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Caucus Report 5 – Tort Reform and Angel Investing

The following update is the official weekly report of the Republican House Caucus –

This week, the House approved new reforms aimed at stemming lawsuit abuse. Frivolous lawsuits are straining small businesses throughout our country, and as our economy continues to inch out of recession, small businesses will be the driver of job creation as we go forward.

We all appreciate and enjoy reading the announcements of major businesses locating in our state – and we can never overestimate the impact of Michelin, BMW, Boeing, and others. But the small businesses owned by our neighbors and friends contribute to as much as 75 percent of new job growth, as some studies have asserted.

Many small businesses operate on tight margins for many years, and the smallest bump in the road can seriously derail what could be the next great company. Entrepreneurs relish a challenge, but the potential of outside uncertainty is something that prevents many businesses from hiring, according to business owners polled in 2007.

The House overwhelmingly approved this lawsuit abuse reform by a vote of 100-7 this week. This law prevents outrageous punitive damages, while still ensuring that if a company hurts you, you will continue to have access to the legal system.

Under the provisions of the bill approved Wednesday (H. 3375), people who win lawsuits are entitled to a maximum punitive damage award of $350,000 or three times the actual damages awarded, whichever is greater. The legislation also requires the Attorney General and Solicitors to disclose contracts when they use outside counsel and imposes limits on the fees the outside counsel may collect from the state.

According to the S.C. Civil Justice Coalition, there has been a slight decrease in the number of criminal and family court cases in South Carolina, but civil cases have increased by 33,000 since 2006.  The average cost to defend a “slip and fall” case can cost a small business more than $50,000 in legal fees.

In another alarming statistic: North Carolina has 9.2 million residents. South Carolina has 4.5 million residents. Both states had about 60,000 workers’ comp claims filed last year.

After the bill was approved, Speaker Harrell told the media: “A fairly balanced system will protect our state’s citizens, greatly benefit existing businesses and will make our state more attractive to new businesses.”

The House passed a similar Tort Reform bill last year, but the legislative session ended before it could become law.  This year, we hope that we took action quick enough so it has plenty of time to become law this session.

In addition to Tort Reform, a committee began debate on legislation that will get the government out of the way of the “Angel Investors” who want to invest in new start-up companies. We believe this legislation will allow people to invest in the next great company right here in our state – companies that will create jobs and become good corporate citizens here at home.