The long-standing dispute amongst legislators regarding “Tort Reform” legislation and attempts to reduce insurance premiums took a step forward on the last day of Louisiana’s First Extraordinary Session of 2020, also known as sine dine.  House Bill 57, also entitled the “Civil Justice Reform Act of 2020”[1] authored by Speaker of the House, Clay Schexnayder (R-Gonzales), was approved by both the Senate and the House of Representatives on June 30th before being sent to Governor Edwards for signing.  Governor Edwards is anticipated to sign the bill, which represents a compromise between the original demands that both sides of the aisle have fought over during the past several legislative sessions.

The legislation, colloquially referred to as “tort reform”, has been a hot topic issue in the Louisiana legislature for the past few years.  In 2019, then-state representative Kirk Talbot (R-River Ridge) introduced HB 372 or the Omnibus Premium Reduction Act of 2019[2] which ultimately died in the Senate Judiciary committee.  In 2020’s Regular Session, now-Senator Kirk Talbot authored a very similar bill[3] that successfully made its way out of committee and was passed through both the House and the Senate before being vetoed by Governor Edwards.  Building off of the issues raised during the heated debates over the two previously failed bills, both sides compromised to reach an agreement that Governor Edwards will sign.

The proposed bills address the following common issues:

  1. Prescription Period – the time period after an incident in which a plaintiff must file a lawsuit or else have the claim barred (similar to statute of limitations in other jurisdictions);
  2. Collateral Source Rule – allows for a plaintiff to recover the full amount of what his/her healthcare provider charged for a particular service, regardless of the amount that was actually paid to healthcare providers on his/her behalf;
  3. Jury Threshold – the minimum amount of alleged damages demanded by a plaintiff that allows the case to be heard by a jury rather than by a judge;
  4. Direct Action Statute – law that allows a plaintiff to sue an insurer/insurance company directly;
  5. Seatbelt Gag Rule – a law that prevents a party from introducing evidence that the plaintiff was not wearing a seatbelt during an accident for purposes of proving comparative negligence and/or reducing damages.

The following chart reflects the general highlights of the differences and similarities in the three bills – as originally introduced – referenced above:

 

  Omnibus Premium Reduction Act of 2019 Omnibus Premium Reduction Act of 2020 Civil Justice Reform Act of 2020[4]
Author Rep. Kirk Talbot Sen. Kirk Talbot Rep. Clay Schexnayder
Prescriptive Period Extended from one year to two years from date of delictual or tortious action. Extended from one year to two years from date of any injury or damage arising from the operation or control of any motor vehicle, aircraft, or watercraft.  Most other delictual actions remain subject to a one year prescriptive period. Not addressed in this bill.
Collateral Source Would repeal collateral source rule and plaintiff’s recovery for medical expenses is limited to amount actually paid to healthcare provider by insurer or Medicare – not the amount that was billed. Would repeal collateral source rule and plaintiff’s recovery for medical expenses is limited to amount actually paid to healthcare provider by insurer or Medicare – not the amount that was billed. Evidence showing that the plaintiff’s medical expenses have been or will be paid shall be admissible.
Jury Threshold Reduced from $50,000 to $5,000. Reduced from $50,000 to $5,000. Reduced from $50,000 to $10,000.
Direct Action Would repeal the direct action statute and plaintiff could no longer sue the insurer of the alleged tortfeasor directly. Would repeal the direct action statute and plaintiff would only be able to sue the insurer of the alleged tortfeasor directly in very limited instances.

Not addressed in original draft.

 

Seatbelt Gag Rule Was not addressed in this bill. Would repeal the seatbelt gag rule and allow the plaintiff’s failure to wear a seatbelt to be considered as evidence of comparative negligence and damages.  If plaintiff was not wearing a seatbelt at the time of the accident, their damages will be reduced by 25%.

Not addressed in this bill, but was addressed in SB 9.[5]

SB 9 will allow a defendant to introduce evidence of the plaintiff’s failure to wear a seatbelt as evidence of the plaintiff’s comparative negligence and to reduce or mitigate damages.

Amendments Made During Session and included in version sent to Governor. This bill never made it to the Governor’s desk.

– Jury Threshold was only reduced from $50,000 to $35,000 – rather than the $5,000 proposed in the initial bill.

– In addition to the amount of medical expenses paid by an insurer and Medicare, the bill presented to the governor included payments made by Medicaid and any cost sharing amount paid by plaintiff.

– Final bill allowed for plaintiff to sue the insurer directly in more instances than allowed in initial bill.

– The existence of insurance coverage cannot be communicated to the jury, absent limited scenarios.

– Plaintiff’s recovery for medical expenses is limited to amount actually paid to the healthcare provider by the insurer, Medicare or any applicable cost sharing amounts paid/owed by plaintiff – not the amount that was billed.  But, the court will award plaintiff 40% of the difference between the amount billed and the amount paid to the medical provider.

End Result Died in Senate Judiciary Committee Vetoed by Governor Edwards Expected to be signed into law by Governor Edwards.

 

Supporters of this legislation contend that it will reduce automobile insurance rates across the state, as Louisiana ranks near the top of the most expensive insurance rates in the country.  Supporters of this legislation argued that each of the changes detailed above will result in reduced insurance rates.  For example, by altering the collateral source rule supporters of the bill contend that the damages awarded to plaintiffs will be less, while the plaintiff is still made whole.  In turn, this would reduce the amount the insurers will have to pay on claims or to satisfy judgments, which would allow for a reduction in rates.  Although not addressed in HB 57, tort reform supporters promoted an increase in the prescriptive period from one year to two years in hopes that the extended time frame would allow for disputes to be resolved prior to parties needing to file a lawsuit.

The Civil Justice Reform Act of 2020, once signed by Governor Edwards, will not go into effect until January 1, 2021 and will not apply to any action arising or pending prior to January 1, 2021.  Time will tell whether Louisianians will experience reduced insurance rates as a result of this legislation.  However, as of July 6, 2020, Louisiana’s largest automobile insurer had already reduced rates by 9.6%.[6]

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[1] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1185162

[2] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1121375

[3] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1164927

[4] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1180636

[5] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1183908

[6] https://www.nola.com/news/business/article_b206c09e-bf96-11ea-8a51-1b6e4653417f.html