AIA: Bush Gives Important Boost to Legal Reform Agenda

Not wasting a minute of 2005, this week President George Bush publicly launched a major effort to enact significant legal reform during his second term, a move praised by the American Insurance Association (AIA).

“President Bush is shining a welcome public spotlight this week on the urgent need for specific civil justice reforms to address the growing problem of lawsuit abuse,” said Robert Vagley, AIA president. “The Administration’s legal reform agenda, focused on class action, medical liability and asbestos litigation reforms, targets areas of the judicial system that too often encourage frivolous lawsuits and excessive awards, placing a tremendous cost burden on our entire economy, businesses and consumers alike.”

The AIA said it agrees with the President when he said the United States needs to pass real medical liability reform this year. That’s why, for example, the AIA will support Maryland Gov. Bob Ehrlich’s (R) veto of HB 2, a watered-down and ineffective medical malpractice bill, recently passed by that state’s lawmakers.

With all of the important and complex issues confronting the nation, the AIA said it appreciates that the President is not only pushing for legal reform from the White House, but is also taking his call for action out to America’s heartland: President Bush visited the “judicial hellhole” of Madison County, Ill., on Jan. 5 to talk about medical liability reform; met with House and Senate leaders Jan. 6 to discuss class action litigation reform, and plans a stop in Michigan Jan. 7 to highlight the need for a solution to the asbestos litigation problem.

The current medical liability crisis has reportedly reduced access to healthcare, increased the practice of defensive medicine, and has been driven primarily by the growing severity in claim costs, with paid losses by insurers more than doubling between 1993 and 2002.

A September 2004, study by the National Association of Insurance Commissioners concluded that “underwriting losses were the major factor influencing the rate increases experienced by physicians and other health care providers over the past several years.” The General Accounting Office reached similar conclusions in its 2003 study of the medical malpractice insurance market. Congressional action on legislation that will bring stability and predictability to the medical liability system is long overdue.

“Trial lawyers will attempt to blame insurer profiteering for the system’s woes. AIA is well prepared to respond to these allegations and prevent them from derailing meaningful malpractice reform,” said Vagley.

Senate Majority Leader Bill Frist (R) said he intends to bring class action reform legislation to the floor during the first week in February. It is expected the proposal will track the last Senate bill from the 108th Congress (S. 2062), which AIA supports. It would allow federal courts to hear national class action lawsuits involving defendants and plaintiffs from different states and provides additional protections to class members.

“Throughout January, we will continue to work closely with the business community to garner every vote needed to seek long-awaited passage of class action reform in the Senate,” said Vagley. According to AIA, the last 10 years have seen a 1,000% increase in class action lawsuits filed in state courts. While class actions with merit serve a useful purpose by permitting the efficient resolution of multiple claims, our state courts are currently clogged with many frivolous suits – actions that do not benefit consumers and unnecessarily harm corporations.

The President has also acknowledged the growing problem of asbestos litigation is bankrupting businesses, robbing the country of jobs and delaying needed relief for truly sick claimants. The current legal system may leave little or no money to pay current and future asbestos victims; will impose large, indirect costs on the economy, and has driven at least 74 companies into bankruptcy.

“The AIA is as committed as ever to working with the White House, Congress and stakeholders to find the best solution for the ongoing asbestos litigation crisis,” added Vagley.