


As a result of the unnecessary litigation, roughly $557.8 billion in gross domestic product and more than 4.81 million jobs are lost.
Excessive litigation is costing American consumers a total of $674.4 billion annually, which translates to an average loss of $5,135 per household, a new study pushing for tort reform finds.
A report conducted by the Perryman Group, an economic consulting firm based in Waco, Texas, concludes prices are 1.32 percent higher on average due to excessive tort costs. For certain items, prices can be significantly higher. Prescriptions are 9.02 percent more expensive due to excess tort costs, while home insurance and auto insurance are up by 4.56 percent and 2.5 percent, respectively.
The report acknowledges that it’s necessary to maintain a robust legal framework to protect consumers, but concludes that the U.S. has gone overboard. The study’s authors reached that conclusion by comparing the annual costs associated with the American tort process to the costs in other similarly developed economies, finding that $247 billion in annual U.S. tort costs are necessary while $367.8 billion are unnecessary.
The U.S. earning losses due to unnecessary torts come to $350 billion. The inflationary effect of those excessive costs adds another $320 billion to the burden, bringing the total to $674.4 billion.
Consumer losses vary by state. The states with the highest total losses per household include Washington, D.C., at $19,140, California at $8,306, and New York at $7,914. Meanwhile, the states with the lowest total losses per household are West Virginia at $2,056 and Mississippi at $1,582.
Furthermore, economic growth is harmed by excess tort costs. As a result of the unnecessary litigation, roughly $557.8 billion in gross domestic product and more than 4.81 million jobs are lost.
The study argues that tort reform is imperative to reduce the excess costs significantly, with a potential solution being federal or state legislation that caps non-economic and punitive damages at a maximum amount. The legislation would theoretically lead to lower consumer prices, higher earnings, and improved economic efficiencies in the American judicial system.
“Consumers are unnecessarily strapped by the economic inflation due to lawsuit abuse, and the only way to undo this hidden tax is to pass meaningful lawsuit abuse reform at the state and federal level,” said Lauren Zelt, executive director of Protecting American Consumers Together, which published the study. “Reforming the system is the only way to ensure that plaintiffs can access a legal system that treats them with the dignity and respect they deserve while protecting consumers’ pocketbooks.”
Trial-lawyer groups have spent millions in recent years to support Democrats who then reward their benefactors with lucrative public contracts to represent consumers in lawsuits against deep-pocketed companies, revenue which the lawyers then pour back into the political system.
Georgia is the latest state to enact historic tort reform, with Governor Brian Kemp signing two bills into law this week that would limit lawsuits in the state. Georgia’s tort costs totaled almost $20 billion in 2022 alone, accounting for 2.6 percent of the state’s gross domestic product. The legislative package will take effect July 1.