Senate, House Clear Lawsuit Reform Bill

The State Senate and House today passed a comprehensive lawsuit reform bill that represents an agreement with lawmakers, business advocates, doctors, mineral owners and trial lawyers. The measure now goes to Governor Henry for action.

House leaders said the deal will reduce the number of frivolous lawsuits in Oklahoma, which will help lower health care costs for all Oklahomans, recruit and retain Oklahoma doctors and bring more cost certainty to businesses in our state, especially small companies.

“The collaboration that occurred between all interested parties to reach this landmark agreement is exactly the type of work the people of Oklahoma expect from their leaders,” said House Speaker Chris Benge, R-Tulsa. “This deal is a compromise, which means everyone didn’t get everything they wanted, but it represents true reform for our state.”

Under the compromise, House Bill 1603 will contain the following major provisions:

Vague noneconomic damages (so-called “pain and suffering” awards) would be capped at $400,000 outside of exceptional circumstances. In rare cases where the cap is lifted, any amount greater than $400,000 could be paid with a reinsurance policy the state would purchase. The bill creates a task force that will study the details of the policy and payment options prior to implementation.

The reinsurance policy would pay up to $20 million a year to injured Oklahomans in exceptional circumstances of gross negligence or severe disfigurement. It is estimated such a policy would cost less than $1 million annually for the additional protection.
In order to have access to the reinsurance policy, doctors are required by the legislation to carry at least $1 million in medical liability insurance, which covers the majority malpractice cases. There is currently no state minimum requirement for insurance coverage.

“This change places the burden on doctors to carry higher levels of insurance to further protect injured Oklahomans, but also adds some certainty to the system in rare catastrophic cases,” said Rep. Dan Sullivan, House author of HB 1603 and the bill’s chief negotiator from the House.

The policy is a unique agreement that gives physicians a hard cap for medical liability insurance purposes but allows Oklahomans who have extenuating circumstances to receive awards above the cap.

As a result of that compromise, insurers will be able to sell medical liability insurance to doctors at lower rates because they won’t have to build up enormous reserves to cover the rare “jackpot” award that would otherwise bankrupt the company.

One of the main reasons doctor’s insurance currently costs so much is the impact of frivolous lawsuits – even though 70 percent of medical liability claims were dismissed between 2004 and 2007, Oklahoma’s major doctor’s insurance company spent $50 million defending those cases.

That cost should be significantly reduced following passage of House Bill 1603, allowing for cheaper insurance policies to be sold to doctors.

In turn, those lower insurance rates will make it easier to attract doctors to currently underserved areas of Oklahoma, particularly rural communities. Today, women all across Oklahoma often have to drive to Oklahoma City or Tulsa to deliver a baby because few local doctors will perform that service due to litigation threat and high insurance rates.

“Doctor and nurse shortages are a serious problem in Oklahoma. We have some of the best physician training in the country, but other states are stealing our doctors away,” said Rep. Doug Cox, an emergency room doctor in Grove. “We are training—often with taxpayer dollars—doctors who are being recruited to lawsuit reform-friendly states, it is a fact. This bill will give those physicians a chance to practice in this state.”

House Bill 1603 also contains other reforms. In the area of class-action lawsuits, court shopping for class-action suits would be restricted, and attorney fees could be reviewed.
The bill also requires an expert to certify that a professional negligence case has merit before it can proceed. That requirement would be waived for plaintiffs who cannot afford the costs associated with finding an expert.

Senator Jay Paul Gumm said he's pleased that a tort reform provision he had authored for several years was included in the lawsuit reform bill. The provision would prevent a gun manufacturer from being sued if their product was used in the commission of a crime.

“These are products that are legally manufactured and owned, and it just makes good sense to make sure this liability protection is part of our state law,” Gumm said. “We’ve come close to getting this proposal to the governor’s desk in the past, only to see it fall victim to politics. I’m very optimistic about its chances this year.”

The Democrat from Durant said most firearm manufacturing facilities are located in states hostile to gun ownership. In contrast, Gumm pointed out most Oklahomans are strong advocates of the 2nd Amendment right to own firearms.

“Whether it is for hunting or for self-protection, owning firearms is part of Oklahoma’s heritage and culture,” Gumm said. “In addition, we have one of the best gunsmith programs in the nation at Murray State College.”

Gumm said firearm manufacturing is a multi-billion dollar industry with high-paying jobs. Tort reform protecting manufacturers coupled with the program at Murray State College would give Oklahoma a greater edge in attracting those jobs.

“I’m excited about the possibility we have to attract an important manufacturing facility to our state. The jobs and revenue such a facility would create would ultimately benefit all of Oklahoma.”

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