Heather Cloud, a state senator and business owner, addresses a recent state budget hearing.
Louisiana tort reform advocates are primed to advance their case in the wake of a study showing that frivolous lawsuits and inflated liability awards cost the state nearly 20,000 jobs annually.
In February, Louisiana Lawsuit Abuse Watch unveiled an analysis that found the state’s legal climate weighs down the economy to the tune of $413 per taxpayer. The losses in terms of annual economic output in Louisiana amount to $1.9 billion, according to the study by The Perryman Group of Waco, Texas.
Spiraling commercial auto insurance rates tied to the legal climate are what newly elected state Sen. Heather Cloud (R-Turkey Creek) said propelled her to run for a seat in the state legislature.
Commercial auto insurance premiums have been going up by $10,000 per year, according to Cloud, who owns a transportation company with her husband, Jody Cloud.
“We just keep hearing from agents about the litigious climate and how it needs to be fixed in Baton Rouge,” she told the Louisiana Record.
Last April, things came to a head for the Clouds’ trucking company, which hauls aggregate such as limestone and dirt, as well as heavy equipment for agriculture, using 18-wheelers. The Clouds received a nonrenewal notice from the company’s insurer, and another company offered a quote that was nearly triple what the firm had been paying for commercial insurance.
“That’s unsustainable – we couldn’t fund that,” Cloud said.
Though the company, which employs seven people in central Louisiana, was able to eventually find adequate insurance coverage for the current year, its future is uncertain, she said.
“I can’t say if we’ll have a company in April,” when the firm is due to renew its insurance, said Cloud, who is now a member of the Judiciary A committee in the Senate. In the coming months, that panel will have a chance to advance tort reforms that stalled in the Senate last year.
The senator is optimistic that reforms will pass the legislature this year.
“We have the numbers, and as long as our people stay joined with linked arms … we’re going to be OK,” Cloud said. “... We don’t have time to kick the can down the road.”
Tort reforms remain a top priority for the Louisiana Association of Business and Industry, according to Lauren Chauvin, LABI’s director of civil justice. Indeed, business owners don’t need to see further research to convince them to support legal reforms, Chauvin said.
“When you talk to people around the state, they don’t need a study to show them how much this legal climate is costing them,” she told the Louisiana Record. “They see it every day. We see businesses struggling every day.”
One of the changes favored by LABI and other reform advocates is reducing the current monetary threshold it takes for a defendant in a civil action to get a jury trial. Currently, Louisiana’s $50,000 jury threshold is the highest of any state, Chauvin said, and 30 states have no jury trial threshold.
“Getting these cases in front of real people – real citizens – will really help to lower these (damages) awards and make them more reasonable,” she said.
Another top priority is changing the law so that juries and judges will be told the true, negotiated price of a plaintiff’s medical treatment, according to Chauvin. Currently, juries are told a “sticker price” that no one actually pays, she said.
In addition, Louisiana is one of only three states that allow plaintiffs to sue insurance companies directly, rather than the individual who caused an accident, according to Chauvin. Reformers want to change that in the coming legislative session.
“If you think it’s the insurance company paying it, it’s more likely they’re going to award a higher amount because you don’t really see the impact of the individual paying, even though the individual pays it in their premiums,” she said.
Gov. John Bel Edwards is also feeling pressure from concerned constituents on legal and insurance issues, so Chauvin is hopeful Edwards won’t use his veto pen if a comprehensive tort-reform bill lands on his desk this session.
“Assuming that the governor will veto this bill is a mistake,” she said.