Tort Reform - House Bill 2661 (Adair/Hobson)
Reform of the civil justice system is a nationwide
issue affecting the medical, insurance and legal systems, proponents of
which view such reform as a way to prevent frivolous lawsuits, lower medical
malpractice rates of physicians and lower medical costs of consumers.
Tort reform came to the forefront of the legislative agenda when, in 2003,
the state’s largest medical malpractice insurer requested a more
than 80% premium increase in order to maintain adequate reserves to cover
claims. Physicians have asserted that such an increase will cause an undue
burden and force some doctors to discontinue practices in specialty areas
or relocate out of state.
Summary of Actions
After both houses of the legislature passed
a version of a tort reform bill, HB 2661, legislative leadership appointed
a special conference committee to hear witness testimony and craft a final
version of the bill. The Joint Committee on Lawsuit Reform consisted of
10 Senators and 14 House members, and was co-chaired by Senator Mike Morgan
and Representative Jari Askins.
During four public hearings, the Joint Committee on Lawsuit Reform received
testimony from over 40 witnesses related to caps on noneconomic damages,
frivolous lawsuits, medical malpractice and insurance reform, product
liability and class action reform. Witnesses, who testified under oath,
included victims of medical malpractice, physicians, medical students,
attorneys, royalty and land owners and representatives of various public
action groups. Court reporters prepared transcripts of each of these public
meetings, and witnesses or others who did not testify at a hearing were
given the opportunity to submit written testimony. Upon conclusion of
the public hearings, the committee conducted numerous further meetings
to discuss and vote on the inclusion of individual proposals in the final
House Bill 2661 passed in the House on May
27, and passed in the Senate and was signed by the Governor on May 28.
The following is a section-by-section outline of HB 2661:
SECTION 1: ATTORNEY FEES IN CLASS
- Requires court to conduct an evidentiary
hearing to determine fair and reasonable fees for attorneys in class
SECTION 2: VENUE FOR MEDICAL LIABILITY
- Provides venue for medical liability
actions brought under the Affordable Access to Health Care Act (county
where cause of action arose; county where any defendant resides; or
county where corporation defendant has its principal office or place
of business or any county where corporation codefendant may be sued).
- Requires court to transfer or dismiss
case upon finding lack of venue.
- States exception to dismissal of case
by requiring court to transfer rather than dismiss case upon finding
lack of venue if dismissal would operate as dismissal with prejudice.
SECTION 3: EXCEPTION LANGUAGE
- Exception language for new Section 5.
SECTION 4: EXCEPTION LANGUAGE AND
ASSESSING ATTORNEY FEES
- Exception language for new Section 5.
- Authorizes court to assess costs and attorney
fees against plaintiff incurred by the defendant for any action dismissed
after a jury is empanelled and then subsequently refiled.
- Limits costs and fees to those incurred
in the previous action by the defendant subsequent to the jury being
SECTION 5: DISMISSAL OF ACTIONS
- Limits dismissal of medical liability
actions without a court order.
- Requires filing of certain dismissal in
court where action is pending.
- Authorizes court to award reasonable costs
against a party upon a finding by the court that the party has acted
in bad faith, vexatiously, wantonly or in an oppressive manner in dismissing
- Authorizes court to condition refiling
of case upon payment of costs.
SECTION 6: CURRENT PREJUDGMENT AND
- Limits current calculations for postjudgment
and prejudgment interest to judgments rendered on or after January 1,
2000 but before January 1, 2005.
- Applies current calculations until January
1, 2005 for postjudgment interest to judgments rendered prior to January
1, 2000 and remaining unpaid.
SECTION 7: INTEREST
- Sets forth procedures for computing postjudgment
and prejudgment interest.
- Applies calculation provisions for interest
to actions filed in the district court on or after January 1, 2005.
- Applies method for computing postjudgment
interest to all judgments remaining unpaid prior to January 1, 2005.
SECTION 8: PRODUCT LIABILITY ACTIONS
- Requires manufacturers to indemnify sellers
against loss in a product liability action.
- Provides exceptions for manufacturer indemnification.
- Requires seller eligible of indemnification
to provide notice to manufacturer of a product alleged defective in
- States exception for notice by seller.
- Entitles seller to certain expenses incurred
to enforce right to indemnification.
SECTION 9: APPEAL BONDS
- Authorizes court to lower amount of appeals
bond for judgment debtor on a showing that debtor is likely to suffer
substantial economic harm.
- Requires court to balance likelihood of
substantial economic harm and the ability of judgment creditor to collect
the judgment if affirmed on appeal.
- States exception to court’s authority
to lower amount of appeals bond.
- Requires court to enter order prohibiting
debtor from dissipating or transferring assets upon lowering of bond.
- Prohibits court from entering order that
interferes with judgment debtor’s use of assets in normal course
SECTION 10: FRIVOLOUS LAWSUITS AND
- Requires court to award certain sanctions
against a party for improper or frivolous representations to the court
for any action not arising out of contract.
SECTION 11: PERMISSIVE JOINDER OF
- Requires court to consider whether forum
is fair and convenient for all parties when joining parties or ordering
SECTION 12: MISJOINDER AND NONJOINDER
- Requires court to consider whether forum
is fair and convenient for all parties when adding or dropping parties.
SECTION 13: ABUSIVE DISCOVERY
- Adds harassment and undue delay to grounds
for issuing a protective order for persons from whom discovery is sought.
SECTION 14: ABUSIVE DISCOVERY
- Authorizes court to issue protective
orders against abusive discovery upon a motion by a person or party
from whom discovery is sought.
- Requires movant to provide to court, along
with motion for protective order, certification showing good faith effort
to resolve dispute without court action.
- Authorizes court to award expenses of
SECTION 15: JUDICIAL PANEL ON MULTIDISTRICT
- Authorizes the Supreme Court to create
a Judicial Panel on Multidistrict Litigation.
- Authorizes Panel to consolidate or stay
certain cases after determining that the transfer or stay will be for
the convenience of the party and witnesses and promote just and efficient
conduct of actions.
- Requires Supreme Court to promulgate rules.
SECTION 16: BUSINESS COURT
- Adds business docket for business court
divisions of the court
SECTION 17: BUSINESS COURT
- States finding for need for business
- Authorizes the Supreme Court to create
a business court division within certain judicial districts.
- Requires Supreme Court to promulgate rules
for establishment and jurisdiction of business court divisions.
SECTION 18: JOINT AND SEVERAL LIABILITY
- Limits joint tortfeasors in civil actions
based on fault and not arising out of contract to amount of damages
allocated to that tortfeasor.
- States exception to several liability
by making liability for damages joint and several if:
1. Responsibility attributed to defendant is greater than 50%; or
2. Any joint tortfeasors acted with willful and wanton conduct or with
reckless disregard and the conduct is the proximate cause of the injury.
- Prohibits application of provisions in
this section to actions brought by state or political subdivision, or
action where no comparative negligence is found to be attributed to
- Applies section provisions to cases accruing
on or after 11/1/04.
(Several liability means liability separate
and distinct from liability of another to the extent that an independent
action may be brought without joinder of others.)
SECTION 19: GOVERNMENTAL TORT CLAIMS
- Modifies definition of employees by adding
volunteer, full-time, or part-time firefighters.
SECTION 20: EXPANDING AFFORDABLE
ACCESS TO HEALTH CARE ACT
- Conforms Language.
- Adds Section 22 [I’m Sorry provisions],
23 [noneconomic damage cap provisions], and 24 [qualifying expert testimony]
to the Affordable Access to Health Care Act.
SECTION 21: NONECONOMIC DAMAGE CAP
- Extends sunset provision from July 1,
2008 to November 1, 2010, for noneconomic damage limit of $300,000 enacted
in 2003 for obstetric and emergency care cases.
SECTION 22: NONECONOMIC DAMAGE CAP
- Extends noneconomic damage cap to any
medical liability action not provided for in Section 21 provided the
defendant has made an offer of judgment and the verdict awarded plaintiff
is less than 1 ½ times the amount of the final offer.
- Requires annual adjustment of damage cap
based upon any positive increase in CPI (Consumer Price Index).
- Prohibits adjustment for any year in which
there is a decline in CPI.
- Defines term—“noneconomic
damages”. (As used in this section, “noneconomic damages”
means only mental pain and suffering, inconvenience, mental anguish,
emotional distress, loss of society and companionship, loss of consortium,
injury to reputation and humiliation; provided, however, noneconomic
damages do not include exemplary damages, as provided for in Section
9.1 of Title 23 of the Oklahoma Statutes).
- Excepts application of noneconomic damage
cap if nine or more jurors find:
o By clear and convincing evidence defendant committed negligence, or
o By a preponderance of the evidence defendant was willful or wanton.
- Requires court to submit to jury an additional
form of verdict under certain circumstances.
- Excepts wrongful death actions from damage
- Applies damage cap provisions to actions
accruing on or after 11/01/04.
- Sunsets this section on 11/01/10
SECTION 23: “I’M SORRY”—INADMISSABLE
- Makes “I’m sorry” gestures
inadmissable as evidence of an admission of liability or admission against
- Defines terms—“relative”
SECTION 24: QUALIFYING EXPERT WITNESSES
IN MEDICAL LIABILITY ACTIONS
- Requires court to consider specified
criteria in determining whether expert is qualified to testify on whether
health care provider departed from accepted standards of health.
- Requires court to state on record any
reason for admitting testimony if the court departs from the criteria.
- Specifies criteria.
SECTION 25: LANDOWNER’S LIMITATION
OF LIABILITY—OUTDOOR RECREATIONAL PURPOSES
- Modifies and adds definitions.
- Limits liability of landowners when providing
public with land for outdoor recreational use.
SECTION 26-32: OKLAHOMA LIMITATION
OF LIABILITY FOR FARMING AND RANCHING LAND ACT
- Creates “Oklahoma Limitation of
Liability for Farming and Ranching Land Act”.
- States purpose of act.
- Limits liability to owners of farming
and ranching land who do not charge more than $10 per acre per year
for such land used for recreational purposes.
- Modifies definitions.
- States exceptions to limited liability.
- Construes provisions.
- Prohibits maintaining an action or recovering
damages from a landowner in contravention of a written release of liability
or waiver to sue for certain injuries.
- States exception to limiting liability
pursuant to a written release.
SECTION 33: LIMITATION OF LIABILITY
OF LANDOWNERS, LESSEES, OR OCCUPANTS OF REAL PROPERTY
- Limits liability of landowners, lessees,
or occupants or real property.
SECTION 34: VOLUNTEER MEDICAL PROFESSIONAL
SERVICES IMMUNITY ACT
- Provides immunity from liability in a
civil action for volunteer medical professionals under certain circumstances.
- Defines terms-“volunteer medical
professional” and “referred volunteer medical professional”.
SECTION 35-53: REGISTRATION OF OUT-OF-STATE
- Creates the “Registration of Out-of-State
- Specifies proceedings and actions to which
the Act does and does not apply.
- Requires revocation of privilege to practice
for certain attorneys who fail to comply with Act within certain time
- Authorizes out-of-state attorneys to file
application to appear as counsel in certain actions or proceedings provided
specified conditions are met.
- Requires out-of-state attorneys to register
with Oklahoma Bar Association and Oklahoma Tax Commission and obtain
approval of court, arbitrator, mediator, or hearing officer before appearing
in an action or proceeding.
- Sets forth procedure for out-of-state
attorneys to register with Oklahoma Bar Association and Oklahoma Tax
- States out-of-state attorneys’ obligations
to Oklahoma Tax Commission.
- Sets forth procedure for filing a motion
- Prohibits out-of-state lawyers from appearing
in any proceeding subject to these provisions until the motion to associate
has been granted.
- Deems out-of-state attorneys admitted
in the event of change of venue or appeal once a motion to associate
has been granted.
- Authorizes court having jurisdiction over
transferred or appealed cause to revoke attorney’s authority to
- States duties of Oklahoma counsel of record
on or before the anniversary date of the filing of the application with
the Oklahoma Bar Association and out-of-state counsel no later than
30 days after the original application anniversary date.
- Requires suspension of out-of-state attorneys
for failure to comply with certain requirements and authorizes reinstatement
- Authorizes waiver of fees for applicants
providing certain pro bono services.
- Requires Oklahoma Bar Association to prepare
annual report relating to out-of-state attorney registration.
- Applies Oklahoma laws and standards of
conduct to out-of-state- attorneys.
- States responsibilities of Oklahoma attorney
SECTION 54: DIRECT DEPOSIT OF TAXES
- Adds fees required to be reported and
disbursed by Insurance Commissioner.
SECTION 55-57: SURPLUS AND RESERVE
SECTION 55 – NEW LAW, NONCODIFIED
SECTION 56-57 - AMENDATORY
- States legislative findings concerning
threatened loss of insurers currently issuing medical malpractice policies.
- Provides moratorium until January 1, 2006
on the applicability of laws of this state that require certain reserves
for insurers domiciled in this state that are issuing policies of medical
professional liability insurance to physicians, allied health care professionals
and health care institutions.
- Requires notice by eligible insurers to
Commissioner if electing to utilize moratorium.
- Requires certain notice on premiums issued
during moratorium period.
- Excepts eligible insurers from maintaining
certain surplus under certain circumstances.
- Prohibits Insurance Commissioner from
enforcing any recapitalization plan against an eligible insurer.
SECTION 58-66: OKLAHOMA MEDICAL PROFESSIONAL
LIABILITY TRUSTS ACT
- Creates the “Oklahoma Medical Professional
Liability Trusts Act”.
- Defines terms—“allied health
care professional”; “association”; “commissioner”;
“department”; “health care institutions”; “medical
professional liability claim”; “physician”; “insureds”;
- Authorizes an association to create a
trust to self-insure physicians, allied health care professionals or
health care institutions against medical professional liability claims.
- Requires compliance with certain conditions
when creating a trust.
- Authorizes trust to make certain purchases
and insure certain entities.
- Excepts certain trusts from reserve and
- Authorizes certain entity to convert to
trust and provides conversion procedure.
- Requires a medical professional liability
trust to file certain items with the Insurance Commissioner within certain
- Requires trust to pay certain tax.
- Sets tax rate.
- States penalty for failure to pay tax.
- Requires Commissioner to report and disburse
collected taxes, fees and penalties.
- Sets forth required provisions of trust
- States reserve and surplus requirements.
- Prohibits contributions into or benefits
from any insolvency guaranty fund by trust.
- Provides duties of Insurance Commissioner
including but not limited to reviewing and evaluating consumer satisfaction
and investment activities of trust, and analyzing, studying and comparing
- Requires trusts to provide Commissioner
with policy changes, rate changes and changes to trust within certain
time period prior to implementation.
SECTION 67 AND 68 : RECODIFICATION
SECTION 69: EFFECTIVE DATE
- July 1, 2004—Sections 54-66.
SECTION 70: EFFECTIVE DATE
- November 1, 2004-Sections 1-53 and Sections
67 and 68
SECTION 71: EMERGENCY CLAUSE
The Oklahoma State Senate, Senate Staff
Senator Cal Hobson, President Pro Tempore