'Tort tax' report: Frivolous lawsuits cost more than $1,200 per resident in Florida

For a state where officials love to brag about its low taxes, Florida, according to a new nationwide report, has a blind spot: a tort tax. 

The tort tax, according to the report, from Citizens Against Lawsuit Abuse, is the reduction in output on a per capita basis when the costs of frivolous lawsuits is weighed against insurance increases, decreased productivity and more. The report, produced by The Perryman Group of Waco, Texas, found that the impact of excessive tort costs on the U.S. economy in 2023 included losses of an estimated $557.8 billion in output and losses of more than 4.81 million jobs when “dynamic effects are considered.” That’s up 7.2% from $520.2 billion in lost output and 0.83% from 4.77 million lost jobs in 2022. 

The reduction in output on a per capita basis nationwide implies a tort tax of $1,666 per person, higher than the 2022 estimate of $1,561, according to the report. “All major industry groups are negatively affected, with business services, retail trade, financial activities and manufacturing experiencing the greatest losses,” the report states. In addition, those costs often can passed on to consumers, from construction to grocery bills and insurance to health care.

Floridians pay a tort tax on average of $1,238 per person, the report found. That’s good for No. 33 in the country, including Washington, D.C. The Sunshine state is one spot higher than Rhode Island and one spot lower than Nevada. The state with the lowest tort tax is Mississippi at $513.21 per person. The highest per-person tort tax lies in Washington, D.C., at $7,813.46. (The No. 1 state after DC is Massachusetts at $2,560.07.)

“Floridians are being robbed daily by the ‘tort tax,’ which are the pass-through costs because of a flawed civil justice system,” Florida Citizens Against Lawsuit Abuse Executive Director Tom Gaitens says in a statement accompanying the report. “We must continue to bail water out of our economic boat. This water of abuse keeps seeping through loopholes and gaps in our system.” 

But the spigot could be headed toward a slow down. The state, through Gov. Ron DeSantis and the Legislature, has enacted several “significant reforms,” the release states. One of those is insurance tort reform from 2023, which recently played a role in 10 insurance firms returing to write policies in the state. “The work that has been done to address lawsuit abuse in our state has been great,” Senior Consumers of America Chairman Randy Ray says in the statement, “but I hope that our state leadership will continue to stand strong on this issue for Florida’s seniors going into this upcoming legislative session.”

Florida Citizens Against Lawsuit Abuse officials, in the statement, say they are hopeful the Legislature will continue to enact reforms in the upcoming session, specifically to address third-party funding litigation. “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,” Gaitens says in the release. “We cannot miss the opportunity of this legislative session to build upon the gains of the past.”