Bill aiming to lower Louisiana auto insurance OK'd by House, but negotiations for final passage ongoing

Advocate, The (Baton Rouge, LA)

May 29--The Louisiana House approved Friday legislation aimed at lowering the cost of automobile insurance.

On a vote of 72 to 28, representatives approved one of the most controversial measures of the shortened session -- one that was hung out as possible gubernatorial veto followed by threatened override effort.

But Republican supporters spent much of the morning negotiating with the staff of Democratic Gov. John Bel Edwards, before allowing Senate Bill 418 to advance while talks continued with the hope for an agreement by 6 p.m. Monday when the regular legislative session adjourns.

Supporters contend that Louisiana has the nation's second highest priced auto insurance because the state's civil justice system differs so much than the rest of the country. The legislation changes technical legal language in order to bring the state's courts more in line, which supporters argue will lower policy prices by 10%, maybe 25%.

"I truly believe this is the number issue, aside from the COVID," state Rep. Ray Garofalo, the Chalmette Republican who handled Senate Bill 418 on the floor of the House. "The reason the costs are so high is because Louisiana is out of step with the rest of the country ... Our tort laws are different than virtually every other state."

The issue was an issue during the fall 2019 campaigns and number of legislators came to Baton Rouge wanting to pass this legislation. One hundred of the Louisiana Legislature's 144 members, mostly the Republicans, received about $508,000 in campaign contributions directly from Louisiana Association of Business & Industry and insurance PACs. Thirty-one members of the House and Senate received about $110,000 in direct contributions from legal community political action committees.

Opponents argue that the measure dramatically reduces the rights of people to seek recompense through the courts for injuries that were not their fault and insurance companies are slow to pay. They also noted that despite claims of lower policy prices, no wording in the legislation actually requires insurers to reduce premium costs.

"You keep using the word 'mandatory,' but I don't see that in the bill," said state Rep. C. Denise Marcelle, D-Baton Rouge.

"The word 'mandatory' is not in the bill," Garofalo replied, adding that Insurance Commissioner Jim Donelon sees his job as forcing lower rates if a company's costs go down during the next 36 months.

"So, for the number one issue we still haven't made it mandatory," said Democratic Baton Rouge, Rep. Ted James, who was attending his first House meeting of the session.

"If we don't do anything, we won't see a reduction, I can guarantee that," Garofalo said.

Rep. Royce Duplessis, D-New Orleans, pointed out that nobody from the insurance industry was called to testify.

"Are y'all willing to wear it doesn't bring down rates," Carter said. A number of previous laws that reduced injured people's rights in court over the past 30 years were enacted on business community promises of lower rates that were not realized.

"If you put your name on the bill you have to be responsible for it," Garofalo responded.

Rookie Rep. Larry Frieman, R-Abita Springs, said "the number one issue" for his constituents is the cost of car insurance, which is about double the national average. He added that he didn't want to return to the North Shore and tell voters that nothing was done.

"If we do nothing we have failed and this session is a failure," Frieman said.

Senate Bill 418 would:

--Extend the deadline for filing a lawsuit from one year to two, called prescription. Both sides agree on this point, saying lawsuits often are filed to protect rights that could be settled with a few more months leeway.

--Lower the amount of damages sought in order to have the case heard by jury instead of a judge from $50,000 to $5,000, called jury threshold. Supporters say everyone is entitled to have their case heard by a jury. Opponents counter that the lower amount would slow resolution as the trial dockets fill up with minor cases that were once heard in lower courts. The jury threshold was established in 1984 -- at the insistence of the business community -- and raised to $50,000 in 1994 partially to keep the cases from ending up in city and parish courts, which don't have the authority to hold jury trials.

--Limit medical expenses recovered to the actual payments made, rather than what a health care provider often charges, called collateral source. Supporters say an injured plaintiff should be recompensed only what his or hers medical insurance actually paid out, rather than the usually higher "book value" of an injury's treatment. Opponents point out that some treatments are not fully covered, such as, helicopter evacuations, of which insurance will pay just a fraction leaving the injured person on the hook for the rest.

--Require lawsuits to be filed against the other driver, rather than the insurance company, called direct action. Supporters argue that juries are more likely to hammer an insurance company than the individual, who after all is responsible for the accident. Opponents counter this section of the law essentially hides the insurers and the coverage from juries.

--Allow judges and juries to know and consider reducing damage awards if the injured plaintiff was not wearing a safety belt. Supporters contend that regardless of fault, a person who broke the law by not wearing seatbelts should not benefit from likely receiving harsher injuries. Opponents point out that the failings of the injured party doesn't mitigate the fact that they were injured through an event not their fault and that proving what the injuries might have been had seatbelts been worn, will require expensive experts and thereby drive up the cost of litigation.

Voting for sweeping changes to civil court system (72): Speaker Schexnayder, Reps Amedee, Bacala, Bagley, Beaullieu, Bishop, Bourriaque, Brass, Brown, Butler, Carrier, Coussan, Crews, Davis, Deshotel, DeVillier, DuBuisson, Dwight, Echols, Edmonds, Edmonston, Emerson, Farnum, Firment, Fontenot, Freiberg, Frieman, Gadberry, Garofalo, Goudeau, Harris, Henry, Hilferty, Hollis, Horton, Huval, Illg, Ivey, M. Johnson, Kerner, LaCombe, Mack, Magee, Marino, McCormick, McFarland, McKnight, McMahen, Miguez, G. Miller, Mincey, Muscarello, Nelson, C. Owen, R. Owen, Pressly, Riser, Romero, Schamerhorn, Seabaugh, St. Blanc, Stagni, Stefanski, Tarver, Thomas, Thompson, Turner, Villio, Wheat, White, Wright and Zeringue.

Voting against SB418 (28): Reps Adams, Bryant, Carpenter, G. Carter, R. Carter, W. Carter, Cormier, Cox, Duplessis, Freeman, Green, Hughes, James, Jefferson, Jenkins, T. Johnson, Jones, Jordan, Landry, Larvadain, Lyons, Marcelle, Moore, Newell, Phelps, Pierre, Selders, and Willard.

Not voting (4): Reps Gaines, Glover, Hodges and D. Miller.

Staff writer Tyler Bridges contributed to this report

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