Tennessee has approved a new tort reform bill which, among other things, regulates some aspects of medical malpractice cases, institutes caps on non economic and punitive damages and makes it more difficult to get punitive damages. You can read a summary of the bill here.
In a news release, Gov. Bill Haslam, a supporter of the bill, claims that the bill will revise the state’s civil justice system "to make Tennessee more competitive for new jobs with surrounding states by bringing predictability and certainty to businesses calculating potential litigation risk and cost.”
You would think that Tennessee is having a hard time attracting businesses because of an out of control civil justice system. Yet, in 2010 Tennessee was rated as the best state in the US by one publication and as the second best by another for providing a good climate for business, according to former Senator Bill Thompson who testified against the approval of the bill. His full testimony, which makes a pretty convincing argument for why the bill is unnecessary, is available here:
Sen. Fred Thompson Testifies for Civil Justice - March 23, 2011 from TN Association for Justice on Vimeo.
Even though I don't agree with it, I can understand the argument to cap non-economic damages; and a cap of $750,000 is pretty high when compared to many other states that impose caps.
On the other hand, I have a hard time with arguments related to punitive damages. First of all, every report I have seen on the subject shows that punitive damages are rarely awarded and that the average award is not out of the ordinary. Every now and then you hear about a case with excessive punitive damages which grab a lot of headlines but these cases are rare and the damages are usually reduced by the courts anyway.
Also, the fact is that punitive damages exist to punish truly outrageous, unacceptable behavior that causes injury to create a disincentive for the defendant and others to continue to engage in the type of irresponsible conduct that created the risks and caused the injury. By placing limits on punitive damages (which are rarely awarded anyway) and, even more, by creating obstacles for people to have the right to recover punitives, tort reformers are explicitly looking to eliminate the deterrent effect of tort law.
UPDATE: (Oct 9, 2011) -- The new law went into effect on October 1. You can find a copy of the bill here. (Thanks to the TortsProf blog for the update and link.)
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