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Committee Accepts Key Amendments as Proposed by Consumer Group

SB 877 (McPherson), a bill that would curb insurance company practices that seek to gain advantages over other parties in litigation through advantageous deals with court reporters cleared the Assembly Judiciary Committee Tuesday on a vote of 11-0. Amendments to strengthen the bill were adopted by the committee at the urging of the Foundation for Taxpayer and Consumer Rights (FTCR) to extend the bill's reach to insurers that are paying the litigation costs on behalf of their insured and to impose civil penalties on entities that violate the bill's provisions.

"The bill as amended, is a step in the right direction towards leveling the playing field between insurers and consumer plaintiffs in litigation during the deposition-taking stages because it will now be enforceable against the parties that most often strike these special deals: insurance companies and certain court reporting firms," stated Pam Pressley, FTCR staff attorney. "This measure should send a message to insurers that they cannot demand preferential treatment from deposition court reporters who are required by law to be impartial officers of the court."

SB 877 and a host of other bills pending around the country are a response to a growing nationwide trend, purportedly aimed at cutting litigation costs, whereby insurance companies and other large corporate defendants are requiring court reporters who take down testimony in depositions to adhere to inequitable, exclusive contractual agreements. These agreements require the court reporters to give special services on preferential terms that are not equally made available to other parties in a lawsuit in exchange for all the insurance company's deposition reporting work. FTCR has documented the most egregious abuses posed by preferential insurer deals with court reporters in its 1999 white paper on the issue, including:

*compiling exclusive databases of witness testimony that give insurance companies an advantage in future cases.

*completing "Witness Information Sheets" that compromise witness privacy by collecting otherwise confidential information such as social security numbers.

*remaining after other parties have left a deposition to take dictation of insurance company counsel's interpretation of proceeding.

*expedited delivery of transcripts at no additional charge to insurers only.

SB 877, as amended,* will:

Prohibit deposition court reporters or the firms they work for from offering or providing services to any party, their attorney or insurer unless those services are offered to all parties or their attorneys.

Require that the services provided by court reporters or the court reporting agency be offered and made available at the same time to all parties.

Require, upon the request of any party that the party noticing the deposition disclose on the record all services and products made available by the deposition reporter or court reporting agency.

Prohibit the deposition reporter from providing commentary about the demeanor of any witness, attorney or party present at a deposition or otherwise collect any personal identifying information about the witness as a special service provided to any party.

Make all of the above provisions applicable to services that are provided to any un-named party financially responsible for the litigation costs, including insurance companies.

Impose a civil penalty of up to $5,000 for any violation of the bill's provisions.

*Italicized provisions are the amendments proposed by FTCR and adopted by the Committee.

The bill's sponsors on Tuesday further agreed to work to accommodate another of FTCR's concerns--that all parties be apprised, prior to the deposition, as to the existence of any preferential agreement, financial or otherwise, between any party and the deposition reporter or agency. FTCR had further argued in its testimony on Tuesday that the bill should require that all services be offered not only at the same time, but also at the same price.

"This provision is needed," according to Pressley, "to prevent discriminatory pricing practices that disadvantage consumer plaintiffs, such as providing deposition transcripts on an expedited basis at no additional cost to insurance defense counsel, while the plaintiffs' attorney may have to pay a hefty surcharge for the same expedited delivery service." The bill as voted out of the Assembly Judiciary Committee still would not require equal pricing.

So far, twenty states have recognized the serious threat to the impartiality of the judicial system posed by insurers' special deals through the passage of legislation or court rules banning or seriously curtailing these practices, including:

New Hampshire

South Dakota

Tennessee

Indiana

Arkansas

North Carolina

Illinois

Hawaii

Texas

Minnesota

Utah

West Virginia

New Mexico

Georgia

Louisiana

Nevada

Kentucky

Michigan

Oregon

Connecticut

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The Foundation for Taxpayer and Consumer Rights is a non-profit, non-partisan 501(c)(3) organization dedicated to advancing and protecting the interests of consumers and taxpayers. A summary of current state laws banning or restricting preferential court reporting agreements and other fact sheets on the issue are available at FTCR's website at http://www.consumerwatchdog.org/justice/fs.