FROM WSJ
HEAD: Mississippi's Tort Reform Triumph
By STEPHEN MOORE, senior economics writer for The Wall Street Journal
editorial page.
For most of the past 30 years, Mississippi has ranked as one of the
poorest
as well as one of the most litigious states. The two statistics are
related.
I met with Mississippi Gov. Haley Barbour recently, and this politician,
best known for helping his state rebuild after Hurricane Katrina in 2005,
had a lot to say about lawsuits.
"We were America's No. 1 judicial hell hole for jackpot jury verdicts,"
the
two-term Republican governor told me. "For trial lawyers, this was the
state
you wanted to come to if you wanted to sue someone."
But it was not the state to come to if you wanted to start a business.
Mississippi's antibusiness reputation was so awful, Mr. Barbour said, that
the CEOs of several Fortune 500 companies told him specifically that they
wouldn't consider locating in the state unless the tort system was fixed.
For doctors, the situation was a little different - many who were inside
the
state were getting out as fast as they could. With 25% annual increases in
malpractice premiums, many physicians simply couldn't survive if they
stayed. The outflux left some counties without a single obstetrician. In
some cases, residents had to drive 100 miles to find a doctor.
One of the worst places, in term of frivolous lawsuits, was Jefferson
County. It became renowned as the lawsuit capital of the country, with
more
plaintiffs than residents. This is the infamous county where one
pharmacist
was named in more than 1,000 lawsuits. In one legendary case against a
pharmaceutical company that sold the diet pill Pondimin (part of the
weight-loss combination known as fen-phen, which was later banned), a
Jefferson County jury awarded $1 billion to the family of a woman who had
taken the drug.
But four years ago, Mississippi transformed itself from judicial hell hole
to job magnet, a story that is instructive for other states trying to
attract jobs in turbulent economic times. The lessons here are especially
timely, because the pro-growth tort reform trend that was once spreading
across the country may soon reverse course.
James Copland of the Manhattan Institute's Center for Legal Policy re****ts
that, thanks to big Democratic gains in state legislatures in 2006, trial
lawyers from coast to coast have replenished their army of allies in state
capitals. "The legislatures are busy at work repealing many of the reforms
while creating new rights to sue, through such scams as patient bill of
rights laws," he says.
Shortly after winning election in 2003 by running on a tort-reform
platform,
Mr. Barbour stitched together a coalition of doctors, business groups,
taxpayers and even unions to roll back the trial lawyer lobby.
"It was not just a battle," recalls Charlie Ross, the Senate sponsor of
the
reform bill, "it was a five-year war." The law that eventually passed was
every trial lawyers' worst nightmare. It capped awards for noneconomic
damages, and prevented the popular practice whereby a plaintiff attorney
seeking to bring a class-action shops around for a court where he'll be
likely to get a favorable ruling or judgment.
Almost overnight, the flow of lawsuits began to dry up and businesses
started to trickle in. Federal Express invested $1 billion in a new
facility
in the state. Toyota chose Mississippi over about a dozen other states for
a
new $1.2 billion, 2,000-worker auto plant. The auto maker has stipulated
that the company would pull up stakes if the tort reforms were overturned
by
the legislature or activist judges.
That hasn't happened. About 60,000 new jobs have arrived in four years -
not
a small number in a workforce of about 1.3 million - and a sharp
improvement
from the 30,000 jobs lost in the four years before Mr. Barbour took
office.
Since the law took effect, the number of medical malpractice lawsuits has
fallen by nearly 90%, which in turn has cut malpractice insurance costs by
30% to 45%, depending on the county.
Another encouraging sign: Fewer Mississippians are heading to law school
and
more are looking at business school as the best way to get rich. Many in
the
younger generation are pursuing a career path that will make them wealth
creators, not wealth redistributors.
Meanwhile, in other states, the trial bar is spending record amounts on
2008
campaigns to make sure that the political massacre plaintiff lawyers
suffered in Mississippi isn't repeated. Next to the unions, trial lawyers
are the biggest givers to Democrats. It is no secret they will want a
payback if the Democrats have a big year on the state level. A big
Democratic theme this year, starting with Barack Obama at the top of the
ticket, is to roll back the well-heeled special interests. Trial lawyers -
some of the richest people in the country - apparently don't count.
The Pacific Research Institute estimates that the tort system nationwide
costs the economy about $7,000 for every family in America. The pols in
Wa****ngton are sending out tax-rebate checks of up to $1,200 for married
couples in hopes of stimulating the economy. But outside of Mississippi
and
a few other places, there seems to be little understanding of how
frivolous
lawsuits and greedy tort lawyers weigh down the economy.
For too long class action lawsuits seemed to be Mississippi's biggest
industry, and tort lawyers seemed to be the only state residents making it
big. That seems to be turning around. One of the richest tort lawyers of
all
is Dickie Scruggs. More than a decade ago he was one of the architects of
the state tobacco settlement. He recently pleaded guilty to attempting to
bribe Mississippi state Judge Henry Lackey.
Thanks to Mr. Barbour, the state's unemployment rate is down to about 6%
from nearly 9%. Last year, Mississippi's per capita income growth was
6.7%,
third highest of the 50 states and well above the national average of
5.2%.
Mississippi tort reform is making the poor richer, and the rich lawyers
less
fabulously rich. Now that's a good way to close the income gap.
********
Too bad dose dim Dems don't see the obvious.
Dionysus
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