Texas Legislators Attempting to Slam Courthouse Doors for Victims and Consumers

Although the State of Texas faces a multimillion dollar budgetary shortfall, the public schools are threatened by massive cuts in teachers and resources, and the elderly, handicapped and the poor are threatened with losing their access to medical care and nursing homes, the Governor of our great State incredibly has decided to make House Bill 274 (HB 274) an anti-consumer piece of legislation commonly called “Loser Pays” an Emergency item in this Legislative Session.

While the bill purports to level the playing field for litigants by allowing the losing party to collect costs and attorney fees for filing frivolous lawsuits, in reality, this legislation is aimed at providing immunity for big business and insurance companies. The notion that there is a lawsuit crisis or a problem with too many frivolous lawsuits is just patently false. The “tort deform” over the last 20 years in Texas has already served to create vehicles for litigants to move the courts to dismiss allegedly frivolous cases and to sanction those attorneys who file those cases. Now, the special interests are back in Austin with their big donors attempting to finish the job and permanently close the Courthouse doors in Texas to victims, consumers, and small businesses.

First, the “Loser Pays” label on this bill is a complete sham. This option can only be initiated by a Defendant. Anytime the Defendant thinks it has a good chance to win on liability, or made even a partial settlement offer, the insurance company can make the ‘loser pay’ election to put pressure on an injured victim or small business (car wreck victim making a claim for medical bills, or business owner making a flood, or storm claim). However, if the insurance company wants to delay, raise frivolous defenses, or give low ball offers on serious cases, the injured person or small business is denied the same basic right to make a “Loser Pays” election. It is fundamentally unfair to give one side this weapon and deny the same rights to the other. HB 274 gives this powerful weapon to multi-billion dollar insurance companies like AIG, Allstate, and State Farm but denies these same rights to working families, children, and victims of drunk drivers. This is indefensible.

Second, this bill is a One Way Street. If the injured person or small business making a claim wins at trial but does not win more than 80% of the insurance company’s pre-trial settlement offer, the victim can be ordered to pay the insurance company’s high priced lawyers, expert witness fees, and court costs. This means that if a person with a valid claim fails to win enough at trial, they can actually end up with a judgment against them to pay for the insurance companies’ lawyers and experts. In addition, the Plaintiff will never be able to recover attorney fees from the insurance company if he/she prevails at trial and beats the settlement offer because the only provision allowing for attorney fees in this bill is if attorney fees are allowed by statute. It explicitly excludes contingency fee contract attorney fees from consideration of recovery.

Texas Watch, a consumer watchdog group in Texas has been all over this scam being perpetrated against Texas citizens. Alex Winslow, the Executive Director at Texas Watch penned a scathing editorial in the San Marcos Daily Record today slamming the attempted power grab by the special interest corporations and insurance companies that seek to trample on Texas citizens rights.

This bill has already passed the Texas House as a result of the Republican supermajority suspending the rules of the House and ramming the legislation through without allowing for either amendments OR debate. The bill is now pending before the Texas Senate after hearings on Monday where there were far more speakers and groups testifying in opposition to the bill than for it.

The ultimate irony is that the “Loser Pays” legal theory is also known as the “British Rule.” When our Founding Fathers crafted the Constitution, the decision was made to move away from the fee-shifting scheme in favor of the “American Rule” that provided that each party would be responsible for their own attorney costs.

I thought we won the Revolutionary War…but now it appears that the Governor of Texas and his special interest money backers want to embrace the ways of a vanquished King and his legal system. What would George Washington, Thomas Jefferson, James Madison and the other Founding Fathers think of our State now??

If you live in Texas and think this attempted power grab by the special interests is unfair and bad for the citizens of this State, please call your Senator now and tell them to not support this bill.