FEBRUARY 12, 2020 - Senate Bill 591, sponsored by Sen. Bill White, began as a bill endorsed by the business community to address the use of punitive damages as a regular part of conversations in tort cases. The bill was considered on the Senate floor yesterday afternoon and evening and was filibustered by Democrats.
The bill that was debated on the floor was a Senate Substitute that added several additional issues, including sovereign immunity protection against punitive damages levied against the state or its employees, Missouri Merchandising Practices Act (MMPA) reforms, and language addressing arbitration and intervention maneuvers by clever trial attorneys in cases involving insurance coverage. CLICK HERE FOR THE LANGUAGE OF THE SENATE SUBSTITUTE.
Associated Industries of Missouri (AIM) is part of a large coalition of businesses and associations called the Missouri Civil Justice Reform Coalition, led by Rich Aubuchon. The debate/filibuster lasted several hours into the early evening before the sponsor laid the bill over for consideration another day. The Senate adjourned shortly after, around 7:15 p.m. AIM president and CEO Ray McCarty was on hand for the debate.
The base bill would require a separate motion in a case alleging punitive damages and would limit their award to cases where the defendant needs to be punished because they have done something egregious that, in the opinion of the court, requires punishment (hence the name "punitive"). Such damages are levied above and beyond the recovery of actual damages that make the plaintiff whole.
Today, punitive damages are often threatened in hopes of driving up settlement amounts. They are not often granted due to such settlements. When awarded, 50% of the punitive damage awards are deposited in the Missouri Crime Victims Compensation Fund. Attorney fees are often based on the amount received by the plaintiff, which would not include such amounts. Also, punitive damages may not be covered by insurance, which provides an incentive for the defendant to consider settlement rather than risking punitive damages. Taken together, the current process may result in higher settlement amounts even if punitive damages are not appropriate in the case, simply to avoid the risk of such damages and possible personal liability for payment of the punitive damages award.
"We appreciate Senate leadership prioritizing this important tort reform legislation and allowing the debate on the bill," said McCarty. "We look forward to additional debate of the punitive damages legislation in the near future and have asked leadership in the House and Senate to prioritize this reform."
Associated Industries of Missouri participated in meetings organized by the Missouri Civil Justice Coalition with House and Senate leadership at the beginning of the legislative session. More than 40 business leaders attended those meetings stressing the importance of tort reform and highlighting the importance of punitive damages reform. A letter signed by the top business associations was also sent to House and Senate leadership to emphasize the importance of tort reform this legislative session.