Controversial Bill To Lower Auto Insurance Rates Goes To Louisiana Governor

Jun. 30--After much negotiation and toil, the Louisiana Legislature finally approved on Tuesday legislation that changes how Louisiana courts operate in hopes that it will bring down auto insurance rates.

The bill received final legislative approval and was sent to Democratic Gov. John Bel Edwards, who will sign it into law, according to his executive counsel who was involved in the negotiations.

"The governor will sign the bill," said Matthew Block, Edwards top lawyer. "There was a lot of hard work put into getting a bill that is a compromise, unlike the bill approved during the last session. There's still a lot of work to do to see if the promises behind it play out, that the reductions will happen."

Over the past two years, and through the 2019 campaigns, business and insurance interests pushed what they called "tort reform," sweeping technical changes to evidence and procedure laws that would reduce the number of injury court cases that they claim is behind Louisiana's perennially high cost of the auto insurance needed to drive. Last year's "most important bill" became this year's after failing in 2019. Many legislators came to Baton Rouge with the sole purpose of passing tort reform and the debate dominated back-to-back sessions that were supposed to be about recovering from the coronavirus and balancing the state's operating budgets.

Legislators got close at the end of the regular session on June 1, passing a bill that turned out to have a fatal flaw mistakenly included. The measure was ultimately vetoed.

Then on Monday night, after almost a week of negotiation, the Senate gave its final OK to House Bill 57, which sponsor House Speaker Clay Schexnayder called the Civil Justice Reform Act of 2020. But moments before the House was to vote on sending HB57 to the governor, improper wording was discovered requiring a quick fix.

Repairs were made, but a new section also was added. The legislation was brought back up Tuesday afternoon, approved by the House, then rushed to the Senate for its approval too.

Business and insurance interests and their mostly Republican supporters contend that Louisiana's record of wrecks and injuries are in line with the rest of the country. But the way Louisiana courts handle lawsuits contribute to the high number of injuries going to court seeking resolution. They supported sweeping changes to technical evidence and procedure laws that would reduce the number of court cases and limit the awards of people who seek compensation for injuries caused by someone else.

Lawyers, judges and healthcare providers and their mostly Democratic allies who opposed sweeping tort reform counter that the changes would make court cases so difficult that injured people will be more likely to accept insurance companies' offers because going to court would become so difficult.

Both sides agreed that the prices of auto insurance policies were too high and in the end, they agreed on some changes to the way civil trials will be conducted starting on January 1.

Essentially, the Civil Justice Reform Act of 2020 makes some, but not all, of the changes sought by business and insurance interests.

The legislation lowers the "jury threshold" -- at what point the amount sought triggers having a jury decide rather than a judge -- from $50,000 to $10,000. Supporters wanted $5,000 saying the threat of jury trial would incentivize more settlements. Opponents said a lower threshold would marginalize municipal courts, which can't hold jury trials and resolve cases much faster, and swamp state district courts, many of which also have to juggle criminal and family dockets. Edwards was said to have sought a $25,000 jury threshold during negotiations.

HB57 sets rules and procedures for demanding a jury trial.

The bill also repeals the two sentences in state law that forbids using failure to wear seatbelts as a way to reduce what is owed for injuries caused in a car wreck. Whether the injured person was wearing a seatbelt would be allowed into the trial.

And the legislation also would forbid the mentioning of the defendant driver's insurance company and policy except at the beginning and end of the trial. Insurers argued, without proof, that juries tend to render higher awards when they know that an insurance company will be paying.

Though sweeping, the provisions of HB57 won't overhaul the state's civil justice as much as supporters had sought initially. Nothing is said about extending what is called prescription, that is the deadline for filing a lawsuit. Earlier bills wanted to extend the deadline from one year after the incident to two years in hopes that the longer period would lead to more resolutions that didn't involve the courts.

Schexnayder had allowed "collateral source" to be removed from the legislation, which angered some tort reform supporters. The complex common law theory was added back into the legislation Tuesday and was passed by both chambers.

Basically, a person whose injuries were treated by his own insurance company often receives a discount from what is regularly charged.

Tort reformers dismissed as "phantom damages" the difference between what was paid and what was charged implying that those injured for accident that was not their fault was underserving of the extra money. They argued that it is unfair to make a defendant pay damages for which the injured person has already been compensated. Opponents point to court decisions going back almost 150 years have ruled that those responsible for the accident shouldn't benefit because the person injured had bought their own insurance.

The legislation limits medical damages to amount actually paid. But trial judge after the verdict can look at the difference between what was paid and what was billed, then award up to 40% of the difference.

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