If you live in California, get ready to pay higher insurance prices, compliments of trial lawyers, the state Supreme Court and indifferent legislators.
At issue is the Supreme Court’s flawed 2021 ruling on the retroactivity of Assembly Bill 1747, legislation enacted in 2013 that created a new grace period statute for life insurance policies.
The court ruling allowed the law to be applied retroactively to life insurance policies that predate its implementation, which makes no sense at all. It’s just the latest example of judicial activism that has made our state a hotbed of lawsuit abuse and serves as further proof that our civil justice system is completely broken.
Essentially, the ruling meant trial lawyers could sue life insurance providers for breaking a law that didn’t exist at the time of the “act” in question — in this case, the end of a life insurance policy.
This would be like lawmakers lowering the speed limit on Highway 101 to 55 mph from 65 mph, and then sending out speeding tickets for drivers caught on video doing 70 mph back in 2013.
The ruling is clearly unfair and will also mean less money for real victims while California’s “tort tax” — the economic cost of lawsuit abuse — will spike.
If California courts allow this practice to continue, insurance premiums will skyrocket, making it difficult for residents to afford life insurance. This will disproportionately hurt lower- and middle-income earners, who are already struggling to make ends meet as we are faced with an impending recession.
The negative impact on the lives of millions of Californians can’t be understated, nor the impact on our economy.
But let’s also not overlook the further deterioration this ruling is likely to have on public confidence in the courts. Our state’s justice system should protect victims and ensure that those who break the law are held accountable, not just enrich trial lawyers.
Yet, the state Supreme Court decision feeds the unquenchable greed of the mass tort lawsuit industry at the expense of everyday citizens.
The direction of our state’s legal system is unsustainable.
As it stands, California courts are considering more than 20 class-action lawsuits against life insurance providers, even when the plaintiffs cannot demonstrate that the life insurance company’s statutory violation harmed them.
The only way to stop this vicious cycle is for our courts to require plaintiffs to show that the insurance company’s actions actually harmed them. Only then will class-action lawsuits be reserved for cases in which harm needs to be remedied.
Californians deserve better than what the courts are producing. We must reform our state’s civil justice system to work for all of us, not just a select few.
Too often, the trial lawyers in California take advantage of the state’s lucrative financial incentives for filing frivolous class-action lawsuits. As a former mayor, former small business owner and engaged member of my community, I’ve worked to prioritize and encourage reform in many areas, but no one can do it alone.
Legislators need to step up and pass meaningful tort reform, and fast, because Sacramento continues to be flooded with special-interest spending to maintain the status quo. It’s going to take all of us to overcome the power of deep-pocketed trial lawyers and the legislators who eagerly cash their checks.
The clock is ticking.
— Frances Romero is a former mayor of Guadalupe. The opinions expressed are her own.