A landmark Louisiana tort-reform bill aimed at reducing auto insurance costs took effect as the new year unfolded, but supporters say consumers may have to wait another year to see lower insurance bills.
The passage of House Bill 57, the Civil Justice Reform Act of 2020, authored by Republican House Speaker Clay Schexnayder, was the top tort-reform priority of the Louisiana Association of Business and Industry in 2020, according to Lauren Chauvin, LABI’s director of civil justice reform.
“This is a great first step to changing Louisiana’s civil litigation environment,” Chauvin told the Louisiana Record. “The idea that Louisiana is looking to move toward having a more fair, predictable civil justice climate has brought more attention to insurers, who have really just cut Louisiana out.”
LABI sent out 1,100 letters to insurers around the nation informing them about the state’s efforts to reduce litigation costs and to urge them to consider entering Louisiana’s insurance market. In turn, LABI has seen an increased interest among insurers to return to the state, raising hopes that the resulting increased competition will eventually bring down auto insurance rates, Chauvin said.
The new law aims to reduce the number of avenues plaintiffs’ attorneys have used to jack up damages awards in auto insurance cases. Reformers argue that reducing these awards and other rule changes will lead to lower legal costs and, in turn, lower premiums.
“What we’re going to see is more access to the courts and more transparency in the courts right away,” Chauvin said.
HB 57 lowered the monetary threshold needed to seek a jury trial in a civil cause of action from $50,000 to $10,000, giving insurers more opportunities to take claims before juries.
In addition, the law reforms how medical expenses are defined in insurance claims. Under the previous law, the medical expense amount was classified as the amount billed to Medicare or a medical provider, but HB 57 defines medical expenses as how much the provider was actually paid.
A court, however, can award 40 percent of the difference between the amount billed and the negotiated amount paid under certain conditions.
The new law also repeals previous prohibitions against informing jurors about a plaintiff’s failure to wear a seat belt as an indication of comparative negligence.
“So now we can more properly allocate the fault by presenting this evidence to a judge or jury,” Chauvin said.
The overall effect will even the playing field when auto insurance claims are filed against insurers, according to Chauvin. “We are slowly cracking away at that wall that was built up over decades,” she said.