Tort law inefficiencies are a $US865 billion ($1067 billion) burden on the US economy every year and are having a direct effect on the cost of liability insurance, according to a new study.

The cost of America’s tort system is published by the Pacific Research Institute (PRI) in a paper entitled “Jackpot Justice: The true cost of America’s tort system”.

Director David Golden says the study calculates for the first time the direct and indirect costs of tort law. It includes not just damage awards, plaintiffs’ attorney fees, defence costs and administrative expenses, but also the effect on research and the rise in health-care spending.

The report also says the “out of control” US legal system has led to increases in the cost of goods and services and reduced US companies’ competitiveness on the international stage.

It says the US spends 2.2% of its gross domestic product on direct tort costs – more than double that of most developed countries.