Federal Spotlight: ATRA Report Shows Excessive Tort Costs

The American Tort Reform Association (ATRA) released on Monday an economic study of six states that determines how excessive tort costs impact employment and job loss, gross product output and annual direct costs. ATRA is an organization that ABI partners with to stay updated on nationwide trends with the legal system. ATRA also provides ABI with resources to help address imbalances in our state’s legal system.

“An out-of-balance civil justice system leads to job loss in every sector across the nation,” ATRA President Tiger Joyce said. “The costs associated with lawsuit abuse put American workers at a disadvantage, creating fewer employment options and rising prices. The reports demonstrate the need for states to address the imbalances in their legal systems as a way to strengthen their economies and provide better opportunities for their citizens.”

The study, which included two neighboring states, estimates nearly a half-million permanent jobs were lost due to excessive tort costs in the six states:

• California: Loss of 197,776 jobs and $11.8 billion in personal income
• Florida: Loss of 126,139 jobs and $7.5 billion in personal income
• Illinois: Loss of 81,685 jobs and $4.9 billion in personal income
• Louisiana: Loss of 15,556 jobs and $945 million in personal income
• Missouri: Loss of 26,548 jobs and $1.62 billion in personal income
• West Virginia: Loss of 3,843 jobs and $238 million in personal income

According to ATRA, the report used Ohio as the baseline, as the state is seen as having a balanced system. It also used an econometric model relating U.S. litigation costs, as reported over time, to other variables, which are both highly correlated with the costs of U.S. litigation and are available at the national and state levels. This analysis was undertaken to estimate the anticipated economic benefit for each of the six states should they adopt the kinds of tort reforms Ohio has enacted. Tort reform is something that affects the cost of doing business. If you have examples of imbalance in the civil justice system that you would like ABI to be aware of, please contact Jessica Hyland.