By Frank De Varona
For many years, Florida was one of the world’s worst examples of a place where frivolous lawsuits made it difficult to do business. In fact, it landed our great state on a list designated as the “Judicial Hellholes” list that is kept by the American Tort Reform Association.
There are many different ideas about what a frivolous lawsuit is without a clear agreement on the exact definition, so let me try to provide an example that will help us make sense of it. If someone is in a restaurant with really rickety stairs and while walking up the stairs, the entire staircase falls in, a lawsuit filed in that case may very well pass the test of not being frivolous. If a woman wearing very high-heeled shoes gets her heel stuck in a crack in the sidewalk outside of a restaurant and drops hot coffee on herself as a result, it is a stretch to say that it would be reasonable to sue the restaurant for the coffee burn. It is my hope that you can see in both instances that the test is really about who is at fault.
For many years in Florida, lawyers have used loopholes to exploit the question of who is at fault and try to sue deep pockets for damages that were not directly caused by those deep pockets. In the 2023 legislative session, our governor and legislative leaders passed a lawsuit reform package that brought some commonsense to bear on making only those entities who were truly at fault for the damages to an injured party. That big lawsuit reform package is exactly what bounced Florida off the bad list and relegated us only to a watch list.
Why is this important? The list itself is not necessarily that big of a deal, but the message communicated from being on the list is that up until a year ago, Florida was a bad place to do business. Small businesses and big businesses alike have to factor in the cost of litigation in everything that they do. The more frivolous and random the lawsuits are, the less predictability there is for their business model. Furthermore, an unexpected expense like a lawsuit can absolutely devastate a small business. How do they deal with it?
First, they buy insurance. That cost gets passed along to consumers. Second, they have to pay out of pocket for additional attorneys every time they are hit with a legal expense. That cost gets passed along to consumers. By the way, when they are sued, if the insurance company has to settle to protect itself from a frivolous lawsuit, the insurance premium goes up. That expense just doesn’t get passed along to that one particular business. It affects every business in the insurance pool. All of those businesses then have to pass those costs along to consumers.
Multiply this across the economy with tens of thousands of frivolous lawsuits, and you can understand why then that the costs of lawsuits is often referred to as the tort tax. That’s because we all pay it.
If one attorney files a frivolous lawsuit and hits it big with a favorable jury, it is not the company paying those big awards, it is all of us: the ratepayers and the consumers in the marketplace.
This is why it was so critical that the legislature deal with this business of bringing common sense to the process. We are all tired of paying the tort tax. There were a few more things that the legislature in this past legislative session failed to address even though they tried. They failed to address third-party financing of lawsuits, and they failed to pass caps on non-economic damages for medical malpractice.
We have more to do, and we should not stop until fairness reigns supreme in the lawsuit system. Otherwise, we all pay, and that is a horrible injustice.
