The Pacific Research Institute released its report comparing the legal climates of all 50 states. According to the U.S. Tort Liability Index: 2008 Report, Florida ranked the worst in terms of tort costs and litigation risks, while North Dakota ranked the best. In a separate ranking, the study also evaluated the tort laws of each state. Colorado had the best tort laws on its books, while Rhode Island had the worst.
“In the competition for jobs and investment among the states, states that suffer from high tort costs and litigiousness will continue to lose jobs and businesses to states with better tort systems. PRI developed the Index as a tool for governors and state legislators to assess their tort systems and to enact laws that will improve the business climate of their states,” said Dr. Lawrence J. McQuillan, coauthor of the study and director of Business and Economic Studies at PRI.
Mississippi’s low tort costs, low litigation risks, and recent tort reforms earn state ‘saint’ status
By merging the quantitative tort costs ranking with the tort laws ranking, the study divided the states into four groups: saints, sinners, suckers, and salvageables.
Saints: States that have relatively low tort costs and/or few litigation risks and relatively strong tort rules on the books. These states are well positioned to contain their tort liability costs in the future if the rules are implemented as written. Mississippi is in this category.
Sinners: States that have relatively high tort costs and/or high litigation risks and relatively weak tort rules on the books. The sinners are likely to face high and rising tort liability costs in the future if lawsuit abuse continues unchecked.
Suckers: States that have weak tort rules on the books because they currently have relatively low tort costs and/or few litigation risks and, therefore, foolishly believe that they are not vulnerable and reform is not needed.
Salvageables: States that have moderate to high relative tort costs and/or moderate to high litigation risks, yet have moderate to strong tort rules, probably as a result of recent reforms.
Mississippi is near the top of the list, 9th, because of its low tort costs and few litigation risks – factors that helped it earn “saint” status. Mississippi ranked 23 in terms of the input variables – the variables that measure the tort laws on its books. “Mississippi has greatly improved its tort climate and business environment in recent years through meaningful tort reform that has reduced tort costs substantially,” Dr. McQuillan said. “The rest of the country should learn from Mississippi’s example. But the state should not rest on its laurels. More tort reforms should be enacted to move Mississippi from 9th to 1st.”
Best and Worst Tort Costs
In its quantitative ranking, the study uses 13 variables in two areas — monetary tort losses and tort litigation risks. These “output” rankings are free of any subjective influence. In addition to Mississippi, the top 10 states are North Dakota, Alaska, North Carolina, Iowa, Virginia, New Mexico, Utah, Wyoming, and Maine. At the bottom are Rhode Island, Pennsylvania, Montana, Illinois, New York, New Jersey, and last, Florida.
Best and Worst Tort Laws
The study uses 28 variables to examine which states have rules on the books that, if implemented and enforced, reduce lawsuit abuse and tort costs. These rules are generally controlled by voters, legislators, and/or judges, either directly or indirectly in each state. The states that have the best overall tort rules on the books, and that will be heading in the right direction if the rules are fully implemented, are Colorado, Texas, Ohio, Georgia, Indiana, Florida, and Michigan. At the bottom are Pennsylvania, Illinois, Maryland, New York, Vermont, and last, Rhode Island. Mississippi ranks 23 for tort rules, primarily a result of recent reforms. The state is heading in the right direction.
“Enormous resources are wasted today on the unnecessary and unproductive redistribution of wealth that occurs with excessive tort litigation,” said co-author Hovannes Abramyan, a PRI public policy fellow. “Meaningful tort reform translates into a better legal environment in which to invest human, physical, and financial capital — the ingredients for self-sustaining economic growth and prosperity. We hope that our rankings will encourage state officials and residents to enact tort reforms or to enforce and defend strongly those they have on the books.”