Is Florida a low-tax state or a high-tax state? It depends on how you define taxes. If you mean the highly visible kind that pay for government services ranging from law enforcement to schools and parks, it’s arguably a low-tax state.On the other hand, if you mean the hidden “taxes” that cost every Floridian lots of money, that raise the cost of government instead of helping to defray it, and that line the pockets of the state’s personal injury lawyers, it’s quite another matter. By that standard, Florida is a high-tax state.South Florida’s personal injury lawyers, in particular, are notoriously aggressive. In fact, the region’s litigation climate is so bad that the American Tort Reform Association (ATRA), in its annual report, has repeatedly dubbed the area a “judicial hellhole.”Why has Florida’s lawsuit problem persisted? Because its courts have been unwilling to shift their civil law procedures into the national mainstream. Result: With the playing field so tilted in favor of personal-injury claimants, many lawsuits never even go to trial.Instead, defendants, even though sometimes blameless, often reach out-of-court settlements. They fear taking their chances in court or can’t afford the legal fees to sustain a defense against deep-pocket lawyers with a flare for the dramatic.So defendants and their insurers often calculate correctly that settling is cheaper – in the short run, at least. And these settlements also allow the personal-injury attorneys to say, “See, there aren’t many of those multimillion dollar jury awards that business owners, insurance companies, and doctors are always griping about.”Unfortunately, however, the cumulative effect of these settlements imposes heavy costs on businesses and professional practitioners such as physicians. When coupled with the occasional large-award verdicts that have a chilling effect on defendants’ willingness to take their chances in court, these costs are steep indeed.Rather than take a chance on losing, entrepreneurs and professionals must pay for insurance to protect themselves against lawsuits, even frivolous ones. The cost is not cheap and must be passed on to customers and clients. This, in turn, amounts to a hidden tax on the goods and services provided.Fortunately, there’s still a chance to build on recent reforms. In 2010, lawmakers addressed the excessive liability exposure businesses faced from slip-and-fall claims.In 2011, they enacted reforms that let juries consider a driver’s fault when he or she claims a vehicle should have provided more protection in a crash. In 2012, they passed laws aimed at reducing fraud and abuse in the state’s Personal Injury Protection (PIP) vehicle insurance system.As a result, Florida’s reputation for civil justice is slowly improving. In fact, in December ATRA shifted South Florida to its “watch list.” Depending on the direction that judges and lawmakers take next, the region could either move off the list entirely, or reclaim its “hellhole” status.Here are four additional steps lawmakers could take this year to lower the litigation taxes hidden in the price of goods and services:• Eliminate junk science. Florida should abandon its antiquated, 85-year-old standard for deciding whether witnesses qualify as experts in trials. Instead, it should adopt the rigorous 1993 standard used by all federal courts and most states.• Address inflated damage awards. The state should let juries hear what medical providers were actually paid to treat patients in personal injury cases, versus only what was billed.• Stop “gotcha lawsuits” against insurers. Legislators should adopt rules to end the legal gaming that lets trial lawyers accuse insurers of failing to settle claims in good faith – even when insurers were willing to pay policy limits.• Protect the right of counsel for treating physicians. Florida should strike a better balance in its health care privacy laws so physicians who are called to testify – but who are not a party to the case – may speak with their own attorneys, something they’re prevented from doing now.During the past several years, state policymakers have identified and corrected several situations in which Florida’s liability laws had fallen out of balance.By building on this solid foundation, Florida may finally shed the perception among many around the country that it’s a state that harbors a “judicial hellhole.”Thomas Perrin is Public Affairs Director of The James Madison Institute, a non-partisan policy center based in Tallahassee. He can be contacted at thomas@jamesmadison.org
