The Staggering Cost of Lawsuits in the U.S.

November 29, 2022

Tort costs and compensation paid in the U.S. totaled $443 billion, or about $3,621 per household during 2020, according to a new report released this month.

The economic study from the U.S. Chamber of Commerce Institute for Legal Reform indicated that total tort costs amounted to 2.1 percent of the national gross domestic product. The report analyzes insurance data and estimated self-insured costs to project total U.S. tort costs.

“Tort Costs in America shows that our lawsuit system is expensive and broken,” said Harold Kim, the institute’s president and the chamber’s chief legal officer and executive vice president.

Among the key takeaways:

• Medical liability costs:  Of the $443 billion total, the U.S. had $17.5 billion in medical liability claims during 2020, including $1.42 billion from Pennsylvania.
• State perspectives:  Pennsylvania’s tort cost per household was $3,316.
• Top two categories:  About $229 billion in tort costs are related to general and professional liability claims and $196.5 billion are attributed to automobile claims.
• The main takeaway:  High costs from the tort system lead to higher prices elsewhere in the economy (household products, services, insurance). Litigation and risk transfer costs make up about 47 percent of the expenditures in the system.
• Quotable:  “The costs of the U.S. tort system are skyrocketing, but cost does not equal value when only 53 cents of every dollar go to plaintiffs,” Kim said.

The report notes that the “tort system has grown at an average annual rate of six percent a year—faster than both inflation and GDP.”

HAP is committed to improving the state’s overall legal liability system to help attract and retain health care providers so that all patients have access to high quality health care. This includes supporting measures to restore reforms that prevent “venue shopping” in medical liability cases following a recent Pennsylvania Supreme Court rule change that allowed the practice to return.

The new report is available to review online.