New data about the economic costs of excessive civil litigation in Louisiana shows consumers in the state bearing an increasing burden, with lawsuit abuse causing an annual “tort tax” of $1,180 per person and yearly job losses exceeding 45,000.
A report compiled last month by Citizens Against Lawsuit Abuse (CALA) found that excessive litigation in the Pelican State results in annual job losses of 45,348 and gross domestic product (GDP) losses of $5.4 billion annually. In addition, lawsuit abuse siphons off state government revenue to the tune of $281.8 million per year, with local government revenue losses estimated at $235.2 million, according to the report.
These numbers emphasize the need for state lawmakers to pass additional legal reforms to curb excesses in the civil justice system, according to Lana Venable, executive director of Louisiana Lawsuit Abuse Watch (LLAW).
“Statistics from this year’s report indicate a negative trend for Louisiana, including a marked increase in jobs lost as a direct result of lawsuit abuse — up from 40,000 to more than 45,000,” Venable told the Louisiana Record in an email. “Hidden ‘tort taxes’ increased by $100 per person, adding another $400 for a family of four. Personal income losses increased by $500,000 per person over last year, reaching more than $3.4 billion.”
Stronger reforms would help reverse this trend, providing more income and opportunities for Louisianans, she said.
Unfounded lawsuits are causing increasing financial pain for families and businesses across the state, the LLAW has reported.
“These impacts are felt in everything from the rising cost of insurance to higher prices for groceries and gasoline,” the LLAW said in a news release.
LLAW, a nonprofit advocacy group, acknowledged that Louisiana in recent years has made some positive steps in implementing legal reforms, but the group argues that more must be done or else the state will miss out on economic opportunities. More sweeping reforms, like those passed in Georgia and Florida, would benefit Louisiana, according to LLAW.
The group also pointed out that the state’s coastal erosion litigation initiated by Louisiana parishes recently ranked fourth on a “Judicial Hellholes” list compiled by the American Tort Reform Association. This is a prime example of “costly coastal litigation that continues to burden the state’s economy and workforce and has openly embraced the plaintiffs’ lawyers leading the charge,” LLAW said.
Louisiana’s “tort tax” of $1,180 is just above the U.S. average tax of $1,771 per person, according to the CALA report, which was compiled by the Texas-based Perryman Group.
The Louisiana industries most affected by job losses as a result of excessive litigation are retail trade, business services, manufacturing and health services, the Perryman study found.
A key concern among the state’s lawmakers has been the cost of auto insurance in the state. According to the Bankrate website, the full car-coverage rate in Louisiana is higher than most states, coming in at $4,135 per year, or 53% above the national average. Bankrate does not list lawsuit abuse as a major cause for the high rates but instead highlights high accident fatality rates, subpar highway infrastructure and severe weather.
The Louisiana Department of Insurance, however, has reported some recent downward pressure on auto rates. In January, Insurance Commissioner Tim Temple approved a 6.6% average auto rate decrease requested by Progressive Security Insurance Co., as well as a 4% average reduction for Progressive Paloverde Insurance Co. The two companies collectively represent 23.5% of the state’s private passenger car market, according to the department.
The insurance decreases followed a 5.9% average auto rate decrease sought by State Farm in December. State Farm represents 30% of Louisiana’s personal auto insurance market.
