Tort Reform Gaining Momentum

Republican executive branch and Congress boosts tort reform

With the Bush administration renewing its claim to the executive branch and Republicans taking more seats in Congress, trucking executives are hopeful that sweeping tort reform will soon be enacted.

Herb Schmidt, president of Contract Freighters Inc. (CFI), told Fleet Owner that excessive litigation against the high-risk trucking industry is among the chief threats to profitability and fair competition.

“Medical costs go up, and the cost of liability insurance goes up in an environment where Democrats are under control, period,” said Schmidt. Anecdotally, Schmidt has seen reform bills killed in the House and Senate by Democratic minorities. “In the tort reform side there hasn’t been enough of a majority in the House and Senate side to make it federal,” he said. “However, there have been meaningful tort reform in numerous states.”

Schmidt has offered testimonies to the Senate and House committees on reform issues.

“[Litigation is] a major cost to transportation,” Schmidt said. “You could be parked and not at fault, and you could be 1% negligent— and still could pay $10 million in damages. [CFI] lost [its] biggest settlement during an incident where we were legally parked— that’s a broken system.”

Workers’ compensation has also been increasingly disproportionate to the plaintiff’s favor, Schmidt said. “For example, if someone breaks an ankle, that person may be deemed 7% disabled by a physician,” Schmidt said. “That 7% may translate to $9000 or $10,000, in most states. In Missouri, a judge has the arbitrary power to make that percentage whatever he wants.”

“We will have meaningful reforms…that holds carriers accountable, and that there won’t be a boondoggle for attorneys,” Schmidt said. “I’d like to see a system that is not painted toward employee or employer- just fair.”

Gary Petty, National Private Truck Council president & CEO, concurs that litigation has been a growing threat to the trucking industry. “The cost of unnecessary litigation where plaintiff lawyers are able to attain exorbitant settlements is a threat to trucking. I think medical and personal injury award caps need to be mandated. I would like to see some federal uniformity, in terms of caps on plaintiff awards, instead of today’s patchwork quilt [of state-by-state legislation],” Petty said, noting certain states are ‘notorious’ for favoring plaintiffs.

This ‘patchwork’ of reforms had in some instances created uneven competitive playing fields for carriers, CFI’s Schmidt noted. “Many times I see where our state government has put us at a terrible disadvantage [compared to carriers operating in] other state governments,” he said.

Jim Berard, Democratic director of communications for the House Committee on Transportation and Infrastructure told Fleet Owner he has no knowledge of a tort reform agenda within the committee. The Republican director was not available for comment at press time.

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