Rep. Portman and Cardin Introduce A New Pension Reform Bill

“Lets be honest,” says ABC President James A. Klein, “for years pensions was a topic that made the collective eyes of Congress glaze over.”

“But,” he says, “Rob Portman and Ben Cardin have delved into the details of pension policy and have made the issues come alive for other members of Congress.”

The new legislation, Klein says, contains many important reforms that help plan participants and their families prepare for retirement and preserve retirement assets.

In other news, industry groups are praising the Senate Judiciary Committee for approving legislation that would reform the class-action litigation system by moving major national class-action lawsuits from state courts to federal courts.

“This is a good step in the right direction,” says Jack Dolan, a spokesman for the American Council of Life Insurers, Washington.

“Life insurers have long supported reform of class-action litigation,” Dolan adds.

“This is a much needed piece of legislation,” says Kenneth D. Schloman, Washington counsel for the Alliance of American Insurers, Downers Grove, Ill., a property-casualty group.

“It hits some of the worst problems in the class-actions system–forum shopping, nuisance suits, class certifications and settlements not in the best interests of plaintiffs,” he says.

The legislation, S. 274, was approved on a bipartisan basis after a compromise was worked out by Senate Judiciary Committee Chairman Orrin Hatch, R-Utah, and Sens. Dianne Feinstein, D-Calif., Herb Kohl, D-Wisc., and Charles Grassley, R-Iowa.

Under the bill approved by the committee, federal courts would have jurisdiction on most major class actions in which the plaintiffs are asking at least $5 million in damages.

Under an earlier version of the legislation, the threshold was $2 million. H.R. 1115, a class-action bill pending in the House, also has a $2 million threshold.

Along with the $5 million threshold, S. 274 establishes a three-tiered system for determining whether a class action is heard in state or federal court.

Under the first tier, if more than two-thirds of the plaintiffs are from the same state as the primary defendant, the case automatically stays in state court, regardless of the amount in controversy or whether one or both parties ask for federal court adjudication.

Under the second tier, if fewer than one-third of the plaintiffs are from the same state as the primary defendant, the case will be heard in a federal court if either side requests it and the $5 million threshold is reached.

Under the third tier, where between one-third and two-thirds of the plaintiffs are from the same state as the primary defendant and the $5 million threshold is reached, the federal judge would have discretion to hear the case based on several factors, such as whether the case is national in impact.

S. 274 also contains a variety of consumer protections, such as judicial review of noncash settlements, plain English settlement notification, a ban on settlements that cause plaintiffs to lose money and various nondiscrimination rules.

Reproduced from National Underwriter Edition, April 21, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.