Colorado ranks second in the nation for its efforts to restrain abusive lawsuits, and while many say that's a benefit to everyone, advocates say it bodes even better for business. The rankings are part of a report from the San Francisco-based think tank Pacific Research Institute. Tort - French for "wrong" - suits are cases in which pain and suffering damages, rather than simply monetary damages, are awarded. High profile cases that have appeared in the headlines recently include a woman who claimed she found a severed finger in a bowl of fast-food chili and Williams v. Philip Morris, in which circuit courts ordered tobacco company Philip Morris to pay $79.5 million in punitive damages to plaintiffs who complained that smoking caused the death of family members.

The case is now under appeal to the Supreme Court. Colorado clinched the PRI report's No. 2 ranking because of reform efforts made between 2000 and 2005. Texas claimed the top ranking. Most states in the Rocky Mountain region fared well in the rankings. Utah placed sixth and Wyoming placed 13th.

One of the report's authors, Lawrence McQuillan, a fellow at the institute, was in Denver last month to discuss the report's findings. States that ranked low in the study, those with high monetary damage limits and few reforms, are considered to be at a competitive disadvantage to states such as Colorado where monetary caps are low, McQuillan said. Colorado's limit for non-punitive damages is $366,250.

Darren McKinney, a spokesman with the American Tort Reform Association, agrees with McQuillan. "There's no question that a district's litigious climate is one the first things a business considers when they want to relocate," he said. "States with a high number of suits are simply not attracting businesses. "

And, attracting fewer businesses means creating fewer jobs. McKinney cited a study by economists Thomas Campbell, Daniel Kessler and George Shepherd which found states that enacted tort reform experienced greater employment gains than those that did not. That may be the case, because Texas, which ranked No. 1 in the PRI study, reported more than triple the growth rate of the state that ranked 50th, Vermont.

However, the Association of Trial Lawyers of America, a trade organization for attorneys who represent alleged victims in tort cases, has consistently released statements that disagree with PRI statistics. They claim the study's figures are erroneously bloated because they include such a wide range of damage payouts, including settlements for minor accidents, and insurance company and CEO salary disputes.

But McQuillen said there are other studies that back up the PRI's findings. Colorado ranked eighth in a survey of the country's fairest courts conducted by the U.S. Chamber of Commerce, and the state ranked sixth in the 2004 Economic Freedom Index of business-friendly states. That's proof, PRI says, that a friendly business climate is directly connected to civil justice reforms. PRI also said it has found a that low number of pain and suffering awards result in lower insurance costs and litigation rates, which is good for business in any instance.

During McQuillan's visit he said that without Colorado's aggressive reform action during the last five years, the state would have ranked 34th in the study. He even went as far as to say that rigid competition between states to create favorable business climates is the driving force behind tort reform. Colorado's "aggressive actions" include a switch from a no-fault auto insurance - where injuries in car accidents were paid regardless of fault - to a tort liability system, where at-fault drivers are responsible for all the damages.

State Tort Reform Rankings

Source: Pacific Research Institute

Copyright 2006 Dolan Media Newswires