BATON ROUGE - A bill that would reduce auto insurance rates in the state by at least 10% and lower the financial bar to access jury trials could soon become law.
The Omnibus Premium Reduction Act of 2020, also known as SB 418, would reduce the threshold for a jury trial from $50,000 to $5,000 and limit personal injury plaintiff’s recovery of medical expenses to the amount actually paid to the healthcare provider by the insurer or Medicare rather than the amount billed.
“Insurers won't have to pay out constant $49,000 awards, which is what's happening by a certain segment of lawyers and is causing the overall cost of our claims to rise,” said Renee Amar, vice president for policy and government affairs at the Pelican Institute for Public Policy.
Currently, legal actions claiming less than $50,000 are decided by a judge not a jury.
“You are not allowed to have a jury trial unless the claim is for more than $50,000 and I think most people would agree that people ought to have access to a jury trial if they want,” said Jeff Albright, CEO of the Independent Insurance Agents & Brokers of Louisiana.
Numbers illustrate the problem: Personal auto insurance premiums increased 56% since 2014 in Louisiana compared to 23% nationwide, according to media reports, and Louisianans are 60% more likely to sue insurers rather than settle out of court.
“Why do we claim to be hurt more in Louisiana and why do we sue more than other states,” Albright told the Louisiana Record. “Is it because we're more fragile than people in other States? I don't think so. I think the reason is that our legal system encourages people to make claims for injuries and to litigate.”
Louisiana had the highest bodily injury (BI) liability claim frequency in the country, according to the Insurance Research Council.
If the proposed bill becomes law, there will be no room for phantom damages any longer, according to Senate Insurance Committee Chair Kirk Talbot (R-River Ridge) who introduced SB 418 in March 2020.
“Right now, plaintiffs are getting extra money that was never incurred and never paid by anyone, which increases insurer's costs,” Sen. Talbot told the Lousiana Record. “This bill will make the injured person whole and that's it. There's not going to be a windfall. We're going to reimburse your actual medical costs, what was paid and nothing more.”
Phantom damages, according to the American Legislative Exchange Council, refer to inflated reimbursement costs for medical care involving bodily injuries that are litigated.
“Louisiana has the highest jury trial threshold in the country and 36 other states don't have a jury trial threshold at all so this brings Louisiana’s legal system more in line with the rest of the nation, which is really the purpose of this bill,” said Mitch Rabalais, communications manager with the Louisiana Association of Business and Industry. “We are an outlier and it shows up in car insurance rates month after month.”
The proposed bill will be heard by the House Civil Law Committee next week on Tuesday.
“We're just excited to see the legislation make it this far through the process and we're very hopeful that it will make it all the way through,” Amar told the Lousiana Record. “We're asking the governor to please not veto it. (Democrat) Governor John Bel Edwards is an attorney and so obviously there are different segments of the trial lawyer population that are good friends of his.”