South Carolina House Advances Cap on Liability Awards

A proposal to cap how much people can be awarded through civil lawsuits in South Carolina received key approval this week.

The House approved the tort reform bill 104-9. It faces another, routine vote before heading to the Senate.

The measure would limit the amount juries could award to punish a person or business for negligence. Such punitive damages could be $350,000 or three times compensatory damages, whichever is greater.

House leaders called it an economic development issue, since neighboring Georgia, Florida and North Carolina already have the caps.

“Unlike a business in a neighboring state, a business in our state is too often one lawsuit away from being put out of business,” said House Speaker Bobby Harrell, R-Charleston.

But opponents said multi-million-dollar lawsuit awards are extremely rare in South Carolina and they doubted the cap would influence whether a company moves to the state.

“Is there any evidence they’re saying, ‘We’re not coming because of tort law?”‘ asked Rep. Bakari Sellers, D-Denmark. “Tort reform is something people want until it’s their family member or friend who gets injured.”

The executive director of the South Carolina trial lawyers’ association said a review of verdicts from courts in the state’s three largest counties — Richland, Charleston and Greenville — shows how extraordinary it is for a jury to award punitive amounts at all in this state.

Of the 136 personal injury verdicts in those counties in 2007 and 2008, juries awarded punitive damages in seven of them, and only two of those involved more than $7,000, said Mike Hemlepp, executive director of South Carolina Association for Justice. He noted an amount seen as unfair could be decreased either by the trial judge or an appeal.

“The occasional large verdict is what people hear about, but it’s just not a widespread problem,” Hemlepp said.

House Judiciary Chairman Jim Harrison, R-Columbia, acknowledged those numbers don’t indicate a problem.

But he called the measure “an important step toward making our legal system more business friendly, while preserving our citizens’ rights to sue if they’ve been wronged.”

Rep. Doug Jennings, D-Bennettsville, argued punitive awards are meant to discourage companies and people from blatantly disregarding how their actions may injure others, but the limits mean they won’t be discouraged from changing their ways.

“When you see a million-dollar verdict, something big has happened,” said Rep. Seth Whipper, D-North Charleston. “What we’re doing is not necessary. You’re going to tell people who are injured that you can’t be properly compensated. Juries react to the story they’re told.”

Hemlepp noted punitive awards, when they’re collectable, are often paid by businesses’ insurance, rather than the company.

He said the measure is designed to squash cases from going to court. Civil lawsuits often involve clients who can’t pay lawyer fees upfront, which means lawyers won’t take frivolous cases. But since lawyers often get paid by taking one-third to 40 percent of the award, capping punitive damages means fewer cases will be taken.

The vote comes five years after the Legislature capped pain-and-suffering awards for medical malpractice lawsuits at $350,000. House Republicans praised that as a success.

Todd Atwater, CEO of the South Carolina Medical Association, said the rates of medical malpractice insurance are going down, as are the number of claims. But the group could not immediately provide numbers by how much.