GE Insurance Solutions: Legal Reform Momentum Continues

February 10, 2006

Victories and defeats in the courtroom can impact the nation’s economy, with potential consequences for decades to come.

GE Insurance Solutions has been tracking and shaping efforts to
level the litigation playing field – variously called tort reform or
legal reform – and has published a summary of what it sees as the
major legal reforms enacted during the past year and what lies ahead
in 2006.

Author Joanne McMahon, assistant general counsel for Government
Relations, said while 2005 was marked by passage of important reforms at both the federal and state level and significant court decisions, the legal reform landscape in 2006 will look different.

McMahon noted that in 2005 Congress passed legislation dealing
with class action litigation, a partial shield for gun manufacturers
and legislation that prohibits lawsuits against manufacturers of a
drug that would cure or reduce the risk of a disease that presents a
public health emergency.

Those reforms, together with state legislation that included
comprehensive legal reforms, capped medical malpractice non-economic damage awards and established medical criteria for asbestos and silica claims, made 2005 an active year.

McMahon also pointed out that a Texas judge made a powerful statement about silica litigation when she ruled that the majority of 10,000 consolidated cases had been improperly filed, sending most of those cases back to the state courts.

In contrast, McMahon said, 2006 looks to be a year when “legal
reform measures will be narrowly focused, targeting specific civil
litigation rules (e.g., venue, joint/several liability) or types of
litigation (e.g., asbestos, silica). In most states and for many
federal congressional members, 2006 will be an election year and
election-year politics will affect legislative activity at both the
federal and state levels.”

McMahon said asbestos reform “will likely be the single most
significant legal reform measure pursued in the 110th Congress.” And,
she continues, “bills aimed at curbing lawsuit abuse and shielding the
food industry from obesity lawsuits will also likely be pursued” at
the federal level.

On the state level, McMahon predicts comprehensive legal reform
bills addressing a wide array of issues such as those passed in 2005
will not emerge in 2006. Rather, bills will be introduced that deal
with select issues such as medical malpractice (Kentucky, New Jersey and New Hampshire), joint/several liability (Florida and West
Virginia), venue (Illinois), non-economic and punitive damages (South
Carolina) and asbestos/silica (Alabama, California, Kansas, Michigan,
Missouri, Pennsylvania, South Carolina, Virginia and West Virginia).

In the courtroom, McMahon expects significant developments on the
food and beverage front, as plaintiffs sue manufacturers for causing
childhood obesity. She said: “The wheels of the mass litigation
machine are constantly in motion, devising new theories of liability.”

Finally, McMahon pointed out that the cost to defend against such
all lawsuits, whether frivolous or not, continues to rise.

“Clearly, the need for a fair and balanced approach to civil
litigation is important to individuals, corporate citizens and the
U.S. economy,” she said. “The extent to which additional legal reforms become law in 2006 – an election year – remain to be seen.”

To read the paper, go to
erccorporate/inst/ic/lc/060117_year.htm. (Due to its length, this URL
may need to be copied/pasted into your Internet browser’s address
field. Remove the extra space if one exists.)

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