On April 15th, when state Rep. Kirk Talbot first introduced HB 372, a now-defeated proposal that had been known as the Omnibus Premium Reduction Act of 2019 and touted by the Louisiana Association of Business and Industry (LABI) as its most important bill of the year, he told members of the House Committee on Civil Law and Procedure that the legislation had been guided by and was based on the findings of a task force he chaired about auto insurance rates.
“We did a task force to look into this problem (the high price of car insurance) in the offseason….(and) we tried to take an analytical, data-driven approach to this problem,” Talbot told his colleagues in the House about the work of the Louisiana High Auto Rates Task Force before explaining the four “reforms” included in his bill (His testimony begins at 35:55).
A month later, in front of a different legislative committee, Talbot was forced to finally acknowledge the facts after state Sen. Ryan Gatti, a fellow Republican, confronted him about a 23-page report that had been completed three months ago by the task force’s actuarial subcommittee but not circulated to the public or even to lawmakers.
All five members of the subcommittee are professional actuaries, and notably, the majority of the subcommittee- four of its members- are employed by car insurance companies State Farm, Allstate, GEICO, and Liberty Mutual. No consumer group’s actuary or other independent voice was invited to weigh in on these proposals.
Nonetheless, their report concluded that the core proposals of Talbot’s bill- reducing Louisiana’s jury trial threshold, expanding the prescription period, eliminating collateral source, and shielding insurance companies from being sued directly- were not proven to have any documented connection with decreases in car insurance rates.
HB 372 had coasted through the House, falling only one vote short of a veto-proof majority, but once it reached the seven attorneys who serve on the state Senate’s Judiciary-A Committee, it was met with sharp criticism from both Republicans and Democrats, who meticulously picked the bill apart.
“I want to make something clear: House Bill 372 is not a result of the task force, correct?” Gatti asked Talbot.
“No, it is not a result of the task force,” Talbot replied. “And I never said it was. And I hope I didn’t mislead anybody into thinking that.”
Gatti had already done his homework, and he knew that, despite what the bill’s supporters had been claiming, Talbot’s task force had largely been a farce, meeting only three times and dominated by the insurance industry and their lobbyists, who, to no one’s astonishment, argued that Louisiana’s expensive rates had nothing to do with insurance companies. They blamed, instead, the cost of litigation, the same gimmicky talking point used by LABI, on nearly every issue, to deflect criticism away from big business and onto the state’s legal system.
Watch the full exchange between Gatti and Talbot:
To those who have watched the protracted debate over the bill or have followed the Bayou Brief’s ongoing investigative series “Wrecked: How Auto Insurance Takes Louisiana for a Ride,” it is difficult to ignore the numerous occasions in which Talbot and others, right from the beginning, referred to the task force as both a source and an authority on the subject.
And it’s impossible to ignore the extent to which both the task force and, presumably, the leadership of the state Department of Insurance had attempted to obfuscate and conceal information related to the task force, as Gatti personally discovered after making multiple requests.
At the conclusion of a marathon hearing on May 7th, the Senate committee agreed to withhold making a final decision on the bill until it had been scrutinized by the legislative fiscal office; they wanted to determine how much the proposal would cost taxpayers, who would ultimately be forced to foot the bill for the anticipated increase in civil jury trials. This too proved difficult to precisely estimate, but the state’s analyst, Zach Rau, nonetheless found that Talbot’s bill would definitely result in an increase in government spending.
Quoting (emphasis added):
“The LA Supreme Court (LASC) anticipates a 33%-50% increase in district-level civil jury trials associated with proposed law, and that the state would be required to reimburse expenditures to district courts with these additional trials within two fiscal years. It is assumed that reimbursements for additional jury trials will be appropriated annually in the judicial expense act utilizing SGF (state general fund). The LASC estimates expenditures per jury trial to total $16,590 and include the following: jury seating ($10,000); civil filing fees ($150); total per diems for jury selection ($2,800); juror compensation ($800); expert witnesses ($2,000); and juror meals ($840). According to the LASC’s 2017 Annual Report, 173 civil jury trials reached verdict in 2017. To the extent a 33%-50% increase in civil jury trials occurs as a result of proposed law, there would be an additional 57-87 trials statewide, yielding an anticipated expenditure increases for district courts of $945,630 – $1,443,330 that would be reimbursed by the state. However, the exact expenditure increase is indeterminable and dependent upon the number of additional civil jury trials associated with this legislation, as well as the actual costs associated with each trial.”
The bill’s ultimate defeat represented a surprisingly forceful rebuke of the insurance industry and the state’s most powerful lobbyists, who had misjudged their ability to convince lawmakers on the flimsy promise of lower rates in exchange for “tort reform” legislation that would have eroded the legal rights of injured drivers and individual victims.
It also signified a major defeat for LABI, who had hoped to stoke resentment against plaintiff’s attorneys as a way of building public support.
Among other things, the bill’s proponents frequently referred to advertisements by trial lawyers as evidence the Louisiana insurance industry was somehow beleaguered. According to two separate studies conducted in 2017, national spending on legal advertising topped $1 billion for the first time, which still pales in comparison to the $3.846 billion spent that year by auto insurance companies. In fact, one company- GEICO- spent more on advertising than the combined amount spent by every lawyer in the entire country. There are approximately 19,307 people licensed to practice law in Louisiana, according to the most recent count conducted by the American Bar Association. By comparison, the state’s Department of Insurance reported last December that Louisiana is home to 145,715 insurance agents.