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Report: Louisiana is one of America’s worst ‘judicial hellholes’

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(The Center Square) — Louisiana remains among America’s top “judicial hellholes,” according to a new report that ranks the state seventh for the second year in a row.

The 2023-24 Judicial Hellholes report from the American Tort Reform Foundation provides an annual look at “places where judges in civil cases systematically apply laws and court procedures in an unfair and unbalanced manner, generally to the disadvantage of the defendants.” Louisiana has ranked in the top eight since at least 2016.

“The issues in the report are the same year after year,” said Sarah Harbison, general counsel for the Pelican Institute. “Our legal climate is a problem that drives away jobs and opportunity.”

It also results in a “tort tax” that costs every Louisiana resident roughly $1,118 and the state about 48,696 jobs each year, according to a study by The Perryman Group cited by the foundation.

“Coastal litigation is the big ugly one,” Harbison said. Over 40 lawsuits filed by six Louisiana parishes against more than 200 energy companies are “a payday for the trial lawyers, and they don’t do anything to restore the coast or protect it for the future,” she said.

The Judicial Hellholes report points to data from the American Petroleum Institute that shows the oil and gas industry supports more than 346,000 Louisiana jobs, or roughly 13% of the state’s total employment, providing more than $25 billion in wages and $54 billion for the state’s economy.

Research from the Pelican Institute shows in the two years after the lawsuits were first launched, 2,000 jobs worth $70 million in wages were lost as a result of the litigation risk.

The Judicial Hellholes report highlights the “government cronyism” involved, with Department of Natural Resources Secretary Tom Harris confirming in an April deposition that he allowed the plaintiffs’ lawyers to determine the validity of the claims, despite their substantial financial interest in the outcome.

Other issues include insurance schemes driving up car insurance rates, which now average $2,906 per year in Louisiana, second only to Florida. Staged accidents with big rigs in New Orleans typically involve a driver known as a “slammer” who intentionally collides with a tractor-trailer before another person enters the vehicle to feign injury.

“Working with lawyers and doctors who may have been in on the scheme, the participants … then demand compensation for the bogus accident,” read the report, which cites at least 50 individuals convicted of the schemes in recent years.

Other issues cited by the foundation revolve around lawsuits following hurricanes that have cost insurers $23 billion between 2020 and 2022 and driven many out of the market. The report cites a Texas law firm that filed 2,766 lawsuits through a scheme that involved unwitting homeowners assigning their insurance benefits to a roofing contractor.

Third-party litigation financing has also been an issue in Louisiana that can pit the interests of private investors against the best interests of the plaintiffs through secret arrangements. Lawmakers approved changes in June to bring transparency to third-party funding, but the legislation, Senate Bill 196, was nixed by Gov. John Bel Edwards.

“The outgoing governor, an attorney with deep ties to the plaintiffs’ bar, was a roadblock for reforms, vetoing several pieces of legislation during his governorship,” the report read.

NFIB State Director Dawn McVea noted the issues outlined in the report can have a big impact on the state’s businesses and the employees that rely on them.

“Small, family-owned businesses don’t have teams of lawyers standing ready to help defend them against every nuisance suit or meritless claim,” she said in a statement. “The cost of defending itself against just one disingenuous lawsuit can be enough to put a small business out of business.

“Our small business members are asking their legislators to support legislation balancing the scales of justice in next year’s legislative session.”

Harbison said she’s optimistic the incoming administration led by Republican Attorney General Jeff Landry will finally provide the will to change the state’s legacy as a Judicial Hellhole.

“The solutions are obvious,” she said. “I’m hopeful a reform-minded legislature and business-focused governor will be able to … move us down or off the list in the next few years.”

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