Legislature Considering Bill to Address “Nuclear Verdicts,”
Which Are Driving Up Consumer Costs in Texas
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. This $1,725 lawsuit tax—which drives up the cost of everything Texans buy, from groceries to housing to insurance—is higher than the national annual average lawsuit tax of $1,666 per person, according to a study released today by Citizens Against Lawsuit Abuse (CALA).
“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 study was prepared for CALA by The Perryman Group, the Waco-based economic research firm. The study comes as the Texas Legislature is considering a bill to address unreasonable court awards known as “nuclear verdicts,” which not only drive-up costs for businesses and consumers but could also threaten the Texas business climate. The legislation, Senate Bill 30 authored by state Sen. Charles Schwertner of Georgetown, has been named a priority bill by Lt. Governor Dan Patrick.
Between 2009 and 2023, Texas led the nation in the number of “nuclear verdicts,” which are court awards of $10 million or more. A total of 207 nuclear verdicts were awarded in Texas during that time, totaling more than $45 billion—costs that are often ultimately borne by consumers throughout the state.
“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.”
The lawsuit tax is even higher in specific regions of the state, the Perryman study found:
- $2,746 per Texan in Austin-Round Rock-Georgetown;
- $2,483 per Texan in Dallas-Fort Worth-Arlington; and
- $2,373 per Texan in Houston-The Woodlands-Sugar Land.
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.”
“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 said.
Added Hachtman: “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.”
For more on Texans Against Lawsuit Abuse, visit www.tala.com.
