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Another bill targets collusive lawsuit settlements

Carolina Journal Online highlights the latest attempt to target collusive lawsuit settlements involving North Carolina’s attorney general.

Jon Guze, John Locke Foundation senior fellow in legal studies, explains why it’s a good idea for state lawmakers to address the issue:

Collusive settlements are a huge problem, and not just with regard to election laws. Making laws is supposed to be the exclusive province of the legislative branch of government. The courts have been letting the legislative branch delegate a limited amount of its legislative power to regulatory agencies, but when that happens the agencies are required to provide the public with notice and an opportunity to comment on what is being proposed. For years, advocacy groups have been colluding with like-minded regulators to circumvent both the separation of powers requirement and the notice and comment requirement. Here’s how it works. The advocacy group sues the agency and demands that it imposes some new regulation, but instead of vigorously defending itself, the agency agrees to a settlement under which it imposes the regulation, which is what it wanted to do all along. The result is that a new law is imposed without the approval of the legislature and without notice and comment. Advocacy groups and regulators also collude in settlements under which the latter agrees to pay a sum of money to the former as a penalty for some supposed administrative failure. The effect is to transfer money from taxpayers to advocacy groups without legislative approval, which raises still more constitutional problems. In my view collusive settlements violate federal civil rights law and ought to expose the parties to civil and criminal liability. That’s not the mainstream view, however, which means the only effective way to restrict the use of collusive settlements is through legislation like this.

The new House bill filed on the topic this week adds another section. It would block financial settlements that would obligate the state to pay more money than the state has available for settlements in the current budget year.

Joe Coletti, Locke senior fellow in fiscal studies, explains how this provision could prove helpful for taxpayers.

A provision like this would help the state avoid some unexpected long-term spending obligations. It’s one thing for elected lawmakers to commit millions or even billions of their constituents’ dollars on an ongoing basis. They can always change their minds in the future, or voters can object and elect new lawmakers. It’s quite a different story when lawsuit plaintiffs and a friendly attorney general work together to guarantee ongoing taxpayer spending.

 

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...