WASHINGTON, Nov 3 (Reuters) – Businesses facing litigation, including suits over asbestos exposure, smoking-related diseases and medical malpractice, should benefit from the Republican election victory, industry groups said on Wednesday.
The re-election of President Bush and Republican gains in both houses of Congress were seen boosting attempts to curb lawsuits against U.S. business.
A bill to stop what proponents call “runaway litigation” — a cherished goal of corporate America, and favored by President Bush — has passed the House of Representatives repeatedly but was blocked twice by Senate procedural wrangling in 13 months.
“This was a big win for advocates of legal reform,” said Julie Rochman, spokeswoman for the American Insurance Association.
“The fact that the Republicans not only maintained their majority but picked up a few seats makes it significantly more likely that it (class action reform) will gain the votes needed to get out of the Senate,” Rochman said.
Republicans said on Wednesday they will have at least 54 seats in the 100-seat Senate, for a gain of three, and 231 seats in the 435-seat House, a gain of four.
One of the most powerful opponents of class action reform, Senate Democratic Leader Tom Daschle, was defeated in his bid for re-election in South Dakota.
Daschle’s election loss was also interpreted as encouraging by some supporters of a bill to replace asbestos suits with a $140 billion national compensation fund. Senate Majority Leader Bill Frist and Daschle had agreed on the overall size of the fund but were far apart on other details.
Stock prices reflected the optimism. Shares of USG Corp. USG.N , a construction materials company in bankruptcy protection since June 2001 because of asbestos claims, were up 23.4 percent at $27.42 a share in late afternoon trading on the New York Stock Exchange.
Bankrupt chemicals company W.R. Grace and Co. GRA.N saw its stock rise 15 percent, to $12.18 and packaging maker Owens-Illinois Inc. OI.N was up 7.3 percent, at $19.28.
Patrick Hanlon, a lawyer who represents the Asbestos Alliance lobbying group, cautioned against overconfidence, noting it still takes 60 votes to overcome procedural hurdles in the Senate.
“I’m not about to count any chickens before they hatch,” he said, noting new Republican senators will not be familiar with the complicated asbestos issue and have not had the chance to indicate what they think about it.
Another area where business lobbyists hope to make gains is medical malpractice reform, a pet cause of Frist, a physician.
“We’re fairly optimistic that the stars are all aligned, and that the prospects look significantly better than they did this year,” said Katie Orrico, director of the American Association of Neurological Surgeons’ Washington office.
The Morgan Stanley healthcare provider index .RXH was up 2.04 percent at 358.6.
Tobacco companies, already appealing a $145 billion judgment and a $10 billion decision in state courts, also saw their stocks get a lift from the Republican victory.
Anti-smoking groups fear Bush’s win could be the catalyst for the Justice Department to settle its $280 billion racketeering suit against cigarette makers.
“We believe there’s a danger that the tobacco companies will see this election as an opportunity to seek a weak settlement of the tobacco lawsuit and to continue opposing important federal tobacco control legislation,” said Bill Corr, executive director of the Campaign for Tobacco Free Kids.
But one industry analyst said talk of a settlement was premature. The outcome of the racketeering case would be determined more by events in the court, he said.