Ohio's Legal Climate

Date: March 04, 2011

Legal Climate
Senate Bill 143 – False Claims Act
NFIB/Ohio Position:  Opposed
No one condones fraud and when the government is the victim it costs all consumers more.  NFIB believes that those doing business with the government and committing fraud should be held accountable.  As the single largest area of spending by the state, it makes sense that Medicaid is the most prevalent area of fraud in state government.   Unfortunately, fraud is not limited to Medicaid alone.  There are many areas of state government that experience fraud and the Ohio Attorney General’s office has a team that works in conjunction with the federal government, dedicated to rooting out and eliminating fraud.  The State of Ohio receives a significant share of recovered monies and with recent changes in the Patient Protection Affordable Care Act (PPACA), the ability to receive an additional 10% of recovered funds is made possible through the enactment of a state false claims act.  Although at first blush this may seem like a good way to help identify fraud and provide additional revenue to the state, in reality the creation of a state false claims act would negatively impact the business climate in Ohio.
In order to qualify for the additional 10%, Ohio would have to enact a state false claims act that contains a qui tam, or whistleblower provision.  This provision would allow individuals a private right of action to file suit on behalf of the government.  On its face, it sounds reasonable that individuals who are working for a company that is defrauding the government would have insider knowledge.  However, when one digs a bit deeper, a couple of concerns arise.  First, there is a significant monetary incentive to filing a qui tam action.  For those that file a claim and the state decides to enjoin the case, that person may receive from 15 to 25%, with 15% being the lowest he or she could receive.  In a recent example of a false claims settlement, the award was $20 million.  Receiving 15% would result in a nice payday of $3 million. Second, of significant concern is the filing of illegitimate claims.  Although the bill provides some teeth for false accusations, the discretion to penalize lies with the judge.  Under the current bill, the attorney general’s office must investigate an accusation, which comes with costs.  A false claims investigation can consume the better part of a year.  Couple this long investigatory timeframe with the fact that 80% of qui tam suits filed are not pursued by the state and you have a significant cost incurred by the attorney general’s office and thus the taxpayers.  
Senate Bill 143 is pending before the Ohio Senate Judiciary Civil Justice Committee.  Contact your state senator today and urge defeat of Senate Bill 143.

Senate Bill 224 – Statute of Limitations on Written Contracts
NFIB/Ohio Position:  Support – NFIB/Ohio Key Vote
Ohio and Kentucky are the only two states in the union with a statute of limitations on written contracts of 15 years.  The next closest states are at 10 years with the preponderance of states at 6 years or less.  This incredibly long liability not only drives up the cost of doing business through increased insurance costs but also creates a paperwork and record keeping burden.  Ohio’s statute of limitations on oral contracts is only 6 years!
The history of this law dates to Ohio’s statehood back in 1803.  At that time, with limited communications and travel times that far exceed those of today, it may have been more practical to have a longer statute of limitations.  However, today we have nearly instant communications and the pony express has long gone by the wayside. 
The change called for in Senate Bill 224 will be a significant step toward making Ohio more business friendly.  Given the significant advances in legal climate in Ohio thanks to the tort reform efforts on the early 2000’s, this legislation will balance a predictable business climate with reasonable liability.  Today, given Ohio’s 10 year statute of repose limitation, individuals and enterprising attorneys are suing individuals for breach of written contract in lieu of statute of repose, as they have an additional 5 years in which to bring their suit. 
Senate Bill 224 is pending in the Ohio Senate Judiciary Committee.  Call you state senator today and urge passage of this important piece of civil justice legislation.

House Bill 275 and Senate Bill 256– Right to Cure
NFIB/Ohio Position:  Support – NFIB/Ohio Key Vote
It is well documented that our court system is clogged with numerous lawsuits and other civil actions.  Employers find themselves subjected to many suits related to faulty products or services under the Consumer Sales Practices Act (CSPA).  House Bill 275 will give businesses the opportunity to correct a wrong and keep some suits out of the court system
The bill allows a business to make a cure offer to the injured party that consists of providing cash, goods or services that are of fair market value.  Additionally the cure offer must include reasonable attorney’s fees related to the filing of the initial complaint, not to exceed $2,500. 
A consumer is by no means obligated to accept the cure offer.  However, should the consumer elect to proceed with his/her suit and the verdict rendered is less than what was offered in the cure offer, the consumer is not entitled to the following: an award of treble (3x) damages, any court costs incurred after the cure offer, and any attorney’s fees incurred after the cure offer.
House Bill 275 provides the opportunity to correct a wrong and prevent potentially costly, drawn out litigation.  It makes the consumer whole and provides attorney’s fees for initial costs.
House Bill 275 has passed the Ohio House of Representatives.  Contact your state senator today and urge the Ohio Senate to begin hearings on this bill.
Senate Bill 256 is pending before the Ohio Senate Insurance, Commerce & Labor Committee.

Senate Bill 202 – Trespasser Liability Act
NFIB/Ohio Position:  Support
S.B. 202 would simply codify the longstanding common law (court-made) rule that a land possessor owes no duty of care to a trespasser except to refrain from willful, wanton, or reckless conduct that is likely to injure the trespasser.  Further, S.B. 202 would also keep in place Ohio’s current exceptions to this rule where a land possessor owes a trespasser a duty of reasonable care, such as:

 1) Where the land possessor finds the trespasser in a position of peril on the property;
 2) Where a child trespasser is injured by a dangerous artificial condition on the land that the child was too young to appreciate but was known to the landowner (i.e. “attractive  nuisance doctrine”); and
 3)  Where an adult trespasser is harmed attempting to rescue a child trespasser  who satisfies  the requirements of the attractive nuisance doctrine. 

Senate Bill 202 is needed to address the recent action by the American Law Institute to finalize their Restatement Third of Torts, which if adopted by the courts in Ohio would expand land possessors duties to trespassers.  The restatement would significantly expand liability of property owners to trespassing individuals.  Although the court retains discretion in adoption of any or all of the restatement, by codifying the current common law rule, Ohio will preserve the long-standing common law protections afforded property owners in this state.

Senate Bill 202 is currently pending before the Ohio Senate Judiciary Committee.  Contact your state senator today and urge passage of this important piece of civil justice legislation. 

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