Government Reform
5:35 am
Thu December 23, 2010

Lawsuit payouts spiking as state budget crumbles

The amount of money the state pays out in lawsuits has doubled in the last four years to more than $50 million dollars a year. This spike in legal costs comes as Washington reduces funding for education, healthcare and other state services. But cutting Washington’s legal bills is no easy task.

In October of 2007 a well-known Seattle environmental attorney named Mickey Gendler was riding his bike across the Montlake Bridge. Suddenly his tire wedged in the steel grating and he was flung over the handlebars. The accident left him confined to a wheelchair, paralyzed from the neck down.

Gendler sued arguing the state of Washington knew the bridge deck was a hazard to cyclists. This fall, Washington agreed to settle the case for $8 million.  It’s just one example of the kinds of lawsuit payouts Washington makes each year.

“The story is that it’s very expensive to have the liability system that we have in Washington,” says Lucy Isaki.

Isaki heads Washington’s Risk Management Division. She says Washington is uniquely exposed to lawsuits.

 

Why the state is exposed

In 1961, the legislature waived what’s known as sovereign immunity. That’s the legal notion that the "king" can do no wrong.  In addition, the state imposes no caps on lawsuit pay-outs, and Washington has something called joint and several liability.  It’s the concept of the 'deep pocket' pays.

In simple terms, even if the state is only partially responsible for an innocent person’s injuries, taxpayers may end up paying the bulk of the legal bill. 

“A better system, I think, would be to have some very generous limits on awards. But in order to do that I think you’d need to reassert sovereign immunity and then say we will compensate for this kind of harm up to $1M or $2M,” says Lucy Isaki.

She isn’t the only one who thinks Washington is over-exposed to lawsuits.

 

State Attorney General weighs in

Republican Attorney General Rob McKenna has been talking about this issue for years. This summer he wrote an op-ed urging lawsuit reform as a way to help address Washington’s ongoing budget crisis:

“We’re now paying out four to twelve times more every year than comparably sized state like Massachusetts, Indiana, Arizona, Tennessee.”

McKenna calls Washington an 'outlier.'  In 2006, he pushed a controversial tort reform bill. But in the Democratic legislature the bill quickly died. McKenna hasn’t tried since then.

This year the issue of lawsuit pay-outs is getting a fresh look because of the state’s fiscal mess. But instead of leading the charge, McKenna is simply advising interested lawmakers on the issue:

“It’s very important that we work closely with legislators because this is extremely difficult to get through a legislature in which the personal injury lawyers are so incredibly influential,” McKenna says.

 

Trial lawyers play a role

Trial lawyers are generous donors to Democratic political campaigns. They also passionately oppose lawsuit limits.

Larry Shannon is with the state’s trial attorney lobby. He disagrees Washington is too exposed to liability. He says Washington taxpayers should be proud of the state’s willingness to take responsibility when the state’s mistakes cause grave harm to an innocent person:

“These are real people going about their lives and have them destroyed and shattered by incidents that could have fully been prevented,” says Shannon.

Remember Lucy Isaki’s suggestion the state could impose a cap of one to two million dollars in damages? Shannon says his organization would hotly oppose that. And here’s why:

“You’re hurting the most catastrophically injured people and when that happens a lot of the so-called savings are illusory because ultimately you’re going to crush that family and they’re going to end up on the social safety net. So what are you really saving?”

Documents show the number of legal claims Washington is paying each year is actually going down. But the average pay-out is up at a time when the state faces another $5 billion hole in the next two year budget.

 

Finding an answer

Representative Deb Eddy, a lawyer and suburban Seattle Democrat, is seeking some middle ground:

“It’s not that we don’t want the state to pay and be accountable, okay?”

But Eddy does think it makes sense to provide additional legal protections to some of the highest-risk lines of state work. Namely, child protective services and community corrections.

She gives the example of a burglar who gets out of prison and is being supervised by the Department of Corrections:

“If they run a stop sign and slam into somebody, is it not reasonable to me for the state to be liable for any and all damages that this person may have caused in this traffic accident,” Eddy says.

It turns out the Department of Corrections, the Department of Social and Health Services and the Department of Transportation are the three state agencies driving most of Washington’s lawsuit pay-outs. 

So far this fiscal year, the state is on track to spend more than $60 million in damages.