News from the LRC:

• LRC opinion editorial: Trial lawyers playing politics at taxpayers’ expense
• LRC press release: Legislature poised to increase taxes to fund liability expansion
• Trial Lawyers Inc.
• Tracking the Trial Lawyers

Trial lawyers playing politics at taxpayers’ expense

An opinion editorial offered by LRC executive director Dana Childers

If I were serving on a city council or a school board somewhere in Washington state, I’d have a bad case of heartburn over what’s percolating through the state legislature. State legislators, who should be busy enough grappling with a severe financial crisis, have found time and energy to cook up legislation that will unnecessarily expand liability and add to the budgetary woes of their colleagues on the local level.

And why? Well, it appears to be political payback.

At the prodding of the state’s powerful trial lawyer lobby, legislators have resurrected—and expanded—an effort via SB 6508 to drastically alter the state’s wrongful death statutes. A similar effort was considered and rejected during the 2008 legislative session. Local government representatives testified in 2008 that such legislation was not only unnecessary, it imposed prohibitive costs onto local governments and the taxpayers who fund those entities.

The Legislature wouldn’t even consider such legislation in 2009, citing the same reasons. Well, what was true in 2008 and 2009 is even more evident in 2010. Strapped local governments can’t afford such unnecessary expansions of liability.

So what’s different in 2010? Why is SB 6508 gaining traction in the Legislature? Could it be that an election year will make some politicos overlook good policy to scratch the backs of those who open their pocketbooks during an election cycle?

Since 2000, trial lawyers through their 10 regional political action committees, have more than doubled their campaign spending, now contributing nearly $1.5 million per election cycle. Political spending by trial lawyer political action committees rivals that of the state’s most powerful unions and businesses.

I suppose in some bizarre way, legislators could call SB 6508 a jobs bill; after all, it will bolster the business of trial lawyers. But at what cost to taxpayers? Let’s take a look.

Our local governments, struggling even now to fund essential services at optimum levels, will need to factor in the additional costs of SB 6508 should it be enacted. That won’t be an easy calculation because the bill presents so many unknowns, including the fact that it is retroactive. Just using known factors, the Association of Washington Cities Risk Management Services Agency says that the local governments they insure will pay increased premiums to cover the increased risks, and that local governments will likely incur an additional $2 million in costs per lawsuit.

Of course, local costs are one piece of the puzzle. At the state level, the Attorney General’s Office estimates SB 6508 will cost the state an additional $1.5 million per case, adding about $18.4 million in costs per biennium.

Milliman, Inc., a nationally recognized actuarial firm, looked at the bill proposed in 2008 and forecast a whopping 80 percent increase in claims against state government, with a potential cost to taxpayers of tens of millions of dollars every biennium. That particular study didn’t look at the effect on local governments, but you can bet local governments would see a similar spike in lawsuits and the associated legal costs. 

Losing a child is a horrible thing no one wants to contemplate. But, our state addressed this issue long ago. Current law already allows for compensation to parents in the event of a minor child’s death or the death of an adult child if the parent is financially dependent on that child. Current law is fair and balanced, and provides adequate protections to the people who most need our protection should the unthinkable happen.

However, SB 6508 goes beyond the balanced approach. It expands current wrongful death statutes in a number of ways, all of which are expensive to local governments and the taxpayers who fund those governments.

SB 6508 over reaches by opening up the pool of people who can file lawsuits in the event of such a tragedy. Traditionally, state law has allowed for recovery of economic damages in the event of the wrongful death of a minor child, but not for an adult child, unless the parent was financially dependent on the child.

SB 6508 changes the law, allowing parents to collect payouts in the death of their child, no matter whether the child is a minor or an adult, with the caveat that the parent must have significant involvement in the decedent's life. There is no definition of the term “significant,” leaving a lot of leeway in interpretation. SB 6508 compounds the budgetary nightmare by allowing for noneconomic damages, which are subjective and unpredictable payouts, in addition to payouts for economic damages, sums which are usually more quantifiable.

Lawmakers have heard compelling testimony from the Attorney General’s office, the Association of Washington Cities, and the Washington State Association of Counties regarding the overwhelming costs associated with SB 6508. Their testimony spoke to the impact on government, which in essence is the impact on Washington taxpayers as we will all bear the financial burdens if SB 6508 is enacted.

This is a year like no other; fiscal prudence should rule the day. Taxpayers should demand to know why Olympia lawmakers have turned a tin ear to the concerns of their local government colleagues. Let’s hope our lawmakers will put good policy ahead of any political power play. Taxpayers simply can’t afford such shenanigans as SB 6508.

 

Liability Reform Coalition issues warning on tax increase to fund liability expansion

Passage of bill will benefit trial lawyers at taxpayer expense

The Washington House of Representatives is on the verge of passing a tax increase on Washington residents that has nothing to do with back-filling the state’s huge budget gap.

Just before midnight Monday, the House Ways and Means Committee recommended passage of SB 6508, an expansion of liability pushed by the state's politically powerful trial-lawyer lobby, but not before Democratic committee members hung an amendment calling for a tax increase to pay for the expansion of liability that ultimately will line the pockets those trial lawyers at taxpayer expense.

Though current law has a fair and balanced approach to wrongful death lawsuits, the state's trial lawyers pushed for an expansion of liability under these statutes, creating a new class of beneficiaries with entitlement to recover both economic and noneconomic damages.

Dana Childers, executive director of the Liability Reform Coalition, noted that a similar bill was rejected during the 2008 Legislature, largely due to the increased expense to local and state government--and the taxpayers who fund those governments.

Until Monday evening, proponents of SB 6508 downplayed the increased costs associated with expanding liability under the wrongful death statutes. But, Rep. Mark Ericks (D-Bothell) successfully amended the bill to create a mechanism to reimburse local governments for the increased costs associated with the expanded liability. The special funding mechanism, dubbed the Government Liability Reimbursement Account, is to be funded by an additional $5 penalty on traffic infractions and a $10 filing fee on Superior Court filings. This account will expire in 2015.

"Rep. Ericks' amendment was a tacit acknowledgement that that this piece of legislation is indeed costly to taxpayers," said Ms. Childers. "Sadly, it is not only costly, it is unnecessary since current law is already fair and balanced. In these tough economic times, I find it interesting that legislators would fund an unnecessary expansion of liability through a tax increase on citizens already struggling to make ends meet."

SB 6508, with Rep. Ericks' amendment, was passed out of the House Ways and Means Committee on a party line vote.

Ms. Childers acknowledged that it is tough to oppose a bill affecting damages that can be claimed for the wrongful death of a child. Losing a child is a horrible thing no one wants to contemplate. But, she points out that Washington state addressed this issue long ago. Current law already allows for compensation to parents in the event of a minor child's death or the death of an adult child if the parent is financially dependent on that child. Current law is fair and balanced, and provides adequate protections to the people who most need our protection should the unthinkable happen.

Ms. Childers maintains that SB 6508 goes beyond the balanced approach. It overreaches by opening up the pool of people who can file lawsuits in the event of such a tragedy. Traditionally, state law has allowed for recovery of economic damages in the event of the wrongful death of a minor child, but not for an adult child, unless the parent was financially dependent on the child.

SB 6508 changes the law, allowing parents to collect payouts in the death of their child, no matter whether the child is a minor or an adult, with the caveat that the parent must have significant involvement in the decedent's life. There is no definition of the term "significant," leaving a lot of leeway in interpretation. SB 6508 compounds the budgetary nightmare by allowing for noneconomic damages, which are subjective and unpredictable payouts, in addition to payouts for economic damages, sums which are usually more quantifiable.

Members of the House Ways and Means Committee rejected a number of amendments, including a one percent business-and-occupation (B&O) tax on plaintiff lawyers to fund the Government Liability Reimbursement Account.

 

 

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