SUBJECT: Civil Procedure; Liability; Courts
TYPE: Original
DATE: February 5, 2001
Net Effect on All State Funds
FUND AFFECTED
FY 2002
FY 2003
FY 2004 Legal Services for
Low-Income People
Fund
Unknown
Unknown
Unknown Tort Victims'
Compensation Fund
($257,598 to
Unknown)
($268,886 to
Unknown)
($275,693 to
Unknown) Total Estimated
($257,598)
($268,886)
($275,693)
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| None | $0 | $0 | $0 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 6 pages.
ASSUMPTION
Officials from the Office of State Courts Administrator, Department of Social Services, Office of State Public Defender, Office of Prosecution Services, Department of Natural Resources, Office of State Treasurer, Office of Administration - Division of Accounting and the Office of Administration - Division of General Services assume the proposed legislation would have no fiscal impact on their agencies.
Officials from the Office of Administration - Division of Budget and Planning assume the proposed legislation would have no fiscal impact on their agency. Officials noted that there could be impact on total state revenue.
Officials from the Department of Revenue assume the proposed legislation would have little or no administrative impact on their agency.
Officials from the Office of the Attorney General noted that they do not know the number of claims that will be appealed to the LIRC and therefore, they do not know how many cases they will defend. Additionally, officials from the AGO do not know how many cases they might bring in subrogation. Officials assume that this number will be minimal and that costs can be absorbed.
Officials from the Department of Labor and Industrial Relations - Division of Workers' Compensation (DOL) assume the proposed legislation establishes responsibility in the Division of Workers' Compensation to administer and adjudicate claims of uncompensated tort victims against the Tort Victims' Compensation Fund.
The DOL will establish and maintain a Tort Victims' Compensation Unit to receive, process and make awards for uncompensated tort victims. The DOL will also establish and maintain a procedure to adjudicate these claims.
The impact of this program is very difficult to assess. In FY 98, the Office of the State Courts Administrator reported that 20,282 tort cases were disposed of. Over the last three fiscal years the average number of tort cases disposed of is 19,264 cases. This includes settlements, dismissals, defendants' verdicts, plaintiffs' verdicts, and default judgments. It is impossible to determine how many cases will result in a verdict for the plaintiff that are uncollectible. This type of data is not collected. It is also impossible to determine how many uninsured motorist claims will be filed as tort cases because of accessibility to these funds. Attempts to obtain this type of information were made with the Missouri Association of Trial Attorneys and the ASSUMPTION (continued)
Missouri Department of Insurance, respectively concerning SB 464 in the 1999 legislative session.
Funding for this program on an ongoing basis is questionable. The statute provides for 65% of punitive damages awards in final judgments to be paid to the Division into the Tort Victims' Compensation Fund. Currently, there are moneys over seven million dollars ($7,000,000) in the Fund. This funding came from two unusual cases in Kansas City where the plaintiffs and defendants absolutely refused to settle the claim. This information is from the Attorney General's Office. In most cases, the plaintiff and defendant settle any punitive damages, even after a jury award. This usually happens while the case is on appeal. Because the case is settled, there would be no final judgment and no payment to the Fund.
Since almost all cases involving tort claims involve claimant attorneys, it is assumed the potential for claims in cases of unsatisfied plaintiffs' judgements will be very high. For the purpose of this fiscal note, the DOL assumes 10% of all cases disposed of will result in claims against the fund. Based on information previously cited, this is an average of 1,926 claims filed
per year (19,264 x 10%). This average is very close to the number of claims filed with the DOL's Crime Victims' Compensation program each year. In FY 96 a total of 1,652 claims were disposed of, in FY 97 a total of 2,206 claims were disposed of, in FY 98 a total of 1,688 claims were disposed of by the Crime Victims' Compensation program.
The DOL assumes the parameters of the Tort Victims' Compensation program in verifying medical, funeral and legal bills, verifying court action and other requirements to establish the validity of a claim under this proposal are also very similar to the manner in which crime victim's compensation claims are handled. For that reason, DOL assumed staffing needs similar to the Crime Victims' Compensation program would be needed to handle the claims process. This includes one Program Manager, one Clerk Typist IV and three Clerk Typist III's. To ensure proper funding, this program must also employ one Legal Counsel to ensure compliance with the statutory provisions and the myriad of legal issues involved in tort claims to ensure proper funding.
In reference to expense and equipment requests of the DOL, Oversight has eliminated the rent expense, assuming these employees could be located in existing space; eliminated the office equipment associated with locating these employees separately from other DOL employees; and reduced the estimated cost of PC printers.
Oversight assumes 35% of all payments received by the Tort Victims' Compensation Fund will be transferred to the Legal Services for Low-Income People Fund which is created in this ASSUMPTION (continued)
proposal; therefore, Oversight has reflected unknown income to the Legal Services for Low-Income People Fund and an unknown loss to the Tort Victims' Compensation Fund.
FISCAL IMPACT - State Government FY 2002 FY 2003 FY 2004
(10 Mo.)
LEGAL SERVICES FOR LOW-INCOME
PEOPLE FUND
Income - Punitive damage awards
Transfer from Tort Victims'
Compensation Fund Unknown Unknown Unknown
TORT VICTIMS' COMPENSATION FUND
Loss - Punitive damage awards
Transfer to Legal Services for
Low-Income People Fund (Unknown) (Unknown) (Unknown)
Cost - Labor and Industrial Relations
Personal Service (6 FTE) ($157,325) ($193,511) ($198,348)
Fringe Benefits (52,436) (64,497) (66,109)
Equipment and Expense (47,837) (10,878) (11,236)
Total costs - DOL ($257,598) ($268,886) ($275,693)
ESTIMATED NET EFFECT ON
TORT VICTIMS' COMPENSATION ($257,598 to ($268,886 to ($275,693 to
FUND Unknown) Unknown) Unknown)
FISCAL IMPACT - Local Government FY 2002 FY 2003 FY 2004
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
No direct fiscal impact on small businesses would be expected due to this proposal.
DESCRIPTION
This proposal establishes procedures for collection of moneys into, and disbursement of moneys from, the Tort Victims' Compensation Fund. Any person filing a punitive damages claim in a Missouri state court must notify the Attorney General of the claim. The state may not intervene in the lawsuit but, in the event of a judgment for punitive damages, the State has a lien against one-half (50 percent) of the punitive damages award, which funds are collected and deposited
into the Tort Victims' Compensation Fund. In the event of a pre-judgment settlement between the parties, the state has no claim or lien.
This proposal establishes the Legal Services for Low-Income People Fund which is to receive 35 percent of the moneys received by the Tort Victims' Compensation Fund. These moneys shall be distributed to legal services organizations in Missouri which are recipients of federal Legal Services Corporation funding and shall be used by the legal services organizations to provide legal services to their low-income population, in the manner approved by the board of directors of each legal services organization.
This proposal directs that 65 percent of the moneys received by the Tort Victims' Compensation Fund be distributed to the Division of Workers' Compensation to assist uncompensated tort
victims. To qualify as an "uncompensated tort victim", a person must meet several criteria. Claims for fund proceeds must be filed with the Division within two years of obtaining a court
judgment for personal injury or wrongful death. This proposal establishes application requirements for requests for disbursement of funds and it affords the Division of Workers'
Compensation discretion in awarding of funds, subject to certain limitations on award amounts, including a $300,000 per award cap. The Division may determine its awards based upon the applications only, or it may hold evidentiary hearings on any claims.
No incarcerated person may receive an award from the fund during his or her period of incarceration and no application or claim for funds constitutes a lien against the state.
In the event that there are insufficient funds in the budget of the division for payment of claims of uncompensated tort victims to pay all claims in full, claims shall be paid on a pro rata basis.
A party aggrieved by a decision of the Division may appeal to the Labor and Industrial Relations Commission. Judicial review may be sought by those aggrieved by a decision of the
DESCRIPTION (continued)
Commission. The State has rights of subrogation in the event an "uncompensated" tort victim collects partial or total satisfaction from the tortfeasor after having received an award
from the Tort Victim's Compensation Fund.
The Division of Workers' Compensation is authorized to promulgate rules and regulations governing application for and distribution of the funds the Division receives from the Tort
Victims' Compensation Fund.
This legislation is not federally mandated, would not duplicate any other program, and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Labor and Industrial Relations - Division of Workers' Compensation
Department of Natural Resources
Department of Revenue
Department of Social Services
Office of Administration - Division of Accounting
Office of Administration - Division of Budget and Planning
Office of Administration - Division of General Services
Office of Attorney General
Office of Prosecution Services
Office of State Courts Administrator
Office of State Public Defender
Office of State Treasurer
Jeanne Jarrett, CPA
Director
February 5, 2001