The costs of tort law and litigation in the US are receiving lots of attention recently: The Pacific Research Institute (not-for-profit think tank based in California) published The US Tort Liability Index: 2006 Report on 11 May 2006. This comprehensive report based on extensive research assesses the best and the worst tort systems in the US. The Index measures the 'inputs' and 'outputs' in tort systems in all 50 states using 39 variables, assessing the present situation and predicting the future. The 39 variables are divided into five subgroups:
1. monetary tort losses (including insurance loss ratios for commercial automobile liability, product liability, medical malpractice, workers' compensation etc.),
2. threats (did the state have 'judicial hellholes' in 2005, attorneys per dollar of GSP and total state incoming civil cases),
3. monetary caps in 2005 (caps on non-economic damages, punitive damages or damages in medical malpractice suits),
4. substantive law rules and reforms in 2005 (class actions, contingency fee limits, product liability or medical malpractice),
5. procedural /structural rules and reforms in 2005 (frivolous suits, jury service etc.).
Some of the best systems according to the Index are : Texas, Colorado, North Dacota and Ohio. The worst: Vermont, Rhode Island, New York. None of the good systems ranked as good in all the categories, though, and the Index stresses the need for further work.
The Index highlights a very important issue - states with high tort costs have lower standards of living, slower economic growth, and the economic climate which discourages innovation.
There is no doubt that tort costs are too high in the US (Index quotes the Tillinghast Study - see entry on 18 May), but it is fascinating to see how much is changing in this area.
The Index predicts the future situation as regards tort costs in the US and divides the states into three groups - saints (states with low tort costs which exacted reforms likely to further decrease these costs, such as Kansas, Texas or Utah), sinners (states with high tort costs which did not introduce any significant reforms, such as Alabama, Florida or Illinois), and salvageables (states with high costs which introduced reforms likely to decrease the costs in the future, such as Arizona, Georgia or Idaho).