Charlotte Injury Lawyer Blog

House Bill 813, like most pieces of legislation, has both proponents and opponents. Mainly, the proponents of the bill are those who are in the legal profession, due to the fact that comparative fault is a system more in line with justice since it allocates fault among those who are responsible. The opponents, being mainly the insurance companies take their position because, according to them, switching to a comparative negligence state would mean more pay-outs to claimants. Because there are two groups with opposite, but legitimate, goals, compromises have to be made to satisfy both groups.

One compromise that the state legislature has made to insurance company lobbying is adopting a modified version of comparative fault where a plaintiff is barred from recovery if her fault exceeds a certain threshold. The North Carolina House of Representatives decided to adopt an amendment to House Bill 813 which states that where a party contributes equal to or greater than the combined responsibility of all other parties, she will be barred from recovery. The other option would have been to allow recovery only when a party's fault did not exceed the combined responsibility of all other parties. Now, with the amendment, a plaintiff who is 50% at fault in an accident can recover nothing, whereas, without the amendment, a plaintiff could recover even if he was 50% at fault.

Another compromise deals with the area of damage allocation. Right now, North Carolina has joint and several liability. This means that if there is more than one defendant in a case, the money awarded to the plaintiff can be recovered from any single defendant. Basically, if one defendant can't pay, the other defendant(s) is liable for the insolvent's share. If comparative fault is implemented, many view that it is unfair to hold a single party liable for more than her proportional fault. A better way to allocate the amount awarded is a method of allocation called several liability. Under pure several liability, each defendant is responsible for her percentage of fault in an accident. The wrench comes where one of multiple defendants is insolvent and cannot pay her portion of the judgment. When this happens, a way to fix the problem is to reallocate the responsible shares among the other parties depending on their proportion of responsibility. This switches the burden of a co-defendant's inability to pay from the plaintiff to the other co-defendant(s) who can pay. Reallocation is seen to be the fairest way to deal with the problem of insolvency.

In another compromise to insurance companies, The North Carolina House of Representatives has adopted an amendment stating that a liable defendant's share can not be increased by reallocation if her percentage of responsibility is less than the plaintiff's. Therefore, if the plaintiff's fault in an accident is more than that of the solvent co-defendant, the plaintiff will have the entire uncollectible share of the insolvent defendant reallocated to her. This is something that would not happen under our current scheme of contributory negligence. In essence, this is a limitation on the amount that a plaintiff can recover under a modified several liability regime of comparative fault.

House Bill 813 is a compromised bill between two-heavy hitters. As it stands now if passed, North Carolina will enact a law that incorporates modified comparative fault system along with modified several liability, allowing for reallocation of the uncollectible share.

Information obtained from:

The Road to Comparative Fault in North Carolina by Burton Craige, a Raleigh attorney
- article can be accessed at: Road to Comparative Fault in North Carolina

Jake Daniel for Hull and Chandler

The most important thing that people want to know about the new comparative fault law is whether it will drive up automobile insurance rates for drivers. North Carolina senators requested a reliable breakdown of the issues to determine the effect that implementing this new law would have on insurance premiums for the citizens of North Carolina. In response, the North Carolina Advocates for Justice hired an independent firm, Pinnacle Actuarial Resources, which specializes in analyzing the insurance industry to study other jurisdictions that have made the switch from contributory negligence to comparative fault.

The study was done in the contiguous comparative negligence states of South Carolina and Tennessee. The data indicated that switching from contributory negligence to comparative fault did not result in any substantial increase in insurance rates. In fact, the study suggested that since those states switched to comparative fault, North Carolina and Virginia rates have increased at a faster pace under their contributory negligence scheme. South Carolina converted from contributory negligence to comparative fault in 1991 and Tennessee followed in 1992. Both states had higher insurance rates than North Carolina before they switched. "After the change, the gap between South Carolina and North Carolina closed from 29.4 percent in early 1991 to 2.6 percent in early 2009. The difference between Tennessee and North Carolina fell from 19.4 percent to 5.4 percent. After moving to comparative fault, according to Pinnacle Actuarial Resources, increases in premiums slowed significantly in South Carolina and Tennessee while North Carolina's contributory premiums climbed at a steeper rate."

However, insurance companies continue to warn consumers that insurance rates will surely rise if comparative fault is adopted. The insurance companies base this on the logic that comparative fault will allow for more lawsuits to be filed that are currently not possible under our contributory negligence regime. More lawsuits filed means more money paid out by insurance companies, meaning higher insurance premiums for everyone. EPIC Consulting LLC conducted a study that was completed in February for the N.C. Rate Bureau, a nonprofit entity serving the North Carolina insurance industry, where the actuaries found data to support this contention. The actuaries reported that a shift to comparative negligence law in North Carolina could increase the number of bodily injury claims by approximately 16.6 percent.

In the end, it is important to remember who is conducting these studies and why. Both the proponents and the opponents of the bill have a stake in the game it's up to the people of North Carolina to decide what's best for them as citizens of this state.

Information obtained from:

The Road to Comparative Fault in North Carolina by Burton Craige, a Raleigh attorney - article can be accessed at: Road to Comparative Fault in North Carolina

Adopt Fairer System of Accountability by David Pishko, a Winston-Salem attorney and president of the N.C. Advocates of Justice
- article can be accessed at: Adopt Fairer System of Accountability

Let those at fault sue and watch your insurance costs rise by Jennifer Cohen, executive director of the Insurance Federation of NC
- article can be accessed at: Let those at fault sue and watch your insurance costs rise

Jake Daniel for Hull and Chandler

This is the first entry in a four-part series giving educational information on House Bill 813 which is being debated this session on the North Carolina Senate floor. This article gives a short overview about what House Bill 813 is all about. Once a week over the next three weeks, a new entry will be posted about the bill discussing different aspects of its content.

House Bill 813 is a proposed enactment that will transition North Carolina into a comparative fault jurisdiction, bringing us into the company of 46 other states who already have some form of comparative fault in place. The only other jurisdictions that currently operate under a contributory negligence regime are Virginia, Alabama, Maryland, and the District of Columbia. Comparative fault allocates responsibility among the parties liable in a case involving injury. This is different from our current system where it stands that if person is the slightest bit at fault in an accident (even 1%), he or she cannot recover any damages whatsoever.

The Uniform Apportionment of Tort Responsibility Act (UATRA) is a model bill that was approved by the National Conference of Commissioners on Uniform State Laws in 2002. This bill basically takes the experiences of other states that have enacted a particular form of comparative fault and incorporates the best features of all those jurisdictions into one act. The North Carolina House of Representatives has integrated UATRA into its bill, so if it passes in the Senate without a complete overhaul this session, North Carolina will most likely enact a comparative fault law based on UATRA.

Contributory negligence is seen and viewed by many versed in that area of the law to be outdated. Comparative fault is thought to be more in line with justice and fairness because it proportions the amount of damages to be paid by a person's level of fault. North Carolina Representative Rick Glazier is the sponsor of House Bill 813 and he has stated that the bill would modernize basic tort law in North Carolina.

Next week's article will address the impact on drivers' insurance in North Carolina if House Bill 813 is enacted into law. The articles that will be posted the following two weeks will respectively address the compromises reached in the bill to help meet the needs of both North Carolina drivers and insurance companies, and how the new comparative fault law, if enacted, will function.

For more a more in-depth look at comparative fault in North Carolina see Road to Comparative Fault in North Carolina published by attorney Burton Craige.

Jake Daniel for Hull and Chandler