According to a financial and economic report by Texas-based forecasting firm, the Perryman Group, Florida’s excess civil litigation costs are higher than the national average, costing billions of dollars and resulting in roughly 126,000 lost jobs.
Tort reform advocates, Citizens Against Lawsuit Abuse, commissioned the report, which claimed Floridians have lost roughly $7.6 billion of personal income a year to excess litigation costs.
The report claims that “exorbitant” damages incurred in civil cases, such as high attorney fees and “inflated” past medical expenses, divert money from the economy and put businesses under undue financial pressure, which eventually translates into lost earnings and job cuts.
But critics say the findings are undermined by the special-interest tort reform group that commissioned the study, and say the group failed to look at the civil justice system’s role in stemming death and injury.
The torts umbrella covers various civil lawsuits, including negligence, defective products and intentional harm cases.
Tort litigation can be “highly beneficial” to society, the report conceded, but found that within a “flawed civil justice system” it can generate “exorbitant” and “unpredictable” levels of damages and awards with unexpected consequences for the industries targeted for slip-and-falls, product liability and other lawsuits.
The retail sector, already embattled because of online shopping, was worst impacted, suffering an estimated 39,413 job losses, according to the analysis. Florida’s business sector also lost around 20,000 jobs, while its health services missed out on roughly 17,000.
According to William Large, president of the Florida Justice Reform Institute, the report highlights Florida’s need for civil justice reform.
Without it, “There will be an incurred cost for businesses and consumer who are paying a tort tax,” according to Large. ”This tort tax finds itself evident in increased insurance premiums and increased costs for consumer goods.”
Researchers compared Florida’s tort costs to Ohio’s — a state with a recent history of “notable” tort reform.
“Instead of being able to invest in businesses, companies are spending money on attorneys and paying out claims, when these dollars would be better suited to be invested back into the companies,” Large said.
“Florida is a problem,” said Sherman “Tiger” Joyce, president of the American Tort Reform Association, the group from which Large’s organization sprouted.
Joyce said the state is home to “some of the worst litigation problems in the country,” pointing to “abuses” of the American with Disabilities Act to bring thousands of suits against businesses, litigation against tobacco companies and insurance disputes.
“If we were having this conversation a generation ago we’d be talking about Texas, but Texas has enacted a series of reforms over the last number of years and has really improved its legal system,” Joyce said. “Florida, unfortunately, has gone in the wrong direction.”
The report, according to Joyce, was an “effort to try to quantify what we think is inherently apparent. When you have a legal system that doesn’t function in a balanced way, it creates burdens and costs.”
‘Widely Inflated’ Numbers
Not everyone agrees.
“We would call this report little more than a public relations gimmick,” said Joanne Doroshow, director of the Center for Justice & Democracy, who said the economic forecasting service conducts studies “on behalf of the special interests who pay them.”
The way Doroshow sees it, the numbers are “widely inflated” and “have no relation to the actual costs of the legal system.”
Doroshow pointed to a 2005 study by the Economic Policy Institute, which claimed that tort litigation costs had been “exagerrated” and that reform could even slow job growth by making it harder for people to pursue claims.
Environmental tort litigator Mark Ter Molen of Mayer Brown in Chicago said he was ”surprised” to see Florida ranked among the worst offenders, but said there’s “no question” that litigation costs are “way out of whack” in the U.S. compared with other countries.
“We do a lot of work for foreign-based companies who are constantly surprised and shocked at both the frequency of litigation in the U.S. and the costs involved,” Ter Molen said.
Those costs, Ter Molen said, are a “real deterrent to folks investing in the US.”
Personal injury and ADA defense attorney Anastasia Protopapadakis of GrayRobinson in Miami was less surprised, pointing out that Florida has one of the largest populations in the country.
“We would expect that there would be more litigation, and therefore more expense on litigation,” Protopapadakis said. “That being said, litigation is really expensive and there are things that we can do to reduce the costs.”
The Perryman Group, headed by economist Ray Perryman, has also compiled reports for the U.S. Federal Reserve and 10 federal cabinet departments, according to its website.
FJRI president Large said he’d like to see the Florida Legislature pass initiatives to address issues like “inflated past medical damages.”
“Lots of times, someone is injured and they are entitled unequivocally to compensation, but they’re told not to see their doctor. They’re told to see a doctor referred to them by the plaintiffs attorney,” he said. “And lo and behold, the past medicals charged in that case are threefold greater than the market price.”