Fort Worth Injury Attorney Blog

Tort reform's about money more than fairness

Proposals to change Texas' civil justice system aren't ever mainly about fairness and right. They're about money: Who's making it, who's spending it and who's giving it to which candidates.

The Legislature significantly changed the system several times in the past 25 years, and there's no denying that sweeping "tort reform" in 2003 slashed the number of lawsuits filed for personal injuries.

That means less money for trial lawyers, who typically represent plaintiffs and tend to support Democrats. Republicans, who usually are backed by moneyed business interests, want to make sure they keep the upper hand.

Thus, Gov. Rick Perry continues promoting the fallacy that Texas runs amok in frivolous suits and unhinged juries, thereby needing emergency legislation to remain business-friendly.

Put aside for a moment the legitimate argument that the latest round of "tort reform" is a remedy in search of a problem.

On May 9, the House passed HB274, which supposedly would make the judicial system more efficient and accessible to everyone. Intentionally or not, the measure has potential for all sorts of mischief that would not improve civil justice.

During floor debate, the House added a provision enabling property owners who successfully challenge their appraisals to get their attorney fees reimbursed by the appraisal districts.

Sound like a victory for the little guy? Not so fast. Who has the resources to risk appealing a tax appraisal dispute through the courts? Most likely deep-pocketed businesses with high-dollar lawyers.

A representative of The Equity Center, which represents 690 school districts, told members of the Senate State Affairs Committee on Monday that, faced with the potential of having to pay uncapped legal fees, appraisal districts probably would undervalue corporate properties, shifting the burden to smaller businesses and residential owners. Not only that, diminished local valuations would leave school districts short on property tax funds -- which are their main revenue source -- and forcing the state to fill the gap.

David Thompson, a witness representing school administrators, pointed out that the Texas Tax Code already provides for attorney fees in successful appraisal challenges; there's just a cap on the winnings. That seems a fair way to protect taxpayers and guard against windfalls. Why change it?

Other critics of the House bill have trotted out a parade of horribles, some quite plausible.

Texas law already provides for a form of "loser pays" that lets parties whose settlement offers are rejected get their costs paid when a jury awards less than was offered. But the amount the "loser" has to pay is limited by law.

But the House bill removes the caps, meaning an individual could win a suit but take a devastating financial hit. One example: A man wrongly held by a hardware store for suspected shoplifting might reject the store's settlement offer, choose a trial to clear his name, get a much lower jury award than the settlement offer, then have to pay the company's enormous fees and costs. Though he did nothing wrong by taking his legitimate grievance to court, he could be financially crippled. Businesses also could face this kind of perversity, critics noted.

State Affairs Chairman Robert Duncan of Lubbock and Sen. Joan Huffman, a Houston lawyer, are working on a committee substitute to correct the problems with the House bill.

The only imperative for this legislation is that Perry wants it. If its passage is inevitable, the bill should at least not make the system worse.

I am delighted to announce my latest substantial recovery, this time on behalf of Mr. D___, a hard working Fort Worth resident. And it's been a busy month, with $1,230,000.00 in recoveries so far!

Mr. D___'s truck was side swiped by a Ford delivery van on the south side of town two years ago. He was taken to the ER, but the initial tests were negative. Unfortunately, my client had to undergo a cervical fusion six months later. He lost his truck driving job, but was already 65 years old at the time.

The defendant's insurance company and its attorneys had many defenses, some of which were valid. They argued that Mr. D___ was not seriously injured, he suffered from arthritis, he didn't even need the surgery, and if he did, their driver did not cause it, his medical bills were excessive, he had fully recovered from his injuries, he was going to retire at the age of 65, the visible damage to both vehicles was relatively minor due to the side swipe, the verdict potential was severely limited under the draconian "paid vs. incurred" statute enacted by the Texas Legislature in 2003, etc.

I fought hard and am proud that I forced the insurance company to pay this outstanding settlement. Then, to increase my client's recovery of money, I greatly reduced the subrogation liens held by his health insurance carrier and various medical providers. Now I am in the process of slashing his Medicare lien so that he will get even more money.

My client was ecstatic with the outcome, as you can see in this photograph. It was my honor to represent this wonderful couple (I also obtained a good settlement for his wife when she was hit in front of a school last year by a FWISD bus) and wish them the best of luck in the future.

House Bill 274 Further Stacks the Legal Deck in Favor of Big-Money Defendants

--- Houston Chronicle Editorial, May 14, 2011

The campaign by so-called tort reformers in Texas has long since moved beyond its avowed goal of preventing frivolous lawsuits and massive damage judgments. With the passage of HB 274 by the Texas House last weekend, it has graduated to an all-out assault on the ability of consumers and small business owners to seek legal redress in civil courts against powerful business interests. You might call the latest iteration "stealth tort reform." The primary damage isn't in what the bill adds to current law. The injustice is in what it eliminates.

The last major tort reform legislation passed in 2003 in Austin mandated that plaintiffs who spurn settlement offers and win a jury verdict must receive a judgment award of at least 80 percent of the offer. Otherwise, they are responsible for paying legal fees for the losing defendant from the date they refuse the settlement offer. However, those fees could not exceed the amount of the judgment, so at worst the winner went home empty-handed.

That existing provision is already a powerful weapon in the legal arsenal of deep-pocket defendants such as insurance companies and corporations, since plaintiffs would be tempted to accept low-ball settlements rather than risk receiving nothing. It's not fair, because winning plaintiffs in most tort cases cannot seek reimbursement of their legal fees, only much smaller court costs. The playing field is already sharply tilted in favor of the defendants.

Not content with that advantage, the crafters of this bill have further stacked the deck. It removes limits on the legal fees a winning plaintiff could be forced to pay if they eschew a settlement offer and the judgment falls below that 80 percent margin. Rather than receive nothing, the winner could be tagged with the loser's huge legal fees. As Houston personal injury lawyer Steve Waldman puts it, "The moral of the story being told by the advocates of this bill is this: If you have a claim against a big corporation, take whatever it offers, because if you dare to take them to a jury, you risk your economic life."

Florida implemented similar provisions, and the ensuing public outcry forced legislators to repeal it five years ago. We agree with Alex Winslow, executive director of the citizen advocacy group Texas Watch, that HB 274 "is designed to force families and small businesses with valid claims to weigh the possibility of paying the legal costs of insurance companies and multinational corporations [and] is at best detrimental to public accountability and at worst unconstitutional." The concept of making plaintiffs with valid cases potentially responsible for defendants' legal fees is a feature of British law that our nation's founders wisely rejected. It's a legal concept that should have no place in Texas courtrooms.

It's hard to believe this legislation was designated by Gov. Rick Perry as an "emergency" to facilitate its already inevitable passage by the House GOP super majority during a raucous, Mother's Day eve session that ended in flaring tempers and abrupt adjournment. Perhaps the only emergency was the governor's need to placate his backers at Texans for Lawsuit Reform, a major contributor to GOP state legislators.
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Under the original proposed new law, the victim of a drunk driver could have to pay the attorney's fees of the drunk - even if the victim WINS at trial!

1. The so-called "Loser Pays" means that who ever 'loses' a lawsuit will have to repay the other side's attorney's fees and costs (each side pays its own now, but that is why we make insurance premium payments, to insure that those will be provided for).

2. However, only the insurance company will get to invoke this law. If you are the injured not at fault motorist and think the negligent driver/his insurance company should pay your legal fees and costs, too bad!

3. Assume a drunk driver rear ends you and your child causing serious injuries. Your medical bills and lost wages total $150,000, but the insurance company only offers $100,000 so you naturally file suit and go to trial. Unfortunately, your medical records state that you might already have had a little arthritis, your son had fallen off a swing set four years ago and bumped his head, and Cigna paid a lot of your medical bills. The other attorney is able to convince the jury the accident was somehow partially your fault and he also convinces the jury not to give you all of your lost wages because 'you should have gone back to work sooner' instead of taking care of your injured child at home. Still, even with all that, you win the case. However, the jury awards you $79,000.00. But you have LOST under this new law because you only won 79% of the insurance company's settlement offer, less than the required 80%, so now you are on the hook for $$$ for their attorney's fees, expert witness fees, deposition bills, court costs, etc.

Please call your state senator immediately and ask him or her not to vote for this horrible law.

House Bill 1110 would require all convicted DWI offenders -- even first timers - to install ignition interlock devices in their car. Even first time convicted offenders would have to blow on the device to calculate their blood alcohol content.

If it's under the legal limit of 0.08, the car engine would start.

Now, only repeat offenders or drivers with a 0.15 BAC level have to have the devices installed.

Arizona's reduced its rate by 46 percent by requiring this, and it is shocking that this is not already the law here.

Of course, the offender can have someone else blow into the machine, or find another car to drive. But it would have a deterrant effect and we must crack down on all of the drunks out there on the roads.

MADD is one of my favorite causes, and it strongly supports this bill.

I only handle personal injury cases, but the "Loser Pays" bill just ramrodded through the Texas House -- without any debate allowed -- should be called "Winner Pays."

If this bill becomes law, the winner of the lawsuit may have to pay the loser's attorney's fees. There is no cap on the amount the winner has to pay. A plaintiff - and this includes a small business - can win a lawsuit and go bankrupt.

The following scenario can actually happen:

1. Joe's Lawn Service ("Mom and Pop" small business) buys 10 XYZ tractors at a cost of $100,000.

2. The tractors do not work, costing Joe to lose most of his landscape business.

3. Joe sues XYZ for the $100,000 cost of the tractors plus $50,000 in lost profits.

4. XYZ offers Joe $80,000 to settle. Joe turns it down because he has lost $150,000.

5. Joe goes to trial and wins $60,000. The jury finds Joe had 40% of the use of the tractors, and the judge disallows Joe's lost profits claim on a technicality.

6. Because Joe won less than 80% of Hodna's offer, he has to pay XYZ's enormous attorney's fees and litigation expenses.

7. XYZ's law firm has assigned one senior partner ($750/hour), one junior partner ($450/hour), two associates ($250/hour each) and a three paralegals ($100/hour each) to defend the case, and has run up $350,000 in legal fees and litigation costs.

8. Joe is awarded $60,000, less XYZ's $350,000 in legal fees. In other words, Joe has won his lawsuit but owes XYZ $290,000!

9. Joe files for bankruptcy.

This can really happen. The current Offer of Settlement rule, Civil Practice Code Section 42.004, subsections (d) and (g) limit the shifting of fees to a reduction of the plaintiff's damage award. Subsections (d) and (g) are repealed by HB 274 - making the amount of fees the winner has to pay the loser unlimited. Under HB 274, a plaintiff can win his lawsuit and end up financially destroyed.

The "tort reformers" seek to limit lawsuits for personal injuries and wrongful death. How do they explain this result to small business owners?

The moral of the story being told by the advocates of this bill is this:

If you have a claim against a big corporation, take whatever they offer, because if you dare to take them to a jury, you risk your economic life.

Call and email your state senator. Repealing CPRC 42.004 (d) and (g) turns "loser pays" into "winner pays." Tell your senator to oppose the repeal of CPRC 42.004 (d) and (g)!

"Winner Pays" is unfair for Texans!