LA tort reform win signals major power shifts

They did it, delivering not just a crushing blow to Democrat Gov. John Bel Edwards but also changed the balance of power between state Republicans and Democrats and prompted perhaps a permanent shift in power relations between the governor and the Louisiana Legislature.

HB 57 by GOP Speaker Clay Schexnayder in its final form accomplishes most of what Republicans wanted with tort reform. The issues involved, in order of impact in reducing vehicle insurance rates, are (1) lowering the amount in controversy, or the jury trial threshold, (2) calculating more accurately the actual costs involved to deal with injury, or collateral source, (3) eliminating the ability to sue insurance companies directly, or direct action, (4) allowing evidence of seat belt usage in a trial, or the seat belt gag rule, and (5) lengthening the amount of time to file these cases for hearing, or the prescription period.

The version, which attracted large majorities (including some legislative Democrats who had opposed bills with similar provisions in the past but who realized it would pass and decided to jump on the train before it left the station) and drew a pledge from Edwards to sign, lowered the threshold in injury cases to from $50,000 to $10,000, created a process to calculate damages more closely related to actual costs, diluted the ability to launch direct action, and removed the seat belt exclusion. These provisions more closely mirror those in states with far lower vehicle insurance rates. The changes take effect permanently and without contingency in 2021.

At the most immediate and micro level, Edwards suffered a massive defeat. Understand that he gained reelection narrowly last year only as a result of a massive amount of donations from trial lawyer-friendly lobbies. The deal was he had to stand as a bulwark against exactly the kinds of things he will sign, but the Legislature’s Republican leadership, reflecting the primacy their party’s members placed on the issue, tore that up by pursuing a strategy that boxed him in that proffered options he loathed even more, termed the “nuclear option,” that would trigger had he not accepted the HB 57 provisions. As a result, the Louisiana GOP acted like a legislative majority party for the first time in its history.

Democrat trial lawyers in the Legislature certainly fought these changes tooth and nail, because these will reduce significantly the amount of ratepayer premiums transferred to them in the current very plaintiff-friendly legal environment. But almost every other Democrat in the Legislature followed because, even if disappointed trial lawyer lobbies had the option to withhold donations, those donations will disappear regardless. Simply, HB 57 defunds Louisiana Democrats, because the long-standing deal also required that trial lawyers reaping the benefits of the current regime launder part of those gains back into donations. With those gains pared, donations that almost exclusively have gone to Democrats will fall significantly and strengthen the GOP’s hand in future elections.

In the clash of titanic issue preferences, Edwards lost. At an intermediate level, Democrats lost. But perhaps the most consequential outcome occurred at the macro level: potentially a permanent shift in the balance of power in Louisiana government.

Notably, HB 57 actually took tort reform further than SB 418 from the regular session, which Edwards vetoed. He could veto this one, and ordinarily his veto would stand because legislators are loath to return for an override session which would happen in the second week of August. But he can’t, beginning with the nuclear option. The nuclear option held because of another action the Republican leadership executed optimally: it passed the capital outlay budget in time for override votes on line items to have occurred during the special session, a meeting it called without Edwards’ assent. This meant any such vetoes cast would have been subject to logrolling where every legislator would vote to override every line item veto of every legislators’ projects.

That would be disaster for Edwards. Once a governor has his shield of invulnerability pierced with successful overrides, it becomes open season on his agenda. All but the hardest core ideologues among Democrats will abandon Edwards and instead try to ply favors from the GOP in realizing it has the power to create outcomes. Thusly cowed, Edwards issued no line item vetoes and thereby surrendered the ability to threaten legislators’ projects if they voted for components of the nuclear option, votes which required only simple majorities in chambers with near-Republican supermajorities.

The same dynamic applies if Edwards went back against his word to sign HB 57. Republicans would balk, and Democrats who put themselves on the line with favorable votes against the party’s biggest financial backer would be furious at being double-crossed. This sentiment would prove enough to generate the first-ever veto override session in the state’s history, which would expose other bills Edwards vetoed as well. Again, his invulnerability would evaporate, and with that most of his influence over the next three years of policy-making.

This strategy’s successful implementation provides future legislatures with a model and demonstrates within this system of government that a part-time Legislature can force its priorities onto the full-time chief executive when it has a sufficient majority and willpower. After hundreds of years of a man-on-horseback tradition within Louisiana political culture that gave governors influence beyond their formal powers, the passage of meaningful tort reform exposes considerable erosion to the base of that statue.