T. Gorton

Mr. GORTON

Mr. GORTON. I have to say to my friend from Alabama I do not recall that. As the alternative dispute resolution provisions in these bills have changed from year to year, certainly no such report has been filed in connection with the alternative dispute resolution proceedings, or, rather, sections in this bill. I see, Mr. President, it is now 5 minutes after 12. I know my colleague from West Virginia wishes to speak, and I yield the floor. Mr. ROCKEFELLER addressed the Chair.

Mr. GORTON. Yes; I am happy to yield for a question.

Mr. GORTON. Has a rollcall been ordered?

Mr. GORTON. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote on Amendment No. 681

Mr. GORTON. Mr. President, I ask for the yeas and nays.

Mr. GORTON. Mr. President, I move to table the Hollings amendment, and I ask for the yeas and nays.

Mr. GORTON. Mr. President, I move to reconsider the vote by which the motion was agreed to.

Mr. GORTON. Mr. President, we are at this last half-hour or 45 minutes before a series of votes, speaking to several amendments: The underlying broad amendment by the Senator from Michigan to extend the joint liability provisions of this bill to all litigation; the amendment proposed by the Senator from Arizona and discussed during the course of the last few minutes; and an amendment by the Senator from South Carolina on insurance data collection and reporting requirements. While he spoke briefly to that last night, I think it important to outline for the benefit of my colleagues who will soon be voting on it what that amendment actually does. The amendment is not so much an insurance reporting act, though it does add inevitably to the huge amount of paperwork with which our society and economy is already burdened, as it is another skillful attempt for all practical purposes to kill this bill, this whole idea. What the amendment would do would be to sunset all of the substantive provisions of the proposal which is now before us. I want to repeat that. It would sunset all of them. I am sorry. Mr. President, I apologize. The notes I have here--the Senator from South Carolina has crossed those provisions out of this provision. Now, it simply requires costly and unnecessary reporting requirements and institutes a brandnew Government bureaucracy. It stems from the proposition from the opponents to this bill that the only goal of the bill is to lower insurance costs. Yet, I do not believe that either the Senator from West Virginia or I have ever included lower interest costs as one of the rationales for the passage of this bill. We hope that it might well be an incidental impact of the passage of the bill. But it is not central to our arguments. To go back to the beginning, each of us has said that it is designed to improve the competitiveness of American businesses, large and small, to increase economic growth and to create more jobs, to make the present system more fair by making it more open to small claims through an alternative dispute resolution mechanism and by creating a uniform and in many cases in many States a more generous statute of limitation on claims and to reduce overall liability costs. But whatever the situation may have been 25 or 30 years ago, overall liability costs are a large universe, of which insurance premium costs are only one and one increasingly less important element. Why? For three reasons: First, in many States, punitive damage awards cannot be insured against. It is not true in all cases but it is true in many States. It is the arbitrary nature of punitive damage verdicts, which is a major goal of the reforms contained in this bill. Second, several years ago through a solution developed in the Commerce Committee, of which both the Senator from South Carolina and I are members, a market solution was created for the nonresponsiveness of insurance premiums to market changes by a Federal Risk Retention Act which allows small businesses to pool themselves together to self- insure in the area of product liability, an act which has been utilized by thousands of small businesses across the country. So they are outside of the insurance field entirely. Finally, of course, most very large businesses, many of the business enterprises which have abandoned product lines or decided not to continue to develop new product lines, are self-insurers. They do not go to insurance companies to insure themselves against product liability costs. They make their own business judgments about what they will develop and what they will market. My friend and colleague from West Virginia is constantly brought up as being originally a sponsor of a bill like this a number of years ago. It is true that he was. But as I trust is the case with all of us, changing circumstances and greater thoughtfulness change our minds on particular courses of action. It has changed my mind on the substance of this bill. There was at least one previous product liability bill in the Commerce Committee which I opposed in the committee, one quite different from this. But when Senator Rockefeller, several Congresses ago, offered an amendment like this, the product liability bill that we were dealing with included strict limits on liability, caps on pain and suffering damages, which this one does not. We did not have the Risk Retention Act in existence at that time. It was a much better argument at that point that this proposal would have a clear cost-cutting effect on insurance.

Mr. GORTON. Mr. President, I yield 10 minutes to the Senator from Arizona.

Mr. GORTON. I am not entirely certain what the question from the Senator from Alabama consists of. But I think I understand it. I will do the best that I can to answer it. Yes; one of the goals of this bill is to reduce transaction costs. It is to see to it that more of the money that goes into the legal system goes to actual victims, whether product liability as the bill is now more inclusive, medical malpractice. We find it an absolute scandal that for every dollar that goes into the product liability system only 40 cents or so gets to victims. And 60 cents goes to transaction costs, most of which goes to lawyers. We have not separated out how much of those lawyer fees are defendants' fees. That is a matter I suspect of indifference to the victim. It is 60 percent. Of course, for most insurance policies there is no limit on the amount that the insurance company will spend in defending the defendant in such a case. There hardly could be. Under those circumstances the claimant's attorney would simply drive the engine until that level had been reached and then no longer would have any opposition. What we are attempting to do in this bill is, one, create more situations in which there was a prompt settlement through something less than full litigation through the ADR provisions in the bill; second, by limiting to in some respects consistent with the Constitution--in fact, a response to the invitation from the Supreme Court of the United States under the Constitution to do so--somehow limiting the possibility of huge punitive damage verdicts causing cases to settle earlier, and at a more reasonable price and at a lower transaction cost; third, of course, simply doing more justice in the system. We hope that it will modestly cut back on the number of lawsuits that are brought in the first place, especially frivolous ones, and cause the meritorious lawsuits to be settled more quickly and even when they go to trial to be settled less frequently with lengthy appeals to appellate courts. This Senator did not say, I report, Mr. President, to my friend, that we did not believe that there would be any reduction in liability insurance costs. The Senator said that we were not utilizing that, we were not making that prediction as an argument in favor of the bill. The argument in favor of the bill is greater justice, especially for smaller claims, the increase in economic growth and the creation of jobs, and the encouragement of the development of new and improved products on the part of the American business community. If you ask this Senator does he think that liability insurance costs will go down, he does. He certainly hopes so. But the point is that if they do not, unlike the situation 8 or 10 years ago, those who have to purchase the insurance or who face product liability claims will have an alternative, an alternative that we created for them in risk retention pools. If the competitive market among big insurance companies does not lower the costs, those risk retention pools certainly will, and they are not a subject of this amendment.

Mr. GORTON. No objection.

Mr. GORTON. Mr. President, I move to reconsider the vote by which the motion to lay on the table was agreed to. Vote on Motion to Table Amendment No. 682

Mr. GORTON. I ask for the yeas and nays.

Mr. GORTON. I do not remember that testimony this year. I believe the Senator from Alabama is probably correct about some such testimony for years past. But to exactly the extent that that is true, the amendment which we are discussing is irrelevant and has no impact other than probably involved in the entire system.

Mr. GORTON

Mr. GORTON. Madam President, I suggest the absence of a quorum.

Mr. GORTON

Mr. GORTON. Madam President, this amendment and the next amendment have been worked out by the two managers and can be agreed to by voice vote.

Mr. GORTON. Madam President, I move to reconsider the vote.

Mr. GORTON. Is the Shelby amendment now the pending business?

Mr. GORTON. Madam President, this is worked out with the two Senators from Alabama who are opponents to the bill but who nevertheless have a legitimate question about a quirk in Alabama law. The amendment applies only to certain cases in Alabama, and is acceptable. THE PRESIDING OFFICER. If there be no further debate, the question is on agreeing to the amendment.

Mr. GORTON. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote On Amendment No. 617, As Amended

Mr. GORTON. This Senator can make one very, very brief comment. He finds it curious that his friend from South Carolina, who is the leading member of his party and the former chairman of the Senate Commerce Committee, on which this Senator serves, and a cosponsor or a supporter of all of the automobile safety legislation which has gone through that committee in the last 15 years, which is the primary cause of a greater safety, should ascribe all changes in safety to product liability litigation. If that is true, he and I have certainly been wasting our time on hearings on automobile safety and passing laws respecting seat belts and air bags and side impact protection and the like.

Mr. GORTON. Mr. President, I yield 5 minutes to the Senator from Utah.

Mr. GORTON. Mr. President, I yield 7 minutes to the Senator from Nebraska.

Mr. GORTON. I yield 8 minutes to the Senator from Kentucky.

Mr. GORTON. Mr. President, how much time does the Senator desire?