Study says West Virginia’s tort costs are down thanks to legal reform

December 3, 2024

A new study shows West Virginia’s tort costs declined 20 percent from 2016 to 2022, as its per-household tort costs was the lowest in the nation for 2022.

The study, titled Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System – Third Edition, was sponsored by the U.S. Chamber of Commerce Institute for Legal Reform, which owns The West Virginia Record. The study was conducted by the Brattle Group on behalf of ILR and can be viewed here.

The study found that the per-household tort cost in West Virginia was about $2,100 in 2022. The study credits that figure to the state Legislature’s “prioritized effort to create and maintain a fair legal system, enacting at least one legal reform almost every legislative session.”

The continued availability and affordability of insurance is a big part of this, according to West Virginia Chamber of Commerce President Steve Roberts.

“West Virginia continues to take steps in the direction of fair courts,” Roberts told The West Virginia Record. “And insurance continues to be more readily available here and more affordable here. There is an insurance crisis, but it hasn’t hit us hard here because of the steps we’ve taken in the right directions.

“We all want courts that are fair to all and that operate efficiently. When we have fair courts that have a high level of public trust, everyone benefits.”

The president of a statewide group for trial attorneys, however, disputes the study.

“Like the rest of the U. S. Chamber propaganda, the so-called tort tax doesn’t exist,” West Virginia Association for Justice President Steven Broadwater told The Record. “It’s fake. It has never been, nor is it now, an accurate analysis of West Virginia litigation costs. Now the Chamber is claiming that its fake solutions solved its imaginary problem. If the Chamber and big insurance really wanted to cut litigation costs, all they have to do is stop denying legitimate claims.

“The U. S. Chamber and the insurance industry admit in the report that the fake tax includes the higher premiums set by Big Insurance to make record profits. They’re rebranding the industry’s annual revenue and expenses, including administrative and overhead costs like advertising. The millions they spend on lobbying and television advertising has nothing to do with actual litigation costs, but they’re calling it a ‘tort tax.’”

Broadwater says the study is “nothing more than an attempt by the insurance industry to justify increasing our premiums and denying legitimate claims in order to continue to rake in record profits.”

“Since 2022, our premiums have gone up a total of 63 percent,” he said. “In 2023, insurance profits totaled $88 billion. And in just the first six months of 2024, it made another $98 billion in profits. It’s absurd.”

Nationally, costs paid into the U.S. tort system hit a record $529 billion in 2022, according to the study.

Some of the reforms West Virginia has enacted in the past decade include:

  • Protecting consumers from predatory lawsuit lending and misleading lawsuit advertising.
  • Ensuring that defendants pay for damages that they — not another party — are responsible for.
  • Limiting unreasonable punitive damages awards to reduce nuclear verdicts.
  • Making sure lawsuit awards reflect the actual cost of medical care.
  • Preventing plaintiffs’ lawyers from hand-picking courts they prefer the most.

ILR President Stephen Waguespack calls West Virginia “a legal reform success story.”

“For years, lawmakers took seriously the state’s reputation as one of the worst lawsuit climates and prioritized fixing it by enacting meaningful reforms, such as reining in misleading lawsuit advertising tactics and caps on out-of-control damages,” Waguespack said. “Lawmakers in states with high tort costs should look at the types of reforms states like West Virginia enacted to bring down their tort costs, such as reining in misleading lawsuit advertising tactics and enacting caps on damages.

“The U.S. tort system is in desperate need of strategic reforms that promote economic growth and lower costs for American households. Plaintiffs’ lawyers and litigation funders are getting bigger paydays at the expense of consumers and businesses. The higher the price tag, the more consumers pay for products and services, and businesses see an increase in their liability burden.”

The study found that the costs and compensation paid into the national tort system was more than $529 billion in 2022. Along with the economic study, the U.S. Chamber ILR also released a new 50-state data center that breaks down the hidden costs of lawsuits per household.

Compare West Virginia’s $2,132 tort burden per household to the national average of $4,207. In Delaware, that average is $8,026. In New York, it’s $7,027. In Washington, D.C, it’s $6,347. In Florida, it’s $5,768. In California, it’s $5,429.

 

Story by Chris Dickerson, West Virginia Record

 

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