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LEGAL ISSUES

Legal Reform on Bush's Agenda

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Dec. 17, 2004--Along with privatizing Social Security and streamlining the tax code, President Bush hopes to stimulate growth by limiting damages paid in class-action, asbestos, and medical malpractice cases.

"The cost of frivolous lawsuits in some cases make it prohibitively expensive for a small business to stay in business or for a doctor to practice medicine, in which case it means the health care costs of a job provider or job creator are escalating," said the President.

According to the President, lawsuits cost the economy more than $250 billion a year. Small businesses, found The Institute for Legal Reform (ILR), a separately incorporated affiliate of the U.S. Chamber of Commerce, carry roughly 35%, or $88 billion, of those costs.

While small businesses are not immune to class-action or asbestos suits, they do not present as great a threat as the costs associated with medical malpractice, noted Dan Danner, the National Federation of Independent Business's Senior Vice President of Public Policy.

"The cost and availability of healthcare is the issue we hear the most about from our small business members. Anything that could stabilize or slowdown the increase in the cost of healthcare would be gigantic," Danner said.

In the four years prior to 2001, both the number of plaintiff victories and the average amount of settlements grew in medical malpractice cases, 13% and 46% respectively, according to the American Insurance Association. In Mississippi, for example, malpractice insurers paid 142% more in 2001 than in 1998. As a result of the increasingly plaintiff friendly environment, insurers have raised premiums, especially for riskier specialties like obstetrics and emergency room care. The higher insurance costs have affected doctors in two ways: some have left the profession or chosen to not perform high-risk procedures; others have begun to practice "defensive medicine," which means they are performing unnecessary, extremely costly medical treatments for fear of being sued.

"Defensive medicine" costs the Federal government an additional $27 billion a year, said the President. Thus, by capping pain and suffering claims, malpractice insurers will be able to lower their premiums, which will bring doctors back into riskier fields. But more importantly, doctors, without the fear of being sued, will practice medicine more efficiently, which will drive down the cost of healthcare.

According to the General Accounting Office (GAO), states that capped damages for pain and suffering at $250,000, the President's proposed level, enjoyed slower growth of both malpractice insurance premiums and claims payments, as opposed to states without caps.

Legal reform has been on the President's agenda since his first term but was overshadowed by terrorism and war. Now, he says, it is a "priority issue" that he is passionate about. By the start of his second term, January 20, 2005, Mr. Bush intends to present Congress a "legislative package" that addresses his plans to reform class-action, asbestos, and medical malpractice cases.





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