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Tort Reform Bill Halted During Senate Judiciary A Committee Hearing

Louisiana State Representative Kirk Talbot’s House Bill 372 received a blow when members of the Senate Judiciary A Committee all but rejected his proposed legislation. He initially marketed the bill as a way to lower insurance costs; however, a close inspection proved it would do anything but. In fact, Talbot’s proposal appeared to be more beneficial to insurance companies than consumers.

The bill focused on lowering jury thresholds, extending the prescriptive period (statute of limitations) for filing a suit, ending the collateral source rule, and eliminating direct action. Senator Jay Luneau stated that HB 372 contained no components that would result in lowered rates.

Lowering Jury Thresholds

While Insurance Commissioner Donelon had once said high premiums were the result of distracted drivers, cheap gas, and costs of repairs, after he heard a trucking company claim that Louisiana’s high jury threshold resulted in greater settlement amounts, lowering thresholds became his sole talking point on the matter. For years after, the Louisiana Association of Business and Industry (LABI) and insurance lobbyists have tried to blame high rates on the cost of a jury trial.

In Louisiana, for a plaintiff’s car accident claim to be heard by a jury, the amount in dispute has to be in excess of $50,000. If the plaintiff loses their case, they must pay for the jury, which in some areas is as much as $8,000. Therefore, a plaintiff will generally settle if their claim is for a small amount, which means insurance companies have to pay out less than if the case was taken to court.

After a series of investigations, the Bayou Brief found no evidence suggesting that the cost of litigation is correlated to the cost of premiums. What they uncovered was that insurance companies employ discriminatory practices when assessing rates. Premiums are often based on socioeconomic status or personal characteristics rather than driver safety. Women usually pay more than men, widowers pay more than married couples, and people with low credit scores pay more than people with high credit scores.

Extending the Prescriptive Period

This component of Talbot’s law would allow plaintiffs to file a lawsuit up to 2 years after their accident; they currently have up to 1 year. Extending the deadline, could potentially reduce the number of suits filed annually and result in a greater number of settlements.

Ending the Collateral Source Rule

In Louisiana, if a person is injured in an accident and they have medical insurance, the amount of money they can claim in a lawsuit isn’t limited to what they paid out of pocket in medical expenses; they can collect the total amount of their medical costs. Ending this rule would mean the injured individual couldn’t collect anything their health insurance had already paid out. This component of Talbot’s bill would not necessarily lead to a reduction in insurance premiums.

Eliminating Direct Action

Direct action is a plaintiff’s ability to sue the insurance company directly. Under Talbot’s proposed bill, they would no longer be able to do so. During the committee hearing, members questioned how this component would lead to reduced insurance premiums, as nothing suggests it would benefit consumers.

Read more on the Bayou Brief’s site.

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