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Wednesday, July 23, 2014

State Capitol Week in Review

Friday, February 7, 2003

Legislative committees have endorsed bills to limit the amounts that juries may award in punitive damages in civil lawsuits, and to repeal the state's plans to deregulate the retail sales of electricity.

House Bill 1038 is commonly known as the tort reform bill. A tort is a wrongful action that creates grounds for a lawsuit. HB1038, which has 11 Senate co-sponsors, was given a do-pass recommendation by the House Judiciary Committee. It would limit the amount of punitive damages in civil suits to $500,000 or three times the amount of compensatory damages, whichever is less.

HB 1038 is supported by business groups, physicians, hospitals and health care providers, nursing home owners and insurance companies. Opposing it are attorneys' organizations and associations representing senior citizens and nursing home patients.

Supporters say tort reform would make Arkansas more attractive to industries that consider locating here. Also, they say that huge amounts awarded in punitive damages have driven up the cost of health insurance to the point it is unavailable or unaffordable to doctors.

Opponents say HB 1038 would not bring down health insurance costs because insurance companies are raising rates in order to recoup investment losses they have incurred on the stock market. They say nursing homes could avoid liability by hiring more staff and improving care.

The House Committee on Insurance and Commerce endorsed House Bill 1114, to repeal the state law on deregulation of retail sales of electricity. It originally was enacted in 1999 but has not yet taken effect. The legislature postponed its effective date after California experienced double digit rate increases and rolling blackouts.

The bill sponsors say that the terms in the 1999 act are outdated, due to national changes in the regulatory environment. Arkansas has relatively low electric rates and the bill would protect residential customers from rising prices, they say.

The House approved House Bill 1030 to limit sales taxes on purchases of truck tractors and trailers. It is supported by a group of trucking companies. HB 1030 also grants a tax amnesty to truckers who have been registering their rigs in Oklahoma.

Oklahoma used to have a very favorable tax climate for truckers, but has recently changed its regulations. Now, Arkansas truckers who have been registered in Oklahoma must decide whether to pay significantly more to register in Oklahoma.

The amnesty provision and the cap on sales taxes in HB 1030 are meant to attract those truckers back to Arkansas. There are questions about the fiscal impact of the bill, however.

Truckers that registered in Arkansas over the past few years would not benefit from the tax amnesty, as would truckers who registered in Oklahoma. Arkansas truckers could sue to receive equal tax treatment as those truckers who have been registering in Oklahoma. If they win a lawsuit, the state may have retroactively reimburse truckers who have always registered in Arkansas and it would cost the state treasury about $17 million, according to revenue officials.