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Louisiana Grapples with Judicial Hellholes® Distinction

From Coasts to Courts, State Struggles Under Weight of Judicial Hellholes® Title


DECEMBER 5, 2023 (WASHINGTON) — Louisiana clinched the No. 7 Judicial Hellholes® spot in the American Tort Reform Foundation’s 2023-2024 report, shedding light on an ongoing crisis demanding immediate attention.


Louisiana faces a range of unique legal issues, according to the report – coastal litigation, insurance schemes, and a lack of transparency, all are to blame for the state’s Judicial Hellholes® reputation.


With Republican Jeff Landry’s recent election as governor, there’s a glimmer of cautious optimism for legal reform in the Pelican State. Outgoing Democratic Gov. John Bel Edwards, a trial lawyer with deep ties to the trial bar, posed a substantial roadblock for reform during his tenure.


This year, the governor vetoed transparency legislation which would have required disclosure in third-party litigation financing agreements. Third-party litigation financing is the multi-billion-dollar industry influencing legal outcomes with, often, zero transparency. Without these disclosure requirements, the financial interests and influence of third-party funders likely will remain hidden from courts and juries.


This is well-evidenced by hurricane-related insurance schemes in Louisiana, which were backed by litigation funders. Between 2020 and 2022, nearly 12,000 insurance cases were filed in Louisiana’s U.S. District Courts – more than one-quarter of the national total. These claims resulted in more than $23 billion in payouts, significantly affecting the state's insurance market.


“One driving force behind this surge are Louisiana's bad faith laws, which encourage trial lawyers to file lawsuits,” Tiger Joyce, American Tort Reform Association President said. “This incentivization fuels more lawsuits and inflated claims. Much of the influx involved a potentially fraudulent scheme between a Texas trial lawyer firm, litigation funders, and a roofing company.”


Law firm McClenny, Moseley and Associates collaborated with a roofing company, which then convinced homeowners to assign their insurance benefits to the roofers. In many cases, without knowledge or consent of clients, MMA was hired as legal representation. Meanwhile, the law firm received backing from a private hedge fund to handle the myriad claims. The Louisiana Department of Insurance’s investigation found that MMA made at least 856 fraudulent representations to Hurricane Ida policyholders, fined the firm $2 million, and issued a cease-and-desist order.


“This arrangement reveals a complex web of financial involvement in the legal proceedings surrounding hurricane-related insurance claims, raising concerns about the integrity of the legal process and the representation of affected homeowners,” Joyce said.


The 2023-2024 report further highlights Louisiana's unique legal challenges, including coastal litigation, all of which contribute to its Judicial Hellhole® reputation.


Lawsuit abuse and excessive tort costs wreak havoc on Louisiana's economy, extracting a "tort tax" of more than $1,100 per resident annually. Due to these exorbitant tort costs, nearly 50,000 jobs vanish each year, affecting the ability of Louisiana residents to afford essentials like groceries and gasoline.


ATRF’s report further underscores the need for transparency and accountability.


“Louisiana residents should not be pawns in the hands of unscrupulous lawyers,” Joyce said. “Predatory practices drive up costs, causing significant turmoil. It’s time for reforms that halt these practices, ensuring justice for all citizens.”


The state’s ongoing coastal litigation, involving 42 lawsuits which started in 2013, continues to pose significant challenges and looks unlikely to end any time soon. In a significant development this year, the U.S. Supreme Court refused to review the 5th Circuit Court of Appeals’ decision to return the 42 lawsuits back to state courts, keeping them within the state's jurisdiction.


This year, it was revealed that Louisiana’s state government gave private trial lawyers investigative powers in the coastal litigation instead of performing the function themselves. Louisiana’s Department of Natural Resources allowed private law firms to perform regulatory violation investigations – a job typically performed by the DNR.


“Allowing individuals with a vested financial interest in the litigation's outcome to conduct these crucial investigations undermines the public's trust in the legal system,” Joyce said.


The energy industry in Louisiana supports more than 346,000 jobs and contributes to more than 13% of the state’s total employment. That equates to more than $25 billion in wages and more than $54 billion contributed to the state’s economy.


“If you're tired of being left in the dark, you're not alone,” Joyce said. “This isn't just about politics; it's about everyday people who deserve transparency and accountability. This is about your rights, your money, and your future. Let’s ensure everyone in Louisiana receives a fair shot.”


Learn more and read the full report at JudicialHellholes.org.


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