Tort reform amendment filed in Senate; would limit damages, fees

A Senate joint resolution was filed Thursday (Feb. 2) to refer a tort reform constitutional amendment to the voters in 2018. The measure would cap lawyers’ contingency fees, punitive damages, and non-economic damages and would give the Legislature certain rulemaking authority.

The amendment, sponsored by Sen. Missy Irvin, R-Mountain View, has 15 sponsors in the Senate and 53 in the House.

It would cap lawyers’ contingency fees in civil actions at 33 1/3% of the net recovery, would let legislators establish the process for calculating the fee and setting penalties, and let the Legislature adjust the fee cap with a two-thirds vote of both the House and Senate.

It would also cap punitive damages in wrongful death and injury cases to $250,000 or three times the compensatory damage for each claimant, whichever is greater. An exception would be created for intentional conduct. Legislators could vote to increase the cap with a two-thirds vote but could not vote to decrease it.

Non-economic damages in wrongful death and injury cases would be capped at $250,000 per claimant, with a maximum of $500,000 allowed for the combined beneficiaries of the decedent. As with the punitive damages cap, legislators could vote to increase but not decrease the cap with a two-thirds majority.

The amendment would authorize the Legislature to adopt legislation that would establish the process for adjusting caps based on inflation or deflation. With a two-thirds vote of each chamber, the Legislature would be authorized to adopt rules of pleading, practice and procedure for the courts, and approve, amend or repeal those rules for the Arkansas Supreme Court. If the Legislature and the Supreme Court’s rules conflict, the Legislature’s rules would control.

The amendment is being pushed by the Arkansas State Chamber of Commerce and various business and healthcare-related associations.

The Legislature can refer three constitutional amendments to the people, but leaders have said they prefer referring only two, one from each house. On Thursday, the Senate adopted rules to recommend one amendment for consideration unless two-thirds of both houses agree to a third.

Because it’s a Senate joint resolution, it would start in that body. Proposed constitutional amendments there will pass through the State Agencies and Governmental Affairs Committee, where a tort reform supporter and co-sponsor of the bill, Sen. Eddie Joe Williams, R-Cabot, is chairman. Williams said Thursday that Arkansas is one of the few states that have not had significant tort reform recently. He said he was optimistic that the bill will be referred to the people.

“I’m never confident up here until it clears both houses and it’s on the ballot, so we’ll see,” he said.

If the resolution is passed out of the Senate, it would be carried by Rep. Bob Ballinger, R-Hindsville, chairman of the House State Agencies & Governmental Affairs Committee. He expects it to be the one constitutional amendment produced by the Senate, and if it makes it out of that chamber, it will pass the House.

“I think it will be a pretty good fight,” he said. “However, what I’d say is that, in the end, we’ve communicated with enough people and gotten most of the big concerns taken care of, so I expect it will probably be successful on the Senate end. If it comes out of the Senate end, then I anticipate the House having no trouble with it.”

Sen. Jim Hendren, R-Gravette, a Senate co-sponsor, said the amendment would help make Arkansas businesses more competitive.

“I know it is a factor when businesses look at locating in the state: What’s the likelihood that I’m going to find myself in very expensive litigation very often?” he said.

Sen. Jeremy Hutchinson, R-Little Rock, an attorney, said tort reform is needed, but the proposed amendment goes too far in limiting citizens’ “ability to get recompense for legitimate harm that’s been done to them.” He said he supports capping punitive damages at three times compensatory damages, which other states have done. He said the $250,000 cap on noneconomic damages troubles him the most.

“It makes a lot of claims impossible to even get into court,” he said.

He said he was asked to be a co-sponsor by the Arkansas State Chamber of Commerce and other organizations, but declined.

Rep. Jana Della Rosa, R-Rogers, said she is opposed to tort reform in general. She said that, as a Republican, she does not “run around telling people how much money they can make for doing what they do,” and that the cap on non-economic damages puts a dollar value on a human life.

The bill is being pushed by numerous state associations, with the Arkansas State Chamber of Commerce serving as the umbrella organization. Randy Zook, president and CEO, said Arkansas’ poor ranking in a CNBC study of state legal climates makes it out of step with its neighboring states.

Joining the Chamber are The Poultry Federation, the Arkansas Trucking Association, Arkansas Farm Bureau, Arkansas Grocers and Retail Merchants Association, Arkansas Health Care Association, Arkansas Medical Society, Arkansas Hospital Associaiton, and Arkansas Osteopathic Medical Association, along with many individual companies. If it makes it to the ballot, Zook said, “We think we’ll be able to raise enough to get our message across to the people of Arkansas.”

Matthew Haas, chief executive officer of the Arkansas Trial Lawyers Association, said the group “would fight wholeheartedly any attempt to encroach upon the constitutional rights of Arkansas citizens.”

“This type of tort reform is nothing more than special interests stripping away Arkansans’ 7th Amendment right to jury trial,” he said. “Lobbyists representing corporate nursing homes and the insurance industries want to help their CEOs avoid accountability when Arkansans are harmed so they can continue lining their pockets with the hard earned money of working families.”