Trial lawyers and terrorism

WASHINGTON -- Three months ago in a private letter, Senate Majority Leader Tom Daschle opposed punitive damages against blameless victims of terrorism. That letter came to light this week a few days after Daschle's agent moved in the opposite direction. The agent was Sen. Patrick Leahy, one of the heaviest Democratic hitters. Meeting with Republican counterparts, he said the majority leader had authorized him to handle a long-delayed Senate-House conference on the terrorism insurance bill. In its current alignment, the conference would reject the Senate provision for punitive damages, much less open the door to more litigation as desired by trial lawyers. That is unacceptable to one of the Democratic Party's most powerful constituencies: the trial lawyers. Leahy denied to me he was blocking the conference, saying that Daschle had asked him only "to get the bill unstuck." But two Senate sources said they got the distinct impression from Leahy that he was trying to keep it stuck by preventing the conference from meeting. While Leahy is not even a member of the Banking Committee (which has jurisdiction over terrorism insurance), he is chairman of the Judiciary Committee who looks out for his former fellow trial lawyers. Holding up the insurance bill has killed or delayed $12 billion worth of new real estate projects, costing 300,000 construction jobs. Moody's Investors Service this week continued to downgrade commercial paper because of no terrorism insurance. The need for temporary federal help in insuring big construction projects was recognized quickly in Washington after the Sept. 11 attacks. A bill passed the Republican-controlled House, 227 to 193, with expectation of Senate passage before Christmas. Such expectation was premature. Any bill blocking court suits for punitive damages was unacceptable to trial lawyers, and a change was pressed by Leahy and Daschle. The catchphrase on the Senate floor by trial lawyer advocates was that the bill could not become a vehicle for tort reform. After six months of tortuous maneuvers, a compromise was reached: punitive damages could be filed against private owners, but not the government. The bill passed June 18. On the next day, Daschle wrote to a supporter who had complained about the long delay. The letter's political nature was indicated because it was not on official U.S. Senate stationery but on a letterhead bearing the inscription "Thomas A. Daschle" and the disclaimer "Not printed at government expense." The response read like a form letter to mollify supporters pressing for terrorism insurance. Daschle began by blaming Republican Sens. Phil Gramm and Trent Lott for the long delay, then made this commitment: "I believe that a consensus package that will ensure that terrorism coverage is widely available at affordable prices, that property owners who bear no blame for a terrorist attack will not be liable for punitive damages, can -- indeed -- must be reached." He warned, however, that "all parties must put aside secondary agendas" -- that is, interference with the trial lawyers. Can property owners be free from punitive damages without pursuing "secondary agendas"? The contradiction became clear when the trial lawyers insisted on their full demands in the final version of the bill. However, Sen. Christopher Dodd, influenced by the dominant insurance industry in his state of Connecticut, could join Republicans for the decisive vote against punitive damages in the Senate-House conference. Another Democratic conferee, Sen. Charles Schumer, is under pressure from New York business constituents to permit passage of the bill, but told me he would not support "tort reform." The only sure way to protect the right to sue for big dollars is for the conference never to meet. Daschle returned from the August recess blaming the Republicans for killing the terrorism insurance bill by turning it into tort reform -- effectively pronouncing the bill dead. President Bush often responds on the campaign, most recently at Davenport, Iowa, Monday, declaring: "Congress needs to pass a bill that is good for the hard hats of America, not good for the trial lawyers." He said the same thing at the Carpenters Union Labor Day picnic in Pittsburgh. At his side was Carpenters President Douglas McCarron, who had just contributed over $1 million in union funds to keep Tom Daschle and Pat Leahy in Senate control.