The Fair Share Act - Arguments For and Against HB 1 and SB 500: Part II
As noted in last week’s entry, HB 1 and SB 500 are competing liability reform proposals that await consideration in the Pennsylvania Senate Judiciary Committee. While each proposal is notionally aimed at adding fundamental fairness to Pennsylvania’s liability system, the particular bills are vastly different in effect. HB 1 would end joint and several liability for liable defendants with less than 60% assessed liability (the “60% Rule”), while SB 500 would only relieve defendants with assessed liability less than that attributed to the plaintiff. Not surprisingly, there exist strong opinions on the respective merits of these proposals.
Proponents of HB 1 argue that it is the only proposal that promises meaningful reform of a flawed system that forty-one (41) other states have already seen fit to abandon. The current joint and several scheme unjustly forces some defendants to pay damages beyond their assessed degree of responsibility solely because they possess the ability to pay. The result is a system that invites abuses. Plaintiffs (and their often contingent-fee advocates) are induced to name as many “deep-pocketed” defendants as possible, regardless of how attenuated their involvement. Huge liability risk is thus foisted upon parties with relatively little culpability. Because of this exposure, companies are forced to spend huge sums of money on liability insurance and legal fees, rather than focusing precious resources on their core mission. Moreover, the threat of having to pay a disproportionate award, regardless of fault, likely compels at-risk defendants to pay much more to settle cases than they might otherwise. More broadly, such a system inevitably contributes to the explosion of health care costs and dampening of economic growth that threaten the overall economic well-being of Pennsylvania.
Opponents of HB 1, on the other hand, argue that the bill is merely an effort to create a “loophole” by which deep-pocketed corporations can avoid liability and shift the risk of insolvent defendants back to plaintiffs and taxpayers. Whatever their assessed percentage of comparative liability, each liable defendant’s negligence may have been a sufficient cause for the entire injury. Therefore, any amount up to 100% of the award is reasonable to impose on each defendant. Regardless, under the proposed reform wealthy defendants will hire the best lawyers and deflect most of the liability onto insolvent defendants, thus leaving plaintiffs uncompensated. Defendants will also be tempted to join numerous other defendants into a suit, regardless of how tangentially related, in order to dilute the percentage of ultimate liability falling on each individual defendant. Moreover, in the event a liable defendant cannot pay its share, plaintiffs will be unable to recover amounts sufficient to repay the Commonwealth Medicare/Medicaid Programs which presumably will pay much of the upfront costs. Therefore, large amounts of unreimbursed medical expenses could be left to the taxpayers of Pennsylvania. Finally, adoption of this proposal could lead to more risky behavior by commercial actors unburdened by the threat of disproportionate award contributions.
Proponents of SB 500 argue that it is less radical than HB 1, but would eliminate at least the most egregious potential outcomes. Support for this bill appears comparatively tepid, however, largely due to the fact that the circumstances addressed are so narrow. Major supporters of liability reform, such as hospitals and other health care institutions, will likely not be appreciably benefitted given the practical challenges to even pursuing contributory negligence by plaintiffs. Thus, adoption of SB 500 would in the vast majority of circumstances amount to change without substance, and thus hold little more than symbolic political value.
