The Pros and Cons of Arkansas Tort Reform

The Pros and Cons of Arkansas Tort Reform
Brad Hendricks (left), a Little Rock attorney, opposes the proposed tort reform amendment. Carl Vogelpohl supports Issue 1 and says it will bring jobs to Arkansas. (Composite illustration/ Photos by Karen E. Segrave)

With less than five months before the November vote on capping attorney’s fees and damages, groups for and against tort reform in Arkansas are making their case with money.

Supporters and opponents of Issue 1 have raised more than $3.5 million to push or fight the proposed amendment, which voters will decide on Nov. 6. It’s a wide-ranging proposal that would:

 Limit damages in personal injury and wrongful death cases. The amendment would restrict monetary awards for non-economic damages such as pain and suffering to $500,000 and punitive damages, which punish wrongful conduct, to $500,000 or three times the amount of the damages awarded to the plaintiff for an actual loss. As it stands, the Arkansas Constitution prevents limits on damages.

 Limit contingency fees to 33.3 percent for lawyers. Currently, in some cases, attorneys can receive 40 percent of the judgment or settlement for taking complex cases.

 Allow the Arkansas Legislature to change court rules regarding pleadings, practices and procedures of the courts, which are currently decided by the Arkansas Supreme Court.

The amendment has broad support from business groups such as the state Chamber of Commerce, the Arkansas Hospital Association, the Poultry Federation and the Arkansas Trucking Association. Supporters have raised more than $1.6 million to pass the amendment.

These groups say passage of the amendment will lead to more jobs because Arkansas could better compete with surrounding states that have tort reform.

“Companies also believe that Issue 1 provides predictability to businesses and industry in Arkansas with the caps on damages,” said Marvin Childers, president and chief lobbyist for the Poultry Federation.

Groups opposed to the amendment have raised more than $2 million and include the Arkansas Bar Association and the Family Council.

Changing the Rules
All elements of the proposal concern attorneys, but allowing state legislators to change court rules poses particular problems regarding the bedrock concept of the governmental separation of powers.

“If you give me control of the rules, I’ll win every game,” said attorney Brad Hendricks of Little Rock, who founded the Liberty Defense Network LLC to fight the proposed amendment. Hendricks himself has donated more than $600,000 to fight it, according to Ballotpedia, an online encyclopedia that covers American politics and elections.

Hendricks said he fears that if the amendment passes, lobbyists will push legislators to change court rules. For example, he said, as a practical matter Arkansas doctors don’t testify against other Arkansas physicians, resulting in attorneys in medical malpractice cases having to go outside the state to find an expert doctor willing to testify.

A lobbyist for the medical industry, however, could ask legislators to change the court rules so only an Arkansas physician could testify as an expert in medical malpractice cases, Hendricks said.

“Boom. All the medical malpractice cases are over,” he said. “That’s just one example.”

The United States has a system of separation of powers in “which the three branches are at least supposedly co-equal,” Hendricks said. “And the lobbyists don’t like that because they can’t control one of those branches. And so the whole point of this is to reduce the power of that one branch that they can’t control.”

Tony Hilliard, president of the Arkansas Bar Association, also said he’s opposed to allowing the Legislature to change the rules of the courts. “That’s the real threat to our legal system,” he said.

And, he said, if the amendment passes, there would be nothing stopping the Legislature from making rule changes that are retroactive, impacting current cases.

Carl Vogelpohl, the campaign manager for Arkansans for Jobs & Justice, which supports the amendment, said a rule change would have to go through the legislative process and be passed with 60 percent of the vote by the Arkansas House and Senate.

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“It’s definitely a more open process than seven members of the Supreme Court making a decision that affects the entire state,” he said.

Attorneys opposed to the amendment also argue that the legislation isn’t needed because judges prevent meritless lawsuits from advancing very far. Defendants also can ask a judge to punish attorneys who file meritless cases, which can lead to the attorneys losing their law licenses.

A judge or an appellate court also has the power to reduce a jury verdict.

Placing a Value on Life
The Family Council Action Committee — a separate political arm of the Family Council — supports tort reform, but not the proposed amendment, because it places the value of a life at $500,000 for those people who don’t have an income.

“If a day care leaves a child in a van and the child dies of a heat stroke, that child has no income and so there are no economic damages to collect,” said Jerry Cox, the president of Family Council of Little Rock.

Vogelpohl said the idea for the proposed amendment was sparked after the Arkansas Supreme Court rolled back the “advances that were made” when the Arkansas Legislature passed the Civil Justice Reform Act in 2003, which capped damages meant to punish the defendant at $1 million.

That legislation also eliminated the theory of joint and several liability, meaning the plaintiff could no longer recover all the damages from any of the defendants, regardless of the individual liability.

Over the years, however, the Arkansas Supreme Court has declared portions of the legislation unconstitutional.

In 2017, Arkansas legislators voted to put a proposed amendment for tort reform on the ballot in November.

“A coalition of folks finally came together and said it’s time for us to put together some meaningful tort reform in Arkansas to help our state be more competitive when we recruit doctors and go out and do economic development,” Vogelpohl said.

The surrounding states have some sort of tort reform, and when businesses are looking to relocate, one of the metrics they consider is the civil justice climate, he said. “It’s not the only thing by any stretch of anybody’s imagination, but it is certainly a key part of the factors that are considered,” Vogelpohl said.

The proposed amendment also doesn’t place a cap on compensatory damages, which are awarded for circumstances such as lost wages and medical bills, Vogelpohl said.

He agreed that a human life is priceless, “but juries put a value on it every day in our current system and will continue to do so under this system.”

Jodiane Tritt, vice president of government relations for the Arkansas Hospital Association, agreed that tort reform could help recruit health care professionals to the state.

Hospitals would expect fewer lawsuits to be filed against them if the amendment passes, she said. “As you might imagine, we have a lot of expenses in defending things where we didn’t have anything to do with” the allegation of wrongdoing.

Hospitals are dragged into lawsuits as defendants just because they are perceived to have “deep pockets,” an inaccurate perception, Tritt said. Nevertheless, they have to spend money defending the suits. “Expenses that don’t go to direct patient care are wasteful,” she said.

Childers, of the Poultry Federation, said the poultry industry gets its “fair share of litigation where mistakes have been made. … Others are just frivolous lawsuits. We believe Arkansas is due for common sense reform like we had in 2003 with the passage of the Civil Justice Reform Act.”

Financial Reports for Groups Supporting or Opposing Issue 1

  Total Monetary Contributions Received Total Expenditures Made
Arkansas Trucking Association $49,000 $49,000
Arkansas Medical Society $258,879 $258,879
Arkansans for Jobs & Justice $1,212,690 $242,231
Arkansas Health Care Association $100,000 $100,000
Arkansas Hospital Association $0 $300,000
Total $1,620,569 $950,110
Defending Your Day in Court $62,298 $53,565
Protect AR Families $1,491,506 $230,892
Liberty Defense Network $522,780 $262,537
Family Council Action Committee $75,850 $692
Total $2,152,434 $547,686

Source: Most recent financial reports on file as of June 6 with the Arkansas Ethics Commission

‘This Isn’t a Solution’
Hendricks, a lawyer for 38 years whose practice area includes personal injury, said that he knows he might not be the best person to speak on defeating Issue 1 because he and his firm have a financial interest in the outcome.

“I could have walked away from this,” he said. “I had no other reason to do this other than I believe it’s what’s right for the state, and it’s right for the citizens of Arkansas. And ultimately it’s what right for business.”

Hendricks said tort reform won’t bring jobs to Arkansas, but if it passes, it will hurt jobs in his field. “It has frozen jobs in the legal profession,” he said. “I don’t know of anyone who is hiring right now.”

Hendricks’ firm handles medical malpractice cases and most of those cases are accepted on the basis of a contingency fee. Bringing a medical malpractice case to trial could cost between $50,000 and $250,000, making cases too expensive to try unless a catastrophic injury is involved.

He often is forced to tell potential clients that he thinks they have a claim, but bringing the case wouldn’t be worth the expense, Hendricks said. And even if a case makes it to a jury, more than 80 of such cases result in a ruling for the defendant. “So many valid claims present a situation where there’s no recourse for the claimant,” he said.

Tré Kitchens, an attorney who works with Hendricks at the Brad Hendricks Law Firm in Little Rock, criticized supporters of the amendment who tout tort reform as a way to attract doctors to the state. “They say we need to recruit doctors to Arkansas and that’s what this will do,” he said. “Do you really want the doctors in Arkansas who come here because they can kill people for only $500,000?”

Placing a value on a life also concerns Chad Gallagher, a campaign adviser for To Protect AR Families, which is opposed to the amendment.

He said that in cases involving the wrongful deaths of children, stay-at-home mothers or the elderly, they don’t have lost wages, so their lives “can never be worth more than $500,000. If they worked, it would” be worth more.

Gallagher, a Republican who worked with Mike Huckabee when he was governor and during his runs for president, said he supports economic development, but “this isn’t a solution in my view.”

He said if legislators want tort reform they could target attorneys who repeatedly file meritless lawsuits that are thrown out.

Cox, of the Family Council, said he supports tort reform, but not the way Issue 1 seeks to accomplish it.

He, too, would like to see more attorneys penalized if they file lawsuits that have little merit. He also would like to examine medical malpractice insurance rates to see if doctors are getting gouged. “Something like that might help our good doctors, so they wouldn’t feel compelled to support this type of tort reform,” Cox said.