Patrick B. McGuigan | May 3, 2011

Lawsuit reform in Oklahoma: Where we’ve been, where we’re going

Patrick B. McGuigan

Governor Mary Fallin signed three lawsuit reform bills into law on April 5, one of the most significant milestones since her November 2010 election as chief executive. The following layman’s summary of the legislation was provided by Fallin’s staff after the bill signing:

“House Bill 2128 places a $350,000 hard cap on non-economic damages. Caps on non-economic damages have been proven to help create jobs and lower medical liability insurance premiums in other states. A 2008 study by the Perryman Group reports that after implementing non-economic damage caps, the state of Texas created 223,700 jobs, increased annual consumer and business spending by $55.3 billion, and grew state revenues by $1.4 billion. The study also reported that medical liability insurance premiums decreased by 21.3 percent and the number of lawsuits filed against hospitals decreased by 70 percent. Thirty states have now placed similar hard caps on non-economic damages, not including Oklahoma. H.B. 2128 will not impact economic damages, such as lost wages, medical expenses, and future loss of expected wages. The bill also includes an exception to the cap in cases of malicious conduct, gross negligence, and reckless disregard.

“Senate Bill 862 eliminates joint-and-several liability, sometimes known as the “deep pocket” rule, where each and every defendant in a tort lawsuit is liable for the entire amount of a plaintiff’s damage regardless of their degree of fault. S.B. 862 eliminates the “deep pocket” consideration, ensuring that plaintiffs seek defendants who are most at fault rather than defendants with the most financial assets.

“Senate Bill 865 requires that juries be instructed in civil cases that no part of an award for damages for personal injury or wrongful death is subject to federal or state income tax; and the jury should not consider income taxes when determining a proper compensation award.”

Visible and deserved roles at the ceremony, besides the governor herself, went to fellow Republican leaders: House Speaker Kris Steele, state Rep. Dan Sullivan, Senate President Pro Tem Brian Bingman, and Sen. Anthony Sykes. Also included were Fred Morgan of the State Chamber, officials with the Oklahoma State Medical Association (OSMA), and others who had worked to overcome a decade’s opposition from the powerful Oklahoma Bar Association, the state’s trial lawyers, and leading law firms.

Two gentlemen were missing from places of honor in front of the room and before the cameras. The first was Andrew Spiropoulos, a law professor at Oklahoma City University who also serves as the Milton Friedman Distinguished Fellow at OCPA.

The second missing face was there, but in the back of the room by himself. Dr. Eli Reshef had a look of contentment on his face. As the event ended, I walked over and said simply, “This happened because of you.” After hours of interviews conducted with him over a decade of reporting and reflecting on lawsuit reform, the rest could remain unspoken. In that wonderful accent of his, the veteran of combat in the Israeli Defense Force smiled and said, “I was one of many. We worked hard, and this is a good result.”

For decades, other than poor educational attainment, the most significant impediment to economic progress in Oklahoma was the state’s legal culture. Still, only in the modern era have political will and clout been sufficient to force a real debate and, ultimately, reforms.

Former Gov. Frank Keating wanted to change our jobs-smothering legal culture during his time in office, from 1995 to 2003, but didn’t have the legislative muscle to get there.

Early in Brad Henry’s two terms as governor, OCPA formed a task force on civil justice reform, focused on “the jobs-killing power of civil litigation.” Gov. Henry later responded with a “medical liability task force” that saw no need for a cap on non-economic damages and no need for any limits on contingency fees and joint-and-several liability.

But good ideas are good ideas, and you can’t keep good people down forever. Then-Sen. Scott Pruitt pressed new legal protections for public school educators, but fell one vote short of getting a majority in the upper chamber. Seeds were planted in that and other battles.

Things stalled, until Republicans got an unanticipated break. The Lone Star State passed meaningful tort reform. In reaction, in an incomprehensible move, state Sen. Stratton Taylor wrote a prospecting letter to trial lawyers inviting them to come to the greener litigious pastures of Oklahoma.

The Wall Street Journal jumped on the issue with a house editorial. The State Chamber said the Claremore counselor had “painted a bulls-eye on the back of every business in Oklahoma.” The OSMA laid out evidence of 60-82 percent premium hikes for physicians who had never been sued. Dr. Reshef and others spoke about the paralyzing effects of “defensive medicine.”

In 2004, Brad Henry said he supported tort reform, and a modest reform measure passed. However, the OSMA made a separate peace with trial lawyers, declaring a “moratorium” on further reform.

That’s when the story took a turn. Dr. Reshef, otherwise moderate to liberal in his politics, broke ranks with the OSMA to form a group I dubbed informally “Doctor Democrats.” They were, as an OCPA sketch put it soon after, “mad as hell, and determined not to take it anymore.”

Thus was born a broad and powerful coalition, of the sort that brings reform in the midst of chaos. The battle continued, with Senate Minority Leader Glenn Coffee pushing reform. Republicans forged a first-ever tie in the upper chamber in 2006 (having taken the state House in 2004). “Doctor Democrats” (and Republicans) were, on this, crucial allies to conservatives.

Gov. Henry made sympathetic noises on lawsuit reform, saying he wanted a “Texas-plus” reform. In 2007 (after one Democrat joined a unified Republican Senate caucus), the Legislature passed a bill that contained 18 of 28 reforms he had described as crucial. In the end, Attorney General Drew Edmondson denounced the bill, Gov. Henry withdrew from the courtship with tort reformers, and ultimately vetoed the measure.

Two years later, however, after Republicans took full control of the Senate, a better-than-nothing set of reforms passed, and Henry rediscovered the merits of legal reform. That 2009 bill was not nirvana, but it was progress. Disingenuously, at least in many cases, the bar association and others declared the war over tort reform over, and that it was time to move on to other things.

As John Wayne might put it, “Not hardly.” Back in 2008, an OCPA analysis had observed that for years—even after the intellectual case for reform had become utterly persuasive even to beneficiaries of the status quo—”the pure political power of big-time lawyers” kept needed reform from advancing.

The Republican tsunami of 2010 ensured that something would happen, and it did. Years of labor set the state for this year’s significant legislative breakthroughs, and last month’s rite of passage.

Because of its progress on lawsuit reform, Oklahoma has moved from what the American Tort Reform Association called a “judicial hellhole” toward what the Pacific Research Institute now characterizes as a system that is “salvageable.” And with the new 2011 laws in place, it would be shocking if that designation is not improved, yet again, to something along these lines: “Oklahoma is on the right road.”

In our brief exchange last month Dr. Reshef repeated what he had told me last winter: “This journey is not over.” Based on the data, Oklahoma has remained mired in the bottom one-third of all states when it comes to actual litigation costs and results.

The new law will affect all of that, but will it be enough? The future seems bright, but letting the sunshine in will require that the law actually go into effect and have a year or two to effect legal outcomes and economic decisions.

Here’s the rub: the culture of the Oklahoma judiciary and the bar associations. Right now, they are steaming at this massive invasion of their turf, even if the law doesn’t go into effect until later this year.

If the Empire strikes back, here’s an outline of the cast of characters on the dark side of the Force.

Defenders of the Stratton Taylor school of legal analysis have lost, politically, but that does not mean they will be without resources if (when?) they try to turn back the clock. They have lots of money, and lots to lose as the new laws go into effect.

Having lost the battle over “Texas-plus” reform, powerful lawyers may organize efforts to rub out the new law through litigation. If they make that move they will, when possible, reward friends and punish enemies.

They may have some odd friends. In a curious twist, a minority of legislative Republicans opposed lawsuit reform this year. It was one of a few issues where a group of self-professed conservatives tried to prevent passage of the conservative agenda. However misguided, this minority could impact the upcoming legal debate.

I have long defended judges and their role as “referees” in legal disputes. It gives this writer no joy to report that, other than the bar associations, the trial lawyer groups, and the immediate past state attorney general, the greatest impediment to lawsuit reform in Oklahoma has been the state Supreme Court.

The Court’s boldest move came in 2004, when they struck down a modest reform bill. The majority opinion derided what they deemed “unanticipated” results of laws “similar to Oklahoma’s scheme.” Scheme? In the same judicial cycle, the justices struck down a 2005 workers’ compensation reform bill, saying limits on medical forum shopping and on the number of doctors involved were “constitutionally infirm and must be stricken.”

Legal interpretation is the function of the judiciary. Protection of market share for trial lawyers is not.

Prof. Spiropoulos, in a recent commentary for The Journal Record in Oklahoma City, said some pronouncements from our state’s High Court “read like the court cut and pasted the position papers of the trial lawyer interest groups.”

Dr. Spiropoulos was the Isaiah of lawsuit reform, prophetically pressing for laws strong enough to actually affect legal culture. Like Dr. Reshef, he refused to characterize earlier efforts as the end of debate. They were both right.

In his commentary, Spiropoulos predicted that if our state justices strike down these lawsuit reforms, “the days of operating in the dark will be over. And if that happens, we’ll know just what to do.”

Was that a threat? Well, no, it was a description. The Right has learned to mimic the Left in judicial selection and retention matters where direct political action is permissible.

Having thrown down the gauntlet of interpretation, the best way to avoid a political war over the judicial function is for the state Supreme Court to allow elected representatives to make laws within the state and American constitutional framework. The justices do not have to like it, but they do have to recognize the new laws as the democratic branches of government resetting the clock.

It’s time to spring forward, not fall back. If the justices “show out,” let the slap-down begin.

Patrick B. McGuigan

Independent Journalist

A member of the Oklahoma Journalism Hall of Fame, Patrick B. McGuigan is founder of CapitolBeatOK, an online news service, and editor of The City Sentinel, an independent newspaper. He is the author of three books and editor of seven, and has written extensively on education and other public policy issues.

Loading Next