Lawmakers pass state budget and civil justice overhaul

By David Jacobs | The Center Square

Louisiana legislators on Tuesday ended their special session with a new state budget, just in time for the new fiscal year, and a deal to overhaul the state’s civil justice system.

Democratic Gov. John Bel Edwards, who vetoed Republican-backed legal system changes passed during this year’s regular session, said he would sign the new version.

The $35.2 billion spending plan uses federal aid to make up for a revenue shortfall caused by the COVID-19 pandemic and the economic restrictions imposed to control the spread. On paper, the budget spends billions more than last year’s, though lawmakers say that’s misleading because federal dollars are counted twice.

House Appropriations Chairman Jerome Zeringue said the spending plan is basically a “standstill” budget, though lawmakers trimmed $24 million from departments across state government. Lawmakers also held off on spending $58 million for planned raises for state government workers, saying it would send the wrong message when so many private sector workers are unemployed.

Louisiana’s state constitution requires lawmakers to pass a balanced budget before the fiscal year begins July 1. Tuesday was their last chance to finish that work after failing to do so during the pandemic-shortened regular session that ended June 1.

Unlike most years, when the major spending bills are not approved until the final moments, lawmakers approved the state operating budget with two hours to spare before the 6 p.m. deadline.

“It was a daunting task,” said Sen. Bodi White, the Senate’s finance chairman.

Edwards said the budget, while not ideal, is “workable,” suggesting it was about the best that could be hoped for under the circumstances.

Legislators rely on Revenue Estimating Conference projections to decide how much money they expect to be able to spend. It’s always an inexact science, made even more difficult this year by COVID-related uncertainty. Many lawmakers expect to return in late summer or early fall to deal with a revenue shortfall or to decide what to do with a new allocation of federal aid.

Legislators during the regular session passed a package of changes meant to overhaul how the state’s court system handles injury claims, particularly from automobile accidents. Many Republicans and business lobbyists believe the current system favors plaintiffs and causes high automobile insurance rates, particularly for the commercial market.

But Edwards vetoed the bill, saying there was no evidence it would lead to cheaper insurance. Many Democrats argued the changes were designed to rig the system against average citizens going against big businesses and insurance companies.

While several bills seeking to reform the civil justice system circulated this year, it was House Bill 57 by House Speaker Clay Schexnayder that achieved final passage. It would reduce the amount of money at stake needed to trigger the right to a jury trial from $50,000, the highest in the nation by far, to $10,000.

Louisiana plaintiffs would retain the right to sue an insurer directly, which has been a point of contention. Some lawmakers argued knowing an insurance company will pay the plaintiff’s damages makes juries more likely to side with plaintiffs.

But in most cases under House Bill 57, juries would never learn the insurer’s identity, though they would hear if the defendant had insurance at the opening and closing of the trial. The bill also allows courts to consider whether a plaintiff’s failure to wear a seat belt contributed to their injuries.

Lawmakers amended HB 57 Tuesday to establish a “collateral source” rule in Louisiana law, which is meant to ensure plaintiffs are only compensated for medical damages either paid or owed, as opposed to the “sticker price” of a procedure, which might be much higher. The goal is to let defendants and insurers avoid paying for “phantom injuries,” supporters say.

However, if there is a difference between the amount billed and the amount paid, judges would have the discretion to award the plaintiff up to 40 percent of the savings, explained Rep. John Stefanski, a Crowley Republican.

“I think [the bill] represents a real compromise,” Edwards said.

The legislation does not include measures sought by Democrats, such as a mandate for insurance companies to lower rates or an expiration date if rates don’t go down. Rep. Denise Marcelle, a Baton Rouge Democrat, said she was willing to vote for the bill but urged her colleagues to come back to the table in future sessions if rates don’t go down.

“I’m worried that this is really going to delay justice,” said Rep. Robby Carter, an Amite Democrat who said a lower jury trial threshold could clog the courts system.

Rep. Jack McFarland, a Winnfield Republican, said the changes, particularly the collateral source rule, would benefit small commercial transport companies whose businesses are threatened by skyrocketing rates.

“I think we found a sweet spot that is going to have an effect [on rates],” he said.