‘Gouging Lawyers’ Hit by ‘Deep-Pockets’ Group

SACRAMENTO — Buoyed by last year’s voter approval of the “deep-pockets” insurance initiative, a coalition of business groups, manufacturers and physicians unveiled an ambitious agenda of more radical proposals Thursday that would limit awards in personal injury and product liability cases across the board.

Focusing its anger on “gouging lawyers,” the coalition, which successfully financed and ran last year’s initiative campaign, proposed a package of bills that would cut deeply into attorney contingency fees, set strict limits on the size of “pain and suffering” awards and make it far more difficult to win punitive damages from companies that manufacture or sell dangerous products.

These measures, patterned after ones the Legislature has previously rejected, go far beyond last year’s initiative, which its sponsors said was a first step in reducing insurance premiums by placing some restrictions on recovery of “pain and suffering” damages.

Should the Legislature reject the latest proposals, coalition members pledged to take their case directly to voters in a another initiative on the 1988 ballot.

“We want to send a clear message that more (liability) reform is absolutely essential,” Kirk West, president of the California Chamber of Commerce, told a Capitol press conference. Calling the package of legislation “reasonable and consistent with the wishes of the people,” West added that reform of the liability system “continues to be the highest priority for business in this state.”

Trial lawyers and victims rights groups immediately vowed to fight the legislation and any subsequent initiative, calling the proposals an attempt to insulate business and industry from social responsibility.

“What they are trying to do is take rights away from victims,” declared Browne Greene, president of the California Trial Lawyers Assn. “The very people who bring about catastrophic injuries are coming in asking for less victims rights and more profits on their own part.”

The far-reaching legal changes sought by the coalition are a follow-up to last June’s successful effort to pass Proposition 51, the “deep-pockets” initiative, which supporters said would lower insurance premiums and make coverage more readily available.

The initiative, approved by voters 63% to 37%, requires that in cases of multiple defendants, each be assessed according to the degree of fault for such “non-economic” damages as pain and suffering. Previously, wealthier defendants who were minimally at fault could be forced to pay a major share of damages if other, more culpable defendants lacked the means to pay.

Since the initiative’s passage, insurance rates have not fallen significantly, although profits of many insurers have risen sharply. Opponents of the reforms hold that up as evidence that the effort was misdirected. But the coalition that backed the initiative contends that it will take more time for the results to emerge.

Even before the initiative passed, however, its backers had acknowledged that their hope was to galvanize public support for more radical changes to the liability system.

“We did not believe (Proposition 51) would solve all of our problems and it has not,” said Larry Naake, executive director of the County Supervisors Assn. of California. “But it was a major step to reverse a trend that was developing over decades and consequently we think the next step has to be taken.”

Model for Agenda

The model for the coalition’s agenda is California’s 1975 landmark overhaul of medical malpractice laws, known as the Medical Injury Reform Act, which limits to a maximum of $250,000 “pain and suffering” awards that can be assessed against physicians. It also prevents lawyers from increasing fees in direct proportion to the size of the judgment and allows settlements to be paid out over many years, rather than in a lump sum.

The coalition’s proposals, while incorporating the medical malpractice provisions, go further, granting immunity to government agencies for injuries arising from poorly designed public projects. In the case of businesses that knowingly manufacture or sell dangerous products, the proposals would require a unanimous jury verdict and evidence “beyond a reasonable doubt” before punitive damages could be awarded.

Jay Angoff, spokesman for the National Insurance Consumer Organization, said business’s real motivation in supporting the proposal is to “limit its liability. . . . These guys are like heroin addicts. They get some reform and then they come back to get more.”

Trial lawyer Greene, meanwhile, said the changes would remove any incentive that industry has for making sure that products are safe.

Nearly all of the proposals offered by the coalition have been rejected by the Legislature over the years, mostly in the Assembly Judiciary Committee, where trial lawyers have considerable influence.

But Harvey Rosenfield, a leader of last year’s “No on 51” campaign, said: “What (coalition members) really want is to be able to blame the Legislature and the trial lawyers for not allowing this stuff to go through. They want to present this horrendous package (to voters) in a form that can’t be changed and sell it with public relations people and 30-second commercials.”