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Punitive damage law reinstated

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SACRAMENTO, Calif.—California lawmakers have voted to reinstate through June 30, 2011, a law that requires that 75% of any punitive damages award to be paid to the state.

The original 2004 so-called split recovery law expired on June 30 of this year. The reinstatement bill--S.B. 832--was opposed by civil justice advocates and insurers, who fear that the measure will increase the size of punitive damage awards.

In a position paper issued on Aug. 29, the Sacramento, Calif.-based Civil Justice Assn. of California noted that while jurors are not supposed to be told of the state's share of any punitive damage award, "the punitive damage sharing scheme in S.B. 832 would soon become public knowledge, encouraging jurors to award exorbitant punitive damage amounts in hopes of reducing their own tax burden, even in the face of an undeserving plaintiff."

The Assn. of California Insurance Cos. also condemned the bill. In a letter to lawmakers, the insurer group said that the concept of split recovery endorsed by the bill "makes no public policy sense from either a fiscal or legal perspective."

Republican Gov. Arnold Schwarzenegger has until the end of September to sign or veto the bill.