Despite progress in passing tort reforms in recent sessions of the state Legislature, Floridians pay on average $1,238 per person in the form of a “tort tax” that eradicates almost 240,000 jobs annually around the state, tort reform advocates said Thursday.
During a virtual press conference, Tom Gaitens, executive director of the Florida chapter of Citizens Against Lawsuit Abuse, and other tort reform advocates urged Floridians not to allow any backsliding on previous reforms, including attorney fee limits and shortening the statute of limitations for filing lawsuits.
Updated numbers from the Texas-based Perryman Group indicate that excessive litigation in Florida led to a $1.4 billion loss in state revenues and a $1.2 billion loss in local revenues annually.
“This tort tax, by its existence, limits our ability to issue goods and services that are provided by the government itself,” Gaitens said. “... We're paying that much more for goods and services than would have existed if we didn’t have that tort tax.”.
In Florida’s agricultural sector alone, excessive tort costs result in the industry having about $1 billion less in total expenditures, $306 million less in gross product, $197 million less in personal income and a loss of 2,488 jobs, according to the Perryman report.
Rebalancing state justice systems through tort reforms results in financial benefits for residents, according to the report.
“Tort reform generally refers to making changes to the civil justice system to limit either the ability to file a lawsuit or the amount of damages that can be received, responding to the belief that verdicts in tort cases have grown to be excessive and distort economic incentives and activity in undesirable ways,” the report says.
Despite recent reforms, the state still has to do more to bounce back from years of ignoring frivolous lawsuits and justice system abuses, Gaitens said, adding that the Legislature this year should pass a bill to address the problem of third-party litigation financing. A bill to ensure more transparency about who is funding civil litigation – whether it be equity funds or offshore interests – was considered in the last legislative session but failed to pass.
“We must continue to bail water out of our economic boat,” he said. “... Reform is necessary to allow Florida’s economy to glide more smoothly, as is intended with transparency and a fair civil justice system for all. We cannot miss the opportunity of this legislative session to build upon the gains of the past.”
The tort tax on Florida residents tends to be more onerous in larger metro areas, according to Gaitens. In southern Florida, it can total $2,100 per person, and in the Tampa region it has reached $1,375 per person, he said.
During the press conference, Randy Ray, chairman of Senior Consumers of America, argued that insurers have been returning to Florida because the biggest threat to a fair insurance market – litigation – has been reined in by recent reforms.
“Everybody thinks that the reason insurance is high in the state of Florida is because of hurricanes …” Ray said. “That’s just not true. It’s because of the storm that goes on in these courtrooms.”
Certain industries continue to be hard-hit by excessive litigation in the form of damages awards, according to the Perryman report. These industries include chemicals, pharmaceuticals, tires, power tools, welding equipment and electrical products, the report says.