Economic Impact Study Released

Civil Justice Reform Would Save Millions, Create Thousands of Jobs

Boston, May 28 - Thousands of jobs and billions of dollars in new wages would be created in Massachusetts if the state legislature enacted a civil justice reform bill currently pending in the legislature's Joint Committee on the Judiciary, according to a study on the economic impact of civil justice reform released today by Suffolk University's Beacon Hill Institute. This is because taxpayers would save millions of dollars in hidden "litigation taxes" every year if the bill passes.

"Over the last half century, there has been an explosion of tort costs," said David Tuerck, Executive Director of the Beacon Hill Institute and Chair of Suffolk University's Economics Department. "These rising costs decrease competitiveness, destroy jobs, and increase the burden on taxpayers." The study found that tort costs have become a "tax" that penalizes consumers and discourages businesses from creating new jobs and investing in growth.

The study, Taxation by Litigation, estimates that if the legislature enacted common sense civil justice reforms statewide, the new law would create:

• 71,649 to 241,224 new jobs
• $2.4 billion to $8.2 billion in new wages
• $9.3 billion to $31.9 billion in new capital
• $144.9 million to $488 million in new tax revenues.

"In this study, we found that tort suits are creating a chilling effect on the business community," Tuerck continued. "Everyone in the state is paying an indirect 'tort tax' because of this tort system, which is hurting our economy. What we end up with is an expensive lottery that operates to the disadvantage of the vast majority of Massachusetts residents, virtually doubling the effective tax on earned income." Tuerck added that "We are not advocating doing away with the system, but returning to its traditional moorings. We simply recommend bringing the tort system under control."

Senate Bill 896, the focus of the study, would curb abuses of the system and reduce the high costs of litigation borne by Massachusetts taxpayers. Among the bill's provisions are those that would:

• Force plaintiffs under the influence of alcohol or drugs at the time of their injuries to prove by clear and convincing evidence that the influence of alcohol or drugs did not help to cause the harm.
• In claims against registered professionals, require plaintiffs to submit an affidavit by a Massachusetts licensed professional stating the claim has merit.
• Eliminate joint and several liability for damages unless the tortious conduct was knowingly undertaken. Under this provision, defendants would only be held liable for that percentage of the harm which they cause.
• Improve the tools courts have to impose sanctions on attorneys and parties for filing frivolous suits or offering meritless defenses.
• Reform product liability law by enacting a fifteen-year statute of repose for product liability claims and incorporating a "state of the art" defense, holding parties only to existing knowledge and science.
• Reduce the statute of limitations on "slip and fall" cases from three years to one.

Tuerck noted that while it would be undesirable as well as impossible to eliminate tort costs entirely, passage of the bill would vastly improve matters and stimulate further economic development. "Passing this bill would be an important step in the right direction," he added.

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Updated on 01/23/2007 5:08 PM