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Reversing Florida’s back-breaking tort tax | Commentary

Mar 14, 2023 at 5:30 am

Florida has taken significant steps to mitigate the effects of the state’s tort environment, specifically as it relates to the challenging property insurance marketplace. The legislature convened in May and December 2022 to pass crucial legislation (Senate Bill 2D and Senate Bill 2A) intended to help the marketplace heal from frivolous lawsuits, insurance company insolvencies and issues resulting from natural catastrophes. (For perspective, Florida makes up 79% of homeowners insurance lawsuits nationwide, but only accounts for 9% of all homeowners insurance claims.) Yet there is still a great deal of room for improvement.

Thankfully, tort reform is expected to be a priority issue for lawmakers in the current legislative session. House Bill 837: Civil Remedies was recently filed by Rep. Tommy Gregory (R-Lakewood Ranch) and Rep. Tom Fabricio (R-Miami Lakes) and since then, it has received overwhelming support from both legislative leadership and stakeholders across a range of industries. The bill aims to eliminate one-way attorney’s fees for all lines of insurance, protect businesses from paying exorbitant damages, and modernize Florida’s “bad faith” law. This could help to reduce the cost of litigation, insurance premiums, and consequently, the tax burden on individuals and businesses throughout the state. It is a bold move that demonstrates a coordinated effort to dig Florida out of its longstanding overly litigious state of affairs.

Floridians should be particularly interested in tort reform because, as recent research has shown, there is an annual “tort tax” of $812.52 per person — and that can be a back-breaking hit for hard-working men and women, as well as their families. Not to mention, Florida continues to be one of the most popular destinations for businesses to set up shop, with a growing number of large and small companies relocating to the state, but the threat of expensive and time-consuming lawsuits can be a major deterrent. Tort reform can help reduce both the risk and cost to businesses, consumers, and taxpayers, making the state a more attractive destination for investment and job creation.

The impact of tort reform would certainly be seen in the health-care sector, and in contrast to what some critics are saying, overall, it would be positive. Medical malpractice lawsuits are a major source of concern for healthcare providers because, like with businesses, they can be incredibly expensive and time-consuming to defend. These lawsuits can also drive up the cost of health care, as providers are forced to transfer the cost of legal fees and damages to patients. By implementing tort reform, Florida can help to reduce the cost of medical malpractice insurance and make healthcare more affordable for all taxpayers, while also ensuring legitimately bad actors and their bad practices are resolved justly and cost effectively. The use of “letters of protection” in medical damages litigation will hopefully be cured through these efforts.

In 2006, Florida TaxWatch’s compelling research and timely testimony helped achieve some of the most meaningful tort reform presented in Florida in the last 20 years — the reform of joint and several liability. Now, with building momentum and support from legislative leaders, we must continue that fight and finish addressing the next set of challenges.

The 2023 Florida Legislature must act to protect Florida’s hardworking taxpayers — they deserve nothing less.

Dominic M. Calabro leads Florida TaxWatch’s research team as president and CEO.

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