South Carolina legislators considering restricting lawsuits against companies were told that fewer lawsuits are being filed since a 2005 state law limited costs for doctors.
A company managing an insurance system for half the state’s doctors told a state Senate panel last week that patient claims are down about a third and premium increases have dwindled to about 3 percent since the state imposed limits on non-economic damages on lawsuits.
Now a Republican-backed Senate bill would attempt to broaden that by imposing a $250,000 punitive damage cap for small businesses. Businesses with more than 50 employees would face no more than three times the actual damages in lawsuits or $250,000, whichever is greater.
“The trendline before were significant double-digit increases,” said Timothy Ward of Marsh USA Inc. runs the South Carolina Medical Malpractice Liability Insurance Joint Underwriting Association. Ward warned his estimates are preliminary.
“There are many variables that go into play,” Ward said. “But this is very suggestive and it does support the hypothesis that the reform is having an impact.”
“I think what we heard today is that non-economic damages caps work. They reduce the frequency of claims,” said Cam Crawford, executive director of the South Carolina Civil Justice Coalition, a group backing lawsuit limits.
Meanwhile, Ward said more insurance carriers are willing to write policies in South Carolina, a sign of competition that’s been absent for years.
It was good news for Republicans who want to limit lawsuits against businesses.
Sen. Larry Martin, R-Pickens, is the bill’s chief sponsor, said it’s important to have the legislation in place as the economy turns around so the state will be more competitive as businesses look for places to expand.
“Those data are extremely positive,” particularly with more competition to write policies and keep prices in check, said Martin, who also chairs the Senate Judiciary panel handling the bill. “That’s what happens when you have a completive market. They do compete and get better.”
It’s a trend also playing out in Mississippi, Texas and Ohio with lawsuit limits passed during the past few years.
But others cautioned that Ward’s numbers don’t tell the whole story.
For instance, the 2005 law required arbitration and other measures to keep issues with doctors from being resolved by lawsuits. And trial lawyers argued the limits only harm people who are hurt and do little to discourage businesses from putting customer and workers at risk.
“They’re not changing the pot of damages,” said Terry Richardson, a Barnwell lawyer. Punitive awards force companies to operate more care and “reduce the number of injuries which really and truly is the only way you save money.”
Martin’s panel took no action on the bill. He hopes to be able to get the bill ready for debate in the full Judiciary Committee by next January.
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