Do Orleans Parish bail bondsmen fleece clients? State insurance department to ask court to settle legal issue

Jan. 25--Faced with an allegation that New Orleans bail bondsmen systematically overcharge criminal suspects in violation of state law, the Louisiana Department of Insurance will ask a state judge to step in to decide the issue, an agency spokeswoman said Wednesday.

A formal complaint lodged in September by the Southern Poverty Law Center claims nearly every bail bond firm operating in Orleans Parish illegally charges their customers 13 percent of the bail amount ordered by judges, rather than the 12 percent set by state statute.

That means felony suspects pay $100 too much on the average bond of $10,000, the SPLC complaint states.

At the heart of the dispute is a practice that bail bondsmen in New Orleans have routinely followed since 2005. That's when state lawmakers approved an increase from two percent to three percent in a bail bond "license fee" -- only for Orleans Parish.

Bondsmen argue that they have a right to pass that extra one percent on to their customers. But in its complaint, SPLC argues that nothing in state law authorizes it.

That additional license fee all goes to help fund the Orleans Parish criminal court, to the tune of about $550,000 a year in additional court funding -- and, according to the SPLC, illegal revenue for bondsmen.

The advocacy group names 21 bail bond companies and underwriters that it claims flout state law as a matter of practice. The group has asked state regulators to halt the practice, fine the companies involved, force them to issue refunds to clients and suspend or revoke their licenses.

The state agency formally responded to SPLC in a letter dated Wednesday, saying it would file a court petition for "declaratory judgment," which is essentially a request for a judge to settle the legal issue.

"Rest assured, the issues identified in your complaint will be addressed in due course," Deputy Insurance Commissioner Jeffrey Zewe wrote.

Ileana Ledet, spokeswoman for the state agency, said Wednesday that the SPLC's complaint would be deemed "closed pending resolution" of the court petition.

Ledet said the agency would likely file its petition in the 19th Judicial District in Baton Rouge, but she declined to say when, or why the agency was turning to a judge four months after receiving the SPLC complaint.

"We just felt this would be the best course of action," she said.

A spokeswoman for the advocacy group said it would wait for the agency to file its petition before commenting.

The complaint marked the latest attack by advocacy groups in Louisiana and elsewhere on a monetary bail system that they argue preys on the poor to fund the criminal justice system.

Matthew Dennis, a veteran New Orleans bail bondsmen who has railed against the tactics of SPLC and other groups, called the complaint an unfair attack on the industry.

Dennis did not dispute that bondsmen in the city charge customers 13 percent, only the notion that it is illegal or untoward.

"This is an attempt for them to run an entire industry into the ground with their stupid legal wrangling," Dennis said. "The bail bond industry continues to be a 10 percent industry. The rest of those fees are imposed by the government, state and local. This is their fee. Where in the world did we carve out this one specific thing in all of our lives that can't be passed on to the consumer?"

Dennis said it makes sense for the state agency to ask the courts to resolve the legal question in the complaint.

"It's smart," Dennis said. "They can punt it back to the judges who started the problem."

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