BIG “I” LAUDS HOUSE PASSAGE OF LAWSUIT ABUSE REDUCTION ACT
Legislation moves to Senate, would discourage frivolous suits and prevent venue shopping
WASHINGTON, D.C., Oct. 26, 2005—The Independent Insurance Agents & Brokers of America (the Big “I”) today hailed the House of Representatives’ passage of H.R. 420, the Lawsuit Abuse Reduction Act (LARA).
This important civil justice reform bill, introduced by Rep. Lamar Smith (R-Texas), also passed the House last year but stalled in the Senate. It addresses two major lawsuit abuses in our legal system that are particularly harmful to small businesses: the filing of frivolous lawsuits and “forum shopping.”
“We are thrilled that the House has passed this bill,” says Charles E. Symington Jr., Big “I” senior vice president of government affairs and federal relations. “If ultimately enacted, H.R. 420 will greatly discourage lawyers from filing frivolous lawsuits and prevent them from shopping around for plaintiff-friendly courthouses to bolster their chances of successfully litigating cases of dubious merits. These two developments would be tremendous steps forward for the small business community.”
LARA provides that any lawyer bringing a baseless or frivolous claim against a business must pay the legal costs resulting from the claim. Under the existing system, plaintiffs’ lawyers have the ability to make lowball offers, just beneath the cost of defending a claim, to compel potential defendants to settle. This causes the business’s insurance costs to rise significantly.
The legislation also requires that plaintiffs in civil tort actions can sue only where they live or were allegedly injured, or where their businesses are located. This would significantly reduce the venue shopping that is now rampant.
“Far too often, small businesses are forced to spend their time and money defending against frivolous lawsuits that could be otherwise devoted to serving their customers and growing their business,” says Brendan Reilly, Big ‘I’ director of federal government affairs. “It is simply common sense to hold plaintiffs’ lawyers responsible for filing unwarranted lawsuits, and to prevent the practice of litigation tourism. We are very pleased that the House once again has acted affirmatively on this much-needed legislation. We will work very hard to convince the Senate to follow suit and send this bill to President Bush for his signature.”
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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