BATON ROUGE — A Louisiana House bill that would set the time limit to sue an insurer for a "bad faith" denial of a claim at a standard 10 years has effectively died in committee.
Currently, some courts have ruled there is a 10-year window for an insurance company to be sued, while others state that it is limited to one year.
The House Committee on Civil Law Procedure voted 5-5 on the bill, HB 720. That means it will not move forward.
Supporters of the bill claim it will clear up conflict in the law. But the bill would also be retroactive, which those opposing the bill said was a way to help a single company, Texas Brine.
Texas Brine was found responsible for the August 2012 Bayou Corne sinkhole in Assumption Parish, which led to the evacuation of 350 residents from their homes.
Indian Harbor Insurance refused to cover the hundreds of millions the company paid out for the damage done. The First Circuit Court of Appeal overturned a lower court when it ruled that Texas Brine should have filed a "bad faith" within a year.
Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch, described the legislation as "short-sighted," which was filed late and allowed little time for public discussion.
It was intended, Landry told the Louisiana Record, to "retroactively impact one specific case that is already making its way through our courts."
She added that it could have had far-reaching implications for many other current and future cases."
"The proposal to extend prescription on bad faith insurance claims from one to 10 years is a dramatic step that would have made Louisiana a complete outlier when compared to states across the county at a time when we are already facing an insurance crisis," Landry said.
"The committee's 5-5 vote essentially means the bill is dead for now, which means we can take the time to have a meaningful public policy discussion about any potential change and all the implications that change before the issue is brought to the legislature again."
State Rep. Walt Leger III (D-New Orleans), who was the bill's lead sponsor, told The Advocate newspaper of Baton Rouge that his legislation intended to sort out a conflict in existing law.
“It concerns me that we would slant our laws in favor of an insurer” over Louisiana citizens and businesses, Leger told the newspaper.