Tort Reform Will Lower Costs for Taxpayers and Consumers

The American justice system is renowned for its fairness and rigorous standards. Ideally, victims can get their due without ruinous litigation. But increasingly, this is not the case. Driven by the prospect of hefty payouts, trial lawyers are increasingly pushing the envelope on dubious cases that can be won on comparative negligence grounds. In other words, plaintiffs can get paid out even if they are mostly at fault. The good news is that states such as Florida, Louisiana, and South Carolina are restoring fairness to their legal systems and providing a roadmap for federal efforts to update liability laws to protect consumers from runaway costs while preserving accountability for those responsible for actual wrongdoing.

Skyrocketing legal payouts are making everything more expensive, fueling inflation and driving economic anxiety. As reporter Camila Domonoske notes, car insurance premiums are up nearly 50 percent over the past five years, and the increasing cost of accidents is a key contributor. According to Patty Kuderer (insurance commissioner for the state of Washington), “The claims paid really drive the cost of the premiums.” Unsurprisingly, states like Louisiana with historically-high litigation rates also tend to have high auto insurance rates. In extreme cases, car accidents are being staged entirely as a pretext for lucrative litigation. 

This problem certainly isn’t limited to the auto industry and its consumers. Each year, there are an astounding 11,000 medical malpractice-related payouts across the country. While many of these cases can be traced back to documentation issues (e.g., patient instructions not being written down), the high and growing payout totals imply far more serious allegations brought against physicians and hospitals. The average payout in the U.S. is more than $400,000, and this sum will only grow larger. Even for the three-quarters of medical malpractice lawsuits that are dropped or dismissed without a trial or settlement, healthcare professionals still need to consult with insurers and lawyers, take time away from their patients, and maybe even face out-of-pocket costs.

Litigation imposes significant costs across these industries and the U.S. economy. Assuming that medical malpractice lawsuits cost the U.S. healthcare system $55 billion per year (almost certainly an underestimate) in insurance, trial, and payout expenses and even a modest proportion of these lawsuits are illegitimate, system reforms could pay for the care of millions of Medicaid patients. And, according to a 2025 study by the Insurance Information Institute, there was “an estimated $42.8 billion in excess litigation value from motor vehicle tort cases filed between 2014 and 2023 in both federal and state civil courts across the United States.”

Congress addressed the issue of lawsuit abuse for rental car and leasing companies in 2005. The Graves Amendment, introduced by House Transportation and Infrastructure (T&I) Committee Chairman Sam Graves (R-Mo.), established a clear national standard: rental and leasing companies should only be held liable for their own negligence, not simply for owning a vehicle. But the exclusion of rideshare apps and “Transportation Network Companies” (TNCs)—which connect riders with drivers on a mass scale—from Graves Amendment language has posed a significant issue for taxpayers and consumers. In the past two decades, the automotive market has been absolutely transformed by the advent of rideshare apps and TNCs.

TNCs have been sued in instances where the driver didn’t even work for a TNC, or when the driver wasn’t on the clock at the time of the accident. TNCs have bizarrely been taken to court even when the driver at fault was an inebriated third-party or ran a red light. While states in general should be in the driver’s seat when it comes to designing their tort systems, legal certainty is sorely needed at the federal level because of the nationwide design and operating model of TNCs. State jurisdictions allowing plaintiffs to sue TNCs when the plaintiff is clearly at fault jeopardize the ride-sharing experience in all jurisdictions. And because TNCs have deep pockets, unscrupulous lawyers will always have an incentive to pursue meritless claims.

Fortunately, states such as Florida are enacting significant reforms to restore fairness and justice to the legal system—and federal policymakers ought to take note. Reforms introduced in 2023 ensure that, if plaintiffs are 51 percent or more at fault for an accident, they are ineligible for a payout. Prior to reforms, Florida plaintiffs could get compensated even if they deserved virtually all the blame for an accident.

Louisiana has taken similarly laudable steps. Signed into law by Louisiana Governor Jeff Landry (R) in May 2025, HB 431 also bars plaintiffs from recovering if the share of fault contributed by the plaintiff is 51 percent or more. These pivotal reforms acknowledge that everyone is ultimately responsible for their own actions—not just those with the deepest pockets. Meanwhile, Arkansas’ HB 1204 ensures that plaintiffs can recover medical expenses as damages, but only if those expenses are actually paid or owed. Finally, South Carolina has reformed its tort laws to protect defendants from being on the hook for other defendants’ wrongdoing.

Hopefully, Florida and Louisiana’s actions provide a roadmap for strengthening federal liability safeguards, such as modernizing the Graves Amendment to cover TNCs.

Tort reform is not only the key to lower costs, but also the right thing to do. Lawmakers at both the state and federal levels must ensure the American legal system works for all.