Unrestrained Litigation Threatens Miss. Judicial System, Insurers Contend

March 27, 2006

While slow but steady progress is being made in improving Mississippi’s judicial climate, the good news is tempered by the threat to the state from unrestrained litigation in the wake of Hurricane Katrina, according to the American Insurance Association.

A U.S. Chamber of Commerce’s annual ranking of state litigation environments recently showed that Mississippi has moved up from last place, 50th, to 48th place in the ranking.

“Mississippi’s political leadership won a hard fought battle two years ago to enact comprehensive tort reform,” Cecil Pearce, AIA Southeast region vice president, said. “It would be a tremendous setback to the state and the businesses that want to contribute to Mississippi’s rebuilding effort if we were to now lose the civil justice reform war due to excessive and frivolous post-Katrina litigation.”

Hurricane Katrina was an unprecedented storm in terms of its destructive force. In the insurance context, legitimate disagreements about insurance coverage arising from the terms of the insurance contract are to be expected after every catastrophe, he said. But “opportunistic lawsuits by trial lawyers seeking to take advantage of both plaintiffs and defendants have the potential to stop and even reverse the important progress that Mississippi has made in recent years in restoring fairness to its courts,” he claimed.

Pearce maintained that the 2004 tort reform bill, new rules issued by the state Supreme Court, and the more balanced membership on the state’s highest courts have begun to have a positive impact on the litigation climate in Mississippi.

“The good news is that those reforms are in place because we are counting on a fair and balanced court system to hold firm against the rising tide of lawsuits now being filed in the state’s courts,” Pearce said.

He warned that Attorney General Jim Hood’s lawsuit against insurers that seeks to invalidate the long-standing water damage exclusion in homeowners insurance policies could have long-term negative ramifications on both the insurance system and the state’s economy if it is successful.

“This is a long-term fight. AIA reaffirms our support for Mississippi’s political and business leadership as they continue their commitment to reining in lawsuit abuse and ensuring that their courts are fair and balanced,” Pearce concluded.

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