PA Act 17 May Hurt Businesses

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When Gov. Tom Corbett, Republican, signed Act 17 last year, he thought it would help businesses by making it harder for plaintiffs to sue multiple entities for a single injury. It turns out that the real consequence of the law may be to drive insurance rates up for all businesses.

The legal concept of “joint and several liability” means that even if a company is only partially responsible for an injury, it is financially responsible for all the damages. Act 17 ended “joint and several liability” except for defendants responsible for 60 percent or more of the damages and in the case of intentional misrepresentation, any intentional tort, or for certain violations of the Hazardous Sites Clean Up Act and the Liquor Code.

That seems like a good thing for businesses, but it turns out it’s not. The new law perversely complicates a plaintiff’s decision regarding whom to sue.

In some cases, filing suit against all negligent defendants may result in the fact-finder’s allocation of less than 60 percent liability to the only defendant capable of fully compensating the injured victim. In a malpractice case, for example, a plaintiff may be forced to file suit only against a hospital – leaving out healthcare providers who may have negligently contributed to the plaintiff’s injuries but cannot adequately compensate the plaintiff.

What that means is that the plaintiff will seek damages from companies having the most responsibility and the most assets. Companies have lost the benefit, in many cases, of fellow defendants with which to share the burden. Many will have to consider carrying higher amounts of insurance coverage and insurance carriers may respond by raising rates or required minimum coverage levels.

So instead of helping businesses, Act 17 may impose new costs on them.

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