The Louisiana Association of Business & Industry won a big one this week.
That would be the case in light of the state Senate passing sweeping legislation that would thwart individuals from recovering financial rewards for damages and injuries sustained in automobile accidents. The legislation, formally known as the Omnibus Premium Reduction Act of 2020 but casually called tort reform, also would require the insurance industry to lower automobile insurance rates in Louisiana by 10 percent.
The bill is now en route to the House of Representatives for consideration where identical legislation is alive as well.
Tort reform has been a hot topic of discussion at the Capitol for years, or at least since the last time LABI succeeded in convincing lawmakers to approve tort reform, which occurred in the 1990s when Gov. Mike Foster was in office. Like the legislation approved by the Senate this week, tort reform of yesteryear promised to lower automobile insurance rates, too. How did that work out?
The tort reform bill of 2020 is chock full of goodies the insurance industry, as well as LABI, says is certain to restrain plaintiffs attorneys from filing lawsuits over what could be considered minor fender-benders. Accordingly, as tort reform advocates claim, the insurance industry could lower automobile insurance rates if it was freed from paying big money to trial lawyers who file so-called frivolous lawsuits.
The bill would extend the deadline for filing a lawsuit from one year to two, known as prescription; lower the amount of damages sought to have the case heard by a jury instead of a judge from $50,000 to $5,000, known as jury threshold; limit medical expenses recovered to the actual payments made, rather than what a health care provider normally would charge, known as collateral source; require lawsuits to be filed against the other driver, rather than an insurance company, known as direct action; and allow judges and juries to reduce damage awards if the injured plaintiff was not wearing a safety belt.
Tort reform’s detractors — namely Sen. Jay Luneau, a plaintiff’s attorney from Alexandria — argue the high cost of trying a case in front of a jury would prohibit individuals who had suffered damages in a car wreck from recovering any money for legitimate claims. Detractors also claim the insurance industry could lower automobile insurance rates now but won’t because of “variables” the industry refers to in setting rates.
Any way you cut it, tort reform’s success in the Senate this week suggest there’s a new power dynamic at work in the Capitol. It’s more conservative and more business-friendly, and it’s not afraid to take on the governor, a lawyer who relied on contributions from plaintiffs attorneys to get elected.
Yet, our acquaintances and friends at LABI and in the Legislature who have worked diligently to pass tort reform should be leery of making promises they can’t deliver, such as cheaper car insurance rates. After all, the tort reform bill of 2020 may say the insurance industry must lower automobile insurance rates, but as is the case under the best intentions, the insurance industry has an escape route.
All they have to do is tell the insurance commissioner they can’t lower rates because they must hold on to their money to pay trial lawyers who file so-called frivolous lawsuits.
And there it is.
Sam Hanna Jr. can be reached by phone at 318-805-8158 or e-mail at email@example.com.