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Legal Reform Is Badly Needed

Congress this year hopes to enact desperately needed legal reform legislation. One legal scholar finds, “Our lawsuit industry too often operates as an engine of injustice and as a drain on the economy,” while a Washington Post columnist states that our tort system is “an abomination.”

It’s a system that brings tremendous costs each year — an estimated $246 billion in 2003 — with less than half of that money going to injured plaintiffs.

Rather than punishing bad behavior in a rational way, our current system has created a culture of legal fear. I am hopeful Congress

will enact reform this year, including bills addressing class action, bankruptcy, medical liability, frivolous lawsuits and asbestos.

Class Action
Class-action litigation has reached a crisis point. Interstate cases involving millions of dollars and citizens from all 50 states are not being heard in federal court where they belong. Instead, “litigation tourists” find state and local courts known as “judicial hell-holes” to file their cases.

Class-action filings in state courts have increased 1,000 percent over the past 10 years; in some notorious magnet jurisdictions, it’s 4,000 percent over the past five years. Trial lawyers shop for courts and judges willing to act as accomplices in a judicial power grab by hearing nationwide cases, and thus setting national policy in a handful of local courts.

Too often, these cases produce coupons for class members and the attorneys bag millions, these costs are passed on as higher prices for consumers and fewer jobs for workers.

Reforming class-action rules will move these national cases where they belong — federal court — while cracking down on outrageous coupon settlements that benefit the attorneys at the expense of class members and the public.

Bankruptcy Reform

The House has passed bipartisan bankruptcy reform legislation on eight occasions in recent years and came extremely close to enacting a conference report in 2002. Many are abusing the current bankruptcy system by using it as a financial planning tool rather than as a course of last resort.

Consumer bankruptcy filings have proliferated over the past decade, with the number of bankruptcy filings escalating by nearly 200 percent to more than 1.6 million cases filed in fiscal 2004. Losses from bankruptcy filings essentially amount to a $400 annual “tax” on every household in our nation.

The bankruptcy reform legislation cracks down on those abusing the bankruptcy system by ensuring those who can afford to repay at least part of their debts do not walk away and pass their debts on to others. Some of the most needy and deserving members in our society would benefit from this legislation. Domestic support claimants, for example, will receive much-needed special protections while families with retirement pensions and education IRAs will not have to use these funds to pay creditors. Family farmers in economic distress will have greater protections to help them keep their farms while they regain their solvency.

Medical Liability
A national medical insurance crisis, driven by unlimited lawsuits, is devastating our nation’s health care system and hurting patients everywhere.

Doctors are being forced to leave their practices or retire early, particularly in high-risk specialties such as emergency medicine and obstetrics and gynecology. In short, unlimited lawsuits are hurting Americans’ ability to access affordable health care by driving doctors out of the healing profession.

The House has passed common-sense legislation based upon California’s time-tested health care reforms, which have proven highly successful since their enactment in 1975. California’s reforms include reasonable limits on inherently unquantifiable and subjective damages, and limits on the contingency fees lawyers can charge so deserving patients will receive larger awards. Nothing in the HEALTH Act limits an award of economic damages from anyone responsible for harm. The HEALTH Act allows for very large, multi million-dollar awards to deserving victims without wasting billions of dollars on an inefficient medical liability system.

The Congressional Budget Office has concluded that “under [the HEALTH Act], premiums for medical malpractice insurance ultimately would be an average of 25 percent to 30 percent below what they would be under current law.”

Billions of dollars currently going toward lawyers and lawsuits could be spent on patient care if Congress enacted the HEALTH Act.

Frivolous Lawsuits
The House has also taken steps to crack down on all types of frivolous lawsuits by passing the Lawsuit Abuse Reduction Act. Without the threat of certain punishment for filing frivolous lawsuits, innocent people and small businesses will continue to face legalized extortion due to frivolous lawsuits. Currently, the harsh economic reality dictates that paying off frivolous claims through monetary settlements often is cheaper than litigating the case until no fault is found.

LARA would require penalties and sanctions for those filing frivolous lawsuits. These mandatory sanctions would serve as a deterrent to those abusing the litigation process. In fact, Sen. John Edwards (D-N.C.) during the presidential campaign endorsed the same sorts of penalties for filing frivolous lawsuits that LARA contains. LARA would also prevent forum shopping by requiring that personal injury cases be brought only where the plaintiff lives or was allegedly injured, or where the defendant’s principal place of business is located.

Finally, legislation to address health care problems due to asbestos exposure, in addition to limits on obesity-related lawsuits, would also improve justice in our legal system.

Our current legal system is hurting the American society in many ways: consumers pay higher prices, businesses hire fewer workers, hospitals and trauma centers close, a fear of litigation reigns.

I’m optimistic this Congress, in concert with President Bush’s leadership, will enact legislation to fix many of these legal abuses and restore some common sense, fairness, and justice to our tort system. It’s long overdue.

Rep. Jim Sensenbrenner (R-Wis.) is chairman of the Judiciary Committee.

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