The House Energy and Commerce Committee this morning is marking up H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, legislation to control the unnecessary or excessive litigation costs that afflict health care in the United States. (Committee video. Hearing started at 10:41 a.m.)

In a timely and important contribution to the debate, the American Tort Reform Association has released a new paper,”The Constitutional Foundation for Federal Medical liability Reform.” In a news release, ATRA explained:

The ATRA paper, The Constitutional Foundation for Federal Medical liability Reform, addresses in some detail questions recently raised about whether provisions of H.R. 5 are consistent with the Commerce Clause, the Tenth Amendment, the guarantees of equal protection and due process, and the right to a jury trial.

“Citing more than 100 years’ worth of Supreme Court precedent, the consistent rejection of federal constitutional challenges to state medical liability reforms, and the opinion of the Congressional Research Service itself,” Joyce said, “our paper puts an end to any serious concern or question about the constitutionality of federal medical liability reform.

“With respect to perhaps the most important question about whether the Commerce Clause gives Congress sufficient authority to promulgate medical liability reform for the nation as a whole, it’s not even a close call. Congress has that authority.

Author of the paper is Mark A. Behrens of Shook, Hardy & Bacon L.L.P., a man who knows his civil liability issues. The National Association of Manufacturers has worked with Behrens and the law firm on numerous occasions over product liability litigation and related issues.

UPDATE (10:45 a.m.): Very timely report. Rep. Tammy Baldwin (D-WI) is making a “states rights” argument against the bill, proposing an amendment. She’s always been such a strong advocate for federalism.

Rep. Lamar Smith (R-TX), the chairman of the House Judiciary Committee, and Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Judiciary Committee, today introduced an important piece of civil justice reform, the Lawsuit Reduction Abuse Act.

The House bill is H.R. 966 (text).

From the joint news release:

The Lawsuit Abuse Reduction Act (LARA) imposes mandatory sanctions for lawyers who file meritless suits in federal court. Federal rules mandating sanctions for frivolous suits were watered down in 1993, resulting in the current crisis of widespread lawsuit abuse. LARA restores the mandatory sanctions which hold attorneys accountable for lawsuit abuse.

Specifically, the legislation:

• Reinstates the requirement that if there is a violation of Rule 11, there are sanctions (Rule 11 of the Federal Rules of Civil Procedure was originally intended to deter frivolous lawsuits by sanctioning the offending party).
• Requires that judges impose monetary sanctions against lawyers who file frivolous lawsuits. Those monetary sanctions will include the attorney’s fees and costs incurred by the victim of the frivolous lawsuit.
• Reverses the 1993 amendments to Rule 11 that allow parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been served.

The House Judiciary Subcommittee on the Courts has a hearing scheduled on the bill at 10 a.m. Friday, March 11. Victor Schwartz, general counsel for the American Tort Reform Association, will be one of the witnesses, ATRA reports.

Gov. Scott Walker and the Wisconsin Legislature have led the way in 2011 in improving their state’s business climate by enacting a major civil justice reform package, but other states are aggressively following the same pro-jobs, pro-investment path. Sherman “Tiger” Joyce of the American Tort Reform Association reports promising developments in major states around the country in a piece in Metropolitan Corporate Counsel, “Prospects for Tort Reform Strong in Many States.”

Despite the shellacking its candidates took in last November’s elections, the nation’s always-formidable lawsuit industry remains optimistic about advancing its liability-expanding agenda here in Washington. What the new House majority may prevent plaintiffs bar lobbyists from achieving legislatively, they expect to achieve administratively through the regulatory agencies of the executive branch. (continue reading…)

Quin Hillyer of The Washington Times comments on the should-be-higher profile case of Comer v. Murphy Oil U.S.A., in a column, “No butterfly caused Katrina“:

A case called Comer v. Murphy Oil USA, winding its way through federal courts, offers leftists a perfect storm of fantasy fulfillment. Yet their fantasy balloons may well get popped. If the case is decided correctly, it could strike separate blows against both lawsuit abuse and global-warming alarmists, including those at the radicalized Environmental Protection Agency. …

This is the class-action lawsuit in which Mississippi residents sued  150 energy companies, chemical manufacturers and other emitters of greenhouse gases, claiming the emissions increased global warming, which made Hurricane Katrina so much more powerful and damaging to property. Compensate us!

Hillyer writes:

Remember the theory of the “butterfly effect,” whereby the flap of an insect’s wings in Brazil somehow could cause a tornado in Texas? In essence, the Comer theory amounts to sort of a butterfly effect writ extra-large. The problem with the butterfly effect is that a gazillion other creatures are flapping their wings all over the world, so it is literally impossible ever to prove a cause-and-effect relationship between airflows in Brazil and Texas or between Bolivia and Tennessee.

The trial judge, U.S. District Judge Louis Girola, Jr., dismissed the lawsuit because it sought to use the courts to balance complicated economic, environmental and international interests. These interests are constitutionally the domain of the political branches of government, not the courts. Unfortunately, a three-judge panel of the Fifth Circuit reversed, allowing the case to proceed. Now the full court will now consider the litigation en banc. Hillyer:

Remember, this first fight involves mere standing to sue, not the merits of the global-warming, butterfly-effect claims. But if it proceeds to trial, literally every one of us who uses energy could be legally liable for some degree of Katrina’s devastation. Energy-company shareholders, including retirees whose pension funds rely on stock in those companies, would see their savings diminished, while consumers surely would pay vastly higher prices if the millions of people who suffered damages in Katrina could lay claims for damages.

Hillyer cites an amicus brief filed in the litigation by the American Farm Bureau Federation, joined by the National Association of Manufacturers, the the American Tort Reform Association. The brief and case summary is available at the NAM’s Manufacturing Law Center’s entry on Comer, here.

Last October a three-member panel of the U.S. Court of Appeals for the Fifth Circuit ruled in Comer v. Murphy Oil USA [585 F. 3d 855 (5th Cir. 2009)] that private landowners along the Gulf Coast of Mississippi could use Mississippi state law to sue more than 150 energy and manufacturing companies for having contributed to global warming. The argument was that global warming made Hurricane Katrina more powerful, causing the damage to their property, and therefore the companies should pay up. (Opinion)

The panel’s opinion was a terrible example of a court deciding that the judiciary is the proper authority to rule on a matter of policy — how society should allocate economic resources in response to the possibility of anthropogenic global warming — that appropriately belongs with the elected, policy-making branch of government, Congress. Indeed, the trial court had dismissed the suit on the grounds it raised non-justiciable political questions.

Good news. In a little noticed decision last Friday, the Fifth Circuit vacated the panel’s ruling and ordered an en banc hearing of the case, that is, decided to bring the litigation before the full court of appeals. (The order is here.) En banc hearings are relatively rare, but the stakes in this case — and the extreme position taken by the panel — warrant the review.

The National Association of Manufacturers joined the American Farm Bureau Federation and the American Tort Reform Association in filing an amicus brief urging the en banc consideration. Excerpt:

The theories alleged by Plaintiffs would dramatically change tort law and negatively affect business and consumer practices far beyond the energy industry and the parties before the court. The practical application of these theories will burden trial judges with extraordinarily speculative litigation against American farms,manufacturers, and virtually all other businesses; arbitrary selection by plaintiffs’ counsel will be the touchstone for liability. The tenuous link between plaintiffs’ alleged harm and defendants’ alleged conduct is beyond anything ever recognized in American tort law. Causation issues will also create an impossible burden for judges and juries. Adjudicating such claims would require a fact-finder to balance the social utility and costs of an enormous range of industrial, agricultural, manufacturing and individual activities that are only remotely related (if at all) to the alleged harm in order to assess and to assign potential liability.

Further, complex regulatory matters should remain within the domain of the political branches, as the constitutional power to engage in the balancing of such economic, environmental and international interests is vested in them. Constitutional issues aside, only these branches of government can fully assess the impact of carbon emissions limits on the entire range of emitters, whether energy producers, farmers, or others not before the court. Those branches can also factor in the financial burden on consumers to afford the added costs associated with such restrictions to their utility, food and other bills.

Comer is one of three major cases where the courts are being asked to assign liability to U.S. companies for contributing to global warming and property damage. The others are Kivalina v. ExxonMobil, in which an Alaskan native village has sued oil companies for beach erosion, a suit since dismissed by a federal district judge; and Connecticut v. American Electronic Power, in which the Second Circuit has ruled that states may bring a federal public nuisance suit against electric utilities.

News, commentary:

• Associated Press, “Appeals Court to revisit Katrina lawsuit“
• Troutman Sanders, “Fifth Circuit Grants Rehearing En Banc in Comer Climate Change Tort Litigation“
• Gardere Wynne Sewell LLP news release “Climate Change Litigation Hits A Roadblock In Fifth Circuit Court Of Appeals“
• Insurance Journal, “Global Warming Litigation Just Getting Started; Costs Will Be Significant“

The American Association for Justice — the trial lawyers lobby — held a press briefing Monday to outline the group’s legislative agenda for 2010. After the usual anti-business fulminations, the AAJ’s news release offers a list of special interest legislation for the plaintiffs’ bar, including the coded language for opposing medical liability reform in Congress: “Protecting patients injured by medical negligence.” That’s a laudable goal, of course, but limits on non-economic damages do not in any way diminish patient protections.

So far, so good for the litigation lobby. The Senate’s health care bill contains provisions to create state demonstration projects on medical liability that actually prevent effective, cost-saving reforms. As the AAJ’s president, Anthony Tarricone, boasted in an e-mail to members in late December:

I am pleased to report that this bill is clear of any provisions that would limit an injured patient’s rights concerning medical negligence claims. This is a stunning victory for your clients considering great pressure from the insurance industry and other interests to include medical malpractice tort “reform” in this bill. While there is a provision for demonstration projects, it provides an absolute opt-out clause for plaintiffs at any time. While some states may embark on demonstration programs we find objectionable, the opt-out provision for plaintiffs minimizes this concern.

Still, as the intraparty negotiations continue over the health care legislation, it’s the House version that may contain the most dangerous provision, an invitation for more lawsuits that Victor Schwartz of Schook, Hardy and Bacon identifies as a “trial lawyer earmark.”

In a news release from the American Tort Reform Association, Victor points to Section 257 in the House-passed legislation.

“Buried in the House health care bill is a multibillion-dollar bonanza for the trial lawyers,” explained ATRA general counsel Victor Schwartz, referring to Section 257 of the legislation. “The section was inserted without one moment of hearings on its merits.”

He said Section 257 “would empower state attorneys general to hire their trial lawyer friends and bring cash-heavy private lawsuits against practically anyone – small and large employers, health care providers, insurers, and others – for any violation of any one of thousands of regulations that will flow from the bill. The section is not in the Senate bill, but trial lawyer lobbyists with total access to the House and Senate leadership are prepared to do everything possible to keep it in the final legislation.”

It’s a stealth campaign, says Victor (who has represented the NAM in legal cases). And stealthiness explains why the AAJ did not mention Section 257 in its list of priorities.

The House health care bill is H.R. 3962, the Affordable Health Care for America Act. Here’s the language:

SEC. 257. ACTIONS BY STATE ATTORNEYS GENERAL:
Any State attorney general may bring a civil action in the name of such State as parens patriae on behalf of natural persons residing in such State, in any district court of the United States or State court having jurisdiction of the defendant to secure monetary or equitable relief for violation of any provisions of this title or regulations issued thereunder. Nothing in this section shall be construed as affecting the application of section 514 of the Employee Retirement Income Security Act of 1974.

The Patient Safety and Medical Liability Reform National Advisory Council (NAC) Subcommittee met yesterday in Washington, initiating the long, consultative process that will lead to demonstration projects that will allow Congress to exclude tort reform from any health care legislation because, hey, they’re working on it. Here’s the agenda and a fact sheet on the $25 million White House initiative.

Sherman “Tiger” Joyce, president of the American Tort Reform Association, submitted a written statement to the advisory panel subcommittee, accmpanied by an ATRA news release, “ATRA to HHS: Surest Road to ‘Patient Safety’ is Access to Top Medical Specialists, Drugs and Devices.” Excerpt:

Washington, DC, October 26, 2009 — As a Department of Health and Human Services panel today convened a hearing to begin discussions of medical liability reform demonstration projects, American Tort Reform Association president Tiger Joyce reminded policymakers that, “Without access to the best specialists and live-saving drugs and medical devices, much of the recent talk about medical errors and patient safety could quickly become academic.”

ATRA’s written testimony to HHS’s Patient Safety and Medical Liability Reform National Advisory Council Subcommittee, which conducted today’s tightly controlled hearing here in Washington, “was the only means by which to express our views and it was quite limited in length,” Joyce noted. “An effective medical liability system should provide predictability and fairness, guided by the over-arching principle of equitably and promptly compensating those who are truly injured by medical negligence,” Joyce’s written statement began. “A balanced system also would help to promote access to health care, deter harmful practices, and reduce the cost of wasteful ‘defensive medicine.’ But in these areas, the current system comes up short.

If we tend to cynicism about the medical malpractice demonstration projects — and grants – it’s because President Obama has never asked that tort reform be included in reform legislation, and he’s ruled out caps on non-economic damages. In recent remarks to the National Association of Manufacturers, Health and Human Services Secretary Kathleen Sebelius did not mention the issue. And, as former Vermont Governor Dr. Howard Dean said, “The reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers in addition to everybody else they were taking on, and that is the plain and simple truth.”

Take a look at the American Association of Justice’s lobbying in the 3rd Quarter on the issues of health care tort reform. They’re against it.

For all the skepticism this process warrents, comments by an experienced lawyer friend of ours remind us to keep paying attention. He notes that these demonstration projects need not necessarily be directed toward cost savings or the reduction of frivolous litigation. A group could apply for a grant and use the demonstration project to undermine court rulings or past reforms. So examine those grants carefully.

By the way, did anybody see any news coverage of yesterday’s meeting?

We’ ve paid little attention to the political goings on in Wisconsin since 2007, when Gov. Jim Doyle tried to pass a tax on oil company revenues, prohibiting them from passing the tax onto consumers. The tax grab eventually died for many reasons, including its obvious violation of the Commerce Clause.

The governor is once again sending business a message: Stay away! Attempting to undo the civil justice reform measures of the 1990s, Gov. Doyle included a major expansion of business and individual liability in his budget (Assembly Bill 75). According to Wisconsin Manufacturers and Commerce’s fact sheet:

It eliminates current joint and several liability rules that compare a plaintiff’s liability to each person who negligently caused the plaintiff’s injury.  Under the budget bill provisions a plaintiff could collect damages even when he or she is more at fault for the injury than any individual defendants, as long as the plaintiff’s liability is not greater than the combined negligence of all the persons against whom recovery is sought.

Further, it repeals current law where the liability of a person who is less than 51 percent negligent for an injury is limited to that person’s percentage of the total negligence.  Finally, it repeals current law that limits joint and several liability to a person whose negligence for the injury is 51 percent or more of the total liability.  Assembly Bill 75 provides that any person whose negligence is equal to or greater than the negligence of the person seeking recovery is jointly and severally liable for all the damages award to the person seeking recovery.

Inclusion of policy provisions in fiscal bills is generally frowned upon, but it’s not clear whether the Legislature will remove the language as in years past. Democrats took control of the Assembly in the 2008 elections and expanded their control of the Senate, so trial lawyers are seeing an opportunity for major policy gains. See also:

• Wisconsin Civil Justice Council Fact Sheet
• Wisconsin Civil Justice Council Memo to Legislature
• Wisconsin Law Journal, “Lawyers divided over proposal”
• Legislative Analysis, via Hamilton Consulting Group.

Unfortunately, Wisconsin is just one state of many where the trial lawyers are trying to expand the opportunities to cash in on the litigation lottery. Sherman “Tiger” Joyce of the American Tort Reform Association summarizes the activity in the state legislature in the April issue of Metropolitan Corporate Counsel, “Rampant “Litigation Legislation” (Except Southeast) Threatens Recovery.”

UPDATE (1:05 p.m.): The Capital Times of Madison reports today, “Legislature set to change limits in personal injury cases.” Cutting to the chase…

“This is simply about the trial lawyers seeking out those who have the deepest pockets,” said Bob Fassbender of the Wisconsin Civil Justice Council Inc., a coalition representing Wisconsin employers that was formed earlier this year to fight such legislation. “But it’s going to have a chilling effect on the state’s business climate at exactly the wrong time.”

Victor Schwartz, general counsel for the American Tort Reform Association (who has also represented the NAM on occasion), issued a statement in reaction to the Supreme Court’s ruling in Wyeth v. Levine. From ATRA:

Personal injury lawyers will applaud today’s Supreme Court decision, but we caution against any over-reading of the Court’s ruling. As the Court’s decision makes clear, implied preemption cases are fact-intensive, turning on what information the agency considered in a specific instance.

The Supreme Court’s decision focuses more attention on the flipside of the federal preemption coin. Several states have already determined, through courts or legislatures, that due deference should be given to the FDA in assessing the validity of a medicine’s warnings, particularly when there has been no wrongdoing by the defendant. The unfortunate truth is that all medicines come with risks. States should pick up the baton left for them today and join these other states in yielding to FDA scientists when, after years of earnest study, the FDA stamps a drug as safe and effective when accompanied by warnings explaining a medicine’s known risks.

U.S. Secretary of Agriculture Ed Schafer headlines this week’s “America’s Business with Mike Hambrick,” highlighting the benefits of trade to the U.S. economy even during the tough times of recession. Secretary Schafer looks at prospects for the pending U.S. free trade agreements, and sees hope for congressional action next year on Colombia and Panama, if not Korea. (For more from this interview, see this post on Shopfloor.org.)

Also on the program this week is Peter Buffett, musician, composer and son of mega-investor Warren Buffett. Peter will be attending the Future Capitals Summit in Abu Dhabi on January 13-15. This conference is taking place to discuss which countries will emerge as centers of commerce in the coming years, a topic of the younger Buffet’s expertise.

The American Tort Reform Association has released its latest “Judicial Hellholes” detailing the states and venues where frivolous and abusive lawsuits drive up costs and destroy justice. ATRA’s general counsel, Victor Schwartz, joins Mike to tell us which jurisdictions are improving and which are becoming even more hell-like. We’ll follow that up with our “Legally Insane” case of the week with Renee Giachino of the American Justice Partnership.

Wind power promises to be an important part of America’s energy portfolio in the coming year. Here to give the lowdown on wind’s potential is Greg Wetston, Senior Director for Government Affairs at the American Wind Energy Association. And for another perspective on wind power, on the program is Steve Lockard, President and CEO of TPI Composites. TPI Composites manufactures the blades you see on those large wind towers.

In our regular segments, NAM commentator Hank Cox recalls “The Way It Was.” And the National Association of Manufacturers President Gov. John Engler will close the program with “The Last Word.”

For more about “America’s Business” and to listen to the program online, please visit www.americasbusiness.org.