Sorry, losers

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http://www.economist.com/node/18712311?story_id=18712311

SOME bills are much more contentious than suspenseful. Take Texas’s new “loser pays” measure. The bill, an extension of the state’s much-vaunted 2003 tort reforms, would make some people who lose a lawsuit responsible for the legal fees of their opponents. Even some winners would be on the hook, if the jury award is much less than they had previously been offered in a settlement. Rick Perry, the governor, has designated the reform an emergency matter, and on May 9th it easily passed the state’s House of Representatives, thanks to the huge Republican majority there. It is now with the state Senate, which also has a Republican majority. They will fiddle with the language. But Mr Perry should be getting his pen ready.

Texas’s “loser pays” provision is the latest in a series of such reforms. Tort reform has long been totemic to the political right, which argues that the current system allows trial lawyers to seek extortionate settlements for alleged damages. That creates extra costs for business, encourages litigiousness and warps sectors of the economy. According to some assessments, the costs of the tort system are equivalent to almost 2% of GDP each year.

Tort costs are especially heavy in health care. Many doctors spend thousands of dollars each year, if not each month, on premiums for medical-malpractice insurance—not because American surgeons and dentists are especially disposed to malpractice, but because a lost lawsuit could be ruinous. Tort reform has been back in the spotlight as concerns about government spending and health-care costs have spurred new looks at cost-saving, confidence-boosting measures. In January, as protesters were preparing to bundle into the Wisconsin state capitol to support unions, Governor Scott Walker signed a package that caps punitive damages for personal injuries, among other provisions. Last week the Tennessee General Assembly passed a similar bill capping non-economic damages.

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1. I have mixed feelings about this.