Pending Tort Reform and Its Implications

This month the S.C. House of Representatives gave third and final approval to a comprehensive tort reform bill. The measure, which would limit punitive damages in lawsuits and require certain procedures when awarding damages, has the support of many business organizations, which say it will lower the cost of doing business in the state and make South Carolina more competitive nationally. The bill is aimed at protecting small businesses from frivolous lawsuits that can oftentimes lead a small start-up to be put out of business. (Source – Charleston Regional Business Journal)

Proponents say that the goal of the bill is to move forward with pro-business measures to make our job-starved state more competitive so it can land more jobs. According to House Speaker Bobby Harrell, “Our goal with this tort reform bill is to bring fair balance to our system, lower the cost of doing business and make our state more competitive while still protecting our citizens from wrongdoing.” (Charleston Regional Business Journal)

However, the civil justice system allows citizens to sue companies that act poorly. So the concerns over the Legislature’s bill centers on how it could take away citizens’ rights and protect bad companies. In the bill, lawmakers are trying to cap punitive damages — monetary awards for companies acting recklessly — at $350,000. Many plaintiffs’ lawyers will tell you to watch out if punitive damages are capped. Why? Because for a small percentage of businesses, that’s a write-off, which could encourage them to be less careful with what they do.

What is most worrisome about this new rush to reform the tort system is the intellectual foundation upon which the case is being built. To say capping damages is needed to “develop the environment” in order to make the state more attractive to businesses is disingenuous in three ways. First, companies behaving appropriately don’t have to worry much about being involved in civil lawsuits that seek huge punitive damages because they are already behaving appropriately and any suits involving damages aren’t likely going to be punitive in nature. Therefore, having a punitive damages cap for a good company that might be interested in moving here really isn’t that much of an incentive. However, capping punitive damages might attract companies that could get in trouble. Second, South Carolina is already very competitive in many business sectors.  On Oct. 28, 2010, House Speaker Bobby Harrell, who sponsored the tort reform bill, highlighted 18 areas where South Carolina was in the top 10 most competitive business climates. There is no indication that limiting punitive damages will improve South Carolina’s status. Third, there are better ways to improve the business climate than tinkering with the civil justice system.  (Source – Brack, Andy, Free Times, “Tort Reform Isn’t Silver Bullet for Jobs”)

It is important to understand the amount of damages that you may be able to recover. Miller|Conway Attorneys in Goose Creek can answer all of your tort reform questions. We are Goose Creek Lawyers that are dedicated to ensuring that you maximize your recovery. Please feel free to call our offices for a free consultation at 843.764.3334.