Louisiana drivers pay some of the nation’s highest auto insurance premiums. To combat these excessive rates, the Civil Justice Reform Act of 2020 was signed into law on July 13. Proponents of the act hope it will lower the cost of insurance policies by easing the burden on insurance companies—who regularly find themselves as defendants in Louisiana courts. The act is Louisiana’s latest attempt at “tort reform.” Tort reform refers to changes to the civil justice system that diminish a plaintiff’s ability to bring tort litigation or reduce the amount of damages available to a plaintiff.
The act makes the following changes to the Louisiana civil court system:
The act becomes effective on Jan. 1, 2021, and does not apply to any cause of action prior to Jan. 1, 2021. Before the passage of the Civil Justice Reform Act, the Louisiana Legislature tried to enact similar legislation. Earlier in the legislative session, the Louisiana House and Senate passed SB 418, which included even more sweeping reform. SB 418 would have extended the deadline to file a lawsuit from one year to two years for most civil actions. It also would have abolished the direct action statute, which allows a plaintiff to sue the wrongdoer’s insurance company directly when a liability policy covers a certain risk. However, Gov. John Bel Edwards vetoed the bill, reasoning that there were no guarantees the bill would cause insurance companies to lower auto premiums.
Please contact Matthew Slaughter or Phelps’ Litigation team if you have any questions or need compliance advice and guidance.