NAMIC Applauds Passage Of Tort Reform Bill

Washington - The National Association of Mutual Insurance Companies (NAMIC) senior vice president for federal affairs David A. Winston today released the following statement applauding House passage of H.R. 420, the Lawsuit Abuse Reduction Act (LARA):

"This bill would impose mandatory sanctions against those parties filing frivolous lawsuits. Our member companies have been forced to use their valuable financial and human resources to respond to such lawsuits. These resources would otherwise be available to grow their businesses and employ more American workers."

Today, by a vote of 228-184, the House of Representatives favorably approved H.R. 420, introduced by Representative Lamar Smith, R-Texas.

H.R. 420 would amend Rule 11 of the Federal Rules of Civil Procedure to penalize attorneys, law firms, or parties who file frivolous lawsuits. The legislation also limits "forum shopping," whereby plaintiffs' attorneys seek the most plaintiff-friendly jurisdictions in which to file a lawsuit against corporate defendants. Under LARA, a suit could be filed only in the jurisdiction in which the plaintiff lives, where the injury occurred or where the defendant has its principal place of business.

Also, in anticipation of House passage of H.R. 420, the Office of Management and Budget (OMB) stated, "The Administration supports House passage of H.R. 420 as it would rein in the negative impact of frivolous lawsuits on the Nation's economy by establishing a strong disincentive to file such suits in Federal and State courts. Junk lawsuits are expensive to fight and often force innocent small businesses to pay exorbitant costs to make these claims go away. These costs hurt the economy, clog our courts, and burden American businesses."

Last May, NAMIC joined the Lawsuit Abuse Reduction Coalition (LARC) representing a broad spectrum of organizations on behalf of small businesses to work for enactment of LARA. Today, it includes more than 150 organizations that represent millions of businesses and employees who are in search of common sense legislation that would help put an end to personal injury lawyers gaming the civil justice system by filing frivolous lawsuits and forum shopping -- abuses that threaten American businesses and their employees.

As a member of this coalition, Winston agrees that, "Frivolous claims and litigation tourism stifle economic growth. Each year, every U.S. citizen pays more for frivolous litigation and other abuses of our civil justice system. Today, the average family of four pays a $3,380 annual ‘tort tax,' a cost added to the price of products and services needed to cover the costs of litigation. No other industrialized country pays more as a percentage of its Gross Domestic Product."

The legislation was reported favorably out of the House Committee on the Judiciary May 25. LARA was reintroduced January 26 in the U.S. House of Representatives by Representative Lamar Smith, R-Texas. Last year, the House passed the Lawsuit Abuse Reduction Act of 2004, H.R. 4571, on September 14, 2004, by a bipartisan vote of 229-174.

SOURCE: NAMIC