Louisiana Gov. Jeff Landry (pictured above) has vetoed Senate Bill 111, a measure intended to limit certain bad faith lawsuits against insurers, according to a report from AM Best.
The bill would have restricted when policyholders could pursue legal action against insurance companies over claims-handling practices.
The legislation proposed that bad faith lawsuits be barred in cases where there was a good faith dispute over liability or the medical cause of an injury. It also would have blocked such suits if insurers had not been given at least 30 days to respond to a policy-limits settlement offer or had not been given adequate time to complete discovery. The term “adequate discovery” was not defined in the bill.
In his veto message, Landry said current bad faith statutes play a key role in discouraging delays in claims processing. He argued that SB 111 could make it more difficult for policyholders to challenge claim denials and might lead to greater uncertainty in the legal process. Landry also raised concerns that the language on discovery could be used to justify indefinite delays in resolving claims.
“If enacted, this legislation would introduce legal uncertainty and leave many policyholders with limited means to hold insurers accountable,” Landry stated.
Insurance Commissioner Tim Temple expressed disappointment with the decision, describing the bill as an effort to address legal system costs that insurers say contribute to higher rates for policyholders. In a statement, Temple said the legislation was designed to create a more balanced environment for insurers defending against lawsuits.
“People across the state tell me the giant payouts promoted by all the attorney billboards and commercials encourage too many lawsuits in Louisiana,” Temple said. “SB 111 would have simply addressed that broken part of our legal system.”
Although the bill was vetoed, Landry has signed other legislation this session aimed at modifying tort laws. These include bills limiting the ability of uninsured drivers to collect injury damages and revising rules on determining the cause of injuries in liability claims.
