The Democratic governor and Republican legislators plan to spend the weekend negotiating long-fought legislation that supporters say will lower the cost of auto insurance but opponents contend will limit the ability of injured people seeking compensation through the courts.
Gov. John Bel Edwards “has some concerns and we’re going to work with him the best we can to get a bill that he can sign,” said state Sen. Kirk Talbot moments after the Louisiana House approved on a vote of 72-28 his Senate Bill 418 – one of the most controversial measures of the shortened session and one that was hung out as a possible gubernatorial veto that supporters threatened to try to override.
Amendments added in the House means the legislation returns to the Senate. Talks are expected to continue until an agreement can be hammered out, added to the bill, then rushed between chambers for approval, all before 6 p.m. Monday when the regular legislative session adjourns.
Talbot and his team from the business and insurance community spent much of Friday talking with the governor's staff and sometimes to Edwards directly looking for compromises on some points in the four-part bill and acceptable wording on other points.
“I would prefer that a bill gets signed into law, one that I think is reasonable,” Edwards said while the House was downstairs at the State Capitol debating the bill.
Supporters contend that Louisiana has the nation’s second highest priced auto insurance because the state’s civil justice system differs so much than the rest of the country. The legislation they call tort reform changes technical language in order to bring the state’s courts more in line, which supporters argue will lower policy prices by 10%, maybe 25%. Opponents counter that the measure dramatically reduces the rights of people to seek recompense through the courts for injuries that were not their fault. They also noted that despite claims of lower policy prices, no wording in the legislation actually requires insurers to reduce premiums.
The issue has been one of the most partisan and confrontational for the past several years. It leaked into Edwards' reelection campaign and was the cornerstone of Republican legislative campaigns.
One hundred of the Louisiana Legislature’s 144 members, mostly the Republicans, received about $508,000 in campaign contributions directly from the Louisiana Association of Business & Industry and insurance industry PACs that pushed the bill. Thirty-one members of the House and Senate, mostly Democratic, received about $110,000 in direct contributions from legal community political action committees that opposed the measure.
“I truly believe this is the number one issue, aside from the COVID,” state Rep. Ray Garofalo, R-Chalmette, told his House colleagues during the debate. “The reason the costs are so high is because Louisiana is out of step with the rest of the country."
He said that insurance industry officials agreed to lower prices if the measure became law. Some representatives were skeptical of claims that were not written into the measure.
“You keep using the word ‘mandatory,’ but I don’t see that in the bill,” said state Rep. C. Denise Marcelle, D-Baton Rouge.
“The word ‘mandatory’ is not in the bill,” Garofalo replied, adding that Insurance Commissioner Jim Donelon sees his job as forcing lower rates if an insurance company’s costs go down during the next 36 months because of the legislation.
“So, for the number one issue we still haven’t made it mandatory,” said Democratic Baton Rouge Rep. Ted James.
“If we don’t do anything, we won’t see a reduction (in insurance rates), I can guarantee that,” Garofalo said.
Rep. Royce Duplessis, D-New Orleans, pointed out that nobody from the insurance industry was called to testify during hours of committee hearings.
“Are y’all willing to wear it if it doesn’t bring down rates,” asked state Rep. Robby Carter, D-Amite. A number of previous laws that reduced injured people’s rights in court over the past 30 years were enacted on business community promises of lower rates that were not realized.
“If you put your name on the bill you have to be responsible for it,” Garofalo responded.
Rookie Rep. Larry Frieman, R-Abita Springs, said “the number one issue” for his constituents is the cost of car insurance, which is about double the national average. He added that he didn’t want to return to the North Shore and tell voters that nothing was done.
“If we do nothing we have failed and this session is a failure,” Frieman said.
After the vote House Speaker Clay Schexnayder, R-Gonzalez, mused that the chances are pretty good that the bill will land on the governor's desk Monday. “It’s a sad day to do all the work we’ve done and not get it through," he said.
"We’re going to get something done," said an ebullient Stephen Waguespack, head of LABI.
Senate Bill 418 would:
• Extend the deadline for filing a lawsuit from one year to two, called prescription. Both sides agree on this point, saying lawsuits often are filed to protect rights that could be settled with a few more months leeway.
• 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 for most personal injury cases, called jury threshold. Supporters say Louisiana has the highest jury threshold in the nation. Lowering the amount needed would allow insurance company defendants greater flexibility and could lead to more settlements. Opponents counter that the lower amount would slow resolution as the trial dockets fill up with minor cases that were once heard in lower courts. 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 the authority to hold jury trials. The parties are expected to find an amount somewhere between $5,000 and $50,000.
• Limit medical expenses recovered to the actual payments made, rather than what a health care provider often charges, called collateral source. Supporters say an injured plaintiff should be recompensed only what his or hers medical insurance actually paid out, rather than the usually higher “book value” of an injury’s treatment. Opponents point out that some treatments are not fully covered, such as, helicopter evacuations, of which insurance will pay just a fraction, leaving the injured person on the hook for the rest. Both sides are working on wording that would allow the courts to also consider expenses left uncovered by the injured person's medical insurance.
• Require lawsuits to be filed against the other driver, rather than the insurance company, called direct action. Supporters argue that juries are more likely to hammer an insurance company than the individual, who after all is responsible for the accident. Opponents counter this section of the law essentially hides the insurers and the coverage from juries.
• Allow judges and juries to know and consider reducing damage awards if the injured plaintiff was not wearing a safety belt. Supporters contend that regardless of fault, a person who broke the law by not wearing seatbelts should not benefit from likely receiving harsher injuries. Opponents point out that the failings of the injured party doesn’t mitigate the fact that they were injured through an event not their fault and that proving what the injuries might have been had seatbelts been worn will require expensive experts and thereby drive up the cost of litigation.
Voting for sweeping changes to civil court system (72): Speaker Schexnayder, Reps Amedee, Bacala, Bagley, Beaullieu, Bishop, Bourriaque, Brass, Brown, Butler, Carrier, Coussan, Crews, Davis, Deshotel, DeVillier, DuBuisson, Dwight, Echols, Edmonds, Edmonston, Emerson, Farnum, Firment, Fontenot, Freiberg, Frieman, Gadberry, Garofalo, Goudeau, Harris, Henry, Hilferty, Hollis, Horton, Huval, Illg, Ivey, M. Johnson, Kerner, LaCombe, Mack, Magee, Marino, McCormick, McFarland, McKnight, McMahen, Miguez, G. Miller, Mincey, Muscarello, Nelson, C. Owen, R. Owen, Pressly, Riser, Romero, Schamerhorn, Seabaugh, St. Blanc, Stagni, Stefanski, Tarver, Thomas, Thompson, Turner, Villio, Wheat, White, Wright and Zeringue.
Voting against SB418 (28): Reps Adams, Bryant, Carpenter, G. Carter, R. Carter, W. Carter, Cormier, Cox, Duplessis, Freeman, Green, Hughes, James, Jefferson, Jenkins, T. Johnson, Jones, Jordan, Landry, Larvadain, Lyons, Marcelle, Moore, Newell, Phelps, Pierre, Selders, and Willard.
Not voting (4): Reps Gaines, Glover, Hodges and D. Miller.
Staff writers Tyler Bridges and Will Sentell contributed to this report