Excessive litigation costs have cost Louisiana 19,794 jobs and a per-person “tort tax” of $417.72, according to an analysis by the Texas-based Perryman Group, conducted by The Perryman Group for Citizens Against Lawsuit Abuse (CALA).
The group estimates that Louisiana’s yearly tax dollar losses are roughly $100.3 million for state government and $84 million for local government.
According to Louisiana Lawsuit Abuse Watch’s (LLAW) 2019-20 Economic Benefits of Tort Reform, Louisiana is losing jobs and revenue because of the state’s civil justice system.
The report measures the impact of excessive civil court costs on Louisiana’s economy, using extensive survey data, industry information and a variety of other source material. The report used Ohio as a baseline since it recently implemented notable tort reform.
The report found that total excessive tort costs impacting the Louisiana economy amount to losses of at least $1.9 billion in annual output (gross product), translating to roughly 19,800 lost jobs and losses of $1.2 billion annually in personal income.
The reduction in business activity resulting from civil justice costs led to lower than expected gross product, the report found, which created a hidden “tort tax” of $412.17 per person.
“These findings clearly show that civil justice reform must be a priority in Louisiana. Frivolous lawsuits and exorbitant plaintiff awards impact all sectors of our economy. These job-killing lawsuits hurt Louisiana families, and in addition, economic opportunities are driven away while resulting costs are passed down in the form of higher prices for goods and services,” said LLAW Executive Director Lana Venable.
Civil justice reforms that have proven beneficial in other states include those aimed at reducing frivolous lawsuits, capping appeal bonds, setting negligence standards and limiting non-economic damages.
“A healthy legal system should ensure fairness for both truly impaired individuals and small and large businesses operating in Louisiana. Imbalances in the system lead to unpredictability for consumers and businesses, costing jobs and resulting in constrained economic growth,” Louisiana Coalition for Common Sense Executive Director Karen Eddlemon said.
According to the U.S. Chamber Institute for Legal Reform’s 2019 Lawsuit Abuse Survey, which measures the reasonability and balance of each states’ tort liability systems, Louisiana ranked second to last at 49 behind Illinois.
The American Tort Reform Foundation’s 2019-20 Judicial Hellholes Report also ranked Louisiana fourth-worst in the nation.
Tort reform, which includes limiting the ability to file lawsuits or the amount of money a plaintiff can receive, is expected to be a primary topic of Louisiana’s legislative session, which begins March 9.
Proponents for tort reform argue Louisiana has too many frivolous lawsuits. Opponents argue it’s the judges’ job to throw out baseless lawsuits.