Trials with Wisconsin Lawyers
The following guest posting is a copy of a letter from Jonathan Barry to his state representatives. Jonathan is the owner of a small ski hill in Wisconsin, and he is commenting on the proposed “joint and several liability law” that many believe is payback to Governor Doyle for the trial lawyers’ support during the last election. The fact that this liability change was buried in the budget act, and would not be debated on its merits, would seem to support that view.
Jonathan writes as follows:
Dear Rep. Pope-Roberts and Senator Erpenbach:
I am writing to each of you to expand on the points made in the email to you below (and including your response to him) from one of our ski patrollers, Rob Wangard, about the likely impact the current state budget provision on joint and several liability will have on Tyrol Basin’s ability to obtain insurance.
I am asking you, no, pleading with you, to please seek to have this provision removed from the budget because of its significant policy implications that quite literally may cause Tyrol Basin, and other tourist and recreational businesses, to close. This provision, if considered at all, should at the least be considered as separate legislation where a full airing of its impacts may be heard and debated.
In reading your response to Rob Wangard’s email, it seems clear that you are not willing to take the position that this proposal should be removed from the state budget and considered separately on its merit. You acknowledge that the reforms of 1995 passed with bi-partisan votes but then allude to “criticism and suggestions by the minority party that ‘was’ ignored by the majority.” Those reforms were passed by margins of 24-8 in the State Senate and 69-27 in the Assembly (1995 SB 11 Act 17) so they were indeed bi-partisan. More importantly, the legislation adopted in 1995 was considered as a separate bill, apart from the budget, and had full hearings in both houses. If you feel that changes to joint and several liability have merit, then please have them considered only after full hearings and by separate votes.
With the jury instruction section, the Governor’s budget provision actually goes further than, as you say, to “effectively return the law to its previous status” before the reforms of 1995. Also, the conditions are different today and the impact of this will be quite significant on small businesses such as Tyrol.
First of all, the economy has all small business reeling, including Tyrol Basin. If we are able to obtain insurance at all, the costs can be expected to increase very dramatically and this alone could sink us. Even today, the costs for liability insurance alone amount to approximately $2.85 for every regular ski ticket sold. In the years before the 1995 tort reforms took effect, that cost was approximately $6.00 for every regular ticket sold. That difference, in this economy, cannot be made up by raising prices. And honestly, Tyrol was not close to being profitable in this most recent season, due to the economy, so we simply do not have the resources to ‘eat’ these cost increases.
More frighteningly, our attorneys and our insurance advisors have told me that the new liability exposure under the proposed tort changes in the budget are difficult, if not impossible to calculate and that, as a result, we may not be able to obtain any insurance coverage. Today, there are only two insurance companies in the country that will write liability policies for small, single focus, ski areas like Tyrol Basin. I do not know why this is the case, but it is a fact. I have been told that recent Wisconsin court cases that have effectively eliminated any protection we may have had under the Wisconsin Recreational Use Statutes (Wis Stats, sec 59.525 (3)(4) ) are a proximate cause of this situation, but I do not know that with certainty. I do know that these court cases have determined that the previous protections afforded for what is called “assumed risk” under the statutes have been determined not to have applicability where any admission is charged–such as at our ski area. I do know that, over the most recent several years, we could only find two insurance companies that would write liability insurance for our business and that this is the case for others of the 32 ski areas in Wisconsin.
If the two companies who are remaining that will write liability insurance for Tyrol Basin cannot determine what their liability exposure may be, one response may be to refuse to write such coverage at all. Further, insurance is written based on several factors including loss history of the business being insured, the risk management implemented by that business and the existence of accumulated loss reserves from having charged rates that provide for such loss reserve accumulation over time, plus a reasonable profit for the insuring company.
When the 1995 reforms were passed, it took several years before our insurance rates started becoming more affordable. That is, I believe, because the liability equation could not be fully determined except after experience of actual losses incurred and an ‘excess’ of loss reserves had been accumulated. Once it became clear that rates for insurance were more than sufficient to cover losses, competition within the insurance industry caused the rates being charged to be reduced. This process took some few years and rates charged to Tyrol Basin, other tourist businesses, restaurants, and the like slowly became more affordable.
Unfortunately, the reverse of this gradual trend in rates cannot be expected to play out in anything like this manner. If you, and other legislators, cause this change in tort law regarding joint and several liability to be passed in this budget, then the insurers will be faced with both a difficult to determine liability exposure and no accumulated loss reserves. At a minimum, the response by insurers will be to immediately raise insurance rates to unforeseen and likely very high levels. Or, they may just decide to cease writing liability policies to small businesses like Tyrol Basin at all until the situation becomes clearer.�
Either result could lead to the shutting down of Tyrol Basin and several other tourist related recreational businesses across Wisconsin. It may cause the same result to restaurants, Inn Keepers and a host of smaller businesses.
Tyrol Basin has 175 seasonal employees who account for some 55,000 person hours of employment. This is equivalent to about 27 full-time employees. The bulk of these employees live in your Assembly and Senate districts. We have, additionally, 84 ski patrollers, again with many of these great people living in your districts.
Our annual payroll, not including taxes, is over $560,000 with again, most of this going to persons living in your Assembly district and virtually all of this going to persons living in Senator Erpenbach’s Senate district.
Tyrol Basin is, I believe, if you include personal property taxes, the largest property tax payer in the Town of Vermont.
Next to the School District, Tyrol Basin is the largest utility user of the Mount Horeb Municipal Electric Utility.
Tyrol Basin is a significant ‘driver’ of tourism activity in the Mount Horeb area. We bring in quite literally some 70,000 people each year that spend money in the Mt. Horeb area restaurants, shops, motels, filling stations and the like. We are a summer banquet destination for the area.
Tyrol has been selected as the venue for Mountain biking for the 2016 Summer Olympics should the Chicago bid be chosen this October. As the mountain biking venue for the Olympics, we are integral to the area and Wisconsin Olympic road bike events as well and our demise could also lead to this opportunity being missed.
If this budget provision passes, all of this is at risk!
More personally, if this provision passes and Tyrol either cannot afford to stay in business or is forced out by a lack of insurance, I will suffer catastrophic financial damage. We cannot, because of lender requirements and personal recognizance on bank debt, stay in business at all without full liability insurance coverage.
If we cannot obtain or afford insurance, Tyrol will close. But we shall still have a significant bank debt to pay off and that debt will not be supported by the scrap value plus the land value of a defunct ski area. The owners of Tyrol, like most small business owners, have personal guarantees for all debt.
If this budget provision passes and Tyrol cannot afford or obtain liability insurance, 20 plus years of building a business that is a community asset will be lost. Twenty plus years of investment and sacrifice will go up in smoke and still there will be bank debt to pay.
Now I know that I’m a republican and you are partisan democrats. I also know, that in your assembly district, Rep. Pope-Roberts, you probably don’t have to worry about losing an election any time soon. But I do trust that you are both honorable and representative elected officials who seeks the well being of the people of your districts and the state of Wisconsin.
I suggest that you consider the issues that I have raised about the impact of this, in my humble opinion, ill-advised and evidently politically driven policy provision. I think you would agree that this is a substantive policy issue. I would hope that you might concur that such a large issue deserves to have full debate and airing and that it be subject to a vote on the merits (or lack thereof) as separate legislation.
Respectfully, you and I know that policy items tucked into the state budget do not get a full airing, nor even a full hearing and they most certainly are often put in the budget to avoid having to vote on them on the merits.
Please, exercise leadership in seeking to remove this provision from the state budget and in having it considered as stand-alone separate legislation where all of these impacts and issues may be examined. Please help to demonstrate that this is not simply a political payback to trial bar supporters as I, and others fear it is.
If this goes through, and the impact is as I fear, local property taxes will have to go up marginally, at the least, local electric rates may increase, 175 of your constituents will lose their full or part-time jobs, over $560,000 in local wages will be lost, some $2.5 million of direct economic activity to the area will be lost and the Olympic bicycling events may not come to Wisconsin at all.
Please instead, help to support the people of the Mt. Horeb area and all those who enjoy Tyrol Basin.
Sincerely,
Jonathan Barry