Lauren Zelt, Executive Director of Protecting American Consumers Together (PACT), said in a press release that addressing lawsuit abuse through reforms at both the state and federal levels is essential to protect consumers and improve the fairness of the legal system.
"The only way to undo this hidden tax is to pass meaningful lawsuit abuse reform at the state and federal level," said Zelt. "Reforming the system is the only way to ensure that plaintiffs can access a legal system that treats them with the dignity and respect they deserve while protecting consumers' pocketbooks."
According to PACT, a study by the Perryman Group indicates that lawsuit abuse acts as a "hidden tax," costing the average U.S. household $5,135 annually. This phenomenon reportedly drives consumer prices up by 1.32 percent and results in a loss of $557.8 billion in output along with 4.81 million jobs. The burden is said to be most significant in the District of Columbia (-$19,140 per household), California (-$8,306), and New York (-$7,914). Price increases are particularly noted for essentials such as prescription drugs (+9.02 percent) and home insurance (+4.56 percent). Reflecting this impact, a spring PACT poll shows that 74 percent of voters want Congress and the administration to mitigate the inflationary effects of excessive litigation through reforms.
The U.S. Chamber of Commerce Institute for Legal Reform reported that in 2022, total costs and compensation paid into the U.S. tort system exceeded $529 billion, representing 2.1% of the national GDP and over $4,200 per U.S. household. The report also found that tort costs have been increasing faster than inflation at an average annual rate of 7.1% between 2016 and 2022. If this trend continues, it is projected that U.S. tort costs will approach $1 trillion by 2030.
A study conducted by the National Bureau of Economic Research found that implementing caps on non-economic damages, collateral source reform, and joint and several liability reform can reduce employer-sponsored health insurance premiums by 1 to 2 percent each. These reductions are more pronounced in Preferred Provider Organizations (PPOs) rather than Health Maintenance Organizations (HMOs), suggesting that tort reform could significantly affect healthcare costs by influencing medical practice patterns.
Zelt brings over 15 years of public-affairs experience to her role as executive director of PACT, having previously founded Zelt Communications, a firm specializing in strategic communications and public relations.
