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Now is time to consider legal reforms in W.Va.

Dec. 24, 2012 @ 06:55 AM

The last few weeks have provided plenty of fodder for West Virginia on the economic development front. 

A recent New York Times story shows that the Mountain State spends more money per capita on “business tax credits and incentives” than all but one of the 50 states. According to the New York Times report, West Virginia spends nearly $1.5 billion per year on incentive programs based on the latest available data. The amount of money the state is spending to “attract” jobs is astounding to say the least, but it is particularly puzzling when you consider the fact that West Virginia routinely ranks nationally as one of the worst states in the nation for business. 

Case in point, West Virginia was just named to the American Tort Reform Foundation’s annual “Judicial Hellholes” list for the 11th straight year. The “Judicial Hellholes” report cites “lingering problems” such as personal injury law that “remains out-of-the-mainstream.” West Virginia is one of only a handful of states that doesn’t have an intermediate appeals court — an oft-cited problem with regard to our legal climate. And our plaintiff-friendly courts are also considered “fertile ground for asbestos litigation” — a problem which has resulted in thousands of out-of-state claims flooding our local courts, and “serious questions ... about the filing of fraudulent claims in West Virginia.”

On the very same day, Forbes Magazine ranked West Virginia as the fifth worst state in the nation for business — a two spot fall from the year prior. One of the key factors considered in Forbes’ business ranking is each state’s regulatory environment, which includes the lawsuit climate for the state.

Unsurprisingly, West Virginia’s regulatory environment ranked 47th. By comparison, Forbes’ top-ranked state for business — Utah — was praised for a regulatory climate that “is less likely to reward frivolous lawsuits or hand out excessive judgments.” 

These reports beg the question of whether West Virginia is better served by continuing its policy of giving away billions of dollars in selective tax incentives, with hopes of attracting specific businesses of locating here, or finally addressing the core problems with a legal system that, by most accounts, makes West Virginia an unattractive place for all businesses.

It’s about time that state lawmakers give the legal reform option a chance. 

In recent years, state lawmakers have balked at passing the meaningful legal reforms that so many job providers cite as necessary for attracting jobs in West Virginia. West Virginia is one of only a handful of states without an intermediate appeals court, and the track record of our state’s appellate process is regularly cited as a deterrent to job providers. Nevertheless, lawmakers in the House of Delegates have dragged their feet on passing what was a signature reform proposal of then-Gov. Joe Manchin’s Independent Commission on Judicial Reform, citing concerns over the annual costs of an intermediate appeals court. Ironically, the cost of such a court — which is attractive to most businesses looking to locate jobs — pales in comparison to some of the multi-million dollar tax giveaways that lawmakers have passed in an attempt to attract just one business to the state.

Every year that the West Virginia Legislature passes on legal reforms, our state economy falls further behind. Our neighboring state of Ohio ranks a whopping 12 spots higher than West Virginia in Forbes’  latest business rankings, and the state was just praised in a Wall Street Journal editorial for passing legislation which would curb fraudulent asbestos lawsuits that continually hurt the reputation of our legal system. West Virginia is closer to 50th than it is to Kentucky (28th) and Pennsylvania (30th), both of which have passed significant legal reform measures in the last two years. Throw in Virginia (second) and Maryland (16th), and West Virginia compares rather poorly to all of its neighboring states, which unsurprisingly rank significantly higher than the Mountain State in regulatory/legal climate.

Personal injury lawyers have had a stranglehold on leadership in the House of Delegates for several years now, resulting in the premature death of many reform measures passed by the state Senate.

But with West Virginia voters recently electing the most Republicans to the House since the Great Depression, “business-friendly” Democrats face a choice this coming legislative session.  Will they form a bipartisan coalition to finally pass the legal reforms necessary to attract jobs to our state? Or will they vote to preserve West Virginia’s personal injury status quo? Time will tell if we are having this same discussion next year.  

Richie Heath is executive director of the West Virginia Citizens Against Lawsuit Abuse.



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