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Op-Ed: Landry, lawmakers have historic opportunity to curb lawsuit abuse

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For too long, Louisianans have felt the pain of lawsuit abuse, both on their finances and through the departure of jobs and opportunities from our state.

A recent study by The Perryman Group estimates 46,302 jobs are lost each year due to our state’s poor litigation environment. Meanwhile, Louisiana homeowners pay more than double the national average for insurance — $2,038 a year per policy, compared to the U.S. average of $1,311.

According to the Insurance Research Council, rampant legal system abuse and inflated claims payments — along with increasing natural disasters and economic conditions — have made Louisiana the most expensive state in the country for both homeowner and auto insurance.

It’s past time to address this crisis and get Louisiana working again. This session, Governor Jeff Landry and the Legislature have a historic opportunity to do just that.

In particular, lawmakers should consider prioritizing reforms to address third-party litigation financing, which were previously passed by the Legislature but ultimately vetoed by former Gov. John Bel Edwards.

The lawsuit loan industry is largely unregulated and can be very dangerous for unsuspecting consumers who are presented with the lure of quick cash. Reforms are much needed to require basic disclosure and shed light on the financial interests that can drive up litigation costs.

In addition, lawmakers should consider reforms to improve Louisiana’s collateral source laws to allow for greater transparency around medical billing—another major driver of skyrocketing litigation costs.

Finally, lawmakers should consider legislation to eliminate Louisiana’s direct-action statute. We are one of only three states in the country where a plaintiff can sue you and your insurance company which encourages nuclear verdicts and drives up the cost of insurance.

And when there is abuse in the legal system, we all pay for it.

Chronic lawsuit abuse is one of the most prominent issues that has impacted the economic health of our state for decades. By passing these and other critical legal reforms, Governor Landry and the Legislature can begin to address some of the root causes plaguing our legal system and help to make our state a place that creates and encourages, rather than chases away, jobs and opportunities for its citizens.

Daniel J. Erspamer is the CEO of the Pelican Institute for Public Policy, which advocates for free market principles.