(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
JS-1237Thank you for having me here today.
First, let me say that I applaud the members of ATRA for your tireless lawsuit abuse reform efforts. This group is doing work that is critically important to our economy. Your effort to bring common sense and fairness to the system is valuable to every American, but particularly to every American who is looking for work and can’t find it.
After all… there are few things that create a greater disincentive to job creation than an atmosphere where little stands between every business owner, ever manager, every doctor and professional of almost any kind… and the next frivolous lawsuit.
I want you all to know the priority that lawsuit abuse reform is to President Bush and his Administration. We are deeply committed to ensuring that victims are compensated fairly when they are injured due to the fault of another person, but we also know that key job creators – the top ones being small-business owners – live in fear of frivolous suits that can damage or destroy their businesses and all the jobs they support.
We know that the current tort system is costing America well over $200 billion each year… that’s a tort tax – paid in the form of lower wages, higher product prices, and reduced investments – of $809 for every individual and more than $3200 for a family of four. And this is a regressive tax, imposed indiscriminately across our economy
To make the situation even less fair, less than 50 cents of each dollar of those tort costs go to victims… and, of that, only 22 cents goes to compensate them for actual economic losses they have suffered… meanwhile the personal injury lawyers profit enormously.
At a time when our economy needs to be expanding, this is unacceptable.
Because a frivolous lawsuit has never created a single job – except jobs for personal injury lawyers – but baseless and excessive suits have killed many.
Our economy is resilient. Thanks to the ingenuity and productivity of the American worker and President Bush’s tax cuts, we are quickly recovering and growing our economy after events that would have set many countries back several years. And we have continued to grow, be creative and productive, even in the face of a constant threat of lawsuit abuse that seems to impact more people and products every year.
There are a few simple truths about how to grow an economy. Tax cuts work. Excessive litigation does not. Letting the free market operate freely… works. Burdening entrepreneurs does not.
This country’s free market system is strong, and the envy of the world. Imagine if we freed it from frivolous suits.
It speaks to the strength and optimism of our health care system, for example, that we have been able to invent so many life-saving and life-enhancing procedures and drugs… that we offer the best health care in the world… in spite of the fact that, as of 2002, 58 percent of physicians reported that they had been the target of a lawsuit, and their malpractice insurance typically rose between 30 and 75 percent over three years, from 2000 to 2002.
Many doctors I know have thrown in the towel. Retired early. Taken their life-saving abilities out of the medical system, because the risks of staying in are just too high, and because they’ve had enough.
Does anyone really believe that 58 percent of doctors are negligent? Of course not. Some members of any profession are going to turn out to be bad apples… but when 58 percent of them are being sued… well, that explains why the term “ambulance chaser” is part of our national vocabulary.
This fear of frivolous, unnecessary litigation hits especially hard at our small businesses and entrepreneurs. As I said, small businesses are the engines of job creation and the engines cannot work effectively when they are slowed y the headwinds caused by frivolous litigation.
New and creative business ventures are often among the least able to absorb the unfair, indiscriminate tort tax, yet are among its easiest targets.
Some personal injury lawyers are taking advantage of a broken system for personal enrichment. They are taking in billions of dollars in profits each year. Some individuals in this industry are known to collect fees of $30,000 an hour.
They have found jurisdictions where they can extract settlements or win jury awards worth millions, and their clients are simply the means to an end for them.
The civil justice system was meant to help people, to ensure fair compensation for injuries and losses. Not to make personal injury lawyers wealthy.
The American people are dismayed by all of this. Hard working men and women know that there is no free lunch, and believe it’s wrong to hold businesses and individuals hostage with lawsuits or even just the threat of lawsuits.
The lack of personal ethics and responsibility, the excesses of greed, is similar to what we saw when corporate scandals erupted two years ago – something that the Congress and the President acted swiftly and successfully to correct and deter through the Sarbanes-Oxley Act of 2002 – but something that also requires the vigilance of individuals both public and private to prevent from happening again.
In spite of popular sentiment against frivolous suits and a system that causes the most cautious and responsible business owners, professionals and private citizens to live in fear… civil justice reform is hard to achieve.
There is a great financial incentive for personal injury lawyers to maintain the status quo… and those lawyers have many legislator allies.
We also face the logistical problem of so many battlegrounds: federal, state, and local.
States have made great strides in bringing common sense to their civil justice systems. Laws have been passed to control lottery-type damage awards, reducing the incentive for unethical attorneys to make something out of nothing. States have taken the lead in passing “forum fairness” laws limiting the ability of personal injury lawyers to “forum shop” class action lawsuits to friendly trial court judges.
But time and time again, state courts, often elected officials themselves with the active support of the trial bar, have struck down these reforms.
ATRA faces this challenge, bravely and steadfastly, every day. And you take on the battles, one at a time.
Please know that you have the President’s full support in your efforts to rein in these abuses that have put a heavy chain on our job creators and our health-care system.
Civil justice reform is a huge issue… but if tackled one step at time, we can reach success. An incremental approach is slower, but it’s more permanent. That’s why we’ve narrowed our federal focus this year to just a few bills: class action reform, medical malpractice reform, asbestos, gun manufacturer liability, and most recently the fast food bill that passed the house last week.
Those last two are a great example of how simple common sense and civil justice reform go hand-in-hand.
If the so-called cheeseburger bill passes the Senate, it will protect restaurants from being sued over the ridiculous claim that they are responsible for obesity. Common sense tells us that eating too much and exercising too little is what leads to obesity. The bill was written to ensure that common sense prevails and restaurants are protected from what everyone recognizes as little more than attorney scams.
Similarly, we need to protect gun manufacturers from being sued when their products – made and sold legally – are used in a violent act.
Another bill that we need the Senate to pass is class action reform. The Class Action Fairness Act is a critically important bill because it would help put an end to one of the most grotesque abuses of the civil justice system today… something referred to as “forum shopping”
Our judicial system was designed to give typical class action plaintiffs a variety of places where a suit can be brought in order to get a fair trial in a convenient location. But personal injury lawyers shop for legal forums in places they refer to as “magic jurisdictions” and ATRA refers to as “judicial hellholes.”
Let me read you a quote from a well-known personal injury lawyer: “What I call the ‘magic jurisdiction’ is where the judiciary is elected with verdict money. The trial lawyers have established relationships with the judges that are elected…. They’ve got large populations of voters who are in on the deal; they’re getting their [piece] in many cases. And so, it’s a political force in their jurisdiction, and it’s almost impossible to get a fair trial if you’re a defendant in some of these places.”
Well, we’re sick and tired of seeing that type of personal injury lawyer bring class-action lawsuits to trial in these judicial hellholes. They gather up hundreds or thousands of claimants together, put huge pressure on defendants to settle, and walk away with millions. And the claimants? They are really just the attorney’s ticket to get into court. In the end they may typically receive a coupon or check worth a few pennies in the mail.
For example, in a recent case, Schwartz v. Citibank (South Dakota), N.A. et al., check for as little as seven cents were mailed to cardholders, while the personal injury lawyers received $7.2 million for their services.
The Class Action Fairness Act would give defendants the right to move these types of suits from state to federal court when a substantial number of the plaintiffs are not residents of the state in which they are filed.
Now that’s common sense, and a strong step toward stopping the lawyers from playing their crooked game.
The pending Medical Malpractice reform bill would encourage alternative dispute resolution, require clear and convincing evidence for punitive awards, and control punitive and non-economic damages. Again, this is a common-sense approach that would go a long way toward protecting our health-care system from baseless suits that are ultimately robbing patients of the quality and convenience that they are paying dearly for.
Asbestos legislation pending on the Hill is another reform that seeks to compensate victims without killing businesses and jobs. While it is very important to take care of those who develop cancer from asbestos exposure, an estimated 90 percent of asbestos lawsuit plaintiffs don’t have cancer and may never develop cancer. Again, the solution needs to be about helping people, not making personal injury lawyers rich. So common-sense reform at the federal level has the President’s full support.
There is a reason why the President’s six-point plan for economic growth includes bringing common sense to our civil justice system.
Lawsuit abuse is the ultimate disincentive for hiring new people. The cost of doing business is substantially increased by a litigious environment. For example, the cost of health insurance and liability insurance goes up for every business customer with every suit that is filed, and those are standard costs of doing business. Every additional employee, sadly, is also an additional threat of a lawsuit against the employer. And this fear of legal exposure hits us hardest in precisely those areas of innovative and creative products and services where America needs most to excel.
Please know that this Administration is committed to helping you get the word out about how we can stop the jackpot justice and bring back common sense, and we’re committed to helping you win this battle, one bill at a time.
I look forward to working with you on changing our civil justice system to one where victims are compensated and justice is served without killing the jobs that our economy needs.
Thank you for having me here today.