Insights

In the last two years, Louisiana has implemented several significant reforms impacting the  litigation landscape for insurance companies. A clear understanding of these changes is essential for insurers that underwrite, broker, or adjust claims within the state.

1.    Direct Action Statute

Historically, Louisiana law allowed plaintiffs to sue a tortfeasor’s liability insurer directly and name the insurer in the lawsuit caption. As of August 2024, this is no longer the law. Under the new Direct Action Statute, a plaintiff may bring a direct action against a tortfeasor’s insurer only if:

1.    the insured has filed for bankruptcy;
2.    the insured is insolvent;
3.    the insured cannot be served with the petition after 180 days;
4.    the tort claim arises between spouses or between a parent and child;
5.    the insurer is a UM carrier;
6.    the insured is deceased; or
7.    the insurer is defending under a reservation of rights or denies coverage.

La. Rev. Stat. § 22:1269. Insurers should pay close attention to the seventh circumstance on this list. Many insurers issue a reservation of rights letter as a matter of course. They may wish to reconsider that practice if they wish to avoid being sued directly.

2.    Prescription

Prior to July 1, 2024, a plaintiff had one year from the date of a tortious act against their person or immovable property to file a lawsuit. Louisiana has revised this deadline to allow two full years for plaintiffs to file their lawsuits.

The new deadline allows more time for pre-suit investigations and claim evaluations which should, hopefully, decrease the occurrence of frivolous filings as there will no longer be a rush to file. However, this increased time period creates a potential pitfall by increasing the risk of evidence deterioration such as loss of video footage, the repair of damaged vehicles, or destruction of records with one year retention policies. Insurers should take great care to preserve any evidence from the moment they are made aware of a claim and take proactive steps such as issuing preservation letters early.

3.    Comparative Fault

A very significant change has occurred to Louisiana’s comparative fault laws. Louisiana has long been a pure comparative fault state, meaning a plaintiff can only recover from a defendant its percentage of fault. For example, if a defendant was found only 10% liable, the plaintiff could only recover 10% of the judgment amount from that defendant.

The new law states that if a plaintiff is found to be 51% at fault for the accident they sued upon, they are barred from recovering any damages. This is a major change in tort law, which some may view as extreme. Likewise, if a plaintiff is found at fault, but less than 51%,  recovery is reduced by their percentage of fault.

4.    No Pay No Play

Previously in Louisiana, if a plaintiff did not have the minimum automobile liability insurance coverage she could not recover the first $15,000 in bodily injury or first $25,000 in property damage. 

Under the new law, uninsured plaintiffs are now prohibited from recovering the first $100,000, in bodily injury or property damage. This represents a major shift in Louisiana’s approach to uninsured motorists.

5.    Collateral Source Rule

The change to the collateral source rule is significant for the consideration of how medical bills will be addressed before juries. The old law only allowed juries to be shown the full amount billed by medical providers. This allowed a potential windfall as commonly, the amount billed is not the actual amount paid by health insurance or the patient.

Under the new collateral source rule, if a plaintiff’s medical bills were paid by a health insurer or Medicare, the jury must be informed of both the amount billed and the amount actually paid. Any award of money to the plaintiff must be limited to the amount actually paid plus anything outstanding.

For other past medical bill paid by Medicaid or an uninsured patient, recovery includes both the amount paid and the outstanding amount including amounts secured by lien, privilege, or guarantee.

6.    Medical Causation Presumption

Previously in Louisiana, plaintiffs benefited from what is colloquially referred to as The Housley Presumption. The Housley Presumption allowed a plaintiff to provide the jury with instructions to presume that simply because the plaintiff had no prior history of illness, injury, or condition, that the accident sued upon caused their medical condition. This presumption has been problematic for defendants as it negates common sense in situations where a plaintiff may have a degenerative condition, unrelated condition, or a condition that was pre-existing but never treated by a physician.

This presumption no longer exists as of May 2025. The result of the dissolution of this presumption means plaintiffs must now present affirmative medical evidence to prove their injuries were caused by an accident even when they have no prior medical history.

7.    Settlement Funding / Bad Faith

A requirement that has always been present has been moved to a different statute, but bears reviewing. All settlements with insurance companies must be paid within 30 days of the agreement. That agreement does not need to be written or formal. La. Rev. Stat. §  22:1892(I).

In practice, there is some flexibility to this rigid deadline. For example, the parties can enter into an initial written settlement agreement that includes payment terms which suspend the 30-day funding requirement.

Together, these changes significantly alter how insurance disputes will be litigated and resolved in Louisiana. Insurers and claims professionals should adapt their processes, reinforce evidence preservation efforts, and educate internal teams on the new requirements to reduce exposure and maintain compliance in this evolving legal environment.