DECEMBER 8, 2020 (WASHINGTON) – Louisiana’s love of lawsuits lands the litigious locale the dubious distinction of “Judicial Hellhole” for the eighth year running.
The American Tort Reform Foundation (ATRF) named Louisiana the No. 5 Judicial Hellhole this year, down one spot from last year. Judicial Hellholes are deemed the most unjust local courts and state civil justice systems in the country. The 2020 report ranks nine and shines a light on lawsuit abuse and its effects.
Louisiana is no stranger to being called a Judicial Hellhole and residents are familiar with how lawsuit abuse impacts their pocketbooks.
This year brought a made-for-TV auto accident scam, trial lawyer ads as far as the eye can see while coastal lawsuits dragged on in the state.
“Not only does lawsuit abuse drag down the overall economy, as we’ve seen this year with thousands of COVID-19-related lawsuits,” American Tort Reform Association (ATRA) President Tiger Joyce said, “But in Louisiana, a family of four can pay a tort tax of more than $1,600 every year – that’s about three months worth of groceries spent on lawsuits!”
Excessive tort costs result in nearly 20,000 Louisiana jobs lost and $1.2 billion lost in personal income annually.
Louisiana’s auto insurance rates are second only to Michigan and premiums have increased 18.3% since 2015 for Louisiana drivers. These high auto insurance costs are a consequence of the state’s climate of lawsuit abuse. Plaintiff-friendly judges and, up until recently, the highest-in-the-nation jury trial threshold result in high litigation costs, meaning it’s more expensive for insurance companies to operate in the state. It also means fewer companies are willing to do business in the state.
Louisianans’ pocketbooks are hit directly, and some businesses are considering whether to relocate to less litigious states or close their doors altogether.
Several south Louisiana residents decided to see just how much they could game the state’s court system. They allegedly had a scheme in which they faked auto accidents with 18-wheeler tractor trailers, then worked with a specific lawyer to get payouts.
The lawsuits usually involved multiple people in the vehicle, with little to no damage, then little to no damage to the insured truck, with the truck driver unaware of an accident or disputing that it happened at all. They sought damages including medical expenses, mental anguish, loss of enjoyment of life, physical pain and suffering, and inconvenience.
Insurance companies often settle these cases rather than spend time and resources going to trial – and facing Louisiana’s “hometown justice.” In total, trucking and insurance companies were defrauded out of $277,500 in the cases. Those involved pleaded guilty to conspiracy to commit wire fraud.
Louisiana’s highways are also littered with trial lawyer advertisements splattered across billboards, signaling to businesses that they’re in a Judicial Hellhole where they’re more likely to get sued.
“These ads drive away businesses who may want to invest in Louisiana and drive away those who have faced the unfortunate reality of their state’s legal climate,” Joyce said.
This year the legislature passed the Civil Justice Reform Act of 2020. It enacts reforms intended to address the state’s outrageous auto insurance costs, including lowering the state’s jury trial threshold from $50,000 to $10,000.
While insurance rates may improve, coastal lawsuits targeting the state’s energy industry drag on. More than 40 lawsuits filed by 7 parishes attempt to outsource enforcement by involving private lawyers in a space meant for democratically elected decision makers who are accountable to the public.
A recent study shows these lawsuits resulted in a loss of more than 2,000 employees in the state’s oil and gas industry, equating to $70 million per year in lost earnings.
“These coastal lawsuits only move the state further in the wrong direction and drag down the state’s economy as it looks to rebound from a difficult year,” Joyce said.
The full 2020-2021 Judicial Hellholes rankings are:
View the full report at JudicialHellholes.org.