Montana Main Street Blog

Why Tort Reform is Not in the Health Care Reform Mix

So says Howard Dean.

Appeal Reforms Needed for Energy Projects

Rarely do we reprint an article verbatum on the blog, but this latest editorial by Llew Jones (District 27 - Conrad) was an excellent one. It demonstrates the need for appeals reform in order to get more energy projects from the drawing board to on-the-ground operations:

"It has been inferred that there is no need for appeals and litigation reform, thus my HB483, HB529, and HB566 are not necessary.

Rep. Jones

Consider the following:

According to the Department of Environmental Quality (DEQ), there have been six major energy projects over the last eight years or so. All six were appealed, some multiple times. Notice that the level of "gaming" of permits, i.e. the never ending nature of appeals on the last three:

Roundup Power. Three appeals to Board and one court challenge. The Board held for Department in one, which was appealed to district court. District court held for Department. Petitioners appealed to Supreme Court. Supreme Court held in part for petitioners and in part for Department. Board held for petitioners in another case. Third appeal to Board dismissed as moot. In court challenge district court held for Department. Petitioners appealed to Supreme Court. Supreme Court dismissed as moot.

Thompson River Co-Gen (proposed Thompson Falls plant), Appeal to Board. Board held in part for Department, in part for petitioners. Ruling in favor of Department appealed to district court. District court upheld Department. Petitioners have appealed to Supreme Court.

Southern Montana Electric (proposed Great Falls plant). Appeal to Board. Ruling in part for petitioners and in part for Department. Ruling for Department appealed to district court. Ruling for petitioners resulted in Department doing a new Best Available Control Technology (BACT) determination. New BACT determination appealed to Board.

I also would suggest that the reader visit the MEIC website and read about the above projects. Roundup was subject to five appeals alone: http://www.meic.org/energy/power_plants/roundup-power-plant-1.

I would also ask that you consider the celebratory tone taken by these folks. I find it disingenuous to celebrate the destruction of these projects without consideration for the job loss, school funding loss, economic impact and higher cost electricity that were caused.

The legislation I am carrying is not about limiting the right of public input. I am a huge supporter of the extensive Montana Environmental Protection Act (MEPA) process that allows the public input which impacts the state and developer's decision making process, although I do grump about how long it takes at times.

What my bills do is create a more predictable and timely framework after the extensive MEPA and permit process is finished. For investors and developers to consider investing millions, even billions of dollars in Montana there must be a predictable framework that allows legit appeals and litigation while still discouraging delay and deleterious gaming.

On a major project, the whole EIS and permit process seems to take around two years. It would seem reasonable that the subsequent appeals and litigation should be wrapped up one way or another within two years. That is certainly not true today. Maybe it can be tomorrow.

This legislation is not about being partisan. I have worked with the Executive branch and across the aisle with some of the more moderate folks. This legislation is about moving Montana forward."

Creating More Ways to Sue Small Businesses

A bill that would add one more way for a disgruntled employee to sue their employer is back. SB 494 (Sen. Windy Boy) is a repeat of HB 213 from last session, which we posted on here. Under this proposed law, an employee or former employee could sue for a "hostile work environment." 

So on top of wrongful discharge, constructive discharge, infliction of emotional distress claims and more, employers could look forward to one more potential frivolous lawsuit. Unlike larger businesses, small businesses do not have HR directors or lawyers on staff. When a piece of new, significant regulation comes out of Helena, small businesses have to spend a lot of money trying to figure out how to comply with the law.

Although it certainly has good intentions, the proposed bill would be a huge hit to small businesses. Thankfully, the Senate Business and Labor Committee promptly tabled the bill.

More Stimulus for Montana Trial Lawyers

Trial lawyers got a victory in the Senate Judiciary committee when SB 285 (Senator Larry Jent) received a 7-5 vote to send it to the floor. The bill would drive up costs in an already costly work comp system by encouraging the use of lawyers in collecting work comp benefits. The current system was set up specifically to discourage the use of attorneys, and this system has worked for more than 99% of claimants. The old system used attorneys very regularly, and that is one reason the Old Fund went broke.

The bill would also take out the "reasonable" requirement in current law. Right now, a claimant can collect attorney's fees if the denial of medical benefits by the insurer was unreasonable. If this bill becomes law, the reasonableness of the denial will not be a factor, and any claimant would be able to get those fees paid.

We hope the full Senate will recognize the high costs of work comp insurance and not make it worse.

Trial Lawyer Stimulus Bill Advances

Today the House narrowly passed out HB 345 (Ken Peterson), which is one of the trial lawyers' number one priorities. In short, the bill would make Montana the first state in the nation to allow a plaintiff to collect attorney fees in a third party bad faith claim. To see the 52-48 vote, click here.

In the next few days, I will summarize the other three or four bills that are high on the priority list for the plaintiff's bar.

An Economic Stimulus Bill for Trial Lawyers

While the nation deals with a historic economic downturn and Washington debates a bill to recharge the economy and create jobs, a group of people gathered in the Montana Legislature's House Judiciary Committee to hear a bill aimed at stimulating the plaintiff's bar.

The bill is HB 345 (Ken Peterson), and it would change the law in Montana regarding third-party acts of bad faith in insurance claims. Currently, Montana is only one of a few states that allow third parties to sue for bad faith. This bill would make us the first and only state in the nation where attorney fees would be rewarded in these cases. Like any other new law that mandates coverage, increases exposure and risk, this bill is going to add cost.

Statistics show that Montana's extraordinary laws regarding insurance have had a considerable effect on insurance cost for consumers. According to testimony at today's hearing, Montanans can expect to pay between 15-40% more for insurance than our neighbors. In addition, the West Virginia Insurance Commissioner conducted a study on the financial impact of their state's third-party bad faith laws and the results of increased costs were conclusive: these laws increase costs for consumers.

Businesses are huge consumers of insurance, and so when we see something that will increase costs for them, we vigorously oppose. With workers' compensation costs, health care costs, energy costs, taxes, and other expenses already beating down employers, we stand firmly opposed to anything else that will burden them from creating more jobs and running the economy.

I know a lot of sectors of our economy are hurting right now. Apparently the plaintiff's bar is one of them. Despite the pleas for this unprecedented legislation, we hope a majority of the House Judiciary will vote to table the bill.

Legally Insane

This post comes from a NAM newsletter column called "Legally Insane." Enjoy:

"A man serving time in a Colorado jail has been trying to break out of the slammer for years. After an unsuccessful attempt two years ago, he once again tried to rappel down the side of the 85-foot prison wall earlier this year. On this attempt, however, he fell 40 feet and sustained injuries.

After he was asked to pay back $64,000 in medical expenses, the wannabe-fugitive filed a suit in Denver court claiming he had warned prison officials of the prison's lackluster security after his first escape attempt. Because of the prison's failure to effectively secure the prison, he claims that he was given 'an open invitation to escape.' He now alleges that it was this invitation that led to his injuries, and the prison should cover these costs.

Since the suit was filed, the jail has had to invest $1.2 million to improve security. As the convict awaits his day in court, he is serving out his escape conviction sentence at the Colorado State Penitentiary - the most secure facility in the state's prison system." 

Is Montana Work Comp Exclusivity Law in Trouble?

Is the Montana Supreme Court ready to again act as a superlegislature in the near future over the issue of worker's compensation exclusivity? A case decided last week might shed some light on the future direction of the Court.

The case is Brady v. PPL Montana, where a worker was severely burned while trying to repair a faulty coal dust collector at the Colstrip plant. He received third and second degree burns from this accident. After getting worker's compensation indemnity and medical benefits, the injured worker filed suit against PPL Montana for allegedly disregarding the facts surrounding the accident that created a high probability of injury to the employee.

Montana law clearly states that injured employees may sue their employer outside of the work comp system under very limited circumstances. In 39-41-719(1), MCA, the legislature made its intentions clear when it comes to workplace injury lawsuits outside the system:

"(1) If an employee is intentionally injured by an intentional and deliberate act of the employee's employer or by the intentional and deliberate act of a fellow employee while performing the duties of employment, the employee or in case of death the employees heirs or personal representatives, in addition to the right to receive compensation under the Workers Compensation Act, have a cause of action for damages against the person whose intentional and deliberate act caused the intentional injury."

In other words, an employer must have acted in a way beyond just negligence or even gross negligence. The act must have been intentional where the employer intended actual harm.

The worker's compensation system was set up to help injured employees with wage loss benefits and medical treatment for work related accidents caused by the negligence of the employee or employer. The question of fault, be it the employer's or the employee's, is irrelevant in work comp in most cases. The responsibility for paying for work comp rests soley on the employer. In this particular case of Brady v. PPL Montana, the employee is looking to collect damages over and above the work comp system. Before that happens, though, the Montana Supreme Court has to overturn the statute and allow the employee to sue his employer for something that was not intentional.

This case is not actually before the Montana Supreme Court. It's being appealed in the 9th Circuit after the Federal District Court granted summary judgment to PPL Montana. The Montana Supreme Court was looking at the issue of constitutionality because the 9th Circuit asked the Court to determine if the statute conflicts with Montana's 1972 constitution. In the end, the MT Supremes ended up punting on the issue altogether in a 4-3 decision where they refused to decide one way or the other.

The majority and dissenting opinions offer some interesting peeks into how some of the justices feel about the statute. While four signed the majority opinion sending the case back to the 9th Circuit, Justice Jim Nelson took the extra step of writing a concurring opinion where he stated:

"I entertain grave reservations about the constitutionality of § 39-71-413, MCA, for various reasons, not the least of which is whether it can withstand scrutiny under Article II, Sections 16 and 17 of the Montana Constitution—respectively, Montana’s fundamental guarantees of access to the courts and to due process of law."

Justice Patricia Cotter also signed this concurring opinion, which puts two justices in the group that would overturn the statute. Three justices dissented, but Justice John Warner's dissent (also signed by Justice Jim Rice) is the most revealing. He states:

"Article II, Section 16 of the Montana Constitution states that there is an exception to the right to full legal redress for an injury that is covered by the Workmen’s Compensation Laws. The legislature has provided the scope of such an exception in § 39-71-413, MCA... and I would conclude that the statute passes constitutional muster."

So two have come right out and said they would overturn the statute (Nelson, Cotter) and two have stated they would uphold the statute (Warner, Rice). The other three (Morris, Leaphart, Gray) didn't make their intentions as clear.

Although this particular case involves a larger employer in Montana, the majority of work comp cases come from accidents in small businesses. These small businesses make up 97% of the businesses in the state according to the SBA. Any opinion overturning work comp laws relating to exclusivity would be devastating to the Montana small business community.

Hat tip to AB.

New Study on Montana's Legal System

The U.S. Chamber's Institute for Legal Reform has released a new 50-state study on state "lawsuit climate." Montana came in 38th, which is up two points from last year's ranking. Not sure whether that was due to Montana's legal climate improving, or if a few other states just moved in the wrong direction.

The business attorneys who took the survey were asked to give states a grade ("A", "B", "C", "D" or "F") in each of the following areas: having and enforcing meaningful venue requirements, overall treatment of tort and contract litigation, treatment of class action suits and mass consolidation suits, punitive damages, timeliness of summary judgment or dismissal, discovery, scientific and technical evidence, non-economic damages, judges' impartiality and competence, and juries' predictability and fairness.

Compared to most of Montana's neighbors in the west, we are behind. Utah is 5th, Colorado is 9th, South Dakota is 12th, North Dakota is 13th, Oregon is 14th, Arizona is 15th, Alaska is 20th, Wyoming is 23rd, Idaho is 26th, Washington is 27th, and New Mexico is 37th. I guess we can take pride in beating Nevada (40th) and California (44th), but that's a little hard to do when so many western states are ahead of us.

The Montana Chamber, along with many other groups, will bring forward pro-active legal reform ideas to the 2009 legislature that will improve our judicial system and discourage lawsuit abuse. We can do better. 

AGs Aligning with Trial Lawyers

The Wall Street Journal has a great article today detailing a troubling practice in some states. It seems that some attorneys general around the country have outsourced their work to big trial lawyer firms. These big contracts are being handed out to some of the largest campaign contributors of these AGs.

I'd be interested to see how much of these settlements go to helping out the people who were allegedly impacted, and how much goes into the pockets of lawyers and state coffers.