State Superintendent of Public Instruction Bill Honig of California is leading a campaign to pass a ballot initiative aimed at curbing the high cost of liability-insurance premiums for school boards and other defendants in personal-injury suits.
The issue is one high on the agenda in virtually every state this year.
Mr. Honig announced at a press conference this month that he would serve as a statewide co-chairman of the campaign for the ballot initiative, known as the “Fair Responsibility Act.” The statewide vote on the initiative will be on June 3.
“We have to get these costs under control because schoolchildren are the victims,” Mr. Honig said. ''The Fair Responsibility Act will help do that.”
The proposed California measure would limit liability for so-called “non-economic” damages—such as mental anguish and pain and suffering—to the extent of a defendant’s actual responsibility for injury.
Under current law, as interpreted by court rulings, a plaintiff can recover full damages from the so-called “deep pocket"—the defendant with the most money—regardless of the extent of that defendant’s responsibility, if another defendant cannot pay all the damages.
For example, if a student is involved in an accident on school property and a jury finds the school at least partially responsible, the jury can require the school board to pay all damages, including damages for pain, suffering, and mental anguish.
If the initiative passes, injury victims could still receive full compensation for real damages, such as medical costs and lost earnings.
State Activity
The liability-insurance issue is one of the most pressing matters facing state governments this year, according to Michael Bird, a staff director of the National Conference of State Legislatures. More than 2,000 bills dealing with insurance have been introduced in the 43 state legislatures currently in session.
“Virtually every state is looking at virtually every aspect,” said Mr. Bird. He added that the proposals range from changing the tort-law system to eliminating the industry’s antitrust exemption to direct intervention in the insurance market.
Limiting liability for non-economic damages is “one of the more popular approaches,” Mr. Bird added. He cautioned that it is still too early in the legislative session to predict what states may do. However, the Wyoming legislature, which has a short session, is considering removing a constitutional prohibition on limiting non-economic damages.
He said that 14 states—including California—currently place some limits on non-economic damages, although most apply restrictions only to certain types of cases, such as medical-malpractice suits.
He noted, however, that the U.S. Supreme Court has thrown out several restrictions on non-economic damages, and other cases involving the issue are pending before the Court this session.
In announcing his support for the California initiative, Mr. Honig said he hoped it would convince insurance companies to lower premiums for school districts, which in many cases have risen as much as 600 percent in one year.
“There’s no question that the deep-pocket mentality is a major contributor to those costs, which are eating up money that should be used for education programs, salaries, and valuable activities,” Mr. Honig said.
Mr. Honig’s concern was echoed by Nellie C. Weil, first vice president of the National School Boards Association, in testimony before a Congressional subcommittee this month. She said that in addition to the problem of rising premium costs, school districts have had insurance policies canceled, or have had policies rewritten to exclude coverage for such contingencies as athletic injury, asbestos removal, or sexual abuse of children.
A similar situation exists for daycare centers and family day-care homes, for which, according to a recent survey, the rate of liability-insurance cancellations and non-renewals has increased threefold during the past six months. (See Education Week, Feb. 5. 1986.)
Effect Disputed
Michael Enfield, an analyst for Marsh & McLennan, a San Francisco-based insurance broker, said that the California initiative would encourage insurance companies to provide policies for local governments at lower cost.
But Will Glennon, a representative of the California Trial Lawyers Association, predicted that premium rates would drop only slightly, if at all. He called the initiative “an insurance-industry scam,” arguing that insurance companies would reap “guaranteed profits” if liability were limited.
Mr. Glennon said the initiative would shift the costs of damages from those found by a jury to have been responsible for injury to the injured person. “That’s a peculiar kind of morality, as far as I’m concerned,” he said.
Consumer groups also oppose the initiative. Ralph Nader, arguing against a similar measure before a Maryland House committee, disputed the contention that high jury awards have caused an increase in insurance premiums.
Rather than limit the amount an injured person can receive in damages, suggested Jay Angoff, counsel for Mr. Nader’s National Insurance Consumer Organization, the federal government and states should regulate the insurance industry more tightly, and allow more consumer representation before insurance commissions.
But sponsors of the initiative claim a broad range of support, noting that they gathered more than 650,000 signatures to place the measure on the ballot.
“The support is probably the biggest coalition in the history of California politics,” said Brad Moore, a spokesman for the initiative campaign. “It is not much of an exaggeration to say it is ‘the world against the trial lawyers.’ ”
The initiative has been endorsed by all 58 counties in the state, as well as 300 cities.
Mr. Moore said legislation to limit damages has passed the state Senate four times but has failed each time in the Assembly. He said the chief opponent has been Speaker Willie Brown, who is a trial lawyer.
But Mr. Glennon said the measure failed because it is a bad law, and predicted a similar outcome this year. “I anticipate the initiative is going to be devastated at the polls,” he said. “There is no way California is going to buy. it. It’s a fraud.”
