Tort Changes Stifling Oklahoma Businesses
OKLAHOMA CITY (Feb. 5, 2025) – Businesses in Oklahoma cannot grow and thrive if they do not have a good idea on how much it will cost to do business. Changes in Oklahoma’s legal landscape have created uncertainty among business owners that has stifled business growth. Tort reform has become a growing concern within Oklahoma’s business community. We cannot have a fully thriving business environment in Oklahoma without tort reform.
The State Chamber of Oklahoma cares deeply about Oklahoma’s business community and wants to ensure businesses are safeguarded from exorbitant levels of damage awarded to plaintiffs as well as unscrupulous exploitation of the judicial system by third parties who spend millions of dollars to fund lawsuits. The State Chamber Research Foundation investigated this important concern, contracting with The Perryman Group, one of the nation’s best economic and financial analysis firms, to analyze the financial toll Oklahoma businesses sustain because of such judicial imbalances.
The Perryman Group’s analysis of this concerning issue within the Oklahoma civil justice system found that excessive tort costs are losing Oklahoma $3.7 billion in gross product each year and almost 32,000 jobs. Excess tort costs resulted in Oklahoma losing $14.9 billion in gross product and 128,500 job years (one person working for one year) from 2020 to 2023.
The 2019 removal of caps on noneconomic damages is a contributing factor to excess tort costs and their economic fallout. The Perryman Group found that the elimination of the noneconomic damages caps caused nearly $2.7 billion in gross product losses and a loss of 20,330 job years from 2020 to 2023. The removal also contributed to a large portion of excessive tort costs from 2020 through 2023, which includes the following:
- 19.7% of lost expenditures
- 17.9% of decreased gross product
- 15.4% of decreased personal income
- 15.8% of lost employment
Business activity generates tax revenue, however, the heavy economic losses from excess tort costs correlate to a decrease in tax receipts that bring money to the state and its many government entities. The Perryman Group found that the annual decrease in tax receipts includes $195 million to the state and $162.5 million to local government entities throughout Oklahoma. Cumulative losses from 2020 to 2023 came to an estimated $776.1 million to the state and $646.6 million to local governments. Removal of the cap on noneconomic damages comprised $135.9 million in tax receipt losses to the state and $102.8 million in such losses to local government entities from 2020 to 2023.
“We’ve got a good ten years’ worth of data to show that the removal of that cap has had a massive economic impact to the state,” said Amanda Hall of the State Chamber Research Foundation. “The numbers show it – the lack of cap leads to devastating verdicts for businesses.”
“This is costing us businesses and jobs,” said Chad Warmington, president and CEO of The State Chamber. “The tort changes are a factor in competitiveness. Companies, when looking to relocate, take into consideration a state’s legal climate. This is horrible for the state of Oklahoma.”
The Perryman Group also determined that excess tort costs make Oklahoma less competitive, which hurts the state’s ability to attract desirable corporate locations and expansions. The detrimental effect of excess tort costs contributes to substantial annual economic development losses, including approximately $4.7 billion in annual gross product and nearly 29,500 jobs. Excess tort costs will continue to hurt Oklahoma far into the future. The Perryman Group anticipates excess tort costs causing major cumulative losses in economic development from 2024 through 2033, including $24.1 billion in gross product and almost 155,900 job years.
The Perryman Group concluded that the costs of excess torts are high in Oklahoma, imposing substantial short-term and long-term harm to the state and its citizens. Excess torts hurt Oklahoma’s ability to grow and become one of the most prosperous economies and competitive business states in the nation.
Read the study here.
Media Contact
Brent Skarky – 405-818-1939, brent@okstatechamber.com
