Oklahoma state lawmakers are beginning the 2025 legislative session with, potentially, $300 million less than they had to appropriate last year.

A new study indicates that much of that shortfall can be attributed, indirectly, to excessive lawsuit costs in Oklahoma that are costing citizens jobs and income and costing the state tax revenue.

“The Economic and Fiscal Impact of Excessive Tort Costs on Oklahoma,” commissioned by the State Chamber Research Foundation and conducted by the Perryman Group, found that excessive tort costs have translated into the loss of $3.7 billion in gross product each year and almost 32,000 jobs in Oklahoma.

The loss of that economic activity also means a lower level of tax collections for state and local governments. The report found the decrease in tax receipts includes $195 million annually to the state and $162.5 million to local government entities.

A 2019 Oklahoma Supreme Court decision that repealed a cap on noneconomic damages accounts for a significant share of those losses. The report estimated that the elimination of the cap has caused nearly $2.7 billion in gross product losses from 2020 to 2023.

“We’ve got a good 10 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.”

In 2011, Oklahoma lawmakers voted to impose a $350,000 cap on awards for noneconomic damages in many, but not all, lawsuits.

The cap on noneconomic damages did not limit the amount of money that could be awarded to a plaintiff for actual damages, such as medical expenses, lost income, and similar impacts.

However, in a bizarre 2019 ruling, the Oklahoma Supreme Court struck down the provision of the 2011 law capping noneconomic damage awards, declaring it a “special law” since the cap would apply in cases “where the plaintiff survives the injury-causing event, while persons who die from the injury-causing event face no such limitation.”

The plaintiff in the case objected that his family was receiving $9.7 million in payment for an on-the-job accident that cost him parts of his arm. The plaintiff was seeking millions more in “noneconomic” damages in addition to the $9.7 million award he had already received.

The repercussions of the court’s decision are being felt through lost jobs across Oklahoma and tax shortfalls at the state Capitol today. The report noted that research has consistently shown that legal uncertainty translates into less business investment and job creation in a state.

The State Chamber report noted, “The costs of excess torts to the Oklahoma economy are substantial. Moreover, the civil justice environment in the state curtails potential economic development, leading to additional losses to individuals, businesses, and government entities across the state. In summary, excess tort costs impose substantial short-term and long-term harms to Oklahoma and its citizens.”

The Perryman Group’s analysis found Oklahoma lost $14.9 billion in gross product and 128,500 job years (one person working for one year) from 2020 to 2023 due to excessive tort costs.

The ripple effect of those losses is felt at the government level as well.

“When the total economic effects are considered (such as those measured in this study), the tax losses associated with excess tort costs are significant,” the report stated. “The Perryman Group estimates that the annual decrease in tax receipts includes approximately $195.0 million to the State of Oklahoma and $162.5 million to local government entities across the state, with cumulative losses over the 2020 through 2023 period of an estimated $776.1 million to the State and $646.6 million to local government entities.”

Removal of the cap on noneconomic damages comprised $135.9 million in tax receipt losses to the state and $102.8 million in tax losses to local government entities from 2020 to 2023.

The Perryman Group estimated that excess tort costs will continue to generate major harm to Oklahoma’s economic development from 2024 through 2033, including $24.1 billion in lost gross product.

“Any economic stimulus, whether positive or negative, generates multiplier effects throughout the economy,” the report stated. “In this instance, excess tort costs reduce productive activity across the economy. The resulting decrease in economic activity has notable negative effects on tax receipts to State and local governments.”