Federal Tort Reform Bills: How These Laws Can Harm Injury Victims in Indiana and Illinois

Federal Tort Reform Bills: How These Laws Can Harm Injury Victims in Indiana and Illinois

In our last post we discussed proposed federal “tort reform” legislation that is pending before Congress and focused upon the potential impact of the Protecting Access to Care Act.  If enacted into law, untold victims will be denied justice for the harms done to them in future medical malpractice cases.

Today we will discuss the potential harm to accident victims and their loved ones in (1) the Lawsuit Abuse Reduction Act; (2) the Fairness in Class Action Litigation Act; and (3)  the Innocent Party Protection Act.

None of these bills are laws – yet.  But they look to have a likelihood of success and that likelihood is sounding the alarm for many who serve to protect and serve the rights of injured Americans in this country.

1.  Lawsuit Abuse Reduction Act: Mandatory Sanctions, No Discretion

The proposed Lawsuit Abuse Reduction Act is proceeding through the House as HR720 with a companion bill moving through the Senate as S237.  The proposal targets what some consider “frivolous claims” being filed in federal court by injury victims.

The law would establish mandatory sanctions upon anyone filing a case that is deemed to be “frivolous.”  These sanctions would be imposed even if the plaintiff and his/her attorney voluntarily dismisses (nonsuits) the lawsuit. 

The law would force federal judges to impose sanctions on injured victims and their attorneys who are found to have filed a “frivolous” case.

The reality means that lots of insurance defense lawyers will be seeking motions for sanctions, or threatening them in the hopes that a fearful and weary injury victim will withdraw their claims against the defendant who caused their harm.

It will also make it a harder call for many lawyers to file and advocate for close cases.  Many attorneys, fretful over the possibility of a defense sanctions motion, may deem the better course to decline the representation rather than zealously fight for the victim.

More sanctions motions will be filed.  Many will fail.  It’s another arrow in the defense team’s quiver to use in order to delay and intimidate injury victims.  And it’s going to increase legal fees and court costs, too.

Right now, judges have discretion in deciding whether or not to impose sanctions and if so, what those sanctions should be for a frivolous filing.  Moreover, since 1933 the federal procedure (Rule 11 of the Federal Rules of Civil Procedure) has been to allow the case to be withdrawn (nonsuited) before any sanctions hearing (21 days to withdraw).

As pointed out by the nonprofit advocacy group Public Citizen, an attempt to make sanctions mandatory has already been tried – and it failed.  From their news release:

The problems with this bill are not theoretical, but proven. In 1983, changes to Federal Rule 11 removed judicial discretion for issuing sanctions. Those changes were overturned a decade later, because the 1983 Rule caused a marked increase in business-to-business litigation and abusive Rule 11 motion practice by lawyers arguing more about sanctions than about the merits of the cases.

Because 1983 changes proved to discourage lawyers from cooperating with each other, the changes prolonged litigation, rather than advancing the goal of coming to a just conclusion. We must not repeat this failed experiment.

 2. Fairness in Class Action Litigation Act

The proposed Fairness in Class Action Litigation Act (H.R. 985) will act to limit who can join a class action lawsuit filed in any federal court.  If it becomes law, only plaintiffs who “had an injury of the same type and scope” can join the class action.

This hamstrings the ability of injury victims to join together as a class; it will limit the membership to the exclusion of some injury victims whose injuries do not dovetail or overlap sufficiently in “type” or “scope.” 

There will be less class action lawsuits filed as a result.

3.  Innocent Party Protection Act

If it becomes law, the Innocent Party Protection Act (H.R. 725) will change who gets to proceed in state court and who must litigate in the federal courthouse.  It will allow defendants in injury cases filed in Indiana and Illinois to take the lawsuit from the state court and move it to the federal courthouse.

If the defendant can show that the amount in controversy is over $75,000 and the plaintiff and the defendant are from different states, then it’s an automatic removal. 

The proposal will help defendants move their case to federal court and get it away from state courtrooms.  It’s done under the concept of “diversity jurisdiction,” where citizens of different states have their controversies heard in a federal forum (even if state law applies to the claim itself).

Insurance carriers who cover corporate defendants support this bill, of course.  They do so for several reasons, including:

  1. This helps the defense because federal dockets are slower that state dockets, giving them an inherent delay of the case. And delay is a big deal to any defendant in a personal injury case.  They do not want to rush to trial.
  2. It also helps defendants because federal courts are considered to be less in tune with plaintiffs. Ask most members of the plaintiffs’ bar and they’ll tell you it’s best to have injury cases tried in the local community in a state courtroom.
  3. This helps corporate defendants like hospital chains, big corporations, drug companies, trucking companies, and other defendants who can show diversity from a victim who lives in Indiana and Illinois. Most corporations that operate in several states will have their corporate offices in a state will favorable taxation (among other things). If this law is passed, it’s a Golden Ticket to removing injury cases out of the state courtrooms of Indiana and Illinois.

From Julie Braman Kane, president of the American Association for Justice, this commentary on this proposed legislation:

“H.R. 725 is nothing more than a license for corporate forum shopping. If enacted, it would do nothing to strengthen the judiciary and would create a system that is ripe for abuse by corporate defendants. At a time when Americans demand more accountability from powerful institutions, it is offensive that Congress is considering legislation that would rig the system against the voters who elected them. 

“This one-sided legislation would make it more difficult for individuals to have their claims heard in state courts, and would allow corporate defendants to move cases into already-overburdened federal courts – resulting in delays and dramatically increased costs to plaintiffs and taxpayers. H.R. 725 would also deprive state legislatures and state courts of their authority to decide disputes, leaving them powerless to enforce the very laws they’ve enacted to protect their citizens. 

“This legislation would have a devastating impact on Americans’ ability to seek justice when they have been injured by corporate wrongdoing. Congress should be making every attempt to advance their constituents’ rights, not fast-tracking unnecessary corporate handouts that will close the courthouse doors to people.”



The four proposed federal “tort reform” laws we have discussed this week endanger injury victims in Indiana and Illinois.  They will harm victims’ rights if they are passed. Let’s be careful out there!



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