CALA: Texans pay $1,725 more for goods and services every year in a lawsuit tax, higher than national average

AUSTIN, Texas – Texans pay an average of $1,725 more for goods and services every year as the cost of lawsuits and massive court awards are passed on to consumers, says Citizens Against Lawsuit Abuse.

CALA says this “$1,725 lawsuit tax” drives up the cost of everything Texans buy, from groceries to housing to insurance. The group says it is higher than the national annual average lawsuit tax of $1,666 per person.

The numbers come from a study prepared for CALA by The Perryman Group, a Waco, Texas-based economic research firm.

“While Texas has been at the forefront of lawsuit reform in the United States, this new study shows there’s still work to be done to defend and advance commonsense lawsuit reforms in our state,” said Mike Hachtman, chairman of Texans Against Lawsuit Abuse.

“It’s clear, we need to rein in excessive lawsuits and massive court awards that are driving up the costs consumers pay for virtually every item on the market.”

The Perryman Group study was commissioned with the 89th Texas Legislative Session in mind. 

State lawmakers are considering a bill to address what CALA believes are unreasonable court awards that the group calls “nuclear verdicts.” They say these court awards not only drive-up costs for businesses and consumers but could also threaten the Texas business climate. 

CALA supports Senate Bill 30, authored by state Sen. Charles Schwertner of Georgetown. The legislation has been named a priority bill by Lt. Governor Dan Patrick.

“We all pay for the cost of lawsuits, win or lose, and whether we’re involved in a lawsuit or not,” said Bobby Jenkins, chairman of Citizens Against Lawsuit Abuse of Central Texas (CALACTX). “Lawsuit abuse can squelch a business’ plans to expand, hire new employees, or deliver pay raises. Consumers pay more for products and services, including liability insurance. For Texans, this annual average lawsuit tax of $1,725 is above the national average.”

Statewide, the Perryman study found lawsuits in Texas drove economic losses at the local and state level, including:

• $33.6 billion in annual direct costs;
• $52.6 billion each year in gross product;
• $2.7 billion each year in state government revenue;
• $2.3 million each year in local government revenue; and
• job losses totaling 453,426.

“We desperately need reforms to limit the ability of unscrupulous personal injury lawyers to shake down small businesses and make a windfall,” Jenkins said. “We must address artificially inflated medical bills that feed unreasonable court awards known as nuclear verdicts; provide medical bill transparency so patients and juries know the true cost of medical services; and implement a fair and consistent way to award non-economic damages, which are intangible and subjective.”

In a press release, CALA cites a 2024 study by research firm Marathon Strategies which shows verdicts of at least $10 million reaching a 15-year high in 2023. A total of 207 “nuclear” verdicts were awarded in Texas during that time, totaling more than $45 billion. CALA said these costs are often ultimately borne by consumers throughout the state.

The Marathon Strategies study, titled “Corporate Verdicts Go Thermonuclear,” found that the number of nuclear jury verdicts increased by 27% in 2023 compared to the prior year. In 2023, the median nuclear verdict rose to $44 million, up from $21 million in 2020.

Of the 207 “nuclear” verdicts, 27 were deemed “thermonuclear,” because the verdicts were worth $100 million or more. The Marathon Strategies study was reported on by Insurance Journal. 

“We must preserve access to courts for legitimate lawsuits, but today’s get-rich-quick lawsuit environment threatens access and drives up costs for everyone,” Jenkins added.

Hachtman added: “A strong and fair civil justice system is an integral part of American democracy. What is clear from this recent economic data analysis from Citizens Against Lawsuit Abuse is that there’s much  work to be done in Texas to defend our positive record of reform and guard against abuses of the civil justice system—which cost consumers and small businesses.”

Editor’s Note: For more on Texans Against Lawsuit Abuse, visit www.tala.com.

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