CHARLESTON — Citizens Against Lawsuit Abuse recently released an annual economic study, finding that the country continues to be plagued with lawsuit abuse.
The report found that there are numerous problems incurred through excessive litigation and civil court costs throughout the nation. It noted that the excessive costs were extremely destructive to American businesses and are harmful to consumers — totaling $160.1 billion in excessive tort costs, or $488 per American in a "tort tax." The report says that the costs have wiped out an estimated $435.6 billion in economic activity, which is 1.2 percent of the overall U.S. economy.
“Lawsuit abuse remains a significant problem in the United States, costing taxpayers billions of dollars to finance unnecessary court costs resulting from litigation," Greg Thomas with West Virginia CALA said. "This new report details the severe effects of lawsuit abuse, and why tort reform is crucial to improving our economic efficiency and overall business environment."
Thomas
The report also found that tort costs impact 2,211,450 jobs nationwide, with a loss of $143.8 million in wages and a $435.6 billion decrease in the economic pie.
The federal government lost $29.5 billion in tax revenue thanks to tort costs, while state and local governments lost $18.1 billion in tax revenues, the report noted.
In West Virginia, the "tort tax" is $323 per person.
"Tort law is an orderly process of resolving disputes and discouraging objectionable behavior," the report states. "It is a vehicle to provide relief to injured parties and a crucial part of our civil justice system. However, when misused, it has serious consequences not only to individuals, but society as a whole."
Unfortunately, it notes, where there is an overly aggressive tort system, it can have an undesirable effect.
"Frivolous tort cases or those that result in excessive damages and rewards can have negative consequences on the economy," the report states. "These excessive tort costs are destructive to American businesses and harmful to consumers, wiping out billions of dollars of economic activity on an annual basis. Tort reform is essential for creating a safer and more productive environment where economic activity can flourish."
The report states that through tort reform, West Virginia can reap the benefits of a more efficient judicial system while growing the economy.
"Were West Virginia to enact reforms examined in this report, the resulting savings to the residents and businesses of the state would be $579,658,000," the report states. "This means that the residents are in effect paying a 'Tort Tax' of $323 per person."
If savings from reforming the tort system could be realized, they would flow through the state’s economy, supporting 6,353 additional jobs and $978.85 million in increased economic activity, according to the report.
