FRONT PAGE CONTRIBUTOR
It’s Time for Lawyers to Loosen Their Grip on the American Economy
As we we peer over the “Fiscal Cliff” and face the upcoming kick-off of Obamacare’s implementation, our already ailing economy is about to get bushwhacked again by these two 800 pound gorillas. One reason we’re here is the incredible influence of trial lawyers in Washington, D.C. and in state capitols across the country.
It’s been said that states are laboratories of innovation, and as a believer in federalism I would say that we must look to the states to solve some of the grim problems we face in Washington. In one case we can turn to my home state of Texas as an example for how to enact sound, reasonable and fair legal reforms that provide a boost to patient care by protecting physicians and hospitals from unwarranted malpractice claims and by encouraging the growth of business by shielding them from frivolous lawsuits allowing them to focus on creating jobs.
America’s civil justice system is the most expensive in the world costing 1.74-percent of the U.S. GDP in 2009, with a tort cost per-person of more than $800.
In Henry The Sixth, Shakespeare famously wrote, “The first thing we do, kill all the lawyers.” We haven’t killed any lawyers in Texas, but we have restricted their ability to sue physicians and businesses for frivolous liability claims. That might seem trivial, but in the long run it has meant a more hospitable legal environment that has contributed to our economic success, something Washington could certainly learn from.
As the son of a doctor and nurse, I’ve seen the impact of runaway personal-injury trial lawyers firsthand so when I worked in Washington, D.C. for Senator John Cornyn from 2002 to 2005, one of the issues I watched closely was tort reform. There were not any great victories for tort reform while I was in D.C. and there still haven’t been, but now is a perfect time for Capitol Hill to get engaged.
As Speaker Boehner and President Obama have bickered back and forth about taxes here and cuts there, they have failed to recognize other means of lessening the burden on the federal government. According to the New York Times, if Congress passed meaningful malpractice reform for physicians we could save $8 billion to the deficit by 2015 or about the same amount as increasing the Medicare eligibility age to 68. Sure that’s only a start on the way to some serious budget trimming, but it would allow physicians to practice without as much fear of ambulance-chasing attorneys taking them to court over every decision to a patient’s care, something we have accomplished in Texas.
At the peak of our jackpot justice crisis here, Texans were being denied access to critical healthcare services as doctors and hospitals spent considerable amounts of their budgets on liability costs. In large expanses of the Lone Star State some patients were being forced to travel great distances simply to see a specialist or even have a baby delivered. Many of these services couldn’t be provided in every region of the state because of escalating liability costs.
The situation was so bad in Texas, where crony Democrat judges, supported by liberal personal-injury trial lawyers that 60 Minutes did a piece entitled, “Justice for Sale,” detailing just how awful in was in the Lone Star State.
Through the leadership of Governor Rick Perry, business leaders from across the state and advocacy groups like Texans for Lawsuit Reform, we were able to reign in these over-litigious attorneys and provide Texans with a more reliable and stable healthcare environment.
In fact since these reforms were enacted, 33 counties in Texas were able to get their first emergency room physician. Think about that for a moment. If you had no immediate access to an emergency room, how comfortable would you feel about starting a family or establishing a business? Many in Texas faced that problem, but no longer.
Since 2003, malpractice insurance rates have plummeted more than 30-percent, and Texas has added nearly 12,000 physicians.
With meaningful malpractice reform in Washington based on the Texas model, Americans could see greater access to medical services, providing critical care access that may be sorely lacking in an Obamcare environment.
Looking back on the last 10 years we’ve seen a drastic improvement here in Texas, not only in the quality of care that has been delivered to Texans with a more stable robust healthcare network, but also in our state’s economy, something that Governor Rick Perry talked about recently on CNBC.
The human instinct is to be free. Free from overtaxation, free from overregulation, free from over-litigation. And until we free up the entrepreneurs in this country, we are going to struggle economically as a nation.
America’s economic growth is stagnant. As my colleague Francis Cianfrocca says on Coffee and Markets, we are merely “bumping along the bottom,” however, here in Texas we’ve enjoyed economic success that many other states have not. As people are fleeing high-tax, poor functioning states like California, they’re flocking to the Lone Star State. Why? Because we have a more stable and predictable economic, regulatory and legal climate.
Texas has no personal income tax, a less intrusive state government and we have enacted liability reforms that make the Lone Star State more attractive to new businesses and those looking to relocate.
In a recent study done for the U.S. Chamber of Commerce that surveyed more than 1,100 executives and senior attorneys, they found that 70-percent indicated that a state’s lawsuit environment impacts their business decisions and the Texas Association of Business found that 95.6-percent of its members list lawsuit reform as an important part of the positive business climate in Texas.
Business news network CNBC ranked Texas as its “Top State for Business” in 2012, the third time the Lone Star State has topped their list in the six years of their study, and ChiefExecutive.net ranked Texas as the “No. 1 State for Business” for the eighth consecutive year saying that the state’s business climate is allowing it to siphon away business from other states, including defections from California’s Silicon Valley.
Former member of the California Legislature Chuck DeVore also left the Golden State for Texas recently saying, “I moved to Texas late last year, joining the 2 million Californians who have packed up for greener pastures in the past ten years, with Texas the most common destination.”
Even Apple, the pride of Cupertino, California is expanding to Texas, announcing earlier this year that they will build a new campus in Austin with 3,600 employees costing $304 million. With the expansion of their already considerable workforce, Apple may even overtake the Lone Star State’s own Dell Computer for employees in the Austin area.
California is currently at the top of the American Tort Reform Association’s “Judicial Hellholes” list, a prized distinction for the Golden State, I’m sure. ATRA says California, “is the undisputed heavyweight champion of the consumer class action,” where small businesses have been “under siege from trolling disability-access lawyers and their professional plaintiffs.” Would you want to conduct business in a state with a legal environment as hostile as that?
Business leaders aren’t the only ones who think tort reform is important. A recent survey found that a whopping 89-percent of American voters think lawsuit abuse is a problem, and it’s not just isolated to Republicans as some opponents of reforms would have you believe. An impressive 86-percent of Democrats and 89-percent of Independents join the 94-percent of Republicans who identify this is a major issue.
The survey also found that 78-percent of respondents agree, “Enacting lawsuit reform is an important part of improving the U.S. business environment and attracting and keeping jobs.”
This is not an issue that policy makers in Washington and in state houses across the country can continue to ignore.
In a framed picture on my office wall is a quote from Abraham Lincoln.
Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man.
Never stir up litigation. A worse man can scarcely be found than one who does this.
The critical grip that over-litigious attorneys have on America’s healthcare system and our economy has to end. If we are to get America on solid financial footing again, we must enact sound and reasonable tort reform policies freeing physicians and entrepreneurs from the fear of frivolous litigation.