Perry Signs HB 274 “Loser Pay” Bill

Governor Rick Perry signed into law his Omnibus Tort Reform Bill best known for its anti-consumer Loser Pay provisions.

The version of HB 274 that was signed into law is substantially different from the original bill. At the outset the most notable of the Loser Pay provisions were that Loser Pay did not apply unless invoked by the defendant and that if a settlement offer was rejected by a plaintiff who thereafter received a judgment for substantially less than the settlement offer then the plaintiff would be responsible, without limit, for the defendant’s attorney’s fees and expenses incurred after the rejection of the settlement offer. The latter provision could potentially create a situation where the plaintiff could file a meritoriously claim, prevail on the claim, and obtain a verdict against the defendant, but because the verdict was in an amount less than the settlement offer and the defendant’s attorney’s fees and expenses incurred after the settlement offer exceeded the amount of the verdict plaintiff could end up prevailing at trial yet owing the defendant money. No one but an insurance company would think that this result was fair or just. This provision was removed from the version of HB 274 which was signed into law.

Loser Pay must still be invoked by the defendant. This allows defendants to use Loser Pay as a strategic tool. Defendants can invoke Loser Pay only in those cases where they have a chance of winning and refuse to invoke Loser Pay in those cases where they have asserted frivolous defenses and are using litigation as a means of spending the victim into submission. HB 274 also increases the amount that a defendant can recover in attorney’s fees and expenses up to the total amount of the plaintiff’s recovery. It is difficult to predict the effect that HB 274 will have in practice. Because the Loser Pay provisions of the Civil Practices and Remedies Code Section 42 apply to both plaintiff and defendant once invoked by the defendant it is unlikely that defendants will be willing to open that can of worms at the courthouse.

For more information contact a Tyler Injury Attorney.

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