A bill that’d wipe out millions of dollars in potential refunds owed customers by New Orleans bail bondsmen is headed to Gov. John Bel Edwards’ desk after quickly clearing the Louisiana House on Thursday without debate or opposition.
The measure, Senate Bill 108, would let New Orleans bail bond companies off the hook for an estimated $6 million in refunds potentially owed after state Insurance Commissioner Jim Donelon ruled in February that bondsmen illegally overcharged customers for 14 years.
Thursday's passage, on an 85-to-0 vote, marked a big win for a bail bond industry, which has found itself under concerted attack from criminal justice reform advocates who are pursing a national campaign to drive out the money bail system in America.
For tens of thousands of New Orleans bail bond customers forced to overpay for help getting out of jail, however, the move amounts to politicians erasing their claims for compensation and short-circuiting a court fight in favor of the bail bond industry, which lobbied hard for the legislation.
Critics call that unconstitutional.
Virtually every state lawmaker lined up behind the bill, which sailed through the Louisiana Legislature virtually unopposed. Several prominent Democrats joined its author, Democratic Sen. Gary Smith Jr., of Norco, in championing it as a business-friendly measure to guarantee fairness to bail bond companies facing repayments that owners contend could bankrupt them.
Just one person, state Sen. Dan Claitor, a Baton Rouge Republican, raised opposition, casting the lone vote against it in the Senate.
But several criminal justice reform groups loudly denounced it as an unconstitutional effort to shield bail bondsmen from accountability at the expense of low-income New Orleans families owed refunds under Donelon’s order.
A court challenge appears likely if Edwards signs it, which a spokeswoman said the governor's "inclined" to do but would need to review the bill's final language.
"Unfortunately, the Legislature has intervened to absolve these profitable companies of their misdeeds," said Micah West, an attorney with the Southern Poverty Law Center's Action Fund, in a statement blasting the vote. "Gov. John Bel Edwards should veto this unconstitutional legislation that puts the wants of the bail bond industry over the needs of New Orleans families."
Several bail bond companies have separately challenged Donelon’s order in administrative court. Administrative Judge William H. Cooper III, of Baton Rouge, on May 17 put any potential refunds on hold at least until a hearing could be held later this month.
The battle over New Orleans bail bond fees dates to an extra 1% “licensing fee” on New Orleans bail bond companies the state Legislature imposed in 2005, with the roughly $500,000 in annual revenue earmarked for the Orleans Parish Criminal District Court.
Bondsmen quickly passed the cost on to customers by raising the fees they charge to 13% of the total bail amount. But a separate state law capping that “premium” at no more than 12% remained unchanged.
The bill passed Thursday would also cancel that 1% license fee hike going forward, a far less controversial provision that's drawn support from all sides. That'd allow bail bond companies to drop fees back to 12% within pinching their profit margins.
The pass-through to bail bond customers appears to have gone unchallenged until the Southern Poverty Law Center lodged a complaint challenging the practice with Donelon’s Louisiana Department of Insurance in 2017.
The group scrutinized New Orleans bail practices as part of a wider campaign against the cash bail system, which they and other critics contend unfairly jails poor defendants.
Donelon mulled the issue for more than a year before ruling in February that New Orleans bail bond companies must pay back every dollar charged customers over the 12% cap.
New Orleans bail bond companies and their allies in the Legislature called it a good-faith mistake. State lawmakers who pushed the 2005 fee hike — including U.S. Rep. Cedric Richmond, D-New Orleans — said they’d always intended customers to pay the cost of the hike.
Lawmakers argued it’d be unfair to force bondsmen to cough up millions in refunds, especially considering the 1% fee hike left their profit margin unchanged.
Critics, including the Southern Poverty Law Center, which filed the initial complaint with Donelon’s Department of Insurance in 2017, paint the issue quite differently.
Even if New Orleans bail bond companies were confused or misled, they’ve argued, state law on the issue remained plainly clear, setting the maximum bail bond premium at 12% with just one lone exception, an extra half-percent fee in Jefferson Parish.
Will Snowden, director of the New Orleans Office of the Vera Institute, a criminal justice research group, said those calling on bondsmen to pay back the money — including him — lost the legislative battle to the bail bond industry, which argued they never pocketed the money.
Snowden said that wasn’t true. What New Orleans bondsmen actually did, according to Snowden, was illegally gouge customers so their own profit margins wouldn’t get squeezed when the fees they owed went up.
Neil Sawhney, an attorney for the SPLC, called collecting excess fees “theft” before a House committee and argued the proposed law “forgives bail bond companies that violated the law for more than a decade, allowing them to keep millions of dollars that they now owe … to New Orleans families.”
Advocate staff writer John Simerman contributed to this report.