A report on Illinois’ legal landscape says the state’s lawsuit-friendly policies cost billions of dollars and more than 80,000 jobs every year.
Critics say that’s an overstatement.
A study conducted by the Illinois Civil Justice League into the cost of tort, or claims of loss or harm, lawsuits and their effect on Illinois’ economy estimates the costs from higher liability insurance premiums and lawsuits themselves cost businesses $4.5 billion directly and another $7.7 billion in economic output every year. The study said this also costs Illinois 81,000 jobs annually.
“All major industry groups are negatively affected, with the retail trade, business services, health services, and other service industries experiencing the greatest losses,” according to the study.
The study also found that the state loses out on an estimated $397 million in annual revenues.
“Companies that are operating in the state have to account for the fact that they are likely to be sued in the state of Illinois,” ICJL President John Pastuovic said. “That just becomes the cost of doing business in the state and the companies that choose to stay here have to account for those losses.”
The job losses are what Pastuovic said really harms the citizens of Illinois, if they choose to remain in Illinois, that is.
“If we’re losing 80,000 new and meaningful jobs in Illinois, what does that mean for our workforce?” he asked. “They’re either going to have to settle for a low-paying job or they’re going to go to one of these neighboring states to get that better job.”
Mark Prince, president of the Illinois Trial Lawyers Association, refuted the numbers in the group’s study. He said the report blames a tiny fraction of the docket.
“They’re equating tort cases to all civil cases when they only account for four percent of the total docket,” he said.
Prince said the real reforms should come in terms of a crackdown on insurance companies that underwrite workers compensation and liability insurance policies.
“If you look at the workers [compensation] system, there have been billions, with a ‘b’, of dollars saved to the system since 2011 but if you talk to small businesses, they don’t see their work comp premiums go down,” he said.
Pastuovic called Prince’s comments “a distraction.”
Due to the 2011 reforms, the number of underwriters spiked to over 300, Prince said.
“They’re not coming to Illinois because they’re losing money,” he said.
The 2011 reforms were seen as a correction to the 2005 changes to workers’ compensation laws spearheaded by then-Gov. Rod Blagojevich, which made Illinois’ costs skyrocket.
Illinois lawmakers, mostly Democrats, passed legislation in 2017 supported by the legal community that would have created state oversight on the companies that issue workers’ compensation policies. It was vetoed by Gov. Bruce Rauner. In his veto message, he said the bill “fails to acknowledge the cost-drivers that are putting our state at a competitive disadvantage for jobs and growth. Instead, it imposes additional regulatory structures where they are not needed.”
According to a 2016 report by the state of Oregon, Illinois had the highest workers’ compensation rates in more than half of the 22 industries they study. It also had a higher workers’ compensation rate than any of its neighbors in the Midwest.
Prince said that the number of civil lawsuit has dropped significantly in recent years.
Liability consulting firm KCIC said in a September report that the number of asbestos and mesothelioma cases in Illinois – big money in the tort litigation world where Illinois is seen as a national leader in those cases – dropped significantly in recent months in the state and the rest of the nation.
This article was first published by Illinois News Network.