Leading the Lawsuit Reform Fight Since 1986!
The 80th Regular Session of the Texas Legislature will be remembered as one of the most politically contentious in the state’s history. Legal reformers also faced significant challenges, making this session the most difficult for business interests since 1991.
Despite attempts to dismantle civil justice reform, defensive efforts were largely successful. The Texas Civil Justice League and its members defeated sweeping anti-indemnity, consolidated insurance programs, and qui tam bills.
Three factors contributed to the difficulties faced this spring: fairness, fallout, and fatigue.
Legal reformers faced a Texas Legislature increasingly sensitive to “fairness” issues, pitting business against consumers and “big” businesses against “small” businesses.
Reformers were forced to deal with fallout from previous reforms. Landmark legal reform legislation in recent sessions created dramatic changes in the state’s civil justice system. Those changes met with vocal opposition from the plaintiffs’ bar and their allied organizations who exploit anecdotal evidence purportedly proving the harm of reform.
Lastly, and possibly most importantly, reformers encountered fatigue from previous battles. Lawmakers were wary of protracted committee and floor battles on civil justice issues. The pressure from legislative leadership to negotiate and compromise was considerably more intense this session.
Legal reform is under assault. In the months ahead, the Texas Civil Justice League will develop and distribute a compelling and thorough defense of the state’s landmark reforms to remind policymakers of the good that has been done and raise awareness about emerging issues. If your business have benefited from these reforms, please continue to support this important work.
For more than twenty years, the Texas Civil Justice League has led the legal reform fight for business. The accomplishments of the past two decades would not have been possible without your generous support. Please accept my sincere gratitude.
George S. Christian, President
Anti-Indemnity
The Texas Civil Justice League led a coalition of professional and trade associations that successfully opposed Senate Bill 346 and similar anti-indemnity measures. If enacted, these proposals would have (1) eliminated the ability of a property owner to require in a construction contract that a person performing construction-related work defend the owner from a lawsuit based on the contractor’s conduct; (2) subjected property owners to a substantial new risk of liability and dramatic increases in litigation costs; and (3) provided a disincentive for safety on a construction site by immunizing certain contractors for liability for their conduct.
The Texas Civil Justice League believes that indemnification and additional insurance provisions in construction contracts must be considered in the larger framework of the state’s workers’ compensation law. Research findings indicate that virtually every state recognizes the statutory employer doctrine in some form. Texas does not recognize the statutory employer doctrine except in limited situations under a Houston Court of Appeals decision, Etie vs. Walsh. While other states have enacted anti-indemnity statutes, they accompany robust statutory employer doctrines that do not exist in Texas.
Qui Tam
Late in the session, the Texas Civil Justice League effectively led efforts to oppose a sweeping qui tam proposal. Senate Bill 1309 allowed private bounty hunter plaintiffs to file lawsuits for “false” claims in the name of the State of Texas and reversed civil justice reform measures passed in the last three legislative sessions.
If enacted, the bill would have made Texas liability laws among the most extreme in the nation, invalidating almost two decades of progress bringing the state’s tort law into the mainstream. The bill was much broader than similar federal statutes and an existing state law permitting such actions for Medicaid fraud.
A person could be sued under the bill even if the person lacked actual knowledge of the information upon which the suit was based. The bill also lowered the legal standard of liability from a deliberate act to mere negligence. Under the federal statute, the defendant must act both deliberately and with actual knowledge of the information claimed to be false. Moreover, a person was not allowed to recover attorney’s fees and costs if the plaintiff’s claim was found to be frivolous or brought for purposes of harassment. The federal act and the Texas Medicaid statute both allow these protections for wrongfully accused defendants.
The bill overrode Texas limitations on punitive damages passed in 1995 and 2003, and circumvented venue reforms passed in those sessions by allowing a suit to be brought anywhere that “any part of a false claim occurred.” The bill also superseded all statutes of limitations and applied retroactively to claims made before the effective date. It would have been used to revive stale claims that are barred as a matter of public policy.
Consolidated Insurance Programs
Senate Bill 354 and House Bill 2014 imposed new regulatory requirements on owner-controlled and contractor-controlled insurance programs used to provide coverage for large construction projects. These bills had major flaws that threatened the continued use of these beneficial insurance programs.
The bills created a new cause of action for damages and attorney’s fees arising from a “violation” of the Act. This new right of action would have been in addition to existing common law remedies for breach of contract and apply to simple inadvertent mistakes, such as sending a required notice one day late or accidentally omitting a minor detail on a report. The Texas Civil Justice League was successful in removing these provisions from the bill. Both proposals imposed a “fiduciary duty” on the administrator of a consolidated insurance program. This term was not defined, introducing significant uncertainty into these contracts. This provision also dramatically expanded the scope of an insurance contract and created substantial liability for property owners and general contractors. This provision was removed from the bill at the Texas Civil Justice League’s request.
New liabilities imposed by the bills would have increased the cost of providing consolidated coverage and consequently reduced the viability of these insurance arrangements. Senate Bill 354 and House Bill 2014 would have increased the cost of construction in Texas. These insurance programs are commonly used by local government (cities and school districts), which means the costs would also be borne by taxpayers. Neither bill made it to the floor.
Health Cares Expenses in Civil Actions
House Bill 3281—passed in tandem with Jones Act venue changes—would award nonexistent damages for medical costs that were not actually charged and will never be paid. Insurance providers would be required to reimburse claimants at the highest “rack rate” for medical care, rather than negotiated lower rates.
The bill encourages incurring unnecessary and inflated medical expenses for the sole purpose of pyramiding damages (particularly “economic” damages) for the impact they have on the value of punitive damage claims. The cost of this legislation would be borne by consumers in the form of higher insurance premiums and higher costs for goods and services. The Texas Civil Justice League and allied interests have urged Governor Rick Perry to veto this legislation.
Asbestos/Silica Multi-District Litigation
Following the success of Senate Bill 15 last session, Senate Bill 749, supported by the Texas Civil Justice League and allied interests, was “clean-up” legislation intended to further protect the rights of people who are suffering from asbestos-related or silica-related injuries, allowing them to pursue claims for compensation in a fair and efficient manner. This bill makes the presiding judge a party in interest for the limited purpose of requesting a writ of mandamus from appellate courts to enforce priority in setting hearings and trials for asbestos or silica-related cases in which the exposed person is living and has been diagnosed with malignant mesothelioma, malignant silica or malignant asbestos-related cancer, or acute silicosis. In addition, Senate Bill 749 authorizes additional compensation for the presiding judge of asbestos or silica multi-district litigation and authorizes the presiding judge to appoint up to four staff members to address the additional workload.
Low-Emission Fuels Act (LEFA)
The Texas Civil Justice League and allied interests fought to pass House Bill 1927, which protected manufacturers and sellers of low emission fuels and fuel additives from lawsuits based on the federally-mandated standards. Contrary to disinformation distributed by opponents, the bill did not affect liability for releasing fuel and fuel additives into the environment. The proposal did not pass this session.
In recent years, fuel refiners and sellers have been targeted by lawsuits based on the presence of fuel additives in gasoline designed to reduce vehicle emissions. These suits have alleged that gasoline containing additives is a “defective product,” even though it fully meets the requirements of the Clean Air Act and accompanying governmental regulations. These suits have also attempted to apply other theories of liability, such as trespass and public nuisance, to fuel refiners and sellers, although their only conduct involved making or selling gasoline manufactured in compliance with specific government standards. Passing this legislation is important for clean air and economic development in Texas.
Copyright 2007 Texas Civil Justice League
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