A new study reveals lawsuits and massive court awards cost Texans an average of $1,725 each year.
Texans Against Lawsuit Abuse says this “tort tax” drives up the cost of everything from groceries to housing to insurance. The Texas figure also is higher than the national average of $1,666.
The study was prepared for Citizens Against Lawsuit Abuse by The Perryman Group, which is based in Waco.
“While Texas has been at the forefront of lawsuit reform in the United States, this new study shows there’s still work to be done to defend and advance commonsense lawsuit reforms in our state,” TALA Chairman Mike Hachtman said. “It’s clear, we need to rein in excessive lawsuits and massive court awards that are driving up the costs consumers pay for virtually every item on the market.”
The Texas Legislature is considering a bill to address extremely large court awards known as “nuclear verdicts.” In addition to driving up consumers costs, TALA says these verdicts also can have a negative impact on the state’s business climate.
Senate Bill 30 authored by state Sen. Charles Schwertner of Georgetown has been named a priority bill by Lt. Governor Dan Patrick.
From 2009 to 2023, Texas led the nation in these so-called “nuclear verdicts” of $10 million or more. There were 207 such verdicts awarded in Texas during those 15 years, totaling more than $45 billion.
“We all pay for the cost of lawsuits, win or lose, and whether we’re involved in a lawsuit or not,” said Bobby Jenkins, chairman of Citizens Against Lawsuit Abuse of Central Texas. “Lawsuit abuse can squelch a business’ plans to expand, hire new employees, or deliver pay raises.
“Consumers pay more for products and services, including liability insurance. For Texans, this annual average lawsuit tax of $1,725 is above the national average.”
If the “tort tax” is broken down into regions of the state, it’s even higher in some cities. It averages $2,746 per person in the Austin-Round Rock-Georgetown area, $2,483 per person in the Dallas-Fort Worth-Arlington area and $2,373 per person in the Houston-The Woodlands-Sugar Land area.
The study also shows lawsuits drove economic losses at the state and local level. That includes $33.6 billion in annual direct costs, $52.6 billion each year in gross product, $2.7 billion each year in state government revenue, $2.3 million each year in local government revenue and job losses totaling 453,426.
“We desperately need reforms to limit the ability of unscrupulous personal injury lawyers to shake down small businesses and make a windfall,” Jenkins said. “We must address artificially inflated medical bills that feed unreasonable court awards known as nuclear verdicts; provide medical bill transparency so patients and juries know the true cost of medical services; and implement a fair and consistent way to award non-economic damages, which are intangible and subjective.
“We must preserve access to courts for legitimate lawsuits, but today’s get-rich-quick lawsuit environment threatens access and drives up costs for everyone.”
Hatchman agreed.
“A strong and fair civil justice system is an integral part of American democracy,” he said. “What is clear from this recent economic data analysis from Citizens Against Lawsuit Abuse is that there’s much work to be done in Texas to defend our positive record of reform and guard against abuses of the civil justice system — which cost consumers and small businesses.”