Texas Should Follow Florida’s Lead in Acting on Litigation Reform

From the ‘90s to early 2000s, Texas was the undisputed leader in civil justice reform. The question now is whether it intends to lead again by modernizing how medical damages are presented to juries or accept the consequences of falling behind as litigation costs spiral.

Reestablishing fairness and transparency in medical damages is the clearest place to start.

Insurance markets across the US are sending increasingly clear signals about how states price litigation risk. Florida, once described as a “judicial hellhole,” finally responded in 2023 by modernizing its civil justice systems and curbing inflated medical damages. Texas, meanwhile, hesitated.

Florida’s experience shows how quickly capital markets respond when the rules become fair and predictable. When litigation risk falls, competition returns. Texas is now testing the opposite hypothesis: What happens when reform stalls?

Nuclear Verdicts

The answer is hitting Texans in their wallets and difficult budget conversations around the dinner table. Insurance rates in Texas are climbing at one of the fastest paces in the country.

Texans now pay the fourth-highest combined home and auto insurance costs nationwide, with homeowners rates rising 19% in 2024 and auto insurance premiums jumping 25% in a single year.

But insurance rates aren’t the only things rising in Texas. In 2024, Texas led the nation in “nuclear verdicts,” or jury awards exceeding $10 million.

This creates a parasitic cycle where excessive verdicts feed off insurance pools, which reappear as higher premiums for families and businesses. As insurers absorb outsized jury awards, they respond by raising liability premiums for employers, who in turn pass those added costs along to consumers through higher prices and reduced services.

Florida’s Market Response

For more than a decade, Florida ranked second in nuclear verdicts. After the state’s 2023 reforms it fell to number 10. The market response was nearly instantaneous:

• Rate reductions: Forty-two auto insurers have since filed for rate decreases.
• Major players: Carriers such as State Farm, Progressive, and USAA have implemented multiple rounds of cuts, some exceeding 20% cumulatively.
• Increased competition: Insurers that previously fled the state are returning, creating a buyer’s market for the first time in years.

This is how insurance markets behave when legal risk becomes predictable. When insurers can accurately price exposure, rather than hedge against runaway verdicts and inflated damages, capital flows back into the market, competition increases, and prices fall.

Unpredictable litigation costs and large jury awards have been shown to drive up claim costs and push insurers to raise premiums or limit coverage, and when Florida’s recent reforms reduced legal volatility, carriers that had previously exited are now reconsidering and returning to the state, lowering risk and encouraging competition.

What Happens Next

The next step for Texas is neither radical nor untested. Lawmakers should revisit reforms that ensure juries see actual medical costs paid—not inflated sticker prices disconnected from reality—while increasing transparency around third-party litigation funding.

At the same time, defense counsel and in-house legal teams must advise clients to account for growing verdict volatility in Texas, reassessing risk exposure, insurance coverage, and venue strategy as long as reform remains stalled. Some insurers are already reducing their presences in Texas.

The heart of the issue in Texas is “phantom damages.” When juries are shown artificially inflated medical bills that bear little resemblance to what providers are actually paid, verdicts become detached from reality. This ends up being absorbed by insurers and passed along to policyholders.

Last session, the Texas Legislature advanced Senate Bill 30, but it fell short of the finish line. This legislation, modeled on Florida’s success, was designed to ensure juries see real economic costs rather than manufactured numbers. Intense opposition from trial lawyers stalled the bill.

If Texas acts, the path is clear. But the challenge for legislators isn’t just trying to keep up with states dedicated to reform, but dealing with new and anticipated litigation trends.

Among the most controversial trends are the rapid growth of the $16 billion third-party litigation finance industry. Outside investors are “betting” on Texas lawsuits. Courthouses are seen as profit centers, not justice centers.

Successful investors specialize in identifying and pricing risk. They wouldn’t deploy capital into Texas litigation unless the returns were consistently attractive. These arrangements incentivize longer, more aggressive litigation strategies—driving up settlement demands and verdict sizes regardless of the underlying merits of a case.

Some of this of the funding is also foreign, allowing those far beyond Texas to influence industries through tactical litigation.

Finally, Texas must strengthen fraud-prevention tools at the Texas Department of Insurance. Despite being understaffed, TDI recovered more than $58 million in restitution in 2024, demonstrating both the scale of insurance fraud in the system and the return on investment when enforcement resources are available. Expanding these capabilities would help reduce illegitimate claims that further inflate costs for honest policyholders.

Florida has shown that when you stabilize the legal environment, the market will respond positively. The 2027 legislative session will determine whether Texas reclaims its role as a leader—or whether it watches from the sidelines as our neighbors define our future.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Ryan Patrick is the CEO of Texans for Lawsuit Reform and previously served as US attorney for the Southern District of Texas, a Texas district court judge, and a law firm partner in private practice.

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