Lawsuit Reform

Policy Solutions to Address COVID-19’s Impact on Issues Pertaining to Civil Justice and Regulatory Reform

As the number of cases of COVID-19 continues to rise, the national government and state governments have an important role to play in their response to the crisis. These policy solutions provide proactive approaches to curb the spread of the virus and/or mitigate its negative effects.

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I. Reducing Regulatory Red Tape

Virtually every facet of our lives is somehow touched by government regulations. The food we eat, vehicles we drive, our workplaces, and even the mattresses in our homes are regulated, in some way, by federal and state governments. According to an estimate by the Competitive Enterprise Institute, regulatory compliance costs and economic impacts total $1.863 trillion annually, equal to a roughly $15,000 “hidden tax” per U.S. household. Americans spend more on this “tax” than any other expense except for housing. The number of state regulations varies considerably. For example, Arizona has just fewer than 64,000, whereas New York has over 307,000. Not all regulations are problematic nor do they need to be done away with entirely. However, regulations should be transparent, fair, and impose minimal financial burdens on businesses and families. In order to expedite the response to COVID-19, states and the federal government should reduce regulatory red tape. Therefore, they should consider the following ideas:

1. Reforming state occupational licensing requirements. Last year, Arizona enacted HB 2569, which allows individuals who are licensed plumbers, barbers, nurses, and other professionals in one state to be granted the same license in Arizona. Additionally, in response to COVID-19, North Dakota Governor Doug Burgum issued an executive order temporarily dropping unique state licensure requirements, allowing professionals—particularly those in healthcare professions – to temporarily practice without North Dakota licensure if they are duly licensed in another state. Prior to the executive order, North Dakota had been working on professional licensure reciprocity, noting the success of the Arizona law. Other states that have eased occupational licensing restrictions on healthcare workers in response to COVID-19 via executive order include Maryland, Oklahoma, Tennessee, and several others. The ALEC model Interstate-Mobility and Universal-Recognition Occupational Licensing Act contains several of the provisions and principles contained in AZ HB 2569.

Overall, loosening restrictions to allow healthcare workers to go where they are needed will help save lives during the crisis.

2. Reducing regulations on the private sector so that they can create and/or deliver essential products. There are certain regulations that ought to be relaxed or removed in order to combat the impact of the virus. For example, federal regulations provide that commercial truck drivers be limited to 11 hours of driving time during a 14-hour work day. The goal is admirable: to reduce accidents caused by driver fatigue. However, due to shortages of groceries and other necessary supplies, such as medical equipment, after President Trump declared a national emergency, the Department of Transportation’s Federal Motor Carrier Safety Administration suspended the limitation on truck driver’s hours.

This comes on the heels of grocers and hospitals reporting a shortage of supplies. A reduction of red tape generally can make medical supplies such as tests for the virus, hospital beds, and respirators more readily available as the situation warrants. It can also provide for easier access to groceries and other essential items.

II. Resolving Potential Court Backlogs

Several courts throughout the country have postponed proceedings and trials for weeks or months, which will likely lead to a backlog in the court system going forward. States have an essential role to play easing that burden on the system and can help resolve this backlog by:

1. Encouraging parties to a lawsuit to consider Alternative Dispute Resolution (ADR). The ALEC model Alternative Dispute Resolution Act would encourage the use of arbitration or other alternatives to formal court proceedings to resolve disputes where a judge and the parties find the approach appropriate and are comfortable with pursuing a speedier solution outside of court. The approach may include early neutral evaluation, mediation, arbitration, mini-trial, or summary jury trial. Although the parties may elect from an assortment of ADR procedures, they are not required to do so. This voluntary approach would provide some relief to court backlog while safeguarding traditional litigation where the parties prefer it and it is more appropriate.

The replacement of trials with ADR has been rising over the last several decades. Additionally, arbiters do not necessarily suffer from the backlogged caseloads of the civil court system and may be able to schedule proceedings at atypical times, such as nights and weekends. Moreover, ADR allows the parties to avoid the complicated paperwork and lengthy hearings, depositions, and subpoenas pursuant to normal court procedure. In most instances, ADR is also cheaper than traditional litigation, as long as the ADR case does not proceed to trial.

Overall, a majority of states have enacted laws encouraging ADR, including Oklahoma, Texas, Utah. Additionally, over two decades ago, the federal government enacted its own version of the Alternative Dispute Resolution Act. Reform to encourage courts to further embrace ADR in the coming months would be a welcome way to help state courts deal with their likely case overload when they return to typical schedules.

III. Limiting Liability for Volunteers and Charitable Organizations

Charitable organizations perform essential and needed services. Especially in a time of pandemic and other emergencies, charitable organizations are often at the front lines rendering medical care or other volunteer services, such as delivering meals and other necessary supplies to individuals. These services are particularly necessary for vulnerable populations, such as the elderly or those with preexisting medical conditions. A policy best practice states can consider is:

1. Encouraging the formation of charitable organizations, preserving the resources of charitable organizations, and encouraging volunteerism. A key component of this is to limit liability of charitable organizations and their volunteers. The ALEC model Volunteer Immunity and Charitable Organization Liability Limit Act would limit the exposure of organizations and volunteers to lawsuits arising from their charitable activities, thereby encouraging nonprofits to provide important services, particularly during times of crisis, without fear of excessive litigation.

The model would limit liability in any civil action brought against a charitable organization based on an act or omission by the organization or its members by allowing for only actual damages that are capped at a certain amount. Additionally, the model provides immunity from liability for a volunteer acting in good faith and in the course and scope of their duties or functions within the organization. This includes those organizations providing health care, which is critically needed right now. These charities are absolutely essential and need to be able to provide for patients without the constant fear of litigation, especially in a time of a nationwide pandemic.

States that have enacted laws limiting liability for volunteer healthcare providers include Maine, South Carolina, Texas, and several others.

IV. Ensuring Individuals Have Access to Information Online

The current facts and circumstances provide for a continuously evolving atmosphere where the sharing of information is essential to providing individuals with the most current information. Many Americans receive their news from online sources – including online platforms. In fact, a 2018 study found that 34% of Americans prefer to receive their news online. Measures states can take to ensure the sharing of information online include:

1. Protecting online platforms and services. The ALEC model Resolution Protecting Online Platforms and Services provides that the government should not be heavily regulating online platforms. Should the government attempt to censor or regulate online platforms during this time, Americans will be deprived of information that could impact millions of lives. The First Amendment has long protected the right of free speech and expression. Even the potential threat of litigation and/or prosecution has the potential to curtail speech. During this time, more information is better than less information.

Additionally, the internet has created millions of jobs in the United States, generated billions of dollars of revenue, and led to trillions of dollars in economic value. Due to large parts of the economy being shut down, it is of crucial importance that the internet and technology sector remain free from burdensome regulations and able to provide jobs and contribute value to the economy.

V. Conclusion

States and localities should consider the above policy ideas to ensure a more effective response to the current situation. Government has an essential role to play in unleashing the capabilities of the private sector to find sound solutions to this crisis. ALEC is committed to providing all government officials and policy stakeholders with the tools they need to make the best decisions for their constituents and general public.

In Depth: Lawsuit Reform

State legal systems and the liability they exert on businesses and individuals are a disincentive to bad behavior and allow fair players to succeed in the marketplace. When lawsuits inappropriately punish good actors, resources are sucked out of the business economy, away from research & development and job creation. Lawsuit…

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