise and successfully convinced the Legislature to pass what the Wall Street Journal called “the most comprehensive tort reform law in the nation.”

This year marks the ten-year anniversary of the Tort Reform Law of 2004, which is probably a good time for all you non-attorneys to ask: What does tort reform really have to do with me?

I’ve hinted at the broader implications of lawsuit abuse. Of particular interest to Mississippians, especially in the days of Obamacare, is the impact of lawsuit abuse on our healthcare system. Without appropriate laws in place, doctors and hospitals couldn’t afford to stay in Mississippi. Former state senator Neely Carlton told a group Monday that, prior to tort reform’s passage, more than 500 Mississippi doctors had let their licenses expire in one year and that at least seven Mississippi counties didn’t have a single OB/GYN.

After the new laws were passed, however, insurance rates dropped, new insurance companies entered the market, and the largest health insurance writer in the state began writing new policies. The comprehensive tort reform law ended the healthcare crisis caused by lawsuit abuse.

In a post-recession environment where job growth still lags, the economic impact of civil justice reform can’t be overlooked. Prior to tort reform, the U.S. Chamber of Commerce ranked Mississippi 50th for its unfair legal climate several years in a row. Businesses not only had to weigh the impact of the “lawsuit abuse tax” (costs of hiring lawyers to defend against frivolous lawsuits), they also had to factor in the nuisance value of settling out of court with people filing these lawsuits.

Mississippians for Economic Progress previously estimated that lawsuit abuse had cost Mississippi about 10,000 jobs and another $1,000 per household in economic impact.

Tort reform stopped the hemorrhaging. Businesses begin to view Mississippi as a viable place to do business. Toyota, which has created thousands of jobs in northeast Mississippi, said it would not have considered locating in Mississippi without tort reform. Other major companies have located or expanded operations here in Mississippi. (GE Aviation expanded operations to include a plant in Ellisville. I’m not saying tort reform was the primary cause, but it certainly didn’t hurt.)

Legal issues remain hugely important to job creation. The 2013 Global Manufacturing Competitiveness Index, a collaboration between Deloitte and the U.S. Council on Competitiveness, studied more than 550 CEOs and senior manufacturing leaders. They found that legal and regulatory concerns were the fifth highest drivers of competitiveness, outranking other factors such as physical infrastructure, energy costs, or even government investment.

Mississippi has enjoyed a pro-growth, business friendly legal environment since the passage of tort reform. Leaders would be unwise to deviate from the proven results of these laws.

But don’t take my word for it. Actual experts on the issue will gather in Jackson to commemorate the ten-year anniversary of the law during the “Mississippi Tort Reform: Ten Years After” conference on May 14. The conference will highlight successes of the law, as well as future risks. Anyone interested in attending the event can register online – simply google the name of the event or visit the Mississippi Economic Council’s website and look under “What’s Happening” (www.msmec.com).

"MISSISSIPPI TORT REFORM: TEN YEARS AFTER" - FREE TO ATTEND. REGISTER HERE.