BHI initiates Tort Law Project

from NewsLink, Vol. 1, No. 2, Winter 1997

According to the Insurance Information Institute, "The American civil liability system cost $161 billion in 1995, or 2.3 percent of the nation's gross domestic product (GDP), compared with 1.4 percent in 1970, and 0.6 percent in 1950." This fact reflects a growing concern in Massachusetts and throughout the country of the increasing burden that tort law is imposing on the economy.

In response to this concern, BHI has initiated a Tort Law Project aimed at assessing the effects on jobs, capital spending, tax revenues and other economic indicators that the tort law system imposes on Massachusetts businesses. The methodology is similar to, and based on, that used to evaluate the effects of taxes on the state economy. Insofar as tort law imposes a tax of about 2.3% on production, limitations on that law can be expected to have effects similar to a cut in taxes.

Since 1986, almost all states (including Massachusetts) have adopted some kind of tort reform legislation. Bill 896, now before the Massachusetts legislature, would further reform state tort law by, among other changes:

limiting to 15 years the period of time that a producer is liable for product defects;

making manufacturers responsible only for existing knowledge and science, rather than knowledge and science that appears after a product is manufactured;

imposing sanctions on frivolous lawsuits; and

changing the statute of limitations on slip-and-fall cases from three years to one.

Changes such as these would reduce the "tort tax" on Massachusetts businesses and individuals and would bring about predictable increases in production, employment, tax revenues and other indicators of economic activity.

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Format revised on 9/9/02 4:05 PM