Reform from activism

30 April 2008

Perseverance, it is said, often pays ofi, and SC&RA members can find proof in three recent legal reform victories, which were driven home by small business owner groups on a federal and individual state level.

The largest in scope and most recent victory (Class Action Fairness Act-CAFA) is being categorized as “the most significant (federal) tort reform in years, which may provide the impetus toward further legal reforms” by Robert Cartwright, Jr., vice chairman of the External Afiairs Committee, Risk & Insurance Management Society, Inc. (RIMS).

Cartwright, loss prevention manager-Northeast zone for Bridgestone Firestone Retail & Commercial Operations, stressed the importance of small business owner involvement to afiect change at the recent RIMS annual conference held in Philadelphia.

“It's very important our voices get heard inside the Beltway and the people in this room really carry the most weight” in discussing legislative issues of interest to business owners, Cartwright told those attending a discussion of risk managers' potential infiuence on Capitol Hill.

Landmark federal legislation The enactment of the Class Action Fairness Act (S.5) (CAFA), can be a first step toward further federal legal reform. Even though class action legal maneuvers by the trial bar have only had an (indirect) impact on specialized carriers and the crane & rigging industry due to the nature of the multi-state, multi-plaintifi claims, the door is open for additional reform that ranges from putting curbs on punitive damages, to change in the way medical malpractice liability is handled. Both these areas directly impact all small business owners, particularly when you consider the high hazard nature of SC&RA member industries, which can easily develop uninsurable punitive damage awards and the fact that the current medical malpractice climate directly impacts the delivery of healthcare to all SC&RA members' employees.

CAFA requires that certain class action lawsuits involving defendants and plaintifis from difierent states be filed in federal rather than state court, which are better equipped to handle these issues, and also very importantly are not susceptible to “venue-shopping”, in which trial lawyers steer cases to certain state courts with reputation for being trial bar friendly. As a result, it is expected that fewer frivolous lawsuits will clog the system, which is a win-win for businesses and consumers alike. Businesses (and those who insure them) will face less exposure, and consumers that have legitimate claims will have the opportunity to see their cases move forward more rapidly.

This new class action fairness legislation was introduced by the Independent Insurance Agents Association (Big “I”), which comprises thousands of small business insurance agents across the US The Big “I”never gave up on enacting this meaningful legal reform bill, even after the dark days in 2004 when the bipartisan deal in the Senate collapsed in the final hours before the vote. The Capitol Hill team continued to push for the legislation, and in the end, its perseverance was rewarded. Because of the resolve of the Big “I” and like-minded groups, as well as Majority Leader Frist, Senator Grarsley (R-Iowa), and Representative Goodlatte (R-Virginia) who introduced the bill on the House side, this commonsense legislation, despite a long wait, has come to pass.

Workers Compensation reforms

Legal reforms in individual states can be as meaningful to SC&RA business owners as the previously mentioned federal reforms that impact all states. This is particularly true in California and Florida, which have recently enacted comprehensive reforms to their respective status for workers compensation.

Both of these individual state reform initiatives were brought forth by small business groups, and the resulting change has been a noticeablemprovement for both states ‘business owners’ insurance costs for workers compensation (and general liability in Florida).

California:

Governor Schwarzenegger made workers compensation reform a top priority in his campaign to un-seat (then Governor) Davis, due to the inordinate number of small businesses exiting in California to neighboring states because of the high costs of workers compensation in 2003 and 2004. The “Governator”listened to small business owners, and made significant changes in return to work requirement and permanent/partial damage award levels, which not only brought back business owners to California, but also generated additional interest from new insurers to the California workers compensation market, which in turn increased competition, resulting in lower costs to the business owners. The National Commission for Compensation insurance (NCCI) recently issued a report that the combined ratio of premiums and losses is the best performance since 1997.

Florida:

SC&RA members should be very proud of the horizontal immunity reform initiated by (fellow SC&RA members), General Crane (Jim Robertson) and Summit Global Partners (Je? Haynes) and their colleagues at the Florida Crane Owners Council (FCOC), many of which are also SC&RA members. This historic legislative change is considered to be both workers compensation (and tort reform) for businesses involved in the construction industry in the State of Florida.

In similar fashion to the new (federal) class action tort reform, the small business group headed by the Florida Crane Owners Council (FCOC) sufiered a disappointing setback in late session of the 2002 legislation when the “Horizontal Immunity” bill to reform the Florida workers compensation (Statute 440) never made it to the floor. FCOC, however, never gave up on enacting this meaningful legal reform bill, and rallied hundreds of small business groups to support this initiative for the 2003 session.

After intense negotiations between FCOC and the Florida trial bar, Governor Bush signed the amendment to the Florida Workers Compensation Statute (440) in July 2003, creating “Horizontal Immunity 440.10(E)”law, which capped attorneys fees, streamlined benefits and return to work rules, and most importantly mandated that workers compensation coverage would be the “sole remedy”for injured workers on construction sites, thereby eliminating “action-over”litigation tactics by plaintifis lawyers working on behalf of workers who normally would file suit against other contractors in addition to collecting the workers compensation benefits.

According to Je? Haynes, CEO of Summit Global Partners/USI, and active participant at the Florida Crane Owners Council, “This legal reform for Florida contractors has reduced workers compensation rates by 14%, and has created an attractive environment for (general liability) insurers in our state”. Haynes adds, “When you consider the significant construction activity that has been occurring in the State of Florida over the past several years, this meaningful legal reform has greatly assisted the (entire) small business community because (the reduction) in the cost of construction resulting from Horizontal Immunity is being passed on to the business owners who are driving the construction projects. I am very proud of my colleagues [at FCOC], all of which are small business owners, who fought hard to get this bill passed.”

Build on the momentum

So, as you can see, the small business activism by owners in Florida, California (and nationally for class action reform) really is key to efflecting change.

Such unfiinching efforts will be needed in coming battles to enact even more legal reforms, and if small business owners can band together the way the Florida Crane Owners Council did, small business can build on the momentum created by these successful changes.

MAGAZINE
NEWSLETTER
Delivered directly to your inbox, World Crane Week Newsletter features the pick of the breaking news stories, product launches, show reports and more from KHL's world-class editorial team.
Latest News
Heavyweight speakers join CATME programme
Participants from Saudi Aramco and Hareket added to the speaker programme
CraneFest auctions raise money for charity
Bidders at Link-Belt’s CraneFest 2021 donated $72,000 to three charities. 
Carlton Group acquires Crews Crane Training International
Carlton group acquired ES Hoisting Solutions in November. The acquisition of Crews Crane Training Internationl complements is a natural progression. 
CONNECT WITH THE TEAM
D.Ann Shiffler Editor, American Cranes & Transport Tel: +1 512 869 8838 E-mail: d.ann.shiffler@khl.com
Matt Burk VP Sales Tel: +1 312 496 3314 E-mail: matt.burk@khl.com
CONNECT WITH SOCIAL MEDIA