Louisiana House and Senate committees spent hours Tuesday to send to each chamber nearly identically worded tort reform bills that supporters claim could lower auto insurance premiums by 10%.
The outcome was never in suspense as both committees are stacked with Republicans who ran last fall on promises of passing sweeping tort reform. And lobbying associations for various business communities have been pushing the legislation hard. In the end the Republicans on each committee voted to advance their measure, while the Democratic committee members opposed.
Still, the House Civil Law & Procedure committee talked about House Bill 9 for about seven hours before voting to advance the measure to full House on a vote of 11 to 5.
Over on the Senate side, Judiciary A committee debated about five hours before voting 4-3 to send Senate Bill 418 to the full Senate.
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Insurance Commissioner Jim Donelon, who has pushed the legislation before three previous Legislatures, says if passed without changes, the savings for consumers could be up to 25% in a few years for Louisiana’s 3 million or so drivers.
Supporters say the way Louisiana courts handle cases seeking recompense for injuries in car wrecks differs from the rest of the country and is the cause for the state having the highest average rates.
“The ways our laws are set up, it’s not a fair system,” said state Rep. Ray Garofalo, R-Chalmette and sponsor of HB9. He said several times that he consulted widely with insurance companies while putting together his bill.
Opponents point out that no data backs up those savings claims. In fact, an empirical look at the proposal found little, if any, impact on rates. The only thing the Omnibus Premium Reduction Act of 2020 is sure to do is to limit injured people’s access to the courts and to lower the damages they could collect if they prevail, opponents say.
“These are pretty massive changes to our civil justice system that are based on pretty much a guess,” said Rep. Mandie Landry, D-New Orleans.
Major changes in the state’s civil justice system will bring more insurance companies to the state, said state Sen. Kirk Talbot, R-River Ridge, and sponsor of SB418.
“What we need is competition,” Talbot said. “Competition will drive the rates down.”
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Both House Bill 9 and Senate Bill 418 would extend the deadline for filing a lawsuit from one year to two, called prescription; lower the amount of damages sought in order to have the case heard by jury instead of a judge from $50,000 to $5,000, called jury threshold; limit medical expenses recovered to the actual payments made, rather than what a health care provider often charges, called collateral source; require lawsuits to be filed against the other driver, rather than the insurance company, called direct action; to allow judges and juries to reduce damage awards if the injured plaintiff wasn’t wearing a safety belt.
Both bills also require insurance companies to reduce rates by 10% if their costs go down, unless they can prove to the insurance commissioner that the rate reduction would hurt their business enough to stop selling polices in Louisiana.
While having near identical language in the two bills is probably persuasive in the supporters’ efforts for winning the debate, under the rules, both chambers are going to have to approve a single bill before the legislation heads to the governor’s desk. The session has 19 more days before adjournment.
Donelon acknowledged that he could not be sure that the companies will actually reduce rates by a specific amount.
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Landry pointed to language in the bill which said that insurance companies can ask the insurance commissioner to not lower rates by 10%. Donelon said he would insist on the 10% reduction unless doing so threatened an insurance company’s insolvency.
Donelon ran from the east side of the State Capitol, where he appeared before the House panel, to the west side to give essentially the same testimony before the Senate committee.
State Sen. Cleo Fields, D-Baton Rouge, pointed out that the Legislature since the 1980s has passed a couple of sweeping “tort reform” bills into law on the promise of lower insurance rates. “At the end of the day we still have the highest insurance rates,” Fields said.
Donelon said the most important section in the multi-part legislation would lower the amount of damages sought in order to have the case heard by jury instead of a judge from $50,000 to $5,000.
He says Louisiana has far more minor soft tissue lawsuits than other states because trying a case worth $15,000 before an elected judge is an incentive for insurance companies to just settle for the limits of the policy rather than challenge the claims in court.
“That’s what feeds the TV lawyers,” Donelon said. “Our claims to litigation ratio are the nation’s highest and that’s the reason for high rates.”
The jury threshold was established in 1984 – at the insistence of the business community – and raised to $50,000 in 1994 partially to keep the cases from ending up in city and parish courts, which don’t have authority to hold jury trials.
Dropping the limit will require cases in the lower courts to transfer to the state district courts, said 21st Judicial District Judge Robert H. Morrison III, of Livingston. He added that criminal trials get precedence because of constitutional time limits, meaning civil trials to a jury will be postponed.
Scott Andrews, testifying in opposition to the ball for the Louisiana Bar Association, predicted that the bill could clog the civil district courts with a 33-50% increase in trial date requests and a sharp increase in managing court dockets.
State Rep. Thomas Pressley, R-Shreveport, questioned the argument that lowering the jury trial threshold would clog the courts.
“The statistics are showing we’re having less and less of trials,” he said, adding that 36 states have no jury trial threshold. “Every other state seems to be able to do this.”
Republicans on the committee voiced support for Garofalo’s bill, especially after several small business owners said insurance rates are rising rapidly and are higher than in neighboring states.
“We failed you, and we failed a lot of businesses in Louisiana,” state Rep. Mike Johnson, R-Pineville, told a woman who owns a business that moves mobile homes.
In House Committee on Civil Law
Voting for changes in civil justice system (11): Vice Chairman Mike Johnson, R-Pineville; Reps Beryl Amedée, R-Houma; Phillip DeVillier, R-Eunice; Michael Charles Echols, R-Monroe; Julie Emerson, R-Carencro; Larry Frieman, R-Abita Springs; Valarie Hodges, R-Denham Springs; Nicholas Muscarello, R-Hammond; Richard Nelson, R-Mandeville; Thomas A. Pressly, R-Shreveport; and Alan Seabaugh, R-Shreveport.
Voting against HB9 (5): Reps Robby Carter, D-Amite; Wilford Carter Sr., D-Lake Charles; Patrick O. Jefferson, D-Homer; Sam Jenkins, D-Shreveport; and Mandie Landry, D-New Orleans.
In Senate Judiciary A Committee
Voting for sweeping “tort reform” (4): Chairman Barrow Peacock, R-Bossier City; Sens Heather Cloud, R-Turkey Creek; Patrick McMath, R-Covington; and Robert Mills, R-Minden.
Voting against SB418 (3): Vice Chairman Jimmy Harris, D-New Orleans; Cleo Fields, D-Baton Rouge; and Jay Luneau, D-Alexandria.