Fight Organized Crime: Re-elect No One

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Here's your 'demonstration project,' Mr. President -- it's called Mississippi
By: David Freddoso
Commentary Staff Writer
09/21/09 9:59 AM EDT

Since passing tort reform in 2004, Mississippi has seen the number of medical malpractice claims plummet by 91 percent from its peak. The state's largest medical liability insurer dropped its premiums by 42 percent, and has offered an additional 20 percent rebate each year since tort reform went into effect.

That is the story that Mississippi's Republican, governor, Haley Barbour, offered on Friday, speaking at the Heritage Foundation. He also made an observation about President Obama's decision to offer only token "demonstration projects" on lawsuit abuse rather than address it meaningfully in his health care reform proposal.

"It's mysterious to me that the administration and the leadership of Congress talk about health care reform and the goal of reducing costs, and yet refuse to put tort reform into the legislation," he said. "I believe $200, $250 billion a year in health care costs is caused by litigation. It may be more than that. But this is the lowest hanging fruit, this ain't rocket science. If they want a demonstration project, come down to Mississippi, and I'll show you a demonstration project." (Last month, Barbour wrote this op-ed for The Examiner on insurance reform.)

Mississippi's legal situation was particularly bad when he came into office, Barbour said. "When I ran for governor in 2003, for the third consecutive year the U.S. Chamber rated Mississippi the worst state in the country for lawsuit abuse -- a judicial hell-hole," he said. "And the reason they rated us that way is because we were. The state was overrun by out-of-state plaintiffs shopping for generous venues, some of which rarely if ever ruled for defendants.

Mississippi's reforms were truly sweeping. The new laws:

* Changed rules of venue, to prevent abusive court-shopping.
* Got rid of the rule of "joint and several liability" -- as Barbour put it, in order to protect the defendant who is only "2 percent negligent" but who has the "deep pockets" that trial lawyers look for when deciding whom to sue.
* Protect innocent landowners and sellers of products. Under the reforms, "if a pharmacist is selling a drug that the FDA has said is appropriate for the purpose it says it's used for, unless the pharmacist knows it has been tampered with, then that pharmacist is immune," said Barbour.
* Put caps on punitive damages, with a sliding scale based on the size of the defendant corporation.
* Put caps on non-economic damages, particularly to deal with medical malpractice liability.

Tort reform made Mississippi liveable for small business and for doctors and hospitals, Barbour said, but it wasn't easy to pass. He discussed the conditions needed to pass it in a state -- chief among which was heavy and involved support from the governor.

"You can't pass real tort reform unless it's led by the governor," he said. "The other side is tough. They have enormous resources. And they fear the trial lawyers -- that if you beat them on tort reform, they won't have those resources anymore." That's why it is not enough to have a governor who works for it behind the scenes.

In addition to gubernatorial leadership, Barbour said that success in curbing lawsuit abuse requires unity between the business and medical communities. "Do not let the trial lawyers separate the medical community from the general business community," he said. People are more likely to understand the effects of liability on medicine than on business, he said, and so it is important to have the whole package pass together.

As a third condition for passing reform, Barbour cited the need for small business to lead the effort, even if big business has to pay for it.

“The way tort reform wins is when legislators go to church, and their friends at church tell them, this is important, this matters, we're watching," he said. "The ones that are not right, they have to understand they are paying a price at home, that it is a serious price. That this is not just another issue. That these are small business people who think someone is going to sue them and take away everything they've worked for for the last 50 years.”

In the wake of tort reform's passage, Barbour added, plaintiffs still have the right to sue and recover damages, and trial lawyers can still make a living -- just not at the previous, exorbitant level. "It has not been very contentious," he said. "Most of the trial lawyers -- particularly the ones who are really good lawyers, think that it's fair," even if "they don't like it."

In addition to the benefits to the medical profession, tort reform has ushered in a new age of economic growth in Mississippi. Such major corporations as General Electric, PACCAR, and Severstal are making major post-tort-reform investments, all on the heels of Toyota's decision to bring 2,000 jobs to the state in 2007.

Barbour said he believes the other companies "wouldn't have really noticed us if it hadn't been for Toyota, and Toyota wouldn't have considered us if it hadn't been for tort reform."