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Louisiana

Louisiana is long known for lawsuit abuse, especially New Orleans. Following the 2019 elections, the Bayou State was poised to improve its civil justice system, despite the state’s plaintiff-friendly governor, John Bel Edwards (D). As with every other state, COVID-19 drastically impacted the 2020 legislative session; however, the state was still able to address the nation’s second highest auto insurance rates in the country and place reasonable constraints on lawsuits related to the pandemic.

Louisiana is moving in the right direction, but much more work remains to be done. A recent Lawsuit Abuse Economic Impact Study conducted by The Perryman Group found the Louisiana economy experiences an estimated loss of $1.9 billion in annual output (gross product) due to excessive tort costs. This amounts to about 19,800 lost jobs and losses of $1.2 billion annually in personal income for hardworking Louisiana citizens. The resulting reduction in business activity due to civil justice costs leads to lower-than-expected gross product, which results in a hidden “tort tax” of more than $400 per person.

SKY-HIGH AUTO INSURANCE RATES AND STAGED TRUCKING ACCIDENTS

Fueled by a climate of lawsuit abuse, the high cost of auto insurance plagues Louisiana families and businesses. Litigation plays a significant role in increasing insurance costs, leading to premium increases of 18.3 percent since 2015 for Louisiana drivers. Louisiana’s auto insurance rates are second only to Michigan. Some insurance companies are no longer writing policies in the state, which reduces competition for consumers. Louisianans are feeling the effects on their pocketbooks, and some businesses are considering whether to relocate to less litigious states or close their doors.

Because of the highly litigious environment in Louisiana, insurers have had to pay for more labor to perform research and risk management. They also are building the risk of future litigation and settlements into their business/financial models. Increases in insurance costs vary, with low-risk carriers seeing an 8-10 percent increase and high-risk carriers seeing 35-40 percent rise annually.

SCAM TARGETING TRUCKING INDUSTRY

Several south Louisiana residents involved in an alleged scheme to fake crashes with 18-wheeler tractor trailers in the New Orleans area have pled guilty to conspiracy to commit wire fraud. The scheme involved the vehicle drivers connecting the passengers with a lawyer referred to in court documents as “Attorney A.” The driver in each accident was paid $1,000 for every passenger involved. The driver was either paid by “Attorney A” in advance or soon after the accidents were staged. In total, trucking and insurance companies were defrauded of $277,500. The companies accrued these costs defending themselves against the baseless lawsuits.

In October 2020, “Attorney A” was identified as Danny Patrick Keating Jr. He was charged with conspiracy to commit mail and wire fraud. He allegedly hired Damian Labeaud to stage 31 accidents and then represented the 77 plaintiffs involved in those accidents.

The lawsuits typically involve multiple people in the claimant’s vehicle, minimal (usually unnoticeable) damage to the claimant’s vehicle, little to no damage to the insured truck, and a commercial driver that is unaware of an accident or disputes that a collision occurred. Many of these cases involve the same attorneys and doctors and allege serious bodily injury and negligence against the trucking company, seeking a big payout. Damages sought include medical expenses, mental anguish, loss of enjoyment of life, physical pain and suffering and inconvenience.

Many insurance companies settle these cases, rather than expend the time and resources involved in going to trial – and facing Louisiana’s “hometown justice.” The underlying issues in Louisiana’s civil justice system and the prevalence of lucrative verdicts make it prime for such abuse. Some trucking companies, however, are fighting back. In fall 2020, Southeastern Motor Freight, Inc. filed a RICO lawsuit against one of the attorneys and two participants involved in staging the accidents.

COASTAL LITIGATION IS A DRAIN ON STATE'S ECONOMY

Coastal lawsuits targeting Louisiana’s critical energy industry stretch the law far beyond its intent, ignore critical facts and involve private lawyers in a space meant for democratically elected decision makers who are accountable to the public. Coastal lawsuits attempt to outsource the enforcement of state-issued permits to local governing authorities. Even though energy companies provide thousands of quality jobs for hard- working Louisianans and millions in tax dollars for state coffers, these baseless lawsuits continue to move forward under Governor Edwards and his high-paid trial attorney friends. A 2020 report by the Louisiana Mid-Continent Oil and Gas Association found the oil and natural gas industry has contributed $73 billion to the state GDP and supported 249,800 jobs in 2019. The industry provided nearly $4.5 billion in state and local taxes, 14.6 percent of the state’s total taxes.

According to a recent economic study by the Pelican Institute for Public Policy, Louisiana’s coastal litigation leads to an economic loss of $44.4 million to $113 million each year. The increased risk of litigation for oil drilling companies has resulted in 53-74 fewer oil wells from 2014 to 2016. As a result, Louisiana has seen “a decrease of more than 2,000 employees across four occupations in the state’s oil and gas industry, and these lost jobs equate to lost earnings of $70 million per year.” These coastal lawsuits continue to move the state in the wrong direction and only serve as a burden on the state’s economy as it looks to rebound from a difficult year.

As it stands now, seven parishes have filed more than 40 lawsuits. These lawsuits have yet to be heard, though the U.S. Court of Appeals for the Fifth Circuit in New Orleans recently affirmed a decision to keep two of these cases in their preferred forum, Louisiana state courts, which are viewed as more friendly to plaintiffs than neutral federal courts. While the initial decision only directly impacts two of the cases brought by the Plaquemines and Cameron Parishes, it sets the stage for the others.

To date, the oil and gas industry has funded over $230 million in “coastal building and protection projects.” If the energy companies are unsuccessful defending themselves, they could be forced to pay billions of dollars. While the defendants are perceived as “Big Oil” companies, the majority of the over 200 defendants are small, independent operators. The litigation has so far failed to accomplish anything substantial, and while it’s pending, the state is losing out on a minimum of $22.6 million each year in industry royalties.

In an effort to stop this unprecedented abuse of the Coastal Zone Management Authority (CZMA), legislation introduced during the 2020 Regular Legislative Session would have clarified and reaffirmed that authority of local government to bring enforcement action under the CZMA is limited to uses of local concern. The legislation would have further clarified that enforcement action for issues of state concern (i.e., state- issued permits) is limited to the Secretary of the Department of Natural Resources or the Attorney General, reinforcing that the state alone is vested with the authority to issue, regulate and bring enforcement action over coastal use permits. This legislation ultimately failed to pass.

POTENTIAL SETTLEMENT ON THE HORIZON?

Meanwhile, a reported settlement with Freeport-McMoRan announced in Fall 2019 has yet to come to fruition. John Carmouche, the coastal ligation’s lead plaintiffs’ attorney, negotiated the deal behind closed doors, and the exact terms of the agreement, including the lawyers’ share of the settlement, still have not been revealed to the public.

However, according to news accounts published in 2019, the proposed deal could generate $23.5 million in cash payments to be directed into a yet-to-be-created state fund dedicated to coastal restoration. Reportedly, another $76.5 million in questionable income could be generated through the sale of ill-defined “environmental credits” created by settlement-mandated “restoration activities” to be carried out over a period of 22 years. There is no explanation of how this vague commitment would be enforced or what security backstops this long-term obligation.

Carmouche’s attempt to pass legislation to effectuate the proposed settlement deal during the 2020 Regular Legislative Session was met with swift opposition and failed to make it out of even one committee. A broad coalition of opponents, including energy industry advocates, landowners, and dozens of business organizations across the state, successfully argued the flawed settlement framework designed by plaintiffs’ lawyers would have: (1) diverted funds away from coastal restoration, (2) incentivized more meritless litigation targeting the energy industry, and (3) effectively allowed for the wholesale outsourcing of state coastal policy and regulatory enforcement authority. There is a clear lack of transparency. Policy, not trial lawyers, should drive solutions. Any settlement framework should also clearly outline the process for funding to flow directly to impacted areas specifically for coastal restoration.

JUDGE’S RECUSAL

Newly elected Louisiana Supreme Court Justice Will Crain was the subject of successful recusal motions by Carmouche, discussed in secret by the court, citing a campaign mailer mentioning Carmouche as proof of “actual bias.”

Louisiana has seen “a decrease of more than 2,000 employees across four occupations in the state’s oil and gas industry, and these lost jobs equate to lost earnings of $70 million per year.”
– Pelican Institute for Public Policy

TRIAL LAWYER ADVERTISING

Advertisements to file lawsuits are rampant in Louisiana. A recent study by the American Tort Reform Association found television viewers in Louisiana’s three largest media markets were bombarded by more than 250,000 ads for lawyers, lawsuits and legal services on local television broadcasts over a six-month period. That translates into one legal services ad aired every minute on average in New Orleans, Baton Rouge and Shreveport, purchased at an estimated cost of $16 million.

One prominent Louisiana plaintiffs’ attorney has 800 billboards up along Louisiana highways, and symbolizes the epitome of trial attorney advertising in Louisiana. The law firm spends about 35 percent of its budget on advertising. As a contingency-fee lawyer, he takes 32 percent of settlements, and even more if the case goes to trial and is successful.

Several proposals were introduced to regulate lawsuit advertising in 2020. The strongest of these measures (S.B. 395) by Senator Heather Cloud (R) would have allowed the Attorney General’s office to regulate ads through its consumer protection authority. Governor Edwards (D) vetoed this legislation following passage in both chambers. A bill introduced by Senator Patrick Connick (R) (S.B. 115), which requires advertisements for legal services that mention settlements or jury awards to disclose the amount of attorney fees paid from a settlement, was signed into law. Additionally, a resolution (SCR 57) by Senator Hewitt (R) urging the Louisiana Supreme Court and the Louisiana State Bar Association to consider a “lawyer advertisement review recognition program” also passed the legislature and did not require the governor’s signature. Civil justice leaders were pleased with the progress, but expect more to be done to address the problem.

JUDICIAL MISCONDUCT AND LACK OF TRANSPARENCY

Louisiana’s judiciary has long maintained a reputation for a lack of transparency in dealing with judicial mis- conduct. Numerous recent scandals have contributed to both the public and legislature losing patience with the judicial branch’s repeated promises to do better. Legislation was filed during the Regular Session to reduce the secrecy surrounding the discipline of judges. Due to the impacts of COVID-19, the legislation did not make it through the process.

In response to public pressure (including an investigative series by The Advocate/NOLA.com), the Louisiana Supreme Court announced in April that it would allow citizens to attend formerly private judicial misconduct hearings. However, it declined to eliminate a rule that prevents people who file complaints against judges from discussing those claims publicly.

FINANCIAL TRANSPARENCY

The Louisiana Supreme Court also began posting financial disclosure information on its newly-revamped website in May only after the private criminal watchdog organization New Orleans Metropolitan Crime Commission posted the same information on its website.

COVID-19’S IMPACT ON BAR EXAM

Stemming from COVID-19, the Louisiana Supreme Court voted to allow 2020 Louisiana law school graduates to forgo the bar exam. Justice John Weimer cast the deciding vote, without disclosing for the record that his daughter is a recent graduate who will benefit from this historic decision by the court. Those who registered for the August and October session of the exam will take an open-book test that they will submit via e-mail.

PASSAGE OF SIGNIFICANT LEGAL REFORM

This year marked the passage of the most significant legal reforms in Louisiana since the 1990s.

THE CIVIL JUSTICE REFORM ACT OF 2020

Louisiana enacted the Civil Justice Reform Act of 2020 to address the state’s auto insurance crisis. The new law will (1) reform direct action by limiting information provided about insurance coverage to jurors during trial, (2) repeal a rule that prevents jurors from learning whether a plaintiff wore his or her seatbelt , (3) lower the highest-in-the-nation jury trial threshold from $50,000 to $10,000, and (4) allow the jury to learn the amount that was actually paid for medical care (rather than inflated amounts that may appear on invoices before significant discounts) while allowing judges the discretion to award a maximum of 40 percent of the difference between the amount billed for medical expenses and the actual amount paid following the verdict. While these changes are not as comprehensive as reform advocates would like, these reforms are positive developments and more critical now as families and businesses work to rebuild Louisiana’s struggling economy.

As a result of the enacted reforms, Louisiana Commissioner of Insurance Jim Donelon expects to see auto insurance premiums begin to drop. “I am cautiously optimistic that it will bring down rates. I know that’s what the intent of the legislature has been. They have worked extremely hard to pass the reforms that would put us in step with almost every other state.”

PASSAGE OF COVID-19 LIABILITY PROTECTIONS

Louisiana adopted a series of laws to reduce the liability concerns of individuals, businesses, schools, and manufacturers during the pandemic. This legislation generally provides that no person, business, or government entity is liable for an injury stemming from exposure to COVID-19 unless it failed to follow applicable public health guidance and operated in a grossly negligent manner. The Legislature also provided specific protections for schools, event planners, restaurants providing to-go service, and makers of personal protective equipment and other products to help in the COVID-19 response.

END NOTES

  • The Louisiana Supreme Court has been asked to decide whether  the  state  is  barred  from  pursuing  a claim under a new theory of liability where  the injury at issue had already been settled in previous litigation. In Landry v. Astrazeneca LP, the attorney general and pharmaceutical companies had settled litigation brought in East Baton Rouge  over  whether the state had paid too much for a drug, Toprol-XL, and related claims. The attorney  general  then  filed  a  new  suit  in  Baton  Rouge  over  the  same  product and conduct. This time, the State alleged that the drug’s price was inflated because the companies had “improperly manipulat[ed] patent filings to frustrate the market of generic equivalents.” In July 2020, the intermediate court permitted the lawsuit, despite the prior settlement, because it found the State was com- plaining about different conduct than at issue in the first suit.

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