Is tort reform coming?
By Catherine Hunt / LSU Manship School News Service
BATON ROUGE — The biggest insurance companies, including State Farm, Allstate and GEICO, have announced temporary premium cuts and rebates of 15 to 25 percent for auto insurance customers in Louisiana since the coronavirus has kept drivers off the roads.
The savings are a welcome relief for the state’s roughly 3 million insured drivers, who together pay the second-highest premiums in the country, following only Michigan residents. And Republicans in the state Legislature say they are looking for solutions that could permanently reduce car insurance rates through “tort reform,” changes that could reduce the number of lawsuits filed over accidents and the size of some of the damage awards.
“I know that insurance companies have given rebates because less people are driving, but we’re still the second highest in the country, and that’s not going to change,” said Sen. Kirk Talbot, R-River Ridge. “I think there is more of a need for this kind legislation now than before because of the coronavirus.”
The legislative session convened March 9, the same day that Gov. John Bel Edwards announced the state’s first confirmed case of COVID-19. The session was suspended a week later, and lawmakers hope to return to the Capitol in May to pass a new budget. They also would like to consider economic relief measures, either then or in a special session later this year, and that could include tort reform.
Republicans have long pushed for such changes. Talbot, who now chairs the Senate Insurance Committee, sponsored a bill last year that passed the Republican-controlled House. But it failed in a Senate committee amid questions by Democrats and other critics about whether the changes really would lower premiums and be fair to people injured in car wrecks.
Louisiana’s rate of car accidents is on par with the rest of the country, but the rate of bodily injury claims is nearly double the national average. Talbot blames the state’s legal climate, contending that “there are things in our tort system that make us very unique to the rest of the country.”
“I think the data proves that those things are creating an environment where these bodily injury claims are double the national average and causing premiums to go up and insurance companies to leave,” he said.
Insurance Commissioner Jim Donelon testified last April that changing the tort laws could reduce auto premiums, possibly by as much as 10 to 15 percent.
Democratic lawmakers and the trial lawyers who represent people injured in car wrecks are skeptical of Talbot’s tort reform bill. They say that there is not enough evidence to guarantee that the changes would result in lower premiums. Some say that the rates are high because up to 15 percent of Louisiana drivers do not have car insurance, and insured drivers end up paying more to compensate for the uninsureds’ lack of coverage.
Edwards also is skeptical of Talbot’s proposals and supports measures to eliminate some of the categories that insurance companies divide drivers into in setting rates.
“Premiums ought to be set on driving records, not on whether someone is poor or female or that sort of thing,” Edwards said. “Obviously we will engage with the Legislature on other legislative instruments that could potentially reduce auto insurance premiums. I do believe there’s plenty of common ground that we can explore.”
Talbot’s bill focuses on four key areas in Louisiana’s tort laws.
First, it would lower the minimum dollar amount for an injury claim to be decided by a jury rather than a judge. Currently, either party in a lawsuit has the right to have a trial before a jury if the claim is for more than $50,000. If the amount is less, a judge determines the verdict without a jury.
Talbot and business groups argue that decreasing this amount is necessary because judges’ decisions may be swayed by constituents or big campaign donors, who often include the trial attorneys who represent the people filing claims. Louisiana has the highest threshold for a decision to be made by a jury in the country, according to the Louisiana Lawsuit Abuse Watch, a conservative group. Some states do not have any such requirements for holding jury trials.
Second, Talbot’s bill would eliminate the ability for an injured party to sue an insurance company along with the other driver. Only a few other states allow direct lawsuits against insurance companies.
“I’ve actually talked to executives from other insurance companies that don’t write in Louisiana who have said that’s one of the reasons they won’t write policies here,” said Rep. Alan Seabaugh, R-Shreveport, the former vice chair of the House Insurance Committee. “They’re scared to death to be named in the lawsuit.”
Supporters of Talbot’s bill say that preventing insurance companies from being sued directly could entice more companies to write policies in Louisiana, thus creating competition among insurers.
“When we have competitive insurance companies, and everyone is trying to get as much market shares as they can, is when rates go down and policyholders benefit,” Talbot said.
Some insurance companies are reluctant to write policies in Louisiana because they are not sure if they will make a profit, said Richard Piazza, chief actuary at the Louisiana Department of Insurance. In the past year, six insurance companies left Louisiana, Talbot said.
Third, Talbot’s bill would increase the time that injured parties have to file lawsuits. Victims now have one year to file a lawsuit, but the bill would increase that to two years to give parties more time to settle out of court.
The final issue addressed in the bill is a rule that prevents a defendant from introducing evidence that a person filing an injury claim has received payment from another party.
“In Louisiana, a doctor just fills in a blank check of how much it’ll cost to fix your injuries, and what the actual medical bill was isn’t admissible in court,” said Seabaugh. “You may have used your insurance and gotten a discount for that procedure, but in Louisiana they’re paying for damages that are not incurred. It inflates the claim. When claims get inflated, premiums go up.”
Sen. Sharon Hewitt, R-Slidell, has filed a bill that would allow juries to hear whether or not an injured victim was wearing a seatbelt at the time of an accident. Currently, that information is not admissible in court in Louisiana.
“If you’re not wearing your seatbelt, and you’re injured worse because you weren’t following the law and weren’t properly protecting yourself, why should the person who hit you have to pay because that’s partly your own negligence?” Seabaugh said.
Opponents say that Talbot’s bill would make it hard for victims of serious accidents to gain the compensation they "deserve," especially because many drivers in Louisiana have relatively low incomes and the insurance companies have deep pockets. They also argue that the law involving seatbelts should not be changed.
“People who are not in favor of tort reform would say whether I had some kind of safety device on shouldn’t matter on whether you should have to pay me for injuring me,” said Kenneth Haines, a plaintiff’s attorney in Shreveport. “It would be like what if I was driving a car that didn't have air bags? Should I be penalized because I drove an older vehicle and didn't have airbags? Or should I be penalized because my airbags didn't deploy?”
A series of bills by Sen. Jay Luneau, D-Alexandria, take a different approach to lowering premiums and have gained the support of Edwards and trial lawyers. These bills aim to prohibit insurance companies from using information such as gender, credit score or marital status in determining rates.
Lowering insurance premiums, whether through tort reform or other measures, could be a main topic of the legislative session if it resumes with enough time left or if the governor calls for a special session later and agrees to include tort reform as one of the topics that can be debated.
“We’re all suffering from this, and it’s time to address it,” Talbot said.