As our readers know from a couple of posts here at The Hayride yesterday, Gov. John Bel Edwards vetoed a trio of bills which would have reformed the legal climate in the state and, among other things, potentially ratcheted down car insurance rates. The main piece of legislation of the three was SB 418 by Sen. Kirk Talbot, which addressed five elements of tort reform that would have brought Louisiana closer in line with other states whose auto insurance rates are considerably less than here in the Sportsman’s Paradise, where rates rank as the most unaffordable in America.
Those five elements were:
- Doing away with the state’s seat belt gag order, in which a defendant in a car wreck lawsuit is not allowed to introduce evidence that the plaintiff wasn’t wearing a seat belt – that’s obviously a pretty major outlier, considering that medical expenses and other damages are likely to go through the roof if you’re not wearing a seat belt when you get in a wreck and it’s in fact illegal to be driving without the seat belt on.
- Reducing the state’s jury trial threshold from $50,000 to $10,000. Most states don’t even have a jury trial threshold, and the next highest number is Maryland’s at $15,000. There are law firms in the state, many of which are very well known as they’re plastered all over television and billboard ads, which have as a major piece to their business models the buying of judges with campaign contributions and the easy settlement of sometimes-dubious cases for $49,900 against insurance companies in large volumes; those cases would now be tried by juries and the TV lawyers’ bottom lines would be considerably affected.
- Changing the state’s prescription period, or statute of limitations, from one year to two years for the filing of personal injury lawsuits. This is thought to give more time for cases to be settled, perhaps without even a lawyer being necessary, and thus cutting down on the number of lawsuits which are actually filed.
- Eliminating “direct action” in personal injury lawsuits, which essentially means that instead of suing a defendant’s insurance company directly, Talbot’s bill would require the defendant be sued. This matters more as a moral statement than a major driver of insurance costs; there might be situations, largely rare, where lawsuits wouldn’t be filed if defendants have to be sued rather than insurance companies.
- Changing the state’s collateral source rule, which is where the big money in insurance rates is. The collateral source rule deals with what pots of money are used to pay an injured person’s medical bills arising from a car wreck, and the crux of the issue is the frequent difference between what a doctor says he’ll charge for medical procedures and what he’ll actually take. Insurers like Blue Cross/Blue Shield will often drive discounts for their members, particularly with in-network medical providers, but attorneys will find ways to get their clients treated out of network in order to run up costs which can be charged to defendants. Talbot’s bill would have instituted a more restrictive regime on damage recovery under the collateral source rule, though he threw in an amendment at the last minute granting injured parties in car wreck suits the right to collect 18 months’ worth of health insurance premiums.
Talbot was hoping that last amendment, pasted onto his bill in the waning hours of the 2020 regular session, would induce Edwards to sign the bill. It didn’t, and with that amendment on the bill he lost six House votes for final passage he originally had, which lowered its support from 72 votes, more than enough for a veto override, to 66 votes.
It doesn’t look like Talbot’s bill is going to be resurrected with a veto override in this current special session. Instead, based on action on the floor of the House of Representatives yesterday, there will be a new main tort reform bill and some new tactics brought to bear.
Tactics which, if the Legislature is willing to be bold enough, will put Edwards under the gun in a way no Louisiana governor has been in modern memory.
The new Omnibus Premium Reduction Act of 2020, or at least the main iteration of it, is HB 57, authored by House Speaker Clay Schexnayder, though as we understand it much of the bill was actually written by Rep. John Stefanski (R-Crowley). Schexnayder’s bill roared off of the House floor with a huge number – a 78-22 vote margin which didn’t even include Republican Paul Hollis, who missed the vote but certainly would have been a yes. Both the independents, Roy Daryl Adams of Clinton and Joe Marino of Gretna, were yes votes and so were 10 Democrats.
Schexnayder’s bill contains three of the five elements of Talbot’s tort reform effort. It leaves out direct action and the two-year prescription, neither of which are considered to be huge movers of insurance rates – the two-year prescription was actually initially a recommendation of the trial bar. And on the collateral source rule it takes a very interesting approach which might well hit the sweet spot to really move insurance rates – namely, that it loosens the evidentiary rules so that all information is now admissible in court.
We’ll illustrate this with a scenario. Let’s say there’s an injured party in a car wreck who has hurt his back and needs surgery. Our injured guy has Blue Cross, and the in-network doctor he would go to see charges a sticker price of $50,000 for the surgery – but only actually charges Blue Cross $20,000 per a deal he has with that insurer. The way things work in Louisiana, the injured’s attorney will attempt to collect the full $50,000 for medical expenses, because that’s where his contingency fee can go through the moon, and the defendant’s attorney, or more particularly the defendant’s insurance company, can’t introduce evidence of what those expenses actually are.
But should Schexnayder’s bill become law, all of that changes. The jury would get all of the information and then they’d decide what number to use, and a rule already in Louisiana law that a plaintiff in a lawsuit has a “duty to mitigate,” meaning you can’t just run up costs to inflate the amount of damages in a lawsuit, would kick in to those deliberations. This could be real tort reform that gives insurance companies the ability to fight overinflated personal injury suits and drives rates down.
It’s a way to allow the market to sort out some of these things rather than overlegislating and ending up with stupid rules that make the state dysfunctional.
Edwards is going to hate this bill, but assuming it gets the same strong support in the Senate it got in the House (it goes in front of the Senate’s Judiciary A Committee tomorrow), he’s going to have no choice but to sign it. And John Bel Edwards, a trial lawyer installed in the governor’s mansion by trial lawyers, will absolutely hate signing a tort reform bill.
Not just because he’ll get his veto overridden. Because the Legislature has decided to check-mate him with three resolutions introduced in the Senate over the weekend which will be heard in the Senate Judiciary A Committee tomorrow.
SCR 14 would suspend the seat belt gag order. SCR 15 would suspend the direct action statute. SCR 16 would suspend the jury trial threshold, taking it to zero. All three are authored by freshman Sen. Robert Mills (R-Bossier Parish), with an assist, we’re told, by Rep. Alan Seabaugh (R-Shreveport), who has identical resolutions in the House beginning to make their way through the process this week.
The Legislature can suspend provisions of Louisiana state law for a year via a majority vote. This was something which came to the attention of the capital crowd in the previous session when Rep. Blake Miguez (R-Erath) filed HCR 58, a resolution which would have suspended Edwards’ emergency powers and ended his economic shutdown from the COVID-19 virus. Mills’ resolutions would be veto-proof so long as they picked up 20 votes in the Senate and 53 in the House, a number well below what tort reform bills have been getting in this legislature.
They would be a major check-mate against Edwards. And while they would only last for a year, absolutely nothing would stop the legislature from renewing them yearly until there is a governor willing to sign a bill to make their changes permanent.
That is the stick forcing Edwards to sign Schexnayder’s tort reform bill and eliminate the necessity of overriding his veto.
A joke going around at the Capitol yesterday had it that these were the “F You” resolutions. They would certainly signify a level of independence, if not outright hostility, to Edwards’ frequent use of his veto pen, and they would prospectively usher in an era in which Louisiana’s legislature wrested control of the state’s lawmaking process from Edwards almost completely. Once the legislature begins suspending state laws with majority votes, there is very little about how Louisiana governs itself they can’t change if they so choose. And to say they can make Edwards’ life hell is an understatement.
The guess here is once Mills’ resolutions come out of Judiciary A and onto the Senate floor, you will see Edwards’ team begin to panic. They’re going to ramp up their rhetoric, the Advocate will begin churning out poison-pen articles trashing the “rogue” legislature and behind the scenes there will be lots of begging and pleading not to engage in such precedent. And at the end of the day Edwards will sign Schexnayder’s bill, because if he doesn’t he faces the prospect of a complete rout on tort reform.
But all of this depends on whether Louisiana’s legislators have learned some lessons from the regular session and galvanized into an organized body with a vision to win. We’ll see this week whether that’s the case.