Louisiana Legislature Passes Civil Justice Reform Act Of 2020

On June 30, 2020, the Louisiana Legislature passed House Bill 57, the Civil Justice Reform Act of 2020, which represents a compromise on the previously sought tort reforms that were vetoed by Governor John Bel Edwards in the prior legislative session. The Governor’s office has indicated that he will sign the new bill into law, which will go into effect on January 1, 2021.

What Tort Reforms Were Accomplished?

  1. The Act reduces the threshold for the right to trial by jury from $50,000 to $10,000. The right to trial by jury will be granted in all tort cases where a plaintiff’s cause of action exceeds $10,000. While the Act does not change the jurisdictional limits of parish and city courts, the law allows a defendant to seek a transfer from those courts to the district courts when more than $10,000 is involved in order to obtain the right to trial by jury;
  2. The Act prohibits disclosure to the jury of the identity of an insurer by name and prohibits the litigants from mentioning the involvement of insurance to the jury, except that the judge will be required to provide an instruction to the jury at the beginning and end of the trial that there is insurance coverage available for the plaintiff’s damages. The purpose of this provision is to prevent multiple references during a trial by plaintiff’s counsel to the insurance company and referring to defense counsel as “counsel for the insurance company”, which frequently occurs during jury trials in Louisiana;
  3. While not abolishing the collateral source rule, the Act somewhat limits the Plaintiff’s recoverable medical expenses where the amount paid by a collateral source is less than the amount billed by the healthcare provider. The Act statutorily codifies that in instances where the bills are paid by Medicaid or workers’ compensation insurance, the plaintiff’s recovery is limited to the amounts paid. In instances involving payments by health insurers or Medicare, which have previously been held collateral sources by Louisiana courts, the Act limits the recoverable medical expenses to the amount paid by the health insurer or Medicare plus an amount equal to 40% of the difference between the amount billed and the amount paid to cover the plaintiff’s “procurement costs”. The Act states that the court can award less than 40% if the Defendant shows that an award of 40% of the discounted amount would render the award unreasonable. Essentially, the Act takes away 60% of the windfall previously received by a plaintiff in cases where the bills were paid by health insurance or Medicare. The Act provides that the jury only is allowed to hear about the total amounts billed, and the Judge is to make the appropriate medical expense award after verdict pursuant to the provisions of the Act;
  4. The Act repeals and eliminates Louisiana’s evidentiary bar on seatbelt usage in civil actions. Under the new Act, the failure of a Plaintiff to wear his or her seatbelt will be admissible at trial for all relevant purposes including comparative fault and/or failure to mitigate damages.

What The Act Fails to Do

  1. The Act does not change Louisiana’s one-year prescriptive period (statute of limitation) for tort claims. Prior legislation had sought to increase the prescriptive period to 2 years;
  2. The Act does not do away with the Louisiana Direct Action Statute which allows insurers to be named directly as defendants in most tort suits in Louisiana. While the Act limits the ability of plaintiff’s counsel to refer to insurance at trials, the insurance company will still be named as a defendant in most suits;
  3. The Act does not limit the amount of medical expenses incurred where amounts remain owed to the medical provider or where the medical expenses have been secured by a contractual or statutory privilege, lien or guarantee. This will allow attorneys to continue to pay and/or guarantee payment of medical expenses, the continued use of litigation funding companies, and instances in which the provider allegedly accepts partial payment for services with the remainder being owed upon resolution of the case. In this author’s experience, these arrangements are often used to artificially inflate medical expenses, particularly in larger cases involving trucking companies and commercial auto insurers.

Civil Justice Reform Act of 2020: The Upshot

The Act does provide some valuable reforms to the present Louisiana tort system, while falling short on the collateral source rule and the calculation of recoverable medical expenses. The implementation of the medical expense provisions of the Act will likely generate several issues that will need to be litigated and interpreted by our Louisiana courts.