Lawsuit Reform

Missouri Working to Improve its Status as a Judicial Hellhole

Missouri’s lawsuit system performs in the bottom third of all state legal systems, 42nd out of the 50 states, according to the US Chamber’s Lawsuit Climate Survey. It is well behind its neighbors in providing fair and predictable justice that safeguards individual liberty and buttresses economic opportunity, in large part because its state laws incentivize unwieldy justice. State Lawsuit tracks poor performance in more than half of its lawsuit reform indicators. For this reason, it has shown up on the annual Judicial Hellholes™ List for nearly a decade, and its own St. Louis was named this year’s top Judicial Hellhole™.

The Missouri legislature may begin to consider some of the most important issues that have been a drain on the state’s economy, by considering policy to make multiple improvements to their lawsuit system.

ALEC has developed the Reliability in Expert Testimony Standards Act to create stronger and more meaningful standards for expert witness evaluation before trial to keep junk science out of the courtroom. Missouri is one of less than a third of states that follows the near-obsolete Frye standard for admitting experts, which in practice allows junk science to be presented in court and risks frivolous verdicts. Expert evidence reform would normalize Missouri’s expert witness standards and bring the state in line with the recommendations of federal and state court judges the country over.

The model Phantom Damages Elimination Act developed by ALEC members would help normalize lawsuit awards by letting medical damages in lawsuits reflect actual out-of-pocket costs rather than inflated billed rates. Missouri juries can currently award phantom damages that reflect costs no party ever had to bear. These phantom damages are portions of awards for medical expenses –the difference between the list price on a bill and the amount actually accepted as full payment – that no one will ever pay or receive for care. Phantom damages reform would ensure plaintiffs get made whole while keeping inflated awards from making a costly legal system more expensive.

The ALEC Private Enforcement of Consumer Protection Statutes Act aims to boost the reasonableness of lawsuits filed under state consumer protection statutes. The Missouri Merchandising Practices Act, much like its sister consumer protection statutes enacted in other states, was created to supplement the work of the Federal Trade Commission to offer additional lines of protection for consumers. The FTC, however, does not create an additional way for consumers to sue. Rather, it receives complaints, reviews them and decides whether action is merited. In all 50 states, however, individuals can sue where they’ve been harmed by an unfair business practice to make them economically whole. Missouri’s MMPA language should be refined to ensure it serves its purpose and doesn’t just provide an alternative place to attempt traditional tort litigation where less proof is typically required. Such reform would require the plaintiff to have actually been harmed in order to bring a claim and would redefine compensatory damages to limit this portion of recovery to out-of-pocket losses.

Many states this year appear poised to consider the issue of asbestos trust transparency, in line with the ALEC Asbestos Claims Transparency Act. The model policy would minimize fraud in the large asbestos lawsuit industry by forcing plaintiffs and their attorneys to be up front with the courts about other defendants that have already been held responsible for the plaintiff’s asbestos injuries. When a company goes bankrupt and has outstanding litigation, courts often set up trusts to pay victims who step forward at a future date. Over 100 companies have gone bankrupt due to asbestos litigation, so there are a number of trusts from which plaintiffs may seek damages. Over the last decade, judges in a handful of courts have uncovered fraudulent lawsuit discrepancies, often in which a plaintiff’s attorney has presented opposing sets of facts to different trusts or in different lawsuits. They place blame on one bankrupted company for all of a plaintiff’s asbestos exposure, recover full damages, then file a lawsuit in court alleging full blame belongs to the new defendant. Reform could offer a simple fix to help preserve scarce asbestos litigation resources by requiring plaintiffs to first file claims against any trusts, then disclose the filing documents and the awards to the court in which they file any subsequent litigation. Transparency under these circumstances is the best way to root out fraudulent, wasteful double dipping.

To encourage job creation, promote market innovation and let Missouri’s economy flourish, the legal system must function fairly and predictably, refraining from punishing good actors and incentivizing frivolous lawsuits. It remains to be seen whether the Missouri legislature and the new governor act to improve its lawsuit laws.

In Depth: Lawsuit Reform

State legal systems and the liability they exert on businesses and individuals are a disincentive to bad behavior and allow fair players to succeed in the marketplace. When lawsuits inappropriately punish good actors, resources are sucked out of the business economy, away from research & development and job creation. Lawsuit …

+ Lawsuit Reform In Depth