As affordability concerns grow across the United States, a newly released report highlights a hidden financial burden for residents of the Los Angeles, Long Beach, and Anaheim region: a “tort tax” of $3,972 per person annually. This figure represents the additional cost each individual bears due to California’s litigious environment.
Economic Impact of Lawsuit Abuse
The report, titled “The Economic Benefits of Tort Reform” and compiled by the Perryman Group, details how lawsuit abuse impacts Californians through increased costs, job losses, and reduced economic activity. The total impact of excessive tort costs on the Los Angeles, Long Beach, and Anaheim economy is estimated at $50.8 billion in lost gross product each year.
The report indicates that Californians lose more than $32.4 billion annually in direct costs related to the production of goods and services. This economic drain as well impacts government revenue, with California’s state government losing over $5.3 billion and local governments losing $4.4 billion each year.
The Role of the ADA
The report points to the Americans with Disabilities Act (ADA) as a source of frequent lawsuits, often based on technical violations where no actual harm occurred. Attempts to reform the ADA have been ongoing for over 25 years.
Last year, Senate Bill SB 84, authored by Senator Roger Niello, offered a potential path toward reform by providing businesses 120 days to correct ADA violations before facing consequences. Although, the bill was blocked when the Assembly Judiciary Committee refused to schedule a hearing. Even Senator Ben Allen acknowledged the need to “fix this problem” during a Senate hearing on the bill.
SB 84 could be considered again in 2026, offering lawmakers another opportunity to enact meaningful reform.
Frequently Asked Questions
What is the “tort tax”?
The “tort tax” is the hidden cost each person in the Los Angeles, Long Beach, and Anaheim region pays annually to compensate for California’s litigious climate, totaling $3,972 per person this year.
How does lawsuit abuse impact the economy?
Lawsuit abuse leads to losses of $50.8 billion in gross product each year in the Los Angeles, Long Beach, and Anaheim economy, as well as over $32.4 billion in direct costs related to the production of goods and services.
What was Senate Bill SB 84?
Senate Bill SB 84 was a bipartisan bill authored by Senator Roger Niello that would have given businesses 120 days to fix ADA violations before facing consequences, but it was blocked in committee.
Considering the financial strain on individuals and businesses, what changes, if any, would you like to see in California’s civil justice system?
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