The legislation, championed largely by Republicans and opposed mostly by Democrats, would have unfairly restricted the ability of victims to get compensation for their injuries or damages, Rendell said.

Lawyers' groups and business advocates have lobbied heavily over the issue for years. Competing legislation favored by the Democratic governor failed narrowly in the Republican-controlled Legislature.

"I believe we must find a better way - a law that will balance the equities between our businesses and the victims of negligence," Rendell said in a statement.

Republicans, business advocates and Rendell's presumptive Republican opponent in the fall general election, Lynn Swann, cried foul, saying that Rendell had signaled his support for their legislation during his campaign for governor several years ago. The legislation's sponsor, Sen. Jake Corman, R-Centre, said he believed the bill was fair and would have freed businesses to spend more on payroll and less on liability costs.

"We had to make hard choices and you have to weigh anyone's right to sue anyone for anything against the ability to have family sustaining jobs," Corman said in a telephone interview.

The AARP and Mothers Against Drunk Driving had supported a veto, Rendell said. Lawsuits over drunk-driving crashes, environmental accidents and intentional actions would not have been covered by the legislation.

The Republican-sponsored bill would have revived a 2002 law that was never enforced before Democrats filed a legal challenge and a court struck it down, citing procedural errors in its passage.

The legislation would have prevented victims from suing multiple defendants with one lawsuit. Also, defendants would only have to pay a share of the damages proportionate to their liability, unless they were at least 60 percent liable or their actions were intentional.

Under current law, victims can sue multiple defendants and be reimbursed for an entire damage award. If defendants do not have enough money to pay their share, then the other defendants must pay that share.

The legislation that Rendell favored would have lowered financial penalties for defendants in cases where the plaintiff bore some responsibility for an injury or damage.

That legislation failed 26-24 in the Senate in December and 100-99 in the House of Representatives last week.