Local governments oppose raising lawsuit caps

Representatives for Nevada's smaller local government units are opposed to increasing the amount of money they can be forced to pay in a lawsuit.

Wayne Carlson, director of the Nevada Public Agency Insurance Pool, said raising the $50,000 limit would cause severe hardships in some small counties, let alone special districts and other local entities.

That pool represents 15 of Nevada's counties- all except for Clark and Washoe - as well as 10 of the state's 18 incorporated cities, four school districts and seven towns and 15 special districts, among others. It's a total of 52 governmental entities.

The lawsuit limit, he said, is already higher than $50,000 because the state Supreme Court has interpreted that amount to be for each cause of action.

So when a person files suit, the lawyer seeks payment through as many causes of action as possible.

In a recent sexual misconduct case, the court ruled each of 100 instances of sexual misconduct could be taken as a separate cause of action, in effect multiplying the limit to a total of $5 million.

Fortunately, Carlson said, the local government won its side of that case but that filing cases as multiple causes of action have raised the potential liability in each case to $300,000 or more.

He also argued that raising the cap would draw more cases with higher demands.

"It is a supply and demand equation," he said. "If the Legislature supplies higher caps, attorneys will file more cases and we will defend more cases and face settlements or judgments at higher amounts."

Stephen Balkenbush of the Liability Cooperative of Nevada, which represents nine small Nevada hospitals, including Carson-Tahoe Hospital, said that that group deals with both lawsuits capped by the $50,000 governmental lawsuit limit and those filed against its private practice doctors who aren't under the cap.

"Both the indemnity expense and defense expense have been substantially higher under uncapped claims versus capped claims," he said, adding that capped claims above the $50,000 mark are also resolved much more quickly.

Capped claims from 1991-99, he said, settled for an average of $113,000 with legal costs of $7,046. Uncapped claims for the same period, he said, averaged some $200,000 per case with defense costs of $30,735.

"From its claims experience, LiCON would anticipate that an increase in the cap would result in more cases being filed, more defense expenses being incurred and an increase in the average judgment or settlement value," Balkenbush said.

The primary objections to the testimony came Friday from committee advisory member Bill Bradley of the Trial Lawyers Association, who said the cost might rise but that he doesn't see that higher limits would create more cases.

And he made it clear that he thinks some of those people who suffer permanent injury or lose loved ones because of such things as governmental negligence deserve to be fully compensated. He pointed out that $50,000 won't even come close to covering medical bills in many of these cases.

But committee chairman Bernie Anderson, D-Sparks, said he agrees with Carlson's "supply and demand" analysis.

Balkenbush asked the committee to consider some total limit on multiple causes of action in suits against governmental entities if they do increase the $50,000 limit.

He said what most scares local officials now is that the limit is already artificial because lawyers have convinced the courts to accept multiple causes of action, each seeking $50,000 in most cases.

The committee took no action but agreed to meet again in February to discuss whether the Nevada law limiting governmental damage awards to $50,000 but allowing multiple causes of action should be changed.