Louisiana’s Leges Begin To Understand Leverage, Pass Tort Reform

Yesterday afternoon, something happened which not too long ago would have been considered a miracle: a relatively aggressive tort reform package passed the Louisiana House of Representatives with 84 votes and the Senate with 35 votes, and John Bel Edwards, a plaintiff lawyer sworn to allegiance with the trial bar, said in a press conference following the passage of the bill that he would sign it.

Edwards had no choice. With 84 votes in the House and 35 in the Senate, his veto of HB 57 would easily have been overridden.

While several bills seeking to reform the civil justice system circulated this year, it was House Bill 57 by House Speaker Clay Schexnayder that achieved final passage. It would reduce the amount of money at stake needed to trigger the right to a jury trial from $50,000, the highest in the nation by far, to $10,000.

Louisiana plaintiffs would retain the right to sue an insurer directly, which has been a point of contention. Some lawmakers argued knowing an insurance company will pay the plaintiff’s damages makes juries more likely to side with plaintiffs.

But in most cases under House Bill 57, juries would never learn the insurer’s identity, though they would hear if the defendant had insurance at the opening and closing of the trial. The bill also allows courts to consider whether a plaintiff’s failure to wear a seat belt contributed to their injuries.

Lawmakers amended HB 57 Tuesday to establish a “collateral source” rule in Louisiana law, which is meant to ensure plaintiffs are only compensated for medical damages either paid or owed, as opposed to the “sticker price” of a procedure, which might be much higher. The goal is to let defendants and insurers avoid paying for “phantom injuries,” supporters say.

However, if there is a difference between the amount billed and the amount paid, judges would have the discretion to award the plaintiff up to 40 percent of the savings, explained Rep. John Stefanski, a Crowley Republican.

“I think [the bill] represents a real compromise,” Edwards said.

The legislation does not include measures sought by Democrats, such as a mandate for insurance companies to lower rates or an expiration date if rates don’t go down. Rep. Denise Marcelle, a Baton Rouge Democrat, said she was willing to vote for the bill but urged her colleagues to come back to the table in future sessions if rates don’t go down.

“I’m worried that this is really going to delay justice,” said Rep. Robby Carter, an Amite Democrat who said a lower jury trial threshold could clog the courts system.

Rep. Jack McFarland, a Winnfield Republican, said the changes, particularly the collateral source rule, would benefit small commercial transport companies whose businesses are threatened by skyrocketing rates.

“I think we found a sweet spot that is going to have an effect [on rates],” he said.

It really did end up becoming a rout. The bill Edwards is signing is more aggressive than the one he vetoed in the regular session. Edwards lost the two-year prescription rule that trial lawyers wanted, the changes to the status quo on direct action make for a significant alteration in how juries will process personal injury cases, the jury trial threshold dropping from $50,000 to $10,000 is a significant blow to Louisiana’s billboard lawyers, the seat belt gag order now goes the way of the dodo and the changes to the collateral source rule Edwards will be signing on to are far less friendly to the trial bar than were on order in the tort reform bill he vetoed.

“Today was a victory for common sense and the clear beginning of a new era in the Legislature focused on passing sensible solutions to improve Louisiana’s legal climate,” LABI president Stephen Waguespack said. “HB 57 is a strong first step for Louisiana’s working families and job creators that will help begin the process of rebuilding Louisiana’s insurance markets.

“Passage of this bill is the culmination of many years of hard work and steadfast advocacy, and while we at LABI are extremely proud of contributing to these long time efforts, we are just as excited to see the overwhelming, bipartisan support in the Capitol for various legal reform measures shown repeatedly over the last month. This new Legislature is obviously hungry to change Louisiana’s reputation for a poor legal climate and HB 57 appears to be simply the first bite at that apple. Our work has only just begun.”

How did this happen? Leverage.

It was always known that the votes would be available to do tort reform this year. When pro-business and conservative candidates all but swept the legislative elections last October and November, with insurance rates and tort reform as the key driving issues playing into those legislative races, it was a sure thing that some progress would be made on tort reform. The question was what – after all, with Edwards’ re-election whatever would be passed would be passed over his objection.

So the threshold to pass a bill wasn’t 53 votes in the House and 20 in the Senate. A simple majority would not make public policy on this issue. Tort reform would only be possible with 70 and 26 votes in the respective legislative bodies; anything less and Edwards, who would rather keep Louisiana’s ridiculously skewed tort system as is, would veto it.

And yet Louisiana’s car insurance rates, the least affordable in the nation as a direct result of Louisiana being the state with the single highest incidence of personal injury lawsuits arising from car wrecks (you’ll hear lots of talk about uninsured drivers, bad roads, more car wrecks and so on, but Louisiana doesn’t stand out from the crowd in any of those categories; it’s the number of injury lawsuits from car wrecks where the state is a major outlier), are like a confiscatory tax on our people. With so many legitimately poor folks in the state, and those poor people being disproportionately black, tort reform aimed at lowering car insurance rates was likely to pull votes from the Legislative Black Caucus.

After all, lower car insurance rates is a deliverable which actually matters to their constituents. When you’re poor, a $50 or $75 savings every month is a big deal. It could be the difference in your kids getting enough to eat, or keeping the lights on. Passing meaningful tort reform can produce that.

The votes were gettable. To get them involved presenting a choice not between HB 57, which ended up being the instrument the Legislature settled on, and nothing – but between HB 57 and more draconian measures.

There were three resolutions brought which would, as Louisiana’s constitution allows, suspend provisions of state law for a year and wipe out large swaths of the current tort system. One of them would have eliminated the jury trial threshold altogether. Another would have done away with direct action altogether. Another would have done away with the seat belt gag order. Those resolutions were not subject to a veto, and they didn’t need a two-thirds vote to pass. Edwards was put in a position where he either cooperated with the Legislature on HB 57 or he would be taken out of the discussion completely; the Legislature could pass new suspensive resolutions every year until Edwards leaves office and then make the changes permanent with a new governor.

Another major piece of leverage was a bill, HB 66 by Rep. Richard Nelson, which went considerably further than did HB 57. Nelson’s bill goes so far as to change Louisiana’s comparative fault rule, where currently you can be, for example, 75 percent responsible for the harm you suffer in an accident and still recover 25 percent of your damages. In other states if you’re a “foolhardy plaintiff” you get nothing, and Nelson’s bill would have made Louisiana look like those states. HB 66 had 88 votes in the House and 35 votes in the Senate. Edwards would have done anything not to have that bill on his desk.

At the end of the day, though the last thing he wanted was to have to sign a tort reform bill, the options were so bad for Edwards that HB 57 looked palatable.

And now, Louisiana’s legislators have a template they can and should use against Edwards for the rest of his term. Here’s hoping they apply that template toward economic and tax policy in order to make Louisiana competitive with its neighbors as they’ve just done with respect to the legal system.



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