The Louisiana State Capitol in Baton Rouge, Louisiana.
(The Center Square) – Gov. John Bel Edwards has signed legislation overhauling Louisiana’s civil justice system, resolving perhaps the most contentious issue from this year’s legislative sessions.
The Democratic governor vetoed a similar measure the legislature passed during their regular session, which many business lobbyists and members of the Republican majority considered their top priority. Legislators and the governor’s office negotiated over House Bill 57 (now Act 37) by House Speaker Clay Schexnayder right up until the June special session’s final day. Edwards indicated after final adjournment that he would sign the bill.
The new law reduces the amount of money at stake in an injury claim needed to trigger the right to a jury trial from $50,000, the highest in the nation by far, to $10,000.
Louisiana plaintiffs would retain the right to sue an insurer directly, which many lawmakers oppose, arguing that juries might approve unwarranted settlements if they know an insurance company, not the defendant personally, will pay the damages.
But in most cases going forward, juries will never learn the insurer’s identity, though they would hear if the defendant had insurance at the opening and closing of the trial. The bill also allows courts to consider whether a plaintiff’s failure to wear a seat belt contributed to their injuries.
The law also establishes the state’s first “collateral source” rule, which is meant to ensure plaintiffs are only compensated for medical damages either paid or owed, as opposed to the “sticker price” of a procedure, which might be much higher. The goal is to let defendants and insurers avoid paying for “phantom injuries,” supporters say.
However, if there is a difference between the amount billed and the amount paid, judges would have the discretion after a verdict is rendered to award the plaintiff up to 40 percent of the savings. This provision allows an insured party to recover at least part of the cost of their insurance premiums and avoid being penalized for having insurance.
The bill does not extend the one-year deadline from the date of an alleged injury to file suit, which had been a feature of previous bills discussed that supporters said could give the parties more time to work out an agreement and avoid litigation. And while supporters said the changes could lead to cheaper auto insurance, there is nothing in the legislation that calls for lower rates.
“This bill will do nothing to lower insurance rates and will seriously limit the people of Louisiana’s access to justice,” said Eric Holl with Real Reform Louisiana, which opposed the changes. “Now that the tort reform fight is over, it’s time for the legislature to enact real insurance reform that will actually lower rates.”
But proponents say the changes will lead to fewer “frivolous” lawsuits, leading to cheaper auto insurance premiums, and improve the state’s overall legal climate.
“HB 57 is a strong first step for Louisiana’s working families and job creators that will help begin the process of rebuilding Louisiana’s insurance markets,” Louisiana Association of Business and Industry President and CEO Stephen Waguespack said. “Our work has only just begun.”
The Pelican Institute also supported the legislation.
“For far too long, Louisianans have felt the pain of lawsuit abuse, both on their personal finances and through the departure of jobs and opportunity from our state. HB 57 is an important first step forward, and we thank House Speaker Clay Schexnayder for showing true leadership and rejecting the entrenched special interests that have dominated the process for far too long,” Daniel Erspamer, chief executive officer of the Pelican Institute for Public Policy, said in a statement. “It’s past time to get Louisiana working, and we are excited to see this legislation help to make our state a place that creates and encourages, rather than chases away, jobs and opportunity for all its citizens.”