As GOP legislators celebrate huge tort reform victory, Sen. Hewitt, House Speaker Schexnayder explain Sen. Peacock’s withdrawal of collateral source as football equivalent of flea flicker.

 


Louisiana House Speaker Clay Schexnayder (R-Gonzales).

Louisiana State Sen. Sharon Hewitt (R-Slidell).

In the waning moments of the 2020 Louisiana Legislative Special Session which concluded on June 30, 2020, a huge victory for tort reform advocates transpired when both bodies approved Speaker Schexnayder’s HB-57 by incredibly wide margins (86-15 in the House and 35-4 in the Senate) and Gov. Edwards indicated that he will sign the measure into law.  The following table summarizes the major provisions and impacts of the tort reform measure:

Component of Louisiana's Tort System.BEFORE HB-57 by Speaker Schexnayder takes effect on 1/1/21.AFTER HB-57 by Speaker Schexnayder takes effect on 1/1/21.
Jury trial threshold (the minimum amount required to enable the defendant to have the right to insist upon a trial by jury rather than a judge).$50,000 (strongly encouraged judge and venue shopping).$10,000 (will make judge and venue shopping far less lucrative).
Seat belt disclosure entailing whether plaintiff was wearing or not.CANNOT be disclosed to the jury.CAN be disclosed to the jury.
Collateral source (the basis upon which medical payment judgments are awarded).The amount the physician, hospital, or other health care provider BILLED.The amount the physician, hospital, or other health care provider WAS ACTUALLY PAID (with a provision for adding up to 40% of the difference between amount billed and amount paid to recover plaintiffs' costs -- e.g. attorney fees -- to obtain that payment).
Direct action (i.e. ability to name as defendant) against defendant's insurance company.Yes.Yes, but with the provision that reference to that insurance company to the jury may transpire only during opening and closing arguments.
Prescription period (i.e. maximum time frame for filing lawsuit after accident).One YearOne Year

In installment two of this series, we’ll examine in depth why the lowering of the jury trial threshold is so critical.  For this segment, however, we want to focus on “collateral source,” which is an item illustrated by specific example in our last post.  Let’s reintroduce the Blue Cross Blue Shield (BCBS) processed claim of Sound Off Louisiana founder Robert Burns for a minor surgical procedure he had performed on June 1, 2020 (not auto-accident-related, but it serves the same purpose as if it had been):

As illustrated above, the surgeon billed $1,600; however, BCBS only approved $184.12, and that was the amount Burns remitted to the physician.

Under the current system, the jury is only shown the $1,600 figure and, hence, that’s the amount they’re likely to award as part of a judgment.  As we illustrated in the feature linked above, the net result of that is a huge unjustified windfall to the plaintiff as well as to his/her attorney (plaintiff’s windfall = $882.55; plaintiff attorney windfall = $471.96 — see previous post for how these windfalls are calculated).

Under the new system to take effect on January 1, 2021 for auto accidents transpiring after that date, the amount to be recovered is limited to $184.12 with a provision of up to 40% of the difference between the two amounts to be added to the final judgment by the judge overseeing the case.  So, in the example above, the judge would have the authority to award a grand total of $750.47 [$184.12 + 0.40 x ($1,600 – $184.12)].

The theory behind the 40% add on by the judge is essentially to permit the plaintiff to recover legal fees required to get the judgment and thus be made whole.  There is a provision in the newly-enacted law stating that the added amount by the judge should not be “excessive.”  The closer the amount billed is to the amount paid (as is apparent, they are miles apart on the example above), the more a judge would be expected to exercise his (her) discretion and make a 40% adjustment.

For example, suppose the amount billed by Burns’ doctor above had been a mere $400.  Then, a 40% add on differential is fully justified to keep the plaintiff from not even being made whole after paying attorney fees.  Under that scenario, the judge could increase the award of $184.12 to $270.47 [$184.12 + 0.40 x ($400 – $184.12)].  Given typical attorney fees of one-third of a judgment, this would leave the plaintiff with $180.31, or an amount which essentially makes him “whole.”

Obviously, when there is an ocean of difference between the amount billed by the doctor and the amount actually paid (as is the case on the illustrated example), there is the potential for a judge to abuse the system and award an unjustified amount ($750.47 in the illustration above); however, there is a provision in the law that says “provided the amount will not be excessive,” so presumably an insurance company could successfully challenge any such abuse by a trial judge.

In the example above, the judge, to be fair and fully compensate the plaintiff for his medical bill, should increase the actual medical payment of $184.12 by $92.06, to $276.18.  That way, after the attorney gets his one-third share ($276.18 x 1/3 = $92.06), the plaintiff is made whole at $184.12 ($276.18 = $92.06).  Now, $92.06 represents only 6.50% of the difference between the billed amount and paid amount, so the smarter judges (or those not still hell-bent on gaming the system) will refrain from making a 40% adjustment and stick with the numbers we’ve just illustrated.

Now, on the linked feature above, we provided a video segment of Sen. Barrow Peacock stating that he was introducing an amendment which would remove “collateral source” from HB-57 “unfortunately.”  As such, everything would remain the same regarding the example above and the jury only be shown the $1,600 figure.  The remainder of the video on that segment dealt with Sen. Heather Cloud appearing on Moon Griffon’s morning show lamenting the fact that was the case and voicing extreme frustration that collateral source had been removed.

For purposes of this feature, we want to reproduce only the 7-second video of Peacock’s removal of the collateral source language.  Here it is:


State Sen. Barrow Peacock removes “collateral source” from HB-57 on the Senate Floor on Monday, June 22, 2020.

In conference committee, the collateral source language referenced in the table above was added into the bill.  Based upon the knowledge that he had at the time, Sound Off Louisiana‘s Burns made a Facebook post congratulating a quick rundown of perceived winners from the passage of HB-57 (the tort reform bill) but also itemizing Sen. Peacock and Senate President Page Cortez as the “biggest losers” based upon the preceding video.

We did openly ponder if House Speaker Schexnayder, who doesn’t have the reputation for being loud or boisterous in public, may have gotten behind closed doors and pounded his fist on the table insisting that collateral source be added back in.  Some people can be far more forceful behind closed doors than they are in public.  In fact, we’ve been told by some folk close to Gov. Edwards that he has been known to “blow his stack” in closed-door meetings with his staff, yet the public never sees that side of him.

We got direct responses to the above Facebook post both from State Sen. Sharon Hewitt (R-Slidell) and House Speaker Clay Schexnayder.  Both indicated that we merely got it “wrong” entailing Peacock and Cortez being “losers” and that it was all part of a master plan to “buy time” and advance the bill with the knowledge all along that collateral source would be added back in conference committee.

In a nutshell, they said that we bit on the football equivalent of a flea flicker.  For those unfamiliar with that play in football, it transpires when the quarterback hands the ball off to a running back who, after approaching the line of scrimmage making the play appear to be a run, turns around and shuffles the ball back to the quarterback, who then seeks to find a wide-open sprinting receiver not covered nearly as tightly as would otherwise be the case because the defense has “bitten” on the appearance that the play is a running play.

Using that analogy, both Burns (and even more so Griffon) most certainly “bit” on the play as a run play, and as “fans” in this football analogy, openly booed VERY loudly (especially Griffon) in that our team was facing a fourth and eight with the clock rapidly churning toward the end of the game, and there was simply no way we were going to get the first down (much less win the game) on a freaking running play!  Accordingly, both Burns (and, again, even more so, Griffon — just listen to the features on the preceding linked post) didn’t hold much back in voicing frustration and anger at the two most integral payers in facilitating this flea flicker (Peacock as running back, and Cortez as quarterback).

Both Sen. Hewitt and Speaker Schexnayder have let us know that we most certainly “bit” on the flea flicker.  Here are their respective responses to our Facebook post:

Senator Hewitt:

Robert, I appreciate your enthusiasm for getting tort reform passed–it has been 25 years in the making and we are all very proud to have moved our state forward on this issue.
While it is true that Sen Peacock removed on the Senate floor the collateral source language in the Speaker’s bill (with his concurrence), there always was a plan by Pres Cortez and Sen Peacock to get collateral source language passed. By allowing the bill to continue to move to conference committee, we bought more time for OUR stakeholders to agree on the best collateral source language to add back into the bill. We also moved Rep Nelson’s and Rep Garofalo’s tort bills through the Senate and back to the House, both of which had collateral source language and could be sent to the Governor. It was all part of the strategy that the President and the Speaker developed together through unprecedented cooperation.

 

Speaker Schexnayder:

Mr. Burns, thank you for the kind words. It was a difficult session considering the circumstances but I am proud of what we accomplished. With that said, you have it completely wrong when it comes to Senate President Cortez and collateral source. You should know that President Cortez and I were in 100% lock-step the entire time – he co-authored my bill. It was with his help that we were able to navigate the process and come out on the other side with the end result, which was our goal from day one. To label him a loser of the session would be to totally misread it.

We fully accept both Sen. Hewitt’s response to our Facebook post and that of Speaker Schexnayder.  We did, however, qualify that acceptance with the statement that we were glad to know this was a “fake out” because otherwise, the optics depicted in the 7-second video above were “horrendously bad.”  We don’t mind being fans of this “sport” who got faked out by the flea flicker.

We did point out to Sen. Hewitt that we found it unfortunate that such high-level chess games had to be played and that it would be nice if we could just play the equivalent of smash-mouth, up-the-gut, in-your-face, boring offense, especially since “our side” has a near-veto-proof majority in both Chambers.  Maybe we just have too much of a soft-spot for old Les Miles!  Nevertheless, we stressed that, whatever may have been required to get the victory, we were pleased with the victory because, as we stated, fiscal conservatives (and we know we speak for many) were starting to get “pretty downtrodden” at always losing, and the victory on tort reform at the end of the Special Session was a most-welcome shot in the arm to rejuvenate many of us!

 

As stated above, our next segment is going to focus on the lowering of the jury trial threshold and, in that feature, we’re going to mention someone’s name who hasn’t even been referenced during all of the current tort reform efforts, and we believe that person deserves very special recognition, and we intend to provide it!

 

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