By John O’Brien  |

June 2, 2010

SAN FRANCISCO (Legal Newsline) – New Jersey and New York are the two states with the highest combination of tort costs and risk, according to a study published by free-market think tank Pacific Research Institute.

The U.S. Tort Liability Index, also produced by the economic research organization Manufacturers Alliance/MAPI, ranked Alaska and Hawaii first and second, respectively, as the states with the lowest tort costs and risks.

North Carolina fared the best of the continental states, finishing third ahead of South Dakota and North Dakota.

The Index, now in its third edition, was authored by Lawrence J. McQuillan, Ph.D., director of Business and Economic Studies, and Hovannes Abramyan, M.A., adjunct public policy fellow.

“Direct tort costs account for almost 2 percent of GDP in the United States-that’s the highest in the world,” said Dr. Lawrence McQuillan, one of the study’s authors.

“These high costs impact American businesses when firms have to divert revenue to fight lawsuits. But all of us ultimately shoulder the burden through higher prices and insurance premiums, lower wages, restricted access to health care, less innovation and higher taxes to pay for court costs.”

Hovannes Abramyan co-authored the study. He said job growth was 57 percent greater in the 10 states with the best tort climates than in the 10 states with the worst tort climates.

Those 10 states, starting at the bottom, were New Jersey, New York, Florida, Illinois, Pennsylvania, Missouri, Montana, Michigan, Connecticut and California.