Bail bond firms in New Orleans are looking to the Louisiana Legislature to resolve a legal standoff with state Insurance Commissioner Jim Donelon over the fees they've been charging customers for the past 14 years.
Donelon ordered bail bondsmen in New Orleans to write partial refunds to tens of thousands of customers since 2005 — totaling an estimated $6 million — after finding most bonding companies in the city routinely charged customers premiums over the statewide 12 percent limit.
Now the bail bonding industry is turning to the Legislature to settle the dispute — which otherwise appears headed to court — and let them off the hook for the refunds.
State Sens. Gary Smith, D-Norco, and Troy Carter, D-New Orleans, are pushing a bill that would cancel the ordered refunds and clarify the fees bail bond companies can charge in Orleans Parish. The Senate Insurance Committee voted unanimously to advance the amended Senate Bill 108.
Most bail bond companies in New Orleans have been charging customers 13 percent premiums on the cost of bail ever since the Legislature hiked the state "licensing fees" for bail bonds in Orleans Parish from 2 to 3 percent in 2005.
Passing the increased fee on to customers trying to get themselves, friends or family members out of jail preserved bail bond companies' profit margins. But the Legislature at the time didn't hike the cap on how much of a premium bondsman can charge customers.
Donelon ruled the extra charge on customers was illegal and ordered the refunds in February after the Southern Poverty Law Center filed a complaint. The move drew howls from the local bail bond industry, which promised to challenge the move in court.
SB108 initially would've allowed New Orleans bail bondsmen to charge higher 13 percent fees on customers — essentially legalizing the longstanding practice Donelon ruled was illegal — but was hastily rewritten in the Senate Insurance committee Tuesday after critics denounced it as a predatory tax on the poor.
Instead, the legislation would undo the 2005 "licensing" fee hike on Orleans Parish bail bonds and leave the overall premium in the city at 12 percent. That extra 1 percent fee funds the Orleans Criminal District Court to the tune of about $500,000 a year.
Carter said the bill would still retroactively legalize the 13 percent premiums charged by most New Orleans bail bondsmen over the last 14 years, meaning they wouldn't have to shell out the refunds ordered by Donelon.
Carter and state Rep. Katrina Jackson, D-Monroe, both took pains during a Tuesday hearing to describe the proposal as a fair, business-friendly and insisted it shouldn't be viewed as part of the growing national controversy over the money bail industry.
"I'd be the last person who'd want to sit here and do anything that'd negatively impact the poor," said Carter.
New Orleans lawmakers in 2005 intended for bail bond customers — not the bail bondsmen — to pay the 1 percent fee to fund Criminal District Court, according to the bill's backers.
Carter said U.S. Rep. Cedric Richmond, D-New Orleans and the 2005 bill's sponsor, former New Orleans Democratic state Rep. Charmaine Marchand, both told him they wanted to increase fees on customers, not shrink the bond company's profit margins. Richmond, then a state lawmaker, helped push the 2005 fee hike through the Legislature.
"I want to make it clear, this is not whether or not you believe the (bail bond) industry needs reform," said Jackson. "These are Louisiana businesses who acted under the color and intent of the law for a long time."
But that's exactly what a number of criminal justice reform advocates who turned up at Tuesday's committee hearing saw the issue as.
Bail bond companies charging the extra 1 percent violated the "plain meaning of the law" for 14 years, said Neil Sawhney, an attorney with the Southern Poverty Law Center in New Orleans. Those customers "are the victims of this legislation, not the bail bonding industry."
Increasing the premiums charged bail bond customers — as Smith's bill initially would've done — would be done "with the sole purpose of padding the bail bonding industry's bottom line" at the expense of some of New Orleans' poorest families, Sawhney said.
Among the customers charged the 13 percent premium — and owed a refund under Donelon's order — is Jerome Morgan, who spent 20 years in prison for murder before a judge overturned his conviction in 2014 and declared him innocent.
New Orleans District Attorney Leon Cannizzaro then spent the next 14 months deciding whether to put Morgan back on trial for the same charges despite the exoneration.
Morgan, who drove from New Orleans to Baton Rouge to testify against the bill, said he had to turn to relatives to pull together enough money — $3,250 — for a bail bondsman to post his $25,000 bond as Cannizzaro weighed a new trial. His refund on the extra 1 percent under Donelon's order would come to $250.
"The bail bond company did not return any of the money I paid them even though I was found factually innocent of the charges," Morgan told state senators.
Carter bristled at some of the criticism — arguing the bill wouldn't increase fees because New Orleans bondsmen have been charging 13 percent for years — before amending the bill.
"This bill purely talks about correcting what was a legislative oversight which was brought to attention by a directive from the commissioner of insurance," Carter said. "I'll be more than happy to be at the table to talk about more reform measures. But this is not the instrument to do it."
Carter said the Orleans Criminal District Court has already petitioned the local city government to cover the roughly $500,000 annual shortfall caused by the fee dispute.
Sawhney, the SPLC attorney, said he'd have to review the new language of the bill before commenting on whether his group would still oppose it.
Morgan, the exonerated former prisoner, said lowering bail fees for future New Orleans customers sounded alright but the proposal still left him unsatisfied.
"I don't get my money back," Morgan said. "The poor still have to pay."