Legislators giving second look at auto insurance

Body

With Louisiana residents facing sky-high auto insurance premiums, state lawmakers are scrutinizing a state law that many say has prevented full transparency in jury trials on personal injury cases.

Five legislative committees with oversight of insurance and lawsuits met Wednesday as part of a series of hearings to research the causes and potential solutions to the state's insurance crisis. Legislators are expected to hold a special session on insurance issues next year.

Auto insurance rates in Louisiana are among the highest in the nation and have been for many years. One recent analysis ranked the state as the eighth most expensive for vehicle premiums.

Speaking to lawmakers on the House Insurance Committee, Commissioner of Insurance Tim Temple said Louisiana has double the national average of auto insurance claims with bodily injury.

Why Louisiana has so many more bodily injury claims — and to what extent that impacts insurance rates — is among the myriad issues legislators are investigating.

Temple said he is looking to Florida as an example, where its lawmakers recently passed a series of laws with industry support that limit the options of policy holders.

The factors driving those high premiums have been the subject of debate for years. Insurance companies have typically been unwilling to share all the variables that go into their formulas for calculating auto premiums. As a result, lawmakers have had to rely on information from lobbyists and lawyers.

Insurance companies blame the high rates on state laws they say have incentivized accident victims to file lawsuits against them. They have long called for "tort reform" or measures that limit the ability of persons injured to seek remedy and the amount of damages they might receive in court.

Proponents of tort reform direct their ire at trial attorneys, whom they refer to as "TV lawyers" or "billboard attorneys" and what they call their opportunistic clients.

"I think there was a mentality of it's an opportunity to get a quick influx of money, so many people that probably could have not gone to the doctor and been fine in a couple of weeks immediately go to an attorney," Rep. Brian Glorioso, R-Slidell, said. "The TV lawyers drive that industry, and that's where the costs are."

Personal injury lawyers who represent accident victims blame the high rates on a multitude of factors. Sen. Royce Duplessis, D-New Orleans, who is a personal injury lawyer, cited corporate executive salaries, marketing costs and poorly maintained roads as factors driving premiums.

The Senate Insurance Committee heard testimony regarding how medical expenses are handled during jury trials on personal injury lawsuits.

Doran Drummond, a Louisiana attorney who specializes on the topic on behalf of insurers, discussed a state statute that prevents juries from receiving evidence that shows the actual costs of a victim's medical expenses. The jury is only allowed to see evidence from the plaintiff regarding the billed amount for a medical expense.

The problem, Drummond said, is that the billed amount can be artificially inflated beyond the amount actually paid for medical treatment.

Personal injury lawyers often have standing agreements with doctors to whom they send their clients to for medical exams and procedures. Rather than collecting immediate payment from the accident victim, the doctors create artificially inflated invoices for the lawyers to use as evidence at trial, according to Drummond.

The jury ends up awarding a high amount based on those billed amounts, and the lawyers eventually give some of that back to the doctors. But it's still well below the artificial amount on the invoice, Drummond said.

The plaintiffs, themselves, are unaware of how everything is being paid and are simply following the direction of their attorneys, he said.

"Think about how this plays out over time in thousands and thousands of cases," Drummond said. "… How does that not drive everyone's auto insurance up?"

Sen. Kirk Talbot, R-River Ridge, suggested legislation that would either get rid of the statute that shields actual medical costs or amend it to allow juries to see evidence of the amounts billed as well as the amounts actually paid for medical expenses.

Under questioning from Duplessis, Drummond revealed that he came to testify at the request of the Louisiana Association of Business and Industry.

LABI was responsible for spearheading the tort reform legislation in 2020. At the organization's urging, lawmakers passed several bills that similarly took away legal tools that accident victims had to fight insurance companies in court. LABI promised the changes would reduce auto insurance rates quickly and significantly, by as much as 25%.

Not only did those discounts fail to materialize, but insurance rates actually increased, and lawmakers have made no significant efforts to roll back the changes.

Duplessis said Drummond's arguments were based on anecdotes. Lawmakers have yet to see any causal evidence or actuarial data that indicates whether personal injury lawsuits or anything else are to blame for high premiums in the state, the senator said.

Talbot said the hearings have only just begun and suggested such evidence could surface at a later date. The Senate Insurance Committee plans to meet every month until next year's regular session, he said.

The current law makes Louisiana an outlier among most other states, according to Talbot.

Alabama has "full transparency" when it comes to the medical billing evidence juries get to see, he said. Talbot also noted Tennessee allows defendants to present evidence of the average or reasonable costs of medical procedures in a particular ZIP code, a concept the law calls "usual and customary" costs.

Louisiana's liberal attitude toward distracted driving is also a problem, several lawmakers and advocates noted during the House Insurance committee.

Conservative lawmakers have repeatedly rebuffed attempts to pass legislation prohibiting the use of hand-held devices such as cellphones while driving. According to data presented to the committee by the Louisiana Department of Transportation and Development, distracted driving was a factor in more than 30% of crashes in Louisiana from 2021-23.

"I personally believe that it contributes to [accidents]," Temple said. "If you're looking at your phone, you're not looking at the road."

The Louisiana Illuminator is an independent, nonprofit, nonpartisan news organization and part of States Newsroom, the nation's largest state-focused nonprofit news organization.