Defense Digest

Ohio's Continued Tort Reform Adventure: Caps, Seatbelts, Collateral Source, And More

Over the past 30 years, Ohio has lived the adventure of tort reform. The Legislature enacted laws in an endeavor to address public policy concerns about inflated insurance costs, personal injury lawsuits and excessive verdicts, while the Ohio Supreme Court chiseled away at the enactments on constitutional grounds. When Ohio first began its tort reform adventure in 1975, the focus was on capping pain and suffering damages in medical malpractice cases. However, in Morris v. Savoy, 61 Ohio St.3d 684 (1991), the Ohio Supreme Court held that the caps violated due process of law because they irrationally and arbitrarily imposed the costs of the intended benefit to the general public solely upon a class consisting of those most severely injured by medical malpractice.

In 1985, 1987 and 1995, Ohio continued to make attempts at comprehensive tort reform, and the Ohio courts continued to reject certain aspects of the legislation. In Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552 (1994), the Ohio Supreme Court ruled that a statute granting a judge exclusive jurisdiction to determine the amount of punitive damages unconstitutionally usurped and impaired the traditional function of the jury in determining the appropriate amount of damages and, therefore, violated the right to a jury trial guaranteed under the Ohio Constitution. Later, in the case of Ohio Academy of Trial Lawyers v. Sheward, 86 Ohio St.3d 451 (1999), the Court found that caps on punitive damages created the illusion of compliance by permitting the jury to assess the amount of punitive damages to be awarded but then nullifying the jury’s award and substituting the will of the General Assembly in cases where a jury awarded punitive damages that exceeded the caps and, therefore, violated the right to trial.

The last significant tort reform opinion rendered by the Ohio Supreme Court occurred in 1999 with State ex re. Ohio Academy of Trial Lawyers v. Sheward, 86 Ohio St. 3d 451 (1999). In a 4-3 majority decision, the Court found the 1995 attempt to reform the state’s tort liability system unconstitutional. Not only did the opinion gut the tort legislation, but the Court clearly displayed its hostility toward the legislative branch’s attempt to usurp judicial authority in the civil system.

Despite the perceived power struggle between the Legislature and the judiciary on public policy and judicial authority, the Ohio Legislature remained resolute. Following the Sheward decision, the General Assembly approved tort reform measures that addressed several narrower issues.

Although the Ohio General Assembly experienced many tort reform successes between 2001 and 2003, it had yet attempted to enact a comprehensive Bill that would address the significant issues that remained; such as capping punitive and noneconomic damages for non-medical malpractice claims, amending the collateral source rule, or implementing rules to curtail the filing of frivolous lawsuits. In May 2003, Ohio again began the process of legislating comprehensive tort reform measures.

On January 6, 2005, Governor Bob Taft signed into law Ohio’s most recent attempt at tort reform-Senate Bill (S.B.) 80. The Bill went into effect on April 7, 2005, and most provisions apply to causes of action accruing on or after this date.

The Legislature touts S.B. 80 as a comprehensive bill that balances the interests of plaintiffs, defendants, and the public, yet meets the constitutional parameters set forth by the judicial system. The Bill tackles the important portions of tort reform that remained unfinished. Following is a summary of the noteworthy provisions of the Bill that have a significant bearing on Ohio tort liability.

Caps on Noneconomic Damages (O.R.C. 2315.18 and 2315.19)

The Bill places caps on compensatory damages, but it does not place limits on economic damages. Non-economic damages are capped at $250,000, or three times the amount of economic damages, with an absolute maximum of $350,000 per plaintiff or $500,000 for a particular occurrence. Exceptions do exist for these caps for particular catastrophic injuries, such as loss of limbs or significant permanent disabilities. Juries are not instructed as to the existence of these caps, and verdicts are to be adjusted afterward, if need be, to conform to the caps. The law also provides a post-judgment motion procedure for challenging an award of noneconomic damages as excessive, and an appellate court is required to consider an award of noneconomic damages de novo. These caps do not apply to claims against governmental entities.

Caps on Punitive Damages (O.R.C. 2307.80 and 2315.21)

S.B. 80 regulates and imposes caps on punitive damages. A defendant now has an absolute right to bifurcate a trial where punitive damages are being claimed. The statute makes it very clear this bifurcation restricts the interjection of evidence that may somehow inflame a jury against a particular defendant. Punitive damages will generally be limited to one to two times the amount of compensatory damages. In a case of a small employer or private individual, punitive damages are capped at two times the amount of compensatory damages, or 10% of the defendant's net worth. Also, the law expands protection from punitive damages to manufacturers who have complied with applicable government regulations.

Evidence of Collateral Sources (O.R.C. 2315.20)

Defendants are permitted to introduce evidence that all or some of the plaintiff's economic damages where paid by a collateral source (health insurance, disability insurance, or some other type of benefits), so long as the collateral source has no contractual or statutory right of subrogation, or if the source is from life insurance or disability. An exception exists, however, with regard to evidence of a life or disability payment if the plaintiff's employer paid for the policy and the employer is a defendant in the action.

Where a defendant interjects evidence of a collateral source payment, a plaintiff is allowed to present evidence of any premiums they paid for that particular collateral source.

Statutes of Repose (O.R.C. 2305.10 and 2305.131)

S.B. 80 creates a ten-year statue of repose for product liability claims against manufacturers and suppliers of products. The law also provides a ten-year statute of repose for construction-related claims. With regard to the latter, the ten-year period begins from the date of substantial completion of the construction project.

Frivolous Lawsuits (O.R.C. 2323.51)

The Bill expands the definition of a frivolous lawsuit along with potential sanctions against plaintiffs and their attorneys for bringing such actions. As amended, the definition of "conduct" is expanded to include filing of a pleading, motion, or other paper in a civil action. "Frivolous conduct" is expanded to include conduct that consists of allegations or other factual contentions that have no evidentiary support, or conduct that consists of denials or factual contentions that are not warranted by the evidence. Further, courts may impose sanctions for such conduct sua sponte.

Product Liability Actions (O.R.C. 2307.71 to 2307.80)

S.B. 80 abrogates all common law product liability causes of actions. Additionally, the law eliminates the consumer expectation test as the sole determinative test to establish a product design defect. Instead, the Bill integrates the test into a list of factors to be considered in the risk-utility test for design defect causes of action.

Borrowing Statute (O.R.C. 2305.03)

The law creates a "borrowing statute," which precludes a plaintiff from bringing suit in Ohio if the matter is time barred in the plaintiff's own state.

Seatbelt Defense (O.R.C. 4513.263)

S.B. 80 allows a defendant to interject evidence that a plaintiff was not wearing his seatbelt and that the failure to wear a seatbelt resulted in the injuries being more severe than they would have been otherwise. This is not a liability defense, but a defense on the issue of damages.

Obesity-Related Claims (O.R.C. 2305.36)

Food manufacturers, sellers, and trade associations are provided immunity from civil damages against claims resulting from, or related to, a person’s weight gain, obesity, or any health condition that is related to cumulative consumption, weight gain, or obesity.

Conclusion

Ohio counsel should carefully assess cases filed after the effective date of the new law. Counsel needs to assure that the new reforms are set forth as affirmative defenses in the answer, that discovery on collateral services is vigorously pursued, and that the law’s substantive changes are part and parcel of the defense strategy.

For instance, the new seat belt damages defense requires some important practice consideration. Counsel may elect to hire an expert to determine the damages impact of a failure to wear a seatbelt, or to respond to a plaintiff’s expert on the issue. Certainly, counsel will have to explore the issue of the failure to wear a seatbelt during cross-examination of the plaintiff’s care providers and doctors. The type of expert may be important as well. Counsel may need to hire bio-mechanical experts to opine on the failure to wear a seatbelt on significant exposure cases.

Like past efforts of tort reform legislation in Ohio, S.B. 80 will no doubt be challenged in our judicial system, and its survivability will be determined in time. What makes this round of tort reform legislation different from past efforts is that the Legislature appears to have tempered the politically charged public concerns of this issue with the constitutional touchstone that the reform must be rationally based to the ends addressed. As with any adventure, there is growth through experience, uncertainty and accomplishment. In the area of tort reform, Ohio will continue to grow with the adventure.

*Sam, a shareholder and managing attorney in our Akron, OH office, can be reached at (330)255-0039 or scasolari@mdwcg.com. Chris and Marty, associates in our Akron, OH office, can be reached at (330)255-0042 or creece@mdwcg.com and (330)255-0041 or msitler@mdwcg.com, respectively.