High-dollar verdicts and liability expansion to blame
Georgia’s penchant for “nuclear” verdicts, liability expansion by the courts and acceptance of third-party lawsuit funding land the state a spot as a “Judicial Hellhole” for the second year in a row.
The American Tort Reform Foundation (ATRF) named Georgia as No. 6 this year, down one spot from last year. Judicial Hellholes are deemed the most unjust local courts and state civil justice systems in the country. The 2020 report ranks nine Judicial Hellholes while shining a light on lawsuit abuse and its effects.
“When we named Georgia a Judicial Hellholes last year, our hope was that it would be a wake up call for state leaders and the courts,” American Tort Reform Association (ATRA) President Tiger Joyce said. “Unfortunately, it appears they didn’t receive the message.”
Trial lawyers in the state spend millions on advertisements, publicizing their jackpot verdicts to recruit more clients, looking for their next big pay day. Between April and September last year, Georgia lawyers spent nearly $19 million on more than 200,000 local TV ads.
This year, several trial lawyer firms received millions of dollars from the COVID-19 federal Paycheck Protection Program. One big firm, Morgan & Morgan applied for and received $12-27 million in relief from five different states, including Georgia. During this same time period, the firm upped its ad spending from $50,000 per day to $300,000 per day.
“These are taxpayer dollars that were meant to help cover expenses like employee salaries and benefits,” Joyce said. “It’s disappointing to know that some of those funds were used to recruit potential clients for even more lawsuits.”
More and more, those lawsuits lead to record-breaking, or “nuclear” verdicts. These are multi-million-dollar awards, usually to compensate for a person’s subjective and immeasurable pain and suffering that are beyond compensation for a person’s injury. These awards typically result from a trial lawyer urging the jury to return a specific, extraordinary amount, misleading the jury to believe such compensation is standard.
Georgia’s trucking industry, which accounts for 1-in-14 jobs in the state, has borne the brunt of such excessive verdicts awarded in the state. Between 2017 and 2018, the average size of a jury verdict in a U.S. trucking case grew nearly 500%.
“Nuclear verdicts lead to higher insurance premiums, bankruptcy, and in the worst cases, some companies must shutter altogether,” Joyce said.
Georgia-based carrier CSS laid off its 55 employees and shut down after 38 years in business, due in part to rising insurance premiums. When this year’s insurance renewal came around, the costs were just too high for them to continue operating. Many other midsize and large carriers also closed their doors in 2019.
The Georgia Supreme Court also placed businesses that keep customer information on the hook for attacks by cyber criminals, even if the plaintiffs have not experienced any harm, through its reversal of Collins v. Athens Orthopedic Clinic.
Continuing their penchant for setting bad examples, this year Georgia courts made themselves more of an outlier by legitimizing third-party lawsuit funding instead of reining in the troubling practice when given the chance.
A federal judge said lawsuit funding agreements aren’t subject to Georgia’s statutory interest rate caps and the Georgia Supreme Court said third-party lawsuit funding doesn’t qualify as lending, so funders are able to charge whatever rate they please.
“Third-party funding of lawsuits is on the rise and is another avenue trial lawyers have discovered can pad their wallets even more,” Joyce said.
Lending firms and even doctors will invest with a lawyer or law firm, providing money to help fund lawsuits, in turn receiving a portion of any of any award or settlement funds. One Atlanta scheme marks up medical bills up to 3.5 times the market rate. The trial lawyer then recovers the enlarged medical bills against a trucker and its insurer, and rewards the lender for its role.
But if they don’t win the lawsuit, these arrangements leave patients stuck with the full, inflated amount billed for medical treatment and they don’t benefit from insurers’ price negotiations.
“The courts’ welcoming attitude indicates this trend will likely to continue growing, leaving consumers vulnerable to predatory practices,” Joyce said.
While the Georgia legislature seemed poised to address lawsuit abuse plaguing the state’s judicial system, its efforts were derailed by the COVID-19 pandemic.
The full 2020-2021 Judicial Hellholes rankings are:
View the full report at JudicialHellholes.org.
Pennsylvania lawmakers introduced liability reform bills to tackle lawsuit abuse. Proposed changes aim to enhance job creation and economic stability by limiting excessive litigation costs.
It’s time to pull back the curtain on third-party litigation financing and restore balance to our courts.
Lawsuit Abuse Awareness Week prompts reflection on Arizona’s civil justice system, highlighting excessive tort costs harming small businesses, job loss, and economic growth.
This week is aimed at educating both the public and our government leaders about how excessive litigation drains resources from businesses, stifles innovation, and ultimately hurts consumers and job creation.
By fostering understanding and promoting smart reforms, we can help create a more balanced civil justice system that serves all citizens.
The Pelican State deserves a judicial system that stands firmly on principles — not one swayed by the most recent political winds.
