Insurers, Agents Bask In Class-Action Victory Industry sets sights on reform bills for asbestos and medical malpractice claims

Washington

The insurance industry raved about the class-action reform measure signed into law by President George W. Bush after an eight-year battle for passage, with the American Insurance Association declaring that the real winners are “all businesses held hostage by frivolous lawsuits.”

“By working together over several years, we have agreed on a practical way to begin restoring common sense and balance to America's legal system,” President Bush said during a signing ceremony at the White House.

“The Class-Action Fairness Act of 2005 marks a critical step toward ending the lawsuit culture in our country,” he added. “The bill will ease the needless burden of litigation on every American worker, business and family. By beginning the important work of legal reform, we are meeting our duty to solve problems now, and not to pass them on to future generations.”

The newly signed law is designed to prevent abuses in the class-action system, such as “venue shopping,” by making it easier to remove such cases to the federal court system.

Industry reaction was totally supportive, which was understandable after years of intense but until now fruitless industry lobbying for the bill.

“President Bushs signature puts class-action reform across the finish line, making winners of businesses held hostage by frivolous lawsuits and consumers who have received nothing more than worthless settlement coupons,” said Melissa Shelk, vice president of federal affairs for the AIA.

“We appreciate that President Bush has made class-action reform a cornerstone of his national tort reform agenda,” Ms. Shelk said. “Republican congressional leaders also should be commended for making this a top priority. In addition, the co-sponsors on both sides of the aisle should be applauded for working in bipartisan fashion on this crucial legislation.”

In commending President Bush for signing the measure, the Independent Insurance Agents & Brokers of America also praised leaders in both houses of Congressincluding Senate Majority Leader Bill Frist, R-Tenn., Sen. Charles Grassley, R-Iowa, Rep. Bob Goodlatte, R-Va., Sen. Chris Dodd, D-Conn., and their allies in this effortfor working hard this month to get the bill to the presidents desk.

“Enactment of the Class-Action Fairness Act is an important first step in creating needed legal reform in America,” said IIABA Chief Executive Officer Robert A. Rusbuldt, who along with IIABA President Tom Grau attended the presidential bill signing ceremony at the White House. “This bill will strike a balance, in class-action cases, between the needs of consumers and small businesses, and the Big I has been pushing for this solution for years.”

“This bill is important for the clients of independent agents,” said Mr. Grau. “As President Bush said today, this bill is the right thing for consumers, for businesses and for real justice. The three real-world examples of class-action problems he cited at the signing ceremony today are just some of the reasons why this law is needed and why it will make the United States a better place to do business.”

Charles E. Symington Jr., IIABAs senior vice president of federal government affairs, said his association now will redouble its efforts to get additional legal reforms enacted, including remedies for the backlog of asbestos-related cases and the daunting number of medical malpractice suits in the court system.

President Bush, in addition to pushing for class-action reform, has been very supportive of the need for broader legal changes, including asbestos and medical liability.

David A. Winston, senior vice president for federal affairs at the National Association of Mutual Insurance Companies, said his group is “extremely pleased and applauds Congress for working so quickly to get this invaluable piece of legislation ready for the president.”

Mr. Winston acknowledged that NAMIC wholeheartedly agrees with President Bushs statement in his State of the Union address that “justice is distorted and our economy is held back by irresponsible class actions and frivolous asbestos claims.”

Carl Parks, senior vice president of the Property Casualty Insurers Association of America, called passage of the bill a “seminal moment in the reformation of our nations legal system. With the passage of this legislation, a portion of the billions of dollars consumers and businesses spend on frivolous lawsuits every year will now slowly begin to trickle back into the American economy, spurring economic growth and the creation of new jobs.”

Wendy Baker, president of Lloyd's America in New York, applauded President Bush's actions to curtail class-action lawsuits. “We welcome the passage of this bill,” she said. “It is an important step in the drive for reform of a tort system that negatively impacts the U.S. economy. This is a positive first step that will help businesses grow and develop without the constant fear of frivolous litigation.”

Opponents of the bill, however, continued to attack the measure, calling it anti-consumer and predicting it will limit access to the justice system.

“While purporting to curtail 'class-action abuses,' S. 5 virtually wipes out state class actions, thereby removing what is sometimes the only venue for redress of injury or fraud for consumers,” according to Rachel Weintraub, assistant general counsel for the Consumer Federation of America in Washington.

“The bill makes it more difficult for consumers to obtain effective and efficient judicial relief for injuries, for example, caused by defective products, fraud in the marketplace or discrimination,” she added. “The jurisdictional changes mandated by S. 5 are designed solely to impede class actions, not to make them fairer or more efficient.”

Reproduced from National Underwriter Edition, February 25, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Insurers, Agents Bask In Class-Action Victory

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