Fretting over high-dollar verdicts, Senate panel ponders legislative fixes

Complaints by defense lawyers and business groups about hefty verdicts and unfavorable rulings are nothing new, but plaintiffs lawyers are keeping an eye on a legislative committee that may spawn another round of “tort reform” legislation.

Fueled by reports of mega million-dollar verdicts, including from parts of the state that were considered relatively conservative and defense-friendly a few years ago, legislation was enacted to create the Study Committee on Reducing Georgia’s Cost of Doing Business. The committee is tasked with tackling legal obstacles that “threaten families, small and large businesses, economic development and all Georgia consumers,” and to “fully review and study the issue of Georgia’s legal climate and its impact on the cost of doing business and performing healthcare services in Georgia.”

The panel’s work has not gone unnoticed by the plaintiffs’ bar.

In an email, Georgia Trial Lawyers Association President Dan Snipes said the organization has followed the committee’s work ”every step of the way. We have spoken to multiple committee members, both senators and community appointments, have attended each meeting with members and staff, and plan to attend the remaining meetings in Savannah and Young Harris.”

“Our hope is to take part in one of the upcoming meetings and contribute to the conversation already taking place about the state of our business climate in Georgia,” he said.

Committee also targeting reducing waste in health care

The committee is also tasked with looking into another subject: reducing waste in health care. The committee’s chairman, state Sen. John Wilkinson (R-Toccoa) said it is too early to predict whether any legislation might come out of the effort.

“We want to hear from everybody: the legal community, business community, health care community, the agricultural sector,” Wilkinson said. “I’m just real anxious to hear what everybody has to say.”

During its first meeting in August, the committee — heavily weighted with business, insurance, health care and defense bar representatives — heard presentations highlighting a number of concerns.

Particular attention focused on a series of eye-popping jury awards over the past few years: A $35 million verdict against Six Flags over an incident that began in the park and ended with a gang attack outside its fences; a $46 million medical malpractice award for a brain injury a patient suffered after a heart attack; a $43 million verdict against CVS for a robbery and shooting in a parking lot; and a $70 million verdict against Kroger for another parking lot shooting and robbery.

Hefty awards in outlying counties include $280 million in a trucking accident that killed five people and a $125 million verdict against an apartment building where an ailing tenant died in a sweltering unit, both in Muscogee County, and a $1 billion verdict against an apartment security company for a rape victim.

The trend has raised an alarm among the defense bar over so-called nuclear verdicts.

A representative from the U.S. Chamber of Commerce’s Institute for Legal Reform, which grades states on how “reasonable and balanced” their courts are “perceived to be by U.S. businesses,” told the committee Georgia is now ranked No. 40 on its “Lawsuit Climate” ranking.

A counterpart from the American Tort Reform Association said the state is on its  “judicial hellhole” watchlist over “troubling” appellate court decisions in recent years.

Among the not-so-recent decisions cited by the speakers was the Georgia Supreme Court’s unanimous 2010 decision in Atlanta Oculoplastic Surgery v. Nestlehutt, which struck down as unconstitutional a 2005 law capping noneconomic damage awards — such as those for pain and suffering — at $350,000 in medical malpractice cases.

Cary Silverman, a partner with Shook Hardy & Bacon in Washington, D.C., representing the Institute for Legal Reform, said that ruling meant “the sky’s the limit for non-economic damages,” although he noted most other states don’t limit such damages. Silverman pointed to the practice of “anchoring,” in which plaintiffs attorneys tell juries in closing what they should award for such damages, as leading to excessive awards.

There was also input from local defense specialists. Jake Daly of Freeman Mathis & Gary, representing the Georgia Defense Lawyers Association, assailed what he termed “phantom damages” based on a plaintiff’s medical bills, which often reflect a provider’s “sticker price” for a procedure, as opposed to what is actually paid.

“I’ve seen $400,000 claimed in medical bills, when the paid amount was under $100,000,” said Daly.

He also said it was time to review Georgia’s law barring evidence of whether someone injured or killed in a car wreck was wearing a seatbelt at the time of the accident.

Bryan Cave Leighton Paisner partner Bill Custer, who is on the board of Georgians for Lawsuit Reform, said he was not representing the organization at the hearing, but presented several issues he said should be addressed. Among his key concerns were negligent security cases against property owners and businesses resulting from the criminal acts of third parties, such as the CVS and Kroger verdicts.

“Landowners and business owners have an obligation to keep their premises safe,” said Custer, but “the trends we are seeing now are dramatically different from what we’ve seen in the past … hundreds of millions of dollars awarded against landowners and businesses for crimes committed by third parties.”

“Negligent security cases are becoming a cottage industry in Georgia,” said Custer, and business owners and insurers are taking note.

“Insurance is getting difficult to obtain for these claims,” said Custer, with some carriers limiting their coverage for such claims to $25,000. “A lot of mom-and-pop businesses aren’t going to be able to afford assault and battery-type insurance.”

The impact is particularly felt in high-crime areas, which often lack full-scale grocery stores and other higher-end businesses, he said.

“The question is whether we are going to hold businesses liable for going into high-crime areas,” said Custer, such as the stretch of southwest Atlanta road hosting the CVS and Kroger sued for crimes on their properties.

“Nobody’s going to go into business on Moreland Avenue if they’re going to get hit with $40 million and $70 million verdicts,” he said.

While juries are often allowed to apportion liability to a third-party defendant, they are also made aware that those individuals are dead, missing or in jail, and the plaintiff is unlikely to get any money from them, he said.

Unlike Georgia, Custer said other states such as Florida and Alabama have passed legislation shielding property owners in negligent security cases if they comply with certain set guidelines regarding lighting and the provision of security guards, he said.

Among other issues discussed was a 2018 Court of Appeals decision applying a statute allowing a victim up to six years to sue the property owner where a crime took place, effectively tripling the tolling limit for filing a negligent security claim involving a third-party defendant.

The goal is to help insurance adjusters ‘do the right thing’

The study committee includes two senators who also practice insurance and medical-malpractice defense law: Bill Cowsert, R-Athens, with Cowsert & Avery, and John Kennedy (R-Macon) with James-Bates-Brannan-Groover.

Other lawyer members include Home Depot general counsel Will Barnette; Will Fagan, senior corporate counsel at MagMutual Insurance; State Farm Insurance counsel Mark Tilkin; Drew Eckl & Farnham partner Barbara Marschalk; and Gino Brogdon Jr., a mediator and plaintiffs’ bar member.

In an interview, Brogdon laughed and agreed that he was “sort of the odd man out,” but said he’s been pleased with the reception his input received from the group.

“This is a very good group that’s been put together, and I do think there’s some potential legislation that could come out of it,” said Brogdon.

“Everybody here, whether they’re from one group or another, is trying to reduce the costs of doing business in Georgia,” he said. “Sometimes there are disagreements in the committee, but it’s very congenial and courteous, as opposed to argumentative.”

“While my plaintiffs’ practice has helped me explain things from an injured citizen’s point of view, my practice as a mediator has allowed me to give productive commentary, and approach issues in a balanced way,” said Brogdon.

There are some issues, Brogdon said, where “we have to find a middle ground,” such as the seat belt law or the statutory limitations for filing time-limited policy demands on an insurer.

“The goal is not to trick the defense bar or insurance adjusters; it’s to help them do the right thing,” he said.

In discussions, he said, “I can’t say there was anything I felt so strongly about I said, ‘No way, can’t happen.’ But there were a lot of times I thought some information was lacking. The idea is to get all these suggestions out there.”

Related:

• 10 biggest bad faith verdicts from 2013-2018
• Georgia Supreme Court ruling limits insurer bad-faith risk
• Georgia insurance commissioner calls for the GUA board to resign

This article first appeared on sister-site Law.com.