Tort reform and Georgia’s judicial nightmare

In 2023, Georgia had the dubious honor of topping the American Tort Reform Association’s list of the country’s “Judicial Hellholes.” This was the second year in a row that Georgia held the number one ranking – although this time it was a split title with Pennsylvania’s courts – due to what the ATRA calls an environment of lawsuit abuse and excessive tort costs.

These concerns have caught the attention of some Georgia lawmakers and Gov. Brian Kemp, and “tort reform” is quickly becoming a more common term in Georgia’s political lexicon. Tort reform takes many specific forms, but it generally refers to reducing the ability of plaintiffs to bring forth liability litigation, or to reduce the amount of damages they can receive.

While liability litigation is not categorically frivolous, the need for tort reform typically highlights cases that are: such as when plaintiffs and their trial attorneys are awarded damages for frivolous or predatory lawsuits. An important takeaway from tort reform efforts is that these kinds of lawsuits have real negative economic consequences for the industries they come across.

For example, medical malpractice litigation not only adds to the cost of healthcare, it can reduce access to and quality of care as well. Indeed across all fields, liability litigation discourages innovation.

Opponents of tort reform argue that reducing the ability to sue for liability or reducing compensation increases risk on the part of consumers. However, this position is based on incomplete and inaccurate assumptions. 

Paul Rubin, an economist who has studied tort reform for decades, asserted that legal fees provide no benefit to consumers. Rubin points out that injured parties are often in contractual agreements with injurers, meaning that “consumers pay in advance for expected tort damages through higher prices for goods and services. For example, the price of a medical procedure includes money to compensate the physician for his malpractice insurance premiums.” Rubin also points out that more than half of the money going through that system goes to legal fees and compensation for non-economic losses.

More recently, in a 2022 report, the U.S. Chamber of Commerce Institute for Legal Reform calculated the cost of the American tort system. Tort costs amounted to $443 billion, or 2.1% of the U.S. GDP. This includes $229 billion in general and commercial liabilities, $196.5 billion in automobile accident claims and $17.5 billion in medical liability claims; these rates have increased over the years.

The report also estimated that the tort system is ultimately inefficient at delivering compensation to plaintiffs. Only 53% of the total size of the tort system accounts for compensation, and the remaining 47% covers litigation costs and other expenses.

The costs of tort litigation, and where the burden of those costs fall, should inform future analysis and reform efforts. Hopefully, that will be the case in Georgia, where the need for reform is apparent.

So, what has earned Georgia its status as a judicial “hellhole?”

Part of what moved Georgia to the top of ATRA’s rankings was the infamous Gwinnett County case in which a client was awarded a stupefying $1.7 billion in a case against Ford Motor Company that ARTA notes was “riddled with ethically questionable events and severely biased court orders.”

2023 saw a continuation of “nuclear verdicts” and their subsequent economic impacts. Estimates again show the cost of tort is passed down to citizens, both in the form of job losses and a “tort tax” of $1,213.80 a year. ARTA asserts that Georgia could increase its gross product by $13.1 billion by reforming lawsuit abuse.

The ARTA report continues, “…third-party litigation financing provides the resources to drive the litigation machine. Both lawyers and lenders profit off the litigation, as unregulated cash-for-lawsuit companies offer plaintiffs loans at excessive rates, then take a substantial share of their awards.”

The report also points out that Georgia trial lawyers are quite aware of their environment; they spent $84.29 million on advertisements in the state.

Although neither the judicial system nor the state legislature has been particularly effective in enacting meaningful tort reform, some legislators have recently shown signs of interest, and Gov. Kemp recently called for revisiting Georgia’s civil litigation laws.

Last year, the “Trucking Opportunity Act of 2023” took aim at “direct action” – a plaintiff’s ability to sue motor carriers and their insurers at the same time – but didn’t pass out of the Senate.

Blair Cash, an attorney practicing commercial vehicle and motor carrier liability law in Georgia, pointed out some of the double standards truckers are held to in Georgia. This includes the obvious unfairness of the aforementioned seatbelt rule, “where a truck driver issued a citation for not wearing a seat belt is issued a violation, assessed a fine and the motor carrier has an unsafe driving violation and seven points assessed to its CSA score. However, passenger vehicle drivers and occupants are not subject to the same set of rules.”

Cash also pointed out the frequency of claims of negligent hiring on the part of trucking companies as well as the direct action statute. Georgia finally limited plaintiffs’ ability to file direct action suits with the passage and signing of Senate Bill 426.

Several states have enacted industry-specific tort reforms recently, such as Iowa’s medical malpractice reform and Florida’s trucking reform (which significantly improved its own “Judicial Hellhole” ranking), and while sweeping reforms of trial law are not to be expected, Georgia’s renewed attention on tort reform will hopefully lead to a fairer legal environment.

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