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Tort Reform: Is The Road Clear At Last?

Business groups waging war against the powerful trial lawyers' lobby found little satisfaction during President Bush's first term. Distracted by the war on terror and Iraq, Bush put tort reform on the back burner. But with his Nov. 2 victory, Corporate America has reason to believe that Bush II will make the issue a priority. On the campaign trail, tort reform was a frequent -- and surefire -- crowd-pleaser; Bush routinely insisted that frivolous lawsuits were hiking the cost of health care and killing jobs.

Now Corporate America is gearing up to win three big prizes: caps on medical malpractice damages, which business believes will lower health-care costs; a move to make class actions less expensive to defend; and a business-funded global settlement to compensate workers and others harmed by asbestos. "With the renewed focus of the Bush Administration, we could have a lot of success," says Sherman Joyce, president of American Tort Reform Assn.

Reformers are so optimistic that they hope to wrap up a measure on class actions before Inauguration Day. The legislation, long stalled in the Senate, would move many multi-state class actions to federal courts, making them easier for business to defend. Supporters had enough Democratic votes to break a filibuster earlier this year, but business -- and the GOP leadership -- dropped the ball. Now they think they can tack the measure on to an omnibus spending bill during November's lame-duck session of Congress.

That would be just the beginning. Proponents of caps on medical malpractice awards think they can roll language into any broader health-care legislation the next Congress tackles. Even the Clinton Administration's Health & Human Services Dept. found that anything that reduced doctors' and hospitals' liability -- such as caps -- could save the health-care system $60 billion to $108 billion a year, simply by reducing the practice of defensive medicine. Advocates say caps also would lead to fewer lawsuits, making physicians' malpractice insurance more affordable and reversing a trend that's seeing doctors shutting their practices. With a half-decent push from the White House, lobbyists believe malpractice reforms could actually happen next year.

An asbestos breakthrough will be tougher. For two years labor, management, and the trial bar have been negotiating to set up a fund to compensate victims whose diseases are linked to asbestos exposure. But as talks drag on, and labor and lawyers make more demands, the fund keeps growing -- hitting $145 billion at last count. Businesses, particularly insurers, want to give up on the pool in favor of a less ambitious plan requiring asbestos claimants to be truly sick before a court hears their cases. A smaller trust would compensate victims suffering from the worst kind of asbestos cancer. But the biggest hurdle to a deal isn't Congress -- it's the deep divisions within business itself.

Tort reform isn't a done deal. The Dems may be in no mood to play ball. Trial lawyers remain a potent lobby. And some Republicans remain ambivalent, including Senator Arlen Specter (R-Pa.), the likely chair of the Judiciary Committee next year. Still, with billions of dollars at stake, business is likely to find ways to get it done.

By Lorraine Woellert in Washington

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