AN ACT Relating to actions based on fault; amending RCW 4.22.030; adding a new chapter to Title 4 RCW; creating a new section; and repealing RCW 4.56.240 and 7.70.070.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. PREAMBLE. Tort law in this state has generally been developed by the courts on a case-by-case basis. While this process has resulted in some significant changes in the law, including amelioration of the harshness of many common law doctrines, the legislature has periodically intervened in order to bring about needed reforms. The purpose of this chapter is to enact further reforms in order to create a more equitable distribution of the cost and risk of injury and increase the availability and affordability of insurance.

The legislature finds that counties, cities, and other governmental entities are faced with increased exposure to lawsuits and awards and dramatic increases in the cost of insurance coverage. These escalating costs ultimately affect the public through higher taxes, loss of essential services, and loss of the protection provided by adequate insurance. In order to ensure the continued availability and affordability of quality governmental services, comprehensive reform is necessary.

The legislature also finds comparable cost increases in professional liability insurance. Escalating malpractice insurance premiums discourage physicians and other health care providers from initiating or continuing their practice or offering needed services to the public and contribute to the rising costs of consumer health care. Other professionals, such as architects and engineers, face similar difficult choices, financial instability, and unlimited risk in providing services to the public.

The legislature also finds that general liability insurance is becoming unavailable or unaffordable to many businesses, individuals, and nonprofit organizations in amounts sufficient to cover potential losses. High premiums have discouraged socially and economically desirable activities and encourage many to go without adequate insurance coverage.

Therefore, it is the intent of the legislature to reduce costs associated with the tort system, while assuring that reasonable compensation for persons injured through the fault of others is available. Objective limits and greater predictability in the amount of awards is necessary. The costs of providing reasonable compensation should be reduced whenever it is possible and equitable by eliminating potential windfalls to persons and purposes for which awards were not intended.

NEW SECTION. Sec. 2. DEFINITIONS. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Economic damages" means objectively verifiable monetary losses, including medical expenses, loss of earnings, burial costs, loss of use of property, cost of replacement or repair, cost of obtaining substitute domestic services, loss of employment, and loss of business or employment opportunities.

(2) "Noneconomic damages" means subjective, nonmonetary losses, including, but not limited to pain, suffering, inconvenience, mental anguish, disability or disfigurement incurred by the injured party, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation, and destruction of the parent-child relationship.

(3) "Present value of future periodic payments" means the sum of money needed now which, when added to what the sum may reasonably be expected to earn in the future, will equal the amount of the periodic payment at the time in the future when it will be paid.

(4) "Bodily injury" means physical injury, sickness, or disease, including death.

NEW SECTION. Sec. 3. LIMIT ON NONECONOMIC DAMAGES. (1) In any action based on fault seeking damages for personal injury or property damage, the claimant is entitled to recover noneconomic losses.

(2) In no action seeking damages for personal injury or property damage may a claimant recover damages for noneconomic losses exceeding two hundred fifty thousand dollars. In applying the limits of this subsection, claims for loss of consortium, loss of society and companionship, and destruction of the parent-child relationship which are asserted by one who did not actually sustain bodily injury shall be added to any claims for noneconomic damages sustained by a claimant who did incur bodily injury.

NEW SECTION. Sec. 4. PERIODIC PAYMENTS FOR AWARDS OF FUTURE DAMAGES. (1) In an action based on fault seeking damages for personal injury or property damage in which a verdict or award for future damages of at least fifty thousand dollars is made, the court or arbitrator shall, at the request of a party, enter a judgment which provides for the periodic payment in whole or in part of the future damages. With respect to the judgment, the court or arbitrator shall make a specific finding as to the dollar amount of periodic payments intended to compensate the judgment creditor for the future damages. As a condition to entry of such a judgment, the court or arbitrator may require a judgment debtor who has not made adequate provision for payment of the periodic payments to post security sufficient to assure full payment of the future damages. Upon satisfaction of the judgment, the security, or so much as remains, shall be ordered returned to the judgment debtor.

(2) In ordering periodic payments for future damages, the court or arbitrator shall determine the present value of those payments and include the present value of future periodic payments in computing the total award on which attorneys' fees are calculated.

(3) Any judgment ordering the payment of future damages by periodic payments shall specify the recipient or recipients of the payments, the dollar amount of the payments, the interval between payments, and the number of payments or the period of time over which payments shall be made. The payments shall be subject to modification only in the event of the death of the judgment creditor.

(4) If the court finds that the judgment debtor has exhibited a continuing pattern of failing to make the payments as specified in subsection (3) of this section, the court may order the judgment debtor to pay the judgment creditor all damages caused by the failure to make the periodic payments, including court costs and attorneys' fees.

(5) Upon the death of the judgment creditor, the court which rendered the original judgment may, upon petition of any party in interest, modify the judgment to award and apportion the unpaid future damages. Money damages awarded for loss of future earnings shall not be reduced or payments terminated by reason of the death of the judgment creditor but shall be paid to persons to whom the judgment creditor owed a duty of support, as provided by law, immediately prior to death.

(6) Upon satisfaction of a periodic payment judgment, any obligation of the judgment debtor to make further payments shall cease and any security posted pursuant to subsection (1) of this section shall revert to the judgment debtor.

NEW SECTION. Sec. 5. APPORTIONMENT OF DAMAGES. (1) In all actions involving fault of more than one entity, including third-party defendants, persons released by the claimant, persons immune from liability to the claimant, and persons with any other individual defenses against the claimant, judgment shall be entered against each defendant except those who have been released by the claimant in an amount which represents that party's proportionate share of the claimant's total damages. The liability of each defendant shall be several only and shall not be joint except:

(a) A party shall be responsible for the fault of another person or for payment of the proportionate share of another party where both were acting in concert or when a person was acting as an agent or servant of the party.

(b) The defendants shall be jointly and severally liable for an indivisible claim for personal injury or property damage if the trier of fact determines that the claimant or party suffering bodily injury or incurring property damage was not at fault.

(2) In determining a party's proportionate share of the claimant's total damages, the trier of fact shall determine the percentage of the total fault which is attributable to every entity which caused the claimant's damages, including the claimant or person suffering personal injury or incurring property damage, third-party defendants, persons released by the claimant, and persons with any other individual defense against the claimant.

NEW SECTION. Sec. 6. ATTORNEYS' FEES. (1) In any action based on fault seeking damages for personal injury or property damage, an attorney shall not contract for or collect a contingency fee for representing any person seeking such damages in excess of the following limits:

(a) Forty percent of the first fifty thousand dollars recovered;

(b) Thirty-three and one-third percent of the next one hundred thousand dollars recovered;

(d) Twenty percent of the next two hundred fifty thousand dollars recovered;

(e) Fifteen percent of the next three hundred fifty thousand dollars recovered; and

(f) Ten percent of any amount on which the recovery exceeds one million dollars.

(2) The limitations in subsection (1) of this section shall apply regardless of whether the recovery is by settlement, arbitration, or judgment or whether the person for whom the recovery is made is a responsible adult, an infant, or a person of unsound mind.

(3) If periodic payments for future damages are awarded, the court shall determine the present value of those payments and include the present value of future periodic payments in computing the total award on which attorney's fees are calculated.

(4) The percentages specified in subsection (1) of this section shall be applied to the net sum recovered after deducting from the total amount recovered an amount equal to the total expenses and disbursements for expert testimony and investigative or other services properly chargeable to the enforcement of the claim or prosecution of the action. In computing the fee, the costs as taxed, including interest upon a judgment, shall be considered part of the amount recovered. For the following or similar items there shall be no deduction in applying the percentages: Liens and assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or of self-insurers or insurance carriers.

(5) If an attorney believes in good faith that the fee schedule fails to provide adequate compensation due to extraordinary circumstances, then the attorney may apply for greater compensation. Application may be made upon affidavit with written notice and an opportunity to be heard to the party or parties to the contract and other persons holding liens or assignments on the recovery. Application shall be made (a) to the superior court judge to whom the action had been sent for trial, or (b) if the action had not been sent to trial, then to the presiding judge in the county in which the action had been filed, or (c) if no action had been filed, then to the superior court presiding judge in the county in which the attorney has an office.

Upon application, if extraordinary circumstances are found to exist and without regard to the consent of the other party or parties to the contract, the court may fix as reasonable compensation for legal services rendered an amount greater than that specified in the schedule. If the application is granted, the court shall make a written order and briefly set forth the reasons for granting the greater compensation. A copy of the order shall be served on all persons entitled to receive notice of the application.

(6) In determining the reasonableness of the parties' attorneys' fees upon application under subsection (5) of this section, the court shall consider the following:

(a) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(b) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(d) The amount involved and the results obtained;

(e) The time limitations imposed by the client or by the circumstances;

(f) The nature and length of the professional relationship with the client;

(g) The experience, reputation, and ability of the lawyer or lawyers performing the services; and

(h) Whether the fee is fixed or contingent.

Sec. 7. Section 11, chapter 27, Laws of 1981 and RCW 4.22.030 are each amended to read as follows:

If more than one person is liable to a claimant on an indivisible claim for the same injury, death or harm, the liability of such persons shall be ((~~joint and several~~)) as provided in chapter 4.-- RCW (sections 1 through 6 of this 1986 act).

NEW SECTION. Sec. 8. REPEALER. The following acts or parts of acts are each repealed:

(1) Section 5, chapter 56, Laws of 1975-'76 2nd ex. sess. and RCW 4.56.240; and

(2) Section 12, chapter 56, Laws of 1975-'76 2nd ex. sess. and RCW 7.70.070.

NEW SECTION. Sec. 9. APPLICABILITY. This act shall apply to all claims or causes of action made or commenced after the effective date of this act.

NEW SECTION. Sec. 10. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 11. CAPTIONS. Section captions as used in this act constitute no part of the law.

NEW SECTION. Sec. 12. LEGISLATIVE DIRECTIVE. Sections 1 through 6 of this act shall constitute a new chapter in Title 4 RCW.