Tort Reform Legislation Passes House, Moves to Senate

October 28, 2005

By a vote of 228-184 on Thursday, the House of Representatives favorably approved H.R. 420, the Lawsuit Abuse Reduction Act (LARA).

The legislation, introduced by Representative Lamar Smith (R-Texas), would penalize attorneys, law firms, or parties who file frivolous lawsuits, and sets limits on “forum shopping,” whereby plaintiffs’ attorneys seek the most plaintiff-friendly jurisdictions in which to file a lawsuit against corporate defendants. Under LARA, a suit could be filed only in the jurisdiction in which the plaintiff lives, where the injury occurred or where the defendant has its principal place of business.

Agents and insurers alike hailed the passage.

“This bill would impose mandatory sanctions against those parties filing frivolous lawsuits,” said the National Association of Mutual Insurance Companies (NAMIC) senior vice president for federal affairs David A. Winston. “Our member companies have been forced to use their valuable financial and human resources to respond to such lawsuits. These resources would otherwise be available to grow their businesses and employ more American workers.”

“We are thrilled that the House has passed this bill,” said Charles E. Symington Jr., Big “I” senior vice president of government affairs and federal relations. “If ultimately enacted, H.R. 420 will greatly discourage lawyers from filing frivolous lawsuits and prevent them from shopping around for plaintiff-friendly courthouses to bolster their chances of successfully litigating cases of dubious merits. These two developments would be tremendous steps forward for the small business community.”

“Frivolous lawsuits cost Americans billions of dollars each year,” said Property Casualty Insurers Association of America President and CEO Ernie Csiszar. “While many cases are legitimate, many others are filed by lawyers simply trying to make a buck at the expense of higher costs of goods and services, including insurance, for consumers. This legislation will increase penalties for lawyers who abuse the system for their own monetary advantage and put the savings back into the pockets of American consumers.”

The Association of Trial Lawyers of America called the bill “unnecessary.”

“The bill is unnecessary – all 50 states already have laws that allow judges to throw out a frivolous suit and sanction the attorney who filed it – but Congress has shown once again it places a higher priority on protecting negligent corporations than the rights of ordinary Americans to seek justice,” said Ken Suggs, president of the Association of Trial Lawyers of America (ATLA).

ATLA also contends that the legislation prevents some foreign corporations from being held accountable in U.S. courts because the bill would require the lawsuit to be brought out where the defendant’s principal place of business is located, even if that is overseas.

“In other words, the injured American family would have to travel abroad to file a lawsuit,” ATLA said in a statement.

The tort reform bill was passed last year by the House but stalled in the Senate.

“PCI urges the Senate to move quickly on this sensible legislation to bring needed relief to courts, businesses and consumers across the nation,” Csiszar said.

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