(Originally published in Citizens for a New Louisiana) — Of all the issues debated in our state capitol, none impacts residents more directly than skyrocketing insurance costs. Louisiana’s system is in desperate need of reform. The question isn’t whether change is necessary but whether our legislature has the political will to enact real solutions.

Will lawmakers deliver meaningful reform that brings relief to policyholders? Or will special interests and trial lawyers (the puppet masters of our elected elite) thwart progress yet again? Let’s examine what’s at stake.

A Legislature Poised for Change

Recently, we provided an opportunity for the public to visit with  Gabe Firment (R 8/10), State Representative and Chair of the House Committee on Insurance. State Representative Josh Carlson (R 8/10) and Senator Blake Miguez (R 10/10) were also in attendance. All three members of our legislature assured us that the rising insurance rates in Louisiana are a major concern and a top priority.

Firment indicated that some vital legislative changes being proposed included changes to:

• Medical billing transparency
• Repealing the Housely presumption
• Modified comparative fault system
• Caps on general damages
• “No pay, no play” policies
• Holding insurers accountable

At its core, insurance is simple: policyholders pool money to share risk. So, why is it so hard for the government to fix the problem?

Auto Insurance: A Case Study in Dysfunction

Let’s focus on a type of insurance everyone deals with: automobile insurance.

Louisiana mandates that drivers carry insurance, with minimum liability limits set at $15,000 per person, $30,000 per accident, and $25,000 for property damage. These limits haven’t changed since 2010, even though the cost of everything else has increased.

The biggest cost driver? Lawsuit abuse. When negligence causes an accident, a “tort” claim arises. That’s why you hear constant calls for tort reform in Louisiana’s insurance debates.

Understanding the Three-Legged Stool of Insurance Claims

An automobile accident claim can best be illustrated by comparing it to a three-legged stool.

1. Liability – Who is at fault?
2. Damages – What injuries or losses occurred?
3. Causation – Did the at-fault party’s actions cause the injuries?

Let’s assume you are leaving church on Sunday and someone rear-ends your vehicle. Except under very rare cases, they will likely be 100% at fault for the accident or liable for the damage they have caused you. That is the first leg: liability. However, in less clear scenarios, both parties may bear some percentage of the liability. That is what is known as comparative fault.

Were you injured? If so, that person could be responsible for your medical bills, lost wages, loss of consortium, pain and suffering, and a host of other things. This is the second leg: damages.

Then, there’s the third leg: causation. Was the negligent act of the other party the cause of your damages? This is where something in Louisiana jurisprudence, known as the Housley presumption, comes into play.

While most legal claims require the plaintiff to prove these elements, Louisiana’s courts have flipped the burden with the Housely presumption, forcing defendants to prove they didn’t cause an injury. This was something invented by the judiciary that has created more lawsuit abuse since 1991. This overreach, dating back to 1991, fuels excessive lawsuits and higher premiums.

An Opportunity for Reform—Blocked by the Senate Judiciary Committee

That is why we took notice when freshman Legislator Michael Melerine (R 7/10) filed a bill (HB24) to repeal the Housely presumption. It would have been a simple fix to make insurance rates more fair. The proposed law was simple:

The lack of a prior history of an illness, injury, or condition shall not create a presumption that an illness, injury, or condition was caused by the act that is the subject of the claim for personal injury. The provisions of this Article shall not apply to personal injury claims brought pursuant to the Louisiana Workers’ Compensation Law.

Seems reasonable, right?

But trial lawyer-friendly lawmakers killed it. In Senate Judiciary Committee A, the bill was deferred without objection, effectively silencing reform. That committee, dominated by lawyers, has long been hostile to tort reform. Without transparency in committee votes, we had to review the video record (about 1:35:00) to confirm that Sen. Gregory Miller (R 4/10) pushed for its deferral.

How Louisiana’s Legal System Inflates Insurance Costs

Ever wondered why accident victims end up in personal injury law firms instead of getting quick settlements?

Many lawyers exploit the system:

• They promise “free consultations” but take 33%+ of settlements.
• They encourage unnecessary medical tests to inflate claim values.
• They send clients to “friendly” doctors who issue high-priced bills instead of reasonable costs.

This fraud cycle doesn’t just affect insurers; it raises everyone’s premiums.

For example:

• In Vermilion Parish, one case saw a medical bill inflated from $124,598 to $328,830—a 200% markup.
• In St. Martin Parish, another provider billed for services never performed—a blatant scam.

Lawmakers must crack down on these predatory medical markups.

How the scam works

You go in for a free consultation and leave as a bonafide client with a free t-shirt and a bag of popcorn. Congratulations! You also just signed away your rights to 33% of your recovery on average. Not only that, but you still haven’t been paid. Your new lawyer will convince you that you may have something more serious going on and should seek further treatment. If you can’t afford to do so, don’t worry! He has providers that will work with him on your bill.

You went to a lawyer out of frustration. Not understanding how to navigate the claims system and get a fair settlement caused you anxiety, but unfortunately, you may have wound up in the office of another ambulance chaser who wants to maximize the payout from the insurance company. Your new lawyer knows that most people in the state carry minimum limit policies, which means you will likely only be able to recover $15,000. He also knows he has what is known as a first-lien position. He gets paid first. And because he is working to receive a percentage of the amount recovered, the higher the recovery, the more money he will make.

So, if your MRI returns with a positive finding, it will be presumed to have been caused by the accident (the Housely Presumption). It will also lead to a referral to an Orthopedic surgeon and possibly a surgery recommendation. This will catch the attention of any astute claims adjuster who quickly realizes that if he doesn’t settle the matter, he risks breaching his fiduciary duty and exposing his insured to an excess judgment. Remember, insurance is a “risk” business.

You must understand this…

It is important to know that the unlevel playing field we have created in Louisiana props up a whole industry of lawyers, doctors, and even outside financiers. That is why tort reform won’t come easy.

Transparency in billing is essential. Again, many industries have set up shop in Louisiana because there is a buck to be made off the backs of the insurance companies and the injured rate payers. Here locally, we have witnessed how middleman medical practices inflate medical bills by tens of thousands of dollars to increase profits, resulting in artificially higher insurance premiums.

Records from the Vermilion Parish Courthouse involving the personal injury case of a Youngsville resident reveal a markup of bills over $200,000. The issue doesn’t appear to be whether the person was injured but rather whether the bills were customary and reasonable. The Judge ruled that the appropriate reasonable and customary amount was $124,5981.13, NOT $328,830.19. In another matter in St. Martin Parish, it was alleged that the company billed for “phantom services that were never performed” and that the company “grossly inflated the bills.”

Meaningful Modifications

There are some things we can and should try here in Louisiana. Putting Housley out to pasture is a good first step. You should have to prove an accident caused your injury, not vice versa. More liberal legislators (and lawyers) like Senator Jay Luneau (D 1/10) will tell you Housely saves money because the presumption prevents the “unneeded” cost of a deposition of a medical provider to establish causation. But Luneau also knows most lawyers don’t have the necessary funds to cover the cost of a deposition for multiple clients.

Who is saving money? He is. So, instead of trying to turn every car accident into a windfall payday, lawyers would have to do a better job of vetting cases to ensure the parties are genuinely injured and not just trying to make some extra money.

Luneau also directs us to only one way to establish causation: a costly deposition. However, the fact is that a doctor could just make a determination in his records whether causation exists or doesn’t. If either side questions that determination, they may choose to depose the doctor. But many doctors don’t want to do the easier determination note at the time of service. That’s because they get paid a hefty sum of cash for missing time from their practice to attend a deposition. Go figure!

It is also essential to understand that self-identifying as an “outlier” and trying to copy what is being done in other states simply will not work here. In 1996, a massive push for “tort reform” virtually eliminated established theories of strict and absolute liability. The legal system in Louisiana is different. And what has resulted from these reforms is a mix of our civil law tradition infused with the outside influence of common law we see in most other states. In essence, you simply can’t copy and paste something from another state and expect it to work here. Our legislators need to realize this.

We Must End Government Interference in the Insurance Market

There are many moving parts and things to consider in our complex legal system regarding making insurance more affordable in Louisiana. But the most crucial factor is not being talked about. It is just as important as leveling the playing field, providing transparency in billing, and making the claims process easier for the consumer. It is removing government barriers to competition.

The single most overlooked issue in Louisiana is overregulation. Regulations should protect consumers, but in Louisiana, they stifle competition. The most innovative insurance markets aren’t found in the U.S. They’re in London and Bermuda, where less government interference has fostered competition.

According to the 2024 Insurance Regulation Report Card, Louisiana ranks 39th in the nation—with a D+ grade. Endless government interventions have trapped our insurance market in a lose-lose situation:

• Raise rates? Politicians scream about affordability.
• Keep rates low? Insurers go bankrupt or flee the state.

If lawmakers truly want lower rates, they must:

1. Eliminate the Housely presumption
2. Pass medical billing transparency laws
3. Remove barriers to competition
4. Stop rewarding predatory lawsuits

The Bottom Line: Will Lawmakers Choose Consumers Over Special Interests?

Solvency regulation is a key factor. While it probably reduces insurance companies’ risk of bankruptcy, poor solvency regulation replaces that risk with an even greater risk: the whole market going bust! The RStreet report card also focuses on important metrics often overlooked by other studies, such as solvency regulation, underwriting freedom, fiscal markets, fiscal efficiency, politicization, and competitiveness in auto and homeowners insurance markets.

While there are some tweaks we can make through tort reform that can make things fairer for insurance producers, we must face the reality that the government is primarily to blame for an unchanging and uninnovative insurance market due to overregulation. All of the other measures are band-aids on a mortal wound.

Without real reform, Louisiana residents and insurance providers will continue to pay the price while trial lawyers and middlemen rake in profits.

So what can YOU do?

• Contact your legislators. Demand action on bills similar to last year’s HB24.
• Push for Senate committee transparency. If lawmakers vote against reform, that information must be easier to access.
• Support candidates who back real change. Don’t let special interests win again.

Insurance costs are crushing Louisiana families.

The legislature can fix it—if they dare to fight for us.

The choice is theirs.