The House passed Governor Rick Perry’s “loser pays” tort reform bill (H.B.274). On the surface, it sounds like a good idea. In reality, it is incredibly unreasonable and unfair. The bill is nicknamed “loser pays” because one of its many provisions would require, only in certain cases, that the loser of the lawsuit pay the winner’s attorney’s fees and other ligation costs. With this legislation, even a winning plaintiff may be assessed defendant fees if the plaintiff rejected a settlement offer higher than the jury’s verdict. For example, if a plaintiff rejects a settlement offer and the jury verdict is less than 80 percent of the offer, the plaintiff would pay the defendant’s attorney’s fees from the time the offer was rejected. Once a defendant invokes the provision, fee-shifting also would apply to a defendant’s rejection of a plaintiff counter-offer.
The Texas tort reform bill basically expands and builds upon the onerous tort reforms passed in Texas in 2003. It further stacks the deck in favor of big businesses and against the ability of individuals and small businesses to seek legal redress against big businesses. Now the bill is headed to the Senate. If passed, Texans — particularly individuals and small-business owners — who are considering filing lawsuits may rethink seeking justice in court to right wrongs; in the “new” Texas, seeking justice could lead to financial ruin. In other words, a “loser pays” system would do nothing more than close the courthouse doors to individuals and small businesses who cannot afford the risk of potentially paying the defendant’s legal fees. Even if they win, the lawsuit could be financially devastating.
“Loser pays” may sound like a reasonable concept, but losing a case does not mean the plaintiff brought a frivolous lawsuit. The “loser pays” philosophy mistakenly assumes otherwise. Litigation costs by a corporate defendant must be matched by the plaintiff. A corporate defendant can easily afford “loser pays”; a system heavily biased against the average citizen. Big businesses often have insurers to finance their litigation expenses; they can simply outspend a plaintiff, eventually forcing an early, low-ball, settlement. If the plaintiff is able to stay the course through financial assistance from lawsuit funding or other means, he/she can still lose. And, Texas “loser pays” goes off the injustice charts like no other “loser pays” legislation ever has. You see, most loser pays legislation tries to appear reasonable or fair by applying to both side of the litigation. In most cases, even though the vast economic disparity between plaintiffs and defendants always make “loser pays” legislation unfair, at least legislators cover their elective butts and seek to apply it to both plaintiffs and defendants. But not Rick Perry; not Texas legislators! Their pro-business, anti-citizen slant is so blatant, that they don’t even attempt to create the appearance of citizen fairness. How, you ask? Because in Texas, “loser pays” only applies to the plaintiff in a lawsuit. That’s right; you read it correctly. What “loser pays” really means is that the insurance company who denies a claim or makes a low-ball offer will NEVER PAY litigation costs regardless of their negligence on deliberate wrong-doing. It permits them to recover litigation costs in all lawsuits by allowing recovery against winning or losing plaintiffs. If the corporate defendant puts forth a frivolous defense; if it ties up fair resolution for years with frivolous appeals and then loses, even if it misbehaves in its claims handling process, it doesn’t have to pay a cent of the plaintiff’s costs and fees! “Loser pays” will block any chance for Texans to go to court and seek fair compensation, but does not apply, at all, to corporate defendants; does that sound fair to you?
Governor Perry: Do you represent all Texas citizens or just some of them? Do you represent injured and disabled citizens? Do you represent those who have been maimed or killed by corporate misfeasance or malfeasance? If you do, why do you refer to legitimate lawsuits as “junk” and why do you give corporations and insurance companies a free pass to present frivolous defenses and make injured and/or disabled citizens wait years for justice and fair compensation as a result? Are you so blinded by your corporate bias and where your campaign dollars come from that you cannot not see the suffering of your citizens?
If passed, this tort reform bill will provide a form of immunity to insurance companies and big businesses so Texans better hope that they never have a significant insurance claim. “Loser pays” is pro-defendant; it favors big businesses that can outspend individuals and small businesses. It will insulate them from negligence and make all Texas citizens less safe. Perry supports big business at the expense of everyday taxpaying citizens. Is that the Texas you want? The power to invoke “loser pays” will rest only with the defendant. The defense lawyers will still engage in ‘deny, delay, and confuse’ and outspend the plaintiff, every chance they get. They face no such “loser pays” threat should the plaintiff prevail in a Texas courtroom. Many individuals and small businesses will lose access to the justice system; the potential cost of litigation might be too high to pursue litigation at the risk of financial ruin. Corporate negligence will run rampant in Texas and citizens will pay dearly for it. In other words, with Texas “loser pays” tort reform, all Texas citizens are ‘losers’.
Texans wake up before it is too late; loser pays is “plaintiff pays”, and it is simply Un-American.
Mark Bello has thirty-three years experience as a trial lawyer and twelve years as an underwriter and situational analyst in the lawsuit funding industry. He is the owner and founder of Lawsuit Financial Corporation which helps provide legal finance cash flow solutions and consulting when necessities of life litigation funding is needed by a plaintiff involved in pending, personal injury, litigation. Bello is a Justice Pac member of the American Association for Justice, Sustaining and Justice Pac member of the Michigan Association for Justice, Business Associate of the Florida, Tennessee, and Colorado Associations for Justice, a member of the American Bar Association, the State Bar of Michigan and the Injury Board.
Attorney, certified civil mediator, and award-winning author of the Zachary Blake Betrayal Series. Mark Bello is also a member of the State Bar of Michigan, a sustaining member of the Michigan Association for Justice, and a member of the American Association for Justice.