George Gibbs Center for Economic Prosperity

The Wash⁠i⁠ng⁠t⁠on T⁠i⁠mes: DeSan⁠t⁠⁠i⁠s and GOP Supermajor⁠i⁠⁠t⁠y Jus⁠t⁠ F⁠i⁠xed Flor⁠i⁠da’s One Major Legal Flaw

By: Sal Nuzzo / 2023

Sal Nuzzo

SENIOR FELLOW

George Gibbs Center for Economic Prosperity

2023

March 28, 2023
Grover Norquist and Sal Nuzzo

Florida Gov. Ron DeSantis and the Republican Legislature last week harpooned the great white whale that conservatives have been hunting for decades: tort reform. The state is about to get richer and redder.

Florida has long been awash in abusive lawsuits brought by trial lawyers. Residents suffer from the subsequent high insurance costs. This mess will end thanks to Mr. DeSantis and a Republican legislative supermajority, which approved a landmark tort reform bill this past week over the protestations of trial lawyers. Mr. DeSantis says that this is “the most significant legal reform that’s ever been done.”

Tort reform was the one missing piece in the Florida success story. On almost every positive metric, Florida leads. No personal income tax. A favorable business tax climate. Spending kept in check. A modest regulatory burden and a strong educational record at an affordable cost to taxpayers. It’s no wonder the Census Bureau reports Florida is the fastest-growing state.

But Florida also “leads” in one not-so-positive way: The total present tort cost to the state is the highest burden in the nation, costing Florida 3% of its gross domestic product annually. That amounts to more than some states’ income taxes.

The currently flawed legal rules have produced nuclear-sized payouts for trial lawyers, driven by excessive lawsuits. “Florida lawsuits rose steadily from 64% of all nationwide homeowners lawsuits in 2016, to 68% in 2017, to 80% in 2018 and 76% in 2019,” National Association of Insurance Commissioners data found.

This system costs Floridians thousands of dollars every year due to higher costs and lost economic activity.

Mr. DeSantis and legislators are right to address this hidden tax, especially as federal spending drives inflation upward. Their bill will protect consumers and taxpayers by changing how plaintiffs’ attorneys are paid in Florida, along with provisions governing transparency of charges in medical claims, and a change to the negligence standards, all of which had turned Florida into a haven of lawsuit larceny.

Such lawsuits are often driven by the rules governing how civil litigation functions in the state. For instance: If someone is injured, rather than seeing their doctor (using their insurance) and then ensuring they get their claim filled, an attorney will have the injured see the lawyer’s doctor. They’ll run up bills for treatment. At trial, the jury sees only the inflated charges, not what the person would have paid had they pursued care as they normally would have.

Some law firms even create complex financial instruments based on the cost of their friendly doctor’s time, and sell them. Lawyers are selling trumped up doctor bills like they’re mortgage bonds to profit off exaggerated treatment of peoples’ injuries.

The problem is everywhere. For cars, Florida makes up a staggering 99% of auto glass repair claims for State Farm. Sure, the state population has grown, but it is still only 6.5% of the U.S. population.

Florida is burdened with scams where roofing companies get homeowners to turn over their rights to legal action to them. Then the company can sue insurers for full roof replacement costs, even when a roof replacement was not needed.

Before tackling broad tort reform, Republicans saved Florida’s failing property insurance market as the state-backed insurer was taking on huge numbers of new policies because other insurers were being crushed by litigation.

“Florida accounted for 79% of the nation’s homeowners insurance lawsuits over claims filed while making up only 9% of the nation’s homeowners insurance claims,” Mr. DeSantis said in his call for an emergency session.

If they had not acted, Floridians would have faced even higher insurance costs as policies of all types would face new fees.

Republican state Rep. Tommy Gregory said his now-enacted bill is designed to “bring the civil justice system back into equilibrium, and that’s going to save all Floridians, all of our constituents, money.”

These landmark tort reforms would not have been possible without the breadth of Mr. DeSantis’ win in the November election and the strengthened Republican supermajority it brought. Thanks to their efforts, Floridians are saying goodbye to the tort tax.

Originally found in The Washington Times.