By JIM COPLAND
John Denver opined that West Virginia is "almost heaven," and while the songwriter focused on the state's natural beauty, the state has long been heaven for personal injury lawyers as well.
For the last three years, corporate executives have ranked West Virginia's legal fairness last among the fifty states in a national survey conducted by the Harris Group for the U.S. Chamber of Commerce.
Though enormously profitable to the litigation industry, West Virginia's legal system isn't doing its citizens much good. The state's economic rankings are a mirror image of its legal position: the Mountain State is the 49th-poorest state, and the average West Virginian earns only two-thirds the national average.
Moreover, West Virginia has not been catching up but rather falling further behind, as its economic growth has lagged national trends for several years running.
Lawsuit abuse is not the only factor underlying West Virginia's economic problems, but it is a significant one. Among the executives surveyed by the U.S. Chamber, 64 percent said that a state's legal climate is important to any decision about where to locate a business.
Proving the point, when Chesapeake Energy cancelled plans to build a $35-million headquarter facility in Charleston earlier this year, it cited the state supreme court of appeals' decision not to hear an appeal from a $405-million verdict that had been levied against the company by a Roane County jury.
Doing business in West Virginia is perilous, since the courts have ruled that businesses can be sued merely because they have sold a product in the state –- even if the item in question was made out of state by an out-of-state manufacturer, and sold to an out-of-state consumer who was injured out of state.
The state Legislature tried to stop this abuse of the legal process, which was making West Virginia a magnet for lawsuits; it passed a law that clearly stated that "a nonresident of the state may not bring an action in a court of this state unless all or a substantial part of the acts ... giving rise to the claim ... occurred in this state."
But in 2006, the Supreme Court of Appeals threw out the legislative reform as unconstitutional under an obscure provision of the U.S. Constitution. The court's decision was breathtaking: it contradicted clear U.S. Supreme Court precedent as well as the law in every other state in the union.
Nevertheless, in some areas of law, such as medical malpractice, West Virginia has been making strides. In 2001, the state's medical malpractice insurance market effectively imploded when the largest insurer pulled out of the market. Maternity wards were closing, and specialists such as neurosurgeons were leaving the state.
In 2001 and 2003, the state Legislature passed reform legislation that required plaintiffs' lawyers to get a doctor to certify their case before proceeding and limiting "pain and suffering" and other hard-to-quantify damage awards to $500,000. The positive effects on the insurance market have been striking: the state's largest medical-malpractice insurer was able to lower or hold steady its rates for each of the last three years.
The success of medical-malpractice reform demonstrates that tort reform can work, but so far, broader successes at curbing lawsuit abuse have been scarce. Even when reforms have been passed, the state's activist judiciary has often found reason to throw out the legislature's enacted changes.
And the state's long-time attorney general, Darrell McGraw, has used the powers of his office to further enrich the litigation industry: in the last three years alone, he's farmed out more than 25 cases to private lawyers, who stood to take in millions of dollars on behalf of the state.
Evidence suggests that many in West Virginia are beginning to see that their state's status as a "trial lawyer heaven" ultimately hurts West Virginians themselves: in a 2005 survey, almost 8 in 10 of them said they thought that litigation in their state was a "serious problem," and three-quarters said they felt that lawyers, rather than consumers or victims, benefited most from the system.
Because West Virginia elects its judges as well as other public officials, its populace can help reverse the state's image at the ballot box. Will that happen on November 4? We'll know soon.
Copland is the director of the Center for Legal Policy at the Manhattan Institute, a public policy think tank, and the project manager and primary author of the Center's Trial Lawyers, Inc.: Update, West Virginia, released Nov. 3.