Louisianan Governor Signs 2020 Tort Reform Legislation

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One of the major outcomes of the 2020 Louisiana Legislative session was the passage of tort reform legislation that supporters argue will lower insurance rates and change the state’s notoriously litigious environment. The Civil Justice Reform Act of 2020, House Bill 57 (“HB57”) introduces a number of key changes:

  • Allows jury trials if damages sought exceed $10,000 (the prior rule required $50,000 in damages);
  • Revised the controversial “collateral source rule”;
  • Repealed the limitation on presenting evidence of a plaintiff’s failure to wear a seat belt in a car accident; and
  • Limits the discussion of a party’s insurance coverage before a jury except (with limited exceptions).

The most significant change, by far, is the amendment to the “collateral source rule.”  The revision effectively limits the plaintiff’s damages to the amount of medical expenses actually paid.  Current law generally allows a plaintiff to recover the total amount billed and ignores any discount to the total amount negotiated by an insurance company. The new law provides that, after a jury verdict, the judge is instructed to award the claimant 40% of the difference between the amount billed by a medical provider and the amount paid by a plaintiff’s health insurer or Medicare unless the defense proves this award is unreasonable. Additionally, HB57 lowers the jury threshold (i.e., the amount in dispute required for a jury trial rather than a bench trial) from $50,000 to $10,000. Other notable changes include the repeal of a prior statute which prohibited evidence of a party’s failure to wear a seat belt for the purpose of reducing damages.

Further, the new law will preclude discussion of a party’s insurance coverage before a jury.  While a plaintiff may still bring suit against a liability insurer directly under Louisiana’s unique “direct action statute,” HB57 prohibits parties from disclosing certain evidence of insurance coverage issues in front of a jury, including the identity of the insurer.

Though controversial, HB57 will not change the legal landscape in Louisiana as much as initially projected based on earlier versions of the bill. While tort reform supporters fought to extend prescription from one year to two years, the final bill contains no such extension. Supporters also argued for a lower jury threshold of $5,000 to incentivize settlements rather than resolution in court but legislators agreed upon the $10,000 threshold instead.

Governor John Bel Edwards signed HB57 into law on July 13 as Act 37 of the 2020 First Extraordinary Legislative Session. The law will be effective on January 1, 2021 and will be applied prospectively only.  This means that HB57 will not apply to any cause of action arising or pending prior to January 1, 2021.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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