TorteDeForm

Cameron Getto

As the Sky over Michigan Falls, Chamber and Republicans Focus on More Tort Deform

Michigan has for months now been in the midst of its worst budget crisis ever. The Governor and the Legislature are talking about taking school money away in the last quarter of the fiscal year, laying off state employees, and potentially shutting down our government. And now the governor is threatening the reduction of Medicare payments to medical providers who serve poor people and elderly people. The problem is due in no small part the last year's Republican-controlled Legislature's elimination of a business tax that is now wearing a $2 Billion hole in Michigan's pockets.

What has the Michigan Chamber of Commerce spent the last several months working on during these trying times? Tort deform. Despite proven facts to the contrary, the Chamber has chosen to spend its time and money on the same thing as the Michigan Republican Party -- more tort deform.

Michigan is the only state in the union that provides complete immunity for drug companies that manufacture and sell dangerous drugs. In a March ad in the Lansing State Journal, the Chamber disingenuously stated:

[Repealing drug immunity laws] is the first step in their plan to turn Michigan into a playground for personal injury lawyers. They want to undo laws that hinder them from recruiting phony victims who aren't even hurt so they can flood our courts with more frivolous lawsuits.
In a press release from the House Republican Communications Services, the response to the repeal attempt was to once again blame trial lawyers, rather than to help victims of dangerous drugs. The Republicans disingenuously stated:
The people who stand to gain the most are the personal injury lawyers looking for their next pig payday.
Is it any wonder that we are still waiting for the Michigan Republican's budget proposal to leave the Senate floor? They seem to be spending all their time taking shots at attorneys and victims, and very little of their time actually doing the job they were elected to do: balance Michigan's budget.

Cameron Getto: Author Bio | Other Posts
Posted at 9:43 AM, May 10, 2007 in
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Comments

Because of Michigan's high sales tax, state income tax, high workmans comp and other business taxes we moved our business out of state. This is not to mention the problems in Wayne, Oakland and Macomb counties.

I can not imagine moving my company back to Michigan with all these issues. I chose to move my business to a state with more reformed courts. Business pay people who then pay taxes. Chase away the business and then who is left to pay the taxes? Empoyer more and more careless litigation and you lose more business. Michigan is crippled and on its last leg, to survive it needs to lure business. Tort reform does this. The timing could be better, but then how do you get rid of decades of democratic spending sprees to catch up?

Posted by: Chris | May 10, 2007 12:51 PM

Hi Chris,

Thanks for your comments. I'd really like to have this discussion with you because I think talking through your viewpoints will very much advance understanding of this issue.

As a first question I'm curious where you get your facts from? why do you have the beliefs about the effect of the courts that you do?

For example how do you know that litigation and the courts are to blame for Michigan's business woes?

Why do you believe that tort reform in Michigan will help?

What is your basis for these viewpoints? Can you please provide links in your response?

Posted by: Cyrus Dugger | May 10, 2007 5:12 PM

The facts we had to base our choices on were easily obtained. It all boils down to economics. For us, the cost of doing business in Michigan included the costs of health insurance, workmans comp and exposure to litigation. It makes a big difference if these are different in other states. We shopped these prices in different communities and states. In Lansing, Michigan we saw the loss of Buick-Olds-Cad and supporting companies and the rise in "sudden disability clames". Our overall costs and liability risks skyrocketed. With the rise in these claimes in the state, we saw our workmans comp increase, not to mention the increase in State Taxes. To remain solvent, we shopped around. We actually used the US Chamber of Commerce data on states and communities where we could optimise our chances. This data includes risks of litigation and what can only be described as favolrable courts. Like many other business we were drawn to the areas that were more favorable. The location that was the best by our research, Austin, Texas. The problem with Austin was, every other business is moving there.

You ask why tort reform will make a difference. It is employers who pay people who pay taxes. Businesses are drawn to locations were there profit is higher and risks are less. Continue the threat of out of control courts and lawsuits and business will go elsewhere.

Posted by: Chris | May 10, 2007 10:01 PM

Chris, I noted that you mentioned the Chamber's data suggested Austin would be a great place for you to go. Did you know the Chamber ranks Texas as having the 44th WORST civil justice system in the nation?

I live in Lansing and I know what you mean about the loss of jobs and supporting industries, but GM's decisions that hurt the area had nothing to do with the legal system.

Similarly, the single business tax has nothing to do with the legal system, and health insurance costs have nothing to do with the legal system.

If I were a business person, I wouldn't want to open up shop in Michigan, but not because of the legal climate. High taxes, limited availability of educated workers, and a poor economic climate in general are all strikes against the state.

But the fact that Texas, which supposedly has a terrible legal climate is more appealing than Michigan is proof that legal "reform" can't make a state a good place to do business.

Posted by: Justinian Lane | May 11, 2007 2:58 PM

The chanber of commerce data was very interesting as it all depends on what type of business you are in. (It is stratified by type) Unfortunately, part of business is risk and looking into the crystal ball. Right now there is such a backlog in the Texas Medical Board for new liscenses from medical personnel moving in that they tell everyone to expect up to one year delay. Continued reforms could make Texas a very good place if these reforms continue and extend to other types of cases. This was suggested to us by the Chamber. We chose Tennessee however which is 8th on the list in regards to the Chambers overall data. Tennessee is seeing a huge number of corporations and business moving in. It has some of the lowest taxes of the states. It also has a problem that is being debated in its Legislature, a 1.3 billion surplus. It also has begun some legal reforms in a different way. Here it has been determined that there exists a "Standard of Legal Practice" that is state wide and this is now being used as the basis for legal malpractice suits.

The big problem with Tennesse is that with everyone moving here property prices are going through the roof!

Posted by: Chris | May 11, 2007 6:19 PM

Hi Chris,

As Justinian has already alluded, you may have had good reasons to move your business from Michigan, but the civil justice system wasn’t one of them.

Your reasons for leaving that you state are related to the civil justice are simply not supported by reality. Your argument is also a non-sequitor.

You first list your reasons for leaving as: a high sales tax, high state income tax, high workers comp, and other business taxes.

You then go on to say that you had to move to a state with more reformed courts.

And yet of these four reasons you provide only one can even be arguably connected to courts or the civil justice system. Taxes simply are not related to the civil justice system.

The one issue that somebody could even make an argument as connected to the civil justice system is not actually connected. The workers compensation insurance premiums you pay (as with doctors and medical malpractice insurance) is primarily guided by fluctuations in the investment returns and the connected cycles of the larger economy than the amount and/or type of claims. Even more damning is the recent report by the Fiscal Policy Institute

“A new study estimates that employers cheat New York State's workers'
compensation system by not paying $500 million to $1 billion a year in required insurance premiums, forcing other employers to pay higher premiums.
The study by the Fiscal Policy Institute, a liberal research group, found that these illegal underpayments represent 15 percent to 20 percent of all the workers' comp premiums that are supposed to be paid each year statewide.
Some companies pay no premiums while others underpay by underreporting the size of their work force to qualify for lower premiums, the study said.
Government, business and labor leaders say the noncompliance hurts the state's business climate by forcing law-abiding companies to pay higher workers' comp premiums when many corporations are already complaining that their premiums are too high.” (link - http://www.tortdeform.com/archives/2007/01/workerss_compensation_fraud_em.html)

Other businesses that fraudulently attempt to skirt their legal obligation to provide workers’ compensation that drive up the cost of workers compensation for all other companies (not workers trying to cheat the system). Your best bet to reduce these workers compensation insurance costs would have been to get all the other companies in your state to be in full compliance and to be covering all their eligible employees.

You also say that the problem is that Michigan’s laws “[empower] more and more careless litigation and you lose more business.” What would great is to get even just five good examples from you of the “careless” litigation in Michigan you speak of and a description of how each crippled business in Michigan (feel free to include careless legal defenses as well). I ask for these examples because I’m just very interested in why you have the beliefs that you do and what examples these beliefs are based on.

What’s ironic about your viewpoint is that even after Michigan gave drug manufacturers full immunity from lawsuits, Pzifer still shipped out of Michigan regardless.

Big Noise in the Mitten State: Part 4 - Gesundheit 911 http://www.tortdeform.com/archives/2007/02/big_noise_in_the_mitten_state_4.html

Pfizer Proves That Tort "Reform" Was a Fraud http://www.tortdeform.com/archives/2007/01/httpwwwtrustygettocom200701ino.html

I’m also curious, what type of business are you in?

Posted by: Cyrus Dugger | May 14, 2007 5:44 PM