Automobile Insurance SubrogationAutomobile Total Loss ThresholdsDeductible ReimbursementDiminution of ValueFirst Come, First Served: Subrogating Multiple Claims in Excess of Policy LimitsFuneral Procession Traffic LawsImputing Contributory Negligence of Driver to Vehicle OwnerKeep Right Traffic LawsLaws Regarding using Cell Phones/Headphones/Texting While DrivingLoss Of UseMed Pay/PIP SubrogationNo Pay, No Play LawsOwner Liability For Stolen VehiclesPayment of Sales Tax After Vehicle Total LossPedestrian and Crosswalk LawsRental Car Company Physical Damage and Loss of Use ClaimsRental Car Company’s Liability Insurance Primary or ExcessSudden Medical Emergencies While DrivingSuspension of Drivers’ LicensesUse of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Federal , State, and Local Governmental EntitiesMunicipal/County/Local Governmental Immunity and Tort LiabilityState Sovereign Immunity And Tort Liability
General Tort Laws/StatutesAnti-Indemnity StatutesContribution ActionsContributory Negligence/Comparative FaultEconomic Loss DoctrineParental ResponsibilitySpoliationStatute of LimitationsStatute of Limitations Exceptions
Health Insurance SubrogationHealth and Disability Insurance
InvestigationAdmissibility of Expert TestimonyPre-Suit Disclosure of Liability Policy Limits in Third-Party ClaimsRecording Conversations
Product Liability SubrogationProduct Liability Law
Property Subrogation“Matching Regulations” And Laws Affecting Homeowners Property ClaimsCondominium/Co-Op Waiver of Subrogation LawsDamage to Property Without Market ValueGeneral Contractor Overhead And Profit Payments In First-Party ACV Property Damage ClaimsLandlord/Tenant Subrogation
Subrogation GenerallyAnti-Subrogation RuleCriminal RestitutionMade Whole DoctrineMedical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Workers’ CompensationEmployee Leasing LawsHospital Lien LawsOCIP/CCIP Subrogation In Workers’ Compensation Construction CasesRecovery Of Increased Workers’ Compensation Premiums By EmployerWhich Workers’ Compensation “Benefits” Can Be Subrogated?Workers’ Compensation Subrogation Waiver EndorsementsWorkers’ CompensationWorkers’ Compensation Claims by Undocumented Employees
Automobile Insurance Subrogation
Automobile Total Loss Thresholds
Total Loss Threshold (75%).
Damage equivalent to 75% or more of the market value as determined by NADA. La. R.S. § 32:702(13).
Automobile and Property: No applicable statute, Administrative Code provision or case law exists. In Progressive v. Coca-Cola, the policy provided, “If we elect to exercise our rights of recovery against another, we will also attempt to recover any deductible incurred by an insured person under this policy unless we are specifically instructed by that person not to pursue the deductible. We have no obligation to pursue recovery against another for any loss not covered by this policy.” The court held that the policy allowed Progressive to collect the insured’s portion of the damages. Progressive Sec. Ins. Co. v. Coca-Cola Bottling Co. United-Gulf Coast, LLC, 2020 WL 6054591 (La. App. 2020).
Diminution of Value
First Party: The Louisiana Court of Appeals has held that “the insurer’s obligation is satisfied once payment is made for the full and adequate physical repair of a damaged vehicle…” Campbell v. Markel American Ins. Co., 822 So.2d 617 (La. App. 2001). Class action against Prudential for failure to pay its insureds for post-repair diminished value. Court said insurer was not required to compensate insured for post-repair diminished value of her damaged vehicle under “repair or replace” language in policy limits. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720 (5th Cir. 2002) (Louisiana law). Another Court of Appeals case required proof of diminution: “diminution in value of a vehicle involved in an accident is an element of recoverable damages if sufficiently established… where the measure of damages is the cost of repair, additional damages for depreciation may be recovered for the diminution in value due to the vehicle’s involvement in an accident.” Defraites v. State Farm Mut. Auto. Ins. Co., 864 So.2d 254 (La. App. 2004). Collision policy which says insurer will repair or replace does not provide coverage for diminished value. Campbell v. Markel American Ins. Co., 822 So.2d 617 (2001); Townsend v. State Farm Mutual Auto. Ins. Co., 793 So.2d 473 (La. App. 2001).
Third Party: As of 2010, L.S.A. § 2800.17 (“liability for the diminution in the value of a damaged automobile”)governs third-party liability for the diminution in the value of a damaged vehicle and provides: Whenever a motor vehicle is damaged through the negligence of a third-party without being destroyed, and if the owner can prove by a preponderance of the evidence that, if the vehicle were repaired to its pre-loss condition, its fair market value would be less than its value before it was damaged, the owner of the damaged vehicle shall be entitled to recover as additional damages an amount equal to the diminution in the value of the vehicle. Notwithstanding, the total damages recovered by the owner shall not exceed the fair market value of the vehicle prior to when it was damaged, and the amount paid for the diminution of value shall be considered in determining whether a vehicle is a total loss pursuant to R.S. 32:702. L.S.A. § 2800.17; see also, Orillac v. Solomon, 765 So.2d 1185 (La. 2000). Diminution in value due to flood damage to vehicle recoverable when, despite repairs, flood-damaged vehicle suffered from residual odor. Rich v. Liberty Mutual Ins. Co., 798 So.2d 1201 (La. App. 2001).
First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits
Where there are multiple claims arising out of an accident, the liability insurer, in entering compromise settlements pursuant to the right accorded it under the provisions of the policy, may exhaust the entire fund, leaving one or more of the injured parties with little or no recourse against such insurer. Richard v. S. Farm Bureau Cas. Ins. Co., 212 So.2d 471 (La. App. 1968) writ issued sub nom. Richard v. S. Farm Bureau Cas. Ins. Co., 215 So.2d 122 (1968) and aff’d, 223 So.2d 858 (La. 1969); Holtzclaw v. Falco, Inc., 355 So.2d 1279 (La. 1977).
Funeral Procession Traffic Laws
Section 300.3 of the Motor Vehicles and Traffic Regulation statutes requires drivers to yield the right-of-way to funeral processions. Processions led by a police escort may pass through intersections that would otherwise require them to stop if the lead vehicle in the procession has lawfully entered the intersection. All vehicles in funeral processions must have their headlights and emergency lights on. La. Rev. Stat. § 32:300.3.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: Contributory negligence of driver is not imputed to owner of vehicle (or to his subrogated property insurer) unless the relationship between them is such that the owner would be vicariously liable for damages caused by such negligent conduct of the third person. North River Ins. Co. v. Allstate, 132 So.2d 90 (La. App. 1961); Gautreaux v. Faucheaux, 105 So.2d 537 (La. App. 1958).
Vicarious Liability/Family Purpose Doctrine: No Vicarious Liability Statute.
Louisiana does not recognize the Family Purpose Doctrine. Davis v. Shaw, 142 So. 301 (La. App. 1932)
Sponsor Liability for Minor’s Driving: La. Stat. Ann. § 32:417: A person who allows an unlicensed person under the age of 17 to drive is jointly and severally liable for damages caused by the negligence or willful conduct of the minor.
LA C.C. Art. 2318: Parents are liable for damage caused by their child.
Keep Right Traffic Laws
Statute: La. R.S. § 32:71 and La. R.S. § 32:73
Summary: Louisiana requires all vehicles to travel in the right lane except when overtaking a vehicle, when the right lane is closed, or upon a designated roadway for one-way traffic. Slower traffic must keep right. Any vehicle proceeding on a “multi-lane highway” at a speed slower than 10 MPH less than the posted maximum speed limit shall be driven in the right-hand lane then available for traffic, or as close as practicable to the right-hand curb or edge of the roadway, except when overtaking and passing a vehicle proceeding in the same direction or when preparing for a left turn at an intersection or on to a private road or driveway. When traveling on multi-lane highways, no vehicle being driven in the left lane except when directed otherwise or preparing for a left turn shall impede any other vehicle that is traveling in the same lane and behind that vehicle. The driver of an overtaken vehicle shall give way to the right in favor of the overtaking vehicle on audible signal. On multi-lane highways, left lane traffic must yield to traffic approaching from behind.
Laws Regarding using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: No cell phone use while driving for first year having drivers’ license. La. R.S. § 32:289.1.
No driver of any age may write, send, or read a text while driving. La. R.S. § 32:300.5.
Drivers with a Class “E” learner’s permit limited to “hands-free” cell phone use. La. R.S. § 32:300.6.
Drivers under age 17, no cell phone use or sending/reading texts while driving, unless it is an emergency. La. R.S. § 32:300.7.
Other Prohibitions: Use of headphones while driving is prohibited. Headphones means headset, headphone, or listening device other than hearing aid or instrument for the improvement of defective human hearing which covers both ears or is inserted into both ears. Any headset, headphone, or other listening device that covers or is inserted into only one ear may be used. Exceptions include headgear for law enforcement purposes and communication between a motorcyclist and its passenger, if the equipment is in the helmet.
No vehicle, contents of a vehicle, or driver in a vehicle shall be inspected, stopped, detained, or searched solely because of a violation of or to determine compliance. La. R.S. § 32:295.2.
Comments: Any local laws regarding cell phone use are preempted by state law. La. R.S. § 33:31
Loss Of Use
Loss of Use: Yes. Loss of use may be recovered for the period necessary for the vehicle to be repaired. Romco, Inc. v. Broussard, 528 So.2d 1309 (La. App. 1988) writ denied, 533 So.2d 356 (La. 1988). Damages for loss of use are measured by the rental cost of a substitute vehicle. Alexander v. Qwik Change Car Center, Inc., 352 So.2d 188 (La. 1977). Loss of use value recoverable, even though no substitute vehicle is rented. Guidry v. Covington, 225 So.2d 311 (La. App. 1969). There is no recovery for loss of use when a vehicle has been substantially destroyed or is not substantially repairable. Skinner v. Scott, 116 So.2d 696 (La. 1959). However, it may be possible to recover loss of use for the time needed to determine whether repairs are possible. Alexander v. Liberty Mut. Ins. Co., 341 So.2d 1273 (La. 1977).
Lost Profits: No case law or statutory support for lost profits as a measure of loss of use damages.
Med Pay/PIP Subrogation
Med Pay: Subrogation per policy terms. Theriot v. Bergeron, 552 So.2d 1 (La. App. 1989); La. Civ. Code §§ 1825-1827.
PIP: Coverage not applicable.
Made Whole: Known as “Full Compensation Rule”. Southern Farm Bur. Cas. Ins. Co. v. Sonnier, 406 So.2d 178 (La. 1981). Burden on insurer.
Statute of Limitations: The one (1) year personal injury (prescription) statute of limitations runs from the date of the insured’s accident. L.S.A.-C.C. Art. § 3499.
No Pay, No Play Laws
Rule: If a person is injured in an accident and that person failed to maintain car insurance, the injured person is barred from bodily injury recovery for the first $15,000 and barred from property damage recovery for the first $25,000 of the cause of action. These limitations on recovery do not apply if the tortfeasor was under the influence at the time of the accident and was convicted of that crime, if the tortfeasor acted intentionally, or if the tortfeasor fled the scene of the accident. Additionally, no insurer shall lose subrogation rights for claims paid under the applicable insurance policy for the recovery of any sums in excess of the first $15,000 of bodily injury and the first $25,000 of property damages.
Authority: The Supreme Court of Louisiana upheld their No Pay, No Play laws as constitutional. Progressive Sec. Ins. v. Foster, 711 So.2d 675 (La. 1998). L.S.A.-R.S. § 32:866
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: La. R.S. § 32:145.
Common Law Rule: Liability may not be imposed on a vehicle owner for injuries sustained by a third party in an accident that occurred while a thief was driving the vehicle. Louisiana Courts have held that the thief’s act of stealing the car supersedes the owner’s negligence as the cause of the third party’s injury. Humphrey v. Balsamo, 914 So.2d 1217 (La. Ct. App. 2nd Cir. 2005); DeCastro v. Boylan, 367 So.2d 83 (La. App. 4th Cir. 1979).
Payment of Sales Tax After Vehicle Total Loss
First-Party Claims: Insured truck owner was not entitled to recover sales tax on vehicle under terms of the policy as result of his truck being stolen and/or damaged, where policy provided for “actual cash value” of the damaged property; fact that insured paid sales tax on the truck did not increase its value. Clark v. Clarendon Ins. Co., 841 So.2d 1039 (La. App. 2003).
Third-Party Claims: State Farm’s insured suffered total loss to vehicle. State Farm paid insured sales tax and sought to subrogate the damages from the tortfeasor. The third party refused to reimburse State Farm for the sales tax. The Supreme Court denied State Farm’s claim, holding that, despite § 2315, below, State Farm was subrogated only to those rights its insured had, and only to the extent of first-party coverage it provided. Section 1830 says the subrogee cannot recover more than the extent of its performance under the policy. The State Farm policy did not obligate it to pay sales tax, so it could not recover sales tax from the tortfeasor. State Farm Mut. Auto. Ins. Co. v. Berthelot, 732 So.2d 1230 (La. 1999).
Vehicle owner can recover sales tax. If the first-party policy requires payment of sales tax, such tax may be recovered in third-party action by subrogated insurer.
Section 2315 (“Liability For Acts Causing Damages”) is known as the “fountainhead” of tort law in Louisiana, and as of 2001 amendment, now provides in part, “Damages shall include any sales taxes paid by the owner on the repair or replacement of the property damaged.”
Pedestrian and Crosswalk Laws
LA R.S. § 32:212: When traffic control devices are not in operation, vehicle must yield to pedestrian. Pedestrians must not leave curb when cars are too close to stop in time.
LA R.S. § 32:213: Pedestrians outside crosswalk must yield right-of-way to pedestrians. If there are traffic signals, pedestrians may not cross outside crosswalk.
Summary: Violation of jaywalking statute is negligence per se. Augustine v. Dugas, App. 4 Cir. 1973, 278 So.2d 907 (La. App. 4th Cir. 1973).
Rental Car Company Physical Damage and Loss of Use Claims
Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. CDW must appear in rental agreement in 10-pt. font and recite language found in statute. La. Stat. § 22:2091.5. Collision and comprehensive coverage in renter’s personal auto policy automatically extends to cover temporary substitute motor vehicle. La. Stat. § 22:681. Car rental employee may not make false, misleading statements, suggest CDW is mandatory, or fail to state at time of sale that CDW may duplicate renter’s own personal auto coverage. La. Stat. § 22:2091.6.
Recovery From Third-Party: Nothing specifically granting car rental company right to recover. Generally, loss of use may be recovered for damage to a rental vehicle for the period of time necessary for the vehicle to be repaired. Romco v. Broussard, 528 So.2d 231 (La. 1988).
Rental Car Company’s Liability Insurance Primary or Excess
Summary: A car rental company is required to maintain the minimum financial responsibility amounts of liability coverage on all rental vehicles. The car rental company’s liability insurance is secondary when the renter has other valid and collectible coverage. Auto insurers are also required to extend personal auto liability coverage to rental or temporary substitute vehicles. La. R.S. § 1296. If a renter opts to purchase supplemental insurance for a rental vehicle, such as a policy typically offered by rental car companies, the supplemental coverage is the primary insurer in the event of an accident.
Sudden Medical Emergencies While Driving
Defense of Sudden Unconsciousness. Sudden or momentary loss of consciousness while driving is a complete defense to an action based on negligence if such loss of consciousness was not foreseeable. Deason v. State Farm Mut. Auto. Ins. Co., 209 So.2d 576 (La. App. 1967).
Driver must show by clear and convincing evidence that his sudden presence in the opposite lane was due to unexpected and unforeseen circumstances over which he had no control. Brannon v. Shelter Mut. Ins. Co., 507 So.2d 194 (La. 1987); Abadie v. City of Westwego, 646 So.2d 1229 (La. App. 1994).
Suspension of Drivers’ Licenses
Administrative Suspension: Twenty (20) days after receipt of an accident report, if the Secretary does not have on file evidence that a party has insurance the Secretary will send notice of suspension of his driver’s license. La. R.S. § 32:872(B). Suspension will remain until the person deposits the required security or one (1) year has passed and no action for damages has been filed. La. R.S. § 32:874(A).
Judgment: When the Commissioner receives the certified copy of the judgment, he will suspend the driver’s license of the judgment debtor. La. R.S. § 32:891(A). Suspension will continue until the judgment is stayed or satisfied. La. R.S. § 32:893.
Contact Information: State of Louisiana, Department of Public Safety & Corrections, Office of Motor Vehicles, P.O. Box 64886, Baton Rouge, LA 70896, (225) 925-6388, http://www.expresslane.org/Pages/default.aspx.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: La. R.S. § 51:2421 to 2425.
Summary: The insured must be given a written estimate that informs the insured of any non-OEM parts that are used and informs the insured that the part’s manufacturer warrants the non-OEM parts, not the auto manufacturer. Any non-OEM part used must be marked with its manufacturer’s name or logo, and the name or logo should remain visible after installation if at all practicable.
Federal , State, and Local Governmental Entities
Municipal/County/Local Governmental Immunity and Tort Liability
Louisiana Governmental Claims Act: La. R.S. §§ 13:5101- 5113 (1975). The State, a State agency, or a political subdivision shall not be immune from suit and liability for injury to person or property. La. Const. Art. XII, § 10. Louisiana Governmental Claims Act applies to political subdivisions (parishes, municipalities, special districts, sheriffs, etc.). La. R.S. § 13:5102.B.
Notice Deadlines: Suit must be brought in Louisiana State Court. La. R.S. § 13:5106. The notice deadline for a suit against the State is the equal to the normal statute of limitations for that type of claim. La. R.S. § 13:5108. Service must be requested within ninety (90) days. La. R.S. § 13:5107(D). One (1) year statute of limitations. La. R.S. § 13:5108.
Claims/Actions Allowed: Political subdivision will be liable for proprietary functions such as the negligent operation of a motor vehicle by an employee or officer done within the scope of their employment. Fullilove v. U.S. Cas. Co. of N.Y., 129 So.2d 816 (La. App. 1961); La. Civ. Code. Art. 2317. City liable if it fails to repair a dangerous sidewalk condition in reasonable time after notice of condition. Haindel v. Sewerage & Water Board, 115 So.2d 871 (La. App. 1959). Street and sidewalk maintenance is a governmental function and liability is the exception. City must keep streets and sidewalks safe. To be liable, defect must be dangerous or calculated to cause injury and danger must be anticipated from defect. Carlisle v. Par. of E. Baton Rouge, 114 So.2d 62 (La. App. 1959).
Comments/Exceptions: No liability (qualified immunity) for policymaking or discretionary acts when such acts are within the scope of their lawful powers and duties except for acts not reasonably related to governmental objectives and acts which constitute criminal, fraudulent, or intentional misconduct. La. R.S. § 9:2798.1. No liability for damage caused by condition of buildings or things unless the political subdivision had actual or constructive notice of defect. La. R.S. § 9:2800.
Damage Caps: Non-economic damages cap of $500,000 per person for personal injury or wrongful death. Does not include property damages, medical expenses. La. R.S. § 13:5106(B). Money for medical care post-judgment placed in a reversionary trust which goes back to the political subdivision if not used. La. R.S. § 13:5106(B)(3).
State Sovereign Immunity And Tort Liability
Tort Claims Act: Louisiana Governmental Claims Act. La. R.S. §§ 13:5101- 5113 (1975).
The State, a State agency, or a political subdivision shall not be immune from suit and liability for injury to person or property. La. Const. Art. XII, § 10.
Notice Deadlines: Suit must be brought in Louisiana State Court. La. R.S. § 13:5106.
The notice deadline for a suit against the State is the equal to the normal statute of limitations for that type of claim. La. R.S. § 13:5108.
Claims/Actions Allowed: In order for a State employee to be a “covered individual”, they must present the Attorney General with a copy of the complaint, who will then determine whether the individual was within their scope of employment during the cause of action. La. R.S. § 13:5108.1. The State will be liable for the negligent operation of a motor vehicle by an employee or officer done within the scope of their employment. Fullilove v. U.S. Cas. Co. of N.Y., 129 So.2d 816 (La. Ct. App. 1961); La. Civ. Code. Art. 2317.
Comments/Exceptions: Liability shall not be imposed on public entities or their officers or employees based upon the exercise or the failure to exercise their policymaking or discretionary acts when such acts are within the scope of their lawful powers and duties except for acts not reasonably related to governmental objectives and acts which constitute criminal, fraudulent, or intentional misconduct. La. R.S. § 9:2798.1.
Damage Caps: $500,000 per person for personal injury or wrongful death. La. R.S. § 13:5106(B). Money for medical care post-judgment placed in a reversionary trust which goes back to the political subdivision if not used. La. R.S. § 13:5106(B)(3).
General Tort Laws/Statutes
Louisiana is one of four states that has enacted an anti-indemnity statute that specifically deals with the oilfield services industry (the others are Texas, New Mexico, and Wyoming).
LSA §38:2216(G) – Section 2216 invalidates indemnity and hold harmless agreements from contractor to public body and from contractor to any architect, engineer.
LSA §9:2780(A)(G)(Louisiana Oilfield Indemnity Act) – The LOIA applies to oil and gas operations and nullifies indemnity, additional insured clauses. Waiver of subrogation void where there is corresponding suit for contractual indemnity. Fontenot v. Chevron, 676 So.2d 557 (La. 1996).
Expressly prohibits the parties from including waivers of subrogation or provisions that require the indemnitee to be named as an additional insured on the indemnitor’s insurance policy.
Joint and Divisible Liability. Generally, several liability – unless defendants commit an intentional tort; they are then jointly and severally (solidarily) liable. La. C.C. Art. 1815, et seq.; Ross v. Conoco, Inc., 828 So.2d 546 (La. 2002). The Louisiana Legislature amended Art. 2324 in 1996, transforming solidary liability into a complex “joint and divisible” obligation. It is described as “comparative fault.” A defendant’s liability is proportionate to his percentage of fault. Notre Dame, LLC v. Kolbe & Kolbe Mill Work Co., 151 F. Supp.3d 715 (E.D. La. 2015). Plaintiff responsible for his own percentage of fault. La. C.C. Art. 2323.
Defendant not liable for more than his percentage of fault and not jointly liable with any other person for damages not attributable to him, unless he conspires to commit intentional, tortious act. Non-intentional tortuous acts are now considered joint and divisible, and each joint tortfeasor is liable only for the degree of fault attributed to his actions. La. C.C. arts. 2323 and 2324. Contribution permits a tortfeasor who has paid more than his share of a solidary obligation (joint liability) to seek reimbursement from the other tortfeasors for their respective shares of the judgment, but only if actions are intentional and/or willful. Hamway v. Braud, 838 So.2d 803 (La. App. 2002).
When a plaintiff settles with and releases one of several joint tortfeasors, he deprives the remaining tortfeasors (obligors) of their right of contribution, and reduces the recovery against the remaining obligor by the percentage of fault of the released tortfeasor. Taylor v. U.S.F.& G., 630 So.2d 237 (La. 1993). Non-parties who are found at fault may also be assigned a percentage of fault, reducing the defendant’s liability to the plaintiff. A cause of action for indemnity does not arise until the lawsuit is concluded and the party seeking indemnity has made payment to the plaintiff or sustained any loss (such as payment of defense costs). Suire v. Lafayette City Parish Consol. Gov’t, 907 So.2d 37 (La. 2005).
The one (1) year statute of limitations applies but runs from the date of payment. La. Civ. Code Art. 3492, 3595; Cole v. Celotex Corp., 599 So.2d 1058 (La. 1992).
Contributory Negligence/Comparative Fault
Pure Comparative Fault: Damaged parties can recover even if 99% at fault. Except for intentional torts, defendant’s liability will be offset by plaintiff’s percentage of liability. L.S.A. – C.C. Art. 2323.
Economic Loss Doctrine
Minority Rule (via statute). With regard to defective products, Louisiana has enacted the Louisiana Products Liability Act (LPLA). La. Rev. Stat. Ann. § 9:2800.51, et. seq. The LPLA defines the “damages” recoverable for a product defect as to include “damage to the product itself”. La. Rev. Stat. Ann. § 9:2800.53(5). Economic loss alone is recoverable in Louisiana. DeAtley v. Victoria’s Secret Catalogue, 876 So.2d 112 (La. App. 2004). However, the 5th Circuit has indicated that this language may intend to say that the ELD doesn’t apply if the aggrieved party does not have the ability to pursue a warranty claim.
Where a vessel’s insurer (Atlantic Specialty Insurance Company) brought a subrogation action against the manufacturer of the vessel’s engine (Caterpillar, Inc.) to recover in tort for an engine failure that damaged the vessel while moored, the defendant argued that the ELD protected them from liability because the engine was an integrated component part of the vessel. Atlantic Specialty Ins. Co. v. Caterpillar Inc., 567 F. Supp. 3d 733 (E.D. La. 2021). The court ruled that the ELD did not bar recovery. A different federal court had previously rejected a manufacturer’s argument that the completed vessel was the “product” for purposes of the economic loss rule, reasoning that the shipowner purchased the defective engine and the vessel separately. Transco Syndicate No. 1, Ltd. v. Bollinger Shipyards, Inc., 1 F. Supp. 2d 608 (E.D. La. 1998). The court went on to say that because the engines were installed on the ship does not make the vessel the object of the contract. The plaintiffs purchased the engine from a Caterpillar distributor. Plaintiffs later provided that engine to shipbuilders to install in the vessel. The engine and the vessel were bargained for pursuant to two entirely separate and distinct contracts. Defendant’s argument that the “object” of both of these contracts is the completed Vessel was unavailing. The Court found that the allegedly defective engine was the object of plaintiffs’ contract with defendant’s distributor. Therefore, the vessel is “other property” for purposes of the economic loss rule. Plaintiffs may not recover for the damage the engine did to itself, but plaintiffs’ tort claims for damage to the Vessel was allowed.
For other applications, the Louisiana Supreme Court has abandoned a mechanical application of the ELD in favor of a case-by-case application of the traditional duty/risk analysis. PPG Industries, Inc. v. Bean Dredging, 447 So.2d 1058 (La. 1984). Louisiana does not recognize a traditional ELD; nor does it recognize a doctrine sufficiently similar to enable the court to conduct an ELD analysis of a plaintiff’s tort claims. Tort damages for economic losses may be recoverable under laws unique to Louisiana. In re Chinese Manufactured Drywall Products Liability Litigation, 680 F. Supp.2d 780 (E. D. La. 2010).
Property Damage / Personal Injury. Parents are liable for damage caused by their child. L.S.A. C. C. Art. 2318.
Minor’s Driving. If a vehicle owner permits a minor under the age of 16 to drive the vehicle, will be jointly and severally liable for any damages resulting from that minor’s negligence. L.S.A. C. C. Art. 32:417.
There are no limits to liability. Child must be under 18-years-old residing with parents.
Tort of Spoliation: Recognizing a claim in tort for spoliation of evidence presents a relatively new concept in Louisiana jurisprudence and has been the subject of recent consideration in Louisiana courts. Pham v. Contico Intern., Inc., 759 So.2d 880 (La. App. 2000). Prior to being discussed as a tort, the term “spoliation of evidence” appeared in Louisiana jurisprudence along with the evidentiary theory of an adverse presumption. Rodriguez v. Northwestern National Ins. Co., 358 So.2d 1237 (La. 1978); Babineaux v. Black, 396 So.2d 584 (La. App. 1981) Miller v. Montgomery Ward & Co., 317 So.2d 278 (La. App. 1975). In those cases where it was proven that a party had destroyed, altered, concealed, or failed to produce evidence relevant to the pending civil claim, and they could not reasonably explain their actions, Louisiana courts have sanctioned the party by instructing the jury of the adverse presumption that had the evidence in question been presented, it would be unfavorable to the party spoliator. Williams v. General Motors Corp., 639 So.2d 275 (La. App. 1994). An allegation that the plaintiff’s claim has been impaired by the loss of evidence which “might” have proven a cause of action if such evidence was available is speculative at best and insufficient to support a recovery in tort. However, the right of an individual to institute a tort action against someone who has impaired the party’s ability to institute or prove a civil claim due to negligent or intentional spoliation of evidence is recognized. Guillory v. Dillard’s Dep’t Store, Inc., 777 So.2d 1, 5 (La. App. 2000). However, in 2015, the Louisiana Supreme Court announced that the negligent spoliation of evidence is so unintentional an act that any recognition of the tort by the courts would not act to deter future conduct, but would, rather, act to penalize a party who was not aware of its potential wrongdoing in the first place. This is particularly true in the case of negligent spoliation by a third party, who is not vested in the ultimate outcome of the underlying case, and thus, has no motive to destroy or make unavailable evidence that could tend to prove or disprove that unrelated claim. This factor weighs in favor of a no-duty rule. Reynolds v. Bordelon, 172 So.3d 589 (La. 2015); Allstate v. Servpro, 2020 WL 5627233 (La. App. 2020). The Supreme Court held that an insurance company could not be held liable for negligent spoliation of evidence when it fails to preserve a vehicle after an accident took place until that vehicle could be inspected for defective equipment. A motorist who was involved in motor vehicle accident sued his auto insurer and the custodian of his vehicle after the accident for negligent spoliation of evidence, stemming from their failure to preserve the vehicle after the accident until it could be inspected for defective equipment. The court dismissed the claim and the Supreme Court affirmed, holding that no cause of action exists for negligent spoliation of evidence, overruling Carter v. Exide Corp., 661 So.2d 698 (La. App. 1995), but did allow a breach of contract action to proceed. The Louisiana Supreme Court refused to recognize a duty to preserve evidence in the context of negligent spoliation.
A plaintiff asserting a state law tort claim for spoliation of evidence must allege that the defendant intentionally destroyed evidence. Desselle v. Jefferson Hosp. Dist. No. 2, 887 So.2d 524, 534 (La. App. 2004). Allegations of negligent conduct are insufficient. Quinn v. RISO Investments, Inc., 869 So.2d 922 (La. App. 2004). Where suit has not been filed and there is no evidence that a party knew suit would be filed when the evidence was discarded, the theory of spoliation of evidence does not apply. Desselle v. Jefferson Hosp. Dist. No. 2, 887 So.2d at 534.
Adverse Inference: The tort of spoliation of evidence has its roots in the evidentiary doctrine of “adverse presumption,” which allows a jury instruction for the presumption that the destroyed evidence contained information detrimental to the party who destroyed the evidence unless such destruction is adequately explained. Guillory, supra.
Statute of Limitations
Personal Property1 YearL.S.A.-C.C. Art. § 3492
Personal Injury/Death1 YearL.S.A.-C.C. Art. § 3492*
Breach of Contract/Written10 YearsL.S.A.-C.C. Art. § 3499
Breach of Contract/Oral10 YearsL.S.A.-C.C. Art. § 3499
Breach of Contract/Sale of Goods/From Sale Date4 YearsL.S.A.-C.C. Art. § 2534
Breach of Contract/Sale of Goods/From Discovery Date1 YearL.S.A.-C.C. Art. § 2534
Statute of Repose/ProductsN/AN/A
Statute of Repose/Real Property5 YearsLa. Rev. Stat. Ann. § 9:2772(A)
Breach of Warranty/After Delivery Date4 YearsL.S.A.-C.C. Art. § 2534**
Breach of Warranty/After Buyer Discovery Date1 YearL.S.A.-C.C. Art. § 2534***
Workers’ Comp Third Party Case1 YearLa. R.S. § 23:1101, et.seq
Strict Product Liability1 YearL.S.A.-C.C. Art. § 3492, 3595
Statute of Limitations Exceptions
*Generally, a one-year prescriptive period for tort claims. However, some torts have a longer time period.
**In cases where seller did not know of the defect, the earlier of four (4) years from delivery date or one (1) year from date of discovery by buyer. L.S.A.-C.C. Art. § 2534 (see L.S.A.-C.C. Art. § 2534 for various exceptions).
***5 Years after the date owner takes possession or accepts the improvement to real property. La R.S. 9:2772. If loss during 5th year (i.e., registry of acceptance; ownership or possession), action can be brought within one (1) year after injury, but in no event more than six (6) years after loss. L.S.A.-C.C. § 9:2772. An action against a contractor or an architect for construction defects must be brought within a ten (10) year liberative ten (10) year prescription period (statute of limitations). L.S.A.-C.C. Art. § 3500. This conflicts with a five (5) year prescriptive period for actions against architects and contractors for ruin of a wood or brick-filled building on account of poor workmanship. But if building is stone or brick, it is ten (10) years. L.S.A.-C.C. § 9:2762.
Health Insurance Subrogation
Health and Disability Insurance
1 Year. L.S.A.-C.C. Art. § 3492.
Subrogation of Medical and Disability Benefits are allowed. L.S.A.-C.C. Art. § 1829(3). Made Whole* and Common Fund Doctrines apply. Barreca v. Cobb, 668 So.2d 1129 (La. 1996). * Can be overridden by first priority contractual language. Bayham v. State Through Office of Grp. Benefits, 2018-1708 (La. App. 1 Cir. 8/29/19), 285 So.3d 1111, writ denied, 2019-01667 (La. 1/14/20), 286 So.3d 1040. Further, in American Postal Workers Union v. Tippitt, 2011-881 (La. App. 3 Cir. 12/7/11) 82 So.3d 379, the court ruled that when the beneficiary settles a case with knowledge of his obligation to reimburse the Plan, he cannot claim he wasn’t made whole.
Admissibility of Expert Testimony
Admissibility Standards: Daubert
Case/Statutory Law: State v. Foret, 628 So.2d 1116 (La. 1993).
Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims
Duty To Disclose: No.
Failure To Disclose A Basis For Bad Faith: Not explicitly, but possibly via assignment from insured. See Kelly v. State Farm Fire & Cas. Co., 2014-1921 (La. 05/05/15), 169 So.3d 328, 342; Smith v. Audubon Ins. Co., 95-2057 ( La. 09/05/96), 679 So. 2d 372, 377.
In March of 2022, Louisiana HB 220 was introduced. It requires that every motor vehicle insurer that may be liable for a third-party claim arising out of an automobile accident must disclose limits within 30 days of request by the claimant or claimant’s attorney. However, 2022 HB 220 died in committee. It appears to have been a bill introduced by a Democrat lawmaker, without Republican support. Currently, there is no means in Louisiana to compel disclosure of third party liability insurance limits, without litigation.
One-Party Consent: The Electric Surveillance Act bars the inception, recording or disclosure of and oral or telephonic communication by the means of an electronic recording device without the consent of at least one party or if they are a party to said communication. La. Rev. Stat. Ann. § 15:1303(c)(4).
Product Liability Subrogation
Product Liability Law
Statute of Limitations/Repose: 1 year for personal injury and wrongful death. L.S.A.-C.C. Art. 3492.
Liability Standards: Other.
Fault Allocations: Pure Comparative. L.S.A.-C.C. Art. 2323.
Non-Economic Caps/Limits On Actual Damages: No.
Punitive Y/N and Limits: Yes.
Heeding Presumption?: Yes. Rebuttable. Bloxom v. Bloxom, 512 So.2d 839, 850 (La. 1987).
Innocent Seller Statute: Yes. L.S.A.-C.C. Art. 2531.
Joint and Several Liability: Yes. La. Civ. Code Art. 2324.
Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; State of the Art; Presumption; Alcohol/Drugs; Sophisticated User.
Restatement 2nd or 3rd?: Restatement 3rd
“Matching Regulations” And Laws Affecting Homeowners Property Claims
Statute/Regulation: Requires insurer to pay to restore property damaged in a fire to its original condition. La. R.S. § 22:695(B).
Caselaw: After a carpet suffered water damage, insured and insurer disagreed over whether insurer was required to pay to replace the entire carpet or if replacement of only the damaged carpet was required. Citing to La. R.S. § 22:695(B), the court ruled that an insurer that issued a RCV policy was required to replace the entire carpet. Holloway v. Liberty Mutual Fire Ins. Co., 290 So.2d 791 (La. App. 1st Cir. 1974)
Comments: Although La. R.S. § 22:695(B) specifically describes fire insurance, it has been used by Louisiana courts to define the meaning of an RCV policy. See Holloway v. Liberty Mutual Fire Ins. Co., 290 So.2d 791 (La. App. 1st Cir. 1974).
Condominium/Co-Op Waiver of Subrogation Laws
Associations shall maintain property insurance and comprehensive general liability insurance. These insurance policies require that: each unit owner is an insured person with respect to liability arising out of their interest in the common elements in the association, the insurer waives its right to subrogation under the policy against any unit owner or member of their household, no act or omission by any unit owner, unless acting within the scope of his/her authority on behalf of the association, will void the policy or be a condition to recovery, and the association’s policy provides primary insurance. La. R.S. § 9:1123.112.
Damage to Property Without Market Value
Service Value: “[E]ntitled to recover its actual loss in wages and material and be restored to same position it was in prior to accident and not restricted to depreciated value of pole.” Southwestern Electric Power Co. v. Canal Ins. Co., 121 So.2d 769 (La. Ct. App. 1960).
Intrinsic Value: “The measure of damages for the loss or conversion of, or injury to, family portraits having no market value is the actual value to the person sustaining the loss.” Lack v. Anderson, 27 So.2d 653 (La. Ct. App. 1946).
Sentimental Value: “The measure of damages for the loss or conversion of, or injury to, family portraits having no market value is the actual value to the person sustaining the loss.” Lack v. Anderson, 27 So.2d 653 (La. Ct. App. 1946).
General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims
Payment And Depreciation Of GCOP/Sales Tax: Insurer on ACV policy did not pay GCOP. The federal court agreed with insured that ACV is equal to RC value less deprecation, and RC value must account for the impact of Hurricanes Katrina and Rita on the costs of supplies and labor, including GCOP cost. Nguyen v. St. Paul Travelers Ins. Co., 2007 WL 3275133 (E.D. La. 2007). In Parr v. Allstate Ins. Co., 2014 WL 5210902 (E.D. La. 2014), the court found that GCOP is a pass-through cost intended to reimburse homeowners for the expense of using a general contractor. The court noted that since the insured sold his home without repairing it, he is not entitled to GCOP. Suit was dismissed in a case in which the plaintiff failed to identify or even allege any facts or circumstances that would demonstrate the need for a GCOP on Mary Edwards’ specific claim. GCOP need not be automatically included within the payment of ACV of the damage made to an insured before actual repair or replacement under a RC policy. Edwards v. Allstate Prop. & Cas. Co., 2005 WL 221558 (E.D. La. 2005).
Specific lease provisions will prohibit subrogation against a tenant. A lease provision, under which the lessor agreed to carry fire insurance on property and released and discharged lessee “from any and all claims and damages whatsoever from any cause resulting from or arising out of any fire” constituted release from fire damage acknowledged to have been caused by lessee’s negligence, and extinguished any subrogation recovery by lessor’s insurer. Home Ins. Co. of Ill. v. National Tea Co., 588 So.2d 361 (La. 1991). The intent of the parties as determined from the terms of the lease is paramount.
An insurer has “no cause of action against a co-insured as subrogor of the named insured.” Olinkraft, Inc. v. Anco Insulation, Inc., 376 So.2d 1301 (La. Ct. App. 1979). An insurer has no right of action against a co-insured of the subrogor for a fire loss caused by the negligence of co-insured, absent design or fraud on part of co-insured. State Farm Fire & Cas. Co. v. Sentry Indem. Co., 316 So.2d 185 (La. Ct. App. 1975). The Louisiana ASR is that an insurance company, which has paid a claim and taken subrogation action, cannot bring a subrogate suit – a suit asserting the rights of the insured whose claim it has paid – against a co-insured. Louisiana Fire Ins. Co. v. Royal Indem. Co., 38 So.2d 807, 810 (La. App. 2nd Cir. 1949) (emphasis added); see also Holden v. Connex-Metalna, No. CIV.A.98-3326, 2000 WL 1818530, at *8 (E.D. La. Dec. 12, 2000); Lloyd’s Syndicate 457 v. Floatec, LLC d/b/a Floatec Solutions, LLC, 2019 WL 149667 (5th Cir. 2019).
Unless stated otherwise in the policy, a customer who borrows an auto from the insured auto agency is not an “insured” and the insurer is entitled to recover for damage to the auto from the customer. Cont’l Cas. Co. v. Oken, 229 So.2d 393 (La. Ct. App. 1969). An insurer cannot seek recovery from an omnibus insured for amounts paid under its policy. Shelter Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 993 So.2d 23 (La. Ct. App. 2008). Insurer did not lose its homeowner’s policy contractual right of subrogation by reason of the fact that it was also the comprehensive general liability insurer of the tortfeasor; after the insurer had made payment under the homeowner policy, its qualities as creditor and debtor of the liability obligation merged and, to the extent of the payment made, the obligation was extinguished by confusion. Norris v. Allstate Ins. Co., 293 So.2d 918 (La. Ct. App. 1974).
In Cont’l Cas. Co. v. Oken, Oken borrowed a car from an auto agency that was insured by Continental Casualty Company (Continental) and soon after he crashed the car. Oken claimed that Continental could not subrogate against him because he was an insured under the policy Continental had issued to the auto agency. The court ruled that there was no indication from the policy language that the policy was meant to apply to Oken and, therefore, subrogation was permissible.
The Louisiana ASR does not bar any action by an insurer against a co-insured, it only bars subrogated claims. There is a distinction between a subrogated claim—prohibited under the ASR—and a freestanding claim that exists “outside the policy.” Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th Cir. 1992); United States v. St. Bernard Par., 756 F.2d 1116, 1127 (5th Cir. 1985). The court in Norris v. Allstate Insurance Co., 293 So.2d 918 (La.App.1974) allowed the insurance carrier to subrogate against a tortfeasor, insured under a separate policy.
For purposes of suspending a criminal sentence, a judge can require restitution as a condition to probation. La. Code Crim. Proc. Ann. art. 895(A)(7). In addition, case law in Louisiana does state that an insurer can be entitled to that restitution. Travelers Ins. Co. v. Chalona, 293 So.2d 498 (La. App. 1974).
Made Whole Doctrine
Louisiana refers to the Made Whole Doctrine as the “Full Compensation Rule” and requires an insured to be fully compensated before an insurer/Plan may exercise its subrogation rights. Southern Farm Bureau Cas. Ins. Co. v. Sonnier, 406 So.2d 178 (La. 1981); Carter v. Bordelon, 370 So.2d 113 (La. App. 1979). Unlike a majority of states, Louisiana does place the burden of proving full compensation on the insured/Plan beneficiary, as opposed to requiring the Plan/insurer to prove it. Wallace v. Aetna Life & Cas. Ins. Co., 499 So.2d 577 (La. App. 1986).
The Louisiana Court of Appeals has indicated that the Made Whole Doctrine is considered a rule of interpretation or gap filler which becomes significant only when a contract or Plan fails to clearly address the issue. Nat’l Emp. Benefit Trust of the Associated Gen. Contractors of Am. v. Sullivan, 940 F. Supp. 956 (W.D. La. 1996); Roberts v. Richard, 743 So.2d 731 (La. App. 1999). The Louisiana Supreme Court has held that despite a subrogation clause, if the insured is less than fully compensated by tort recovery, the insurer is only partially subrogated, and the insured has complete priority in receiving payment. Sonnier, supra; Brister v. Blue Cross and Blue Shield of Fla., Inc., 562 So.2d 1040,1044 (La. Ct. App. 1990) (“What the Supreme Court held in Sonnier was that since the survivors had not been fully compensated, the subrogated insurer could not collect from the survivors the amount the insurer had paid them.”). However, in American Postal Workers Union v. Tippitt, 82 So.3d 379 (La. App. 2011), the Court of Appeals ruled that when a beneficiary/insured settles a case with knowledge of his obligation to reimburse the Plan, he cannot claim he wasn’t made whole.
Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Collateral Source Rule: Common law CSR well-established in Louisiana. It prevents the reduction of plaintiff’s recovery to the benefit of the tortfeasor because of collateral sources obtained at plaintiff’s expense or through foresight, and prevents evidence of same. Louisiana Dep’t of Transp. & Dev. v. Kansas City S. Ry. Co., 846 So.2d 734 (La. 2003). CSR prevents tortfeasor from benefitting from the “victim’s foresight in purchasing insurance and other benefits.” Hoffman, infra. Louisiana rule of evidence prevents party from introducing evidence of collateral source to prove liability or mitigate damages. La. Code Evid. Ann. art. 409.
Recovery of Medical Expenses Rule:
Private Insurance: “Benefit of the bargain” approach. Verdict not reduced by collateral sources (which presumably included write-offs by insurer). Griffin v. Louisiana Sheriff’s Auto Risk Ass’n, 802 So.2d 691 (La. App. 2001). Griffin involved contractual write-offs. However, in 2015, Louisiana Supreme Court held that such write-offs do not fall within the scope of the CSR. Hoffman v. 21st Century N. Am. Ins. Co., 209 So.3d 702 (La. 2015), reh’g denied (Dec. 7, 2015). Write-offs in Hoffman were negotiated by plaintiff’s counsel and no consideration was paid for them. Court declined to extend the CRS to attorney-negotiated medical discounts obtained through the litigation process. Free medical services can also be recovered. Johnson v. Neill Corp., 2015 WL 9464625 (La. App. 2015). The CSR is not applicable when the plaintiff has paid no consideration for the benefits. The CSR is inapplicable to medical expenses charged above the amount actually paid by a workers’ compensation carrier under the workers’ compensation medical fee schedule. Simmons v. Cornerstone Investments, LLC, 2019 WL 2041377 (La. 2019).
Medicare/Medicaid: Because Medicaid is free for its recipients, they cannot recover the write-off, but Medicare recipients can recover it since they pay consideration for it. Bozeman v. State, 879 So.2d 692 (La. 2004).
Related Law/Comments: The CSR prevents the reduction of plaintiff’s recovery to the benefit of the tortfeasor because of monies received by plaintiff from sources independent of tortfeasor’s procuration or contribution. Therefore, any payments received from an independent source are not subtracted from tort victim’s recovery from the tortfeasor, and tortfeasor is liable for the same amount regardless of whether tort victim had the prudence to purchase insurance. Louisiana Dep’t of Transp. & Dev. v. Kansas City S. Ry. Co., 846 So.2d 734 (La. 2003). Where an insured has collision coverage with GEICO and has a third-party claim against a tortfeasor also insured by GEICO, the insured cannot make a double recovery by arguing the CSR should not prohibit him from making a collision claim for the same property damage he collected from GEICO as the tortfeasor’s liability carrier. Subrogation is the exception to the CSR. Pelle v. Munos, 2020 WL 853730 (La. App. 2020).
Employee Leasing Laws
The employee leasing company and its client company are both considered employers and both are protected by the Exclusive Remedy Rule. La. R.S. § 22:1210.56(C).
Hospital Lien Laws
Statute: La. R.S. §§ 9:4751 – 4755. Proceeds Recovered by Injured Persons.
Perfecting Lien: To serve Notice under Louisiana law:
(1) If, prior to the payment of insurance proceeds, or to payment of any judgment, settlement, or compromise on account of injuries, a written notice containing name and address of injured person and name and location of interested health care provider, hospital, or ambulance service is delivered by certified mail, return receipt requested, or by facsimile transmission with proof of receipt of transmission by the interested health care provider, hospital, or ambulance services, or the attorney or agent for the interested health care provider, hospital, or ambulance service, to the injured person, to his attorney, to the person alleged to be liable to the injured person on account of the injuries sustained, to any insurance carrier which has insured such person against liability, and to any insurance company obligated by contract to pay indemnity or compensation to the injured person. § 9:4753.
(2) This privilege shall be effective against all persons given notice according to the provisions of this Section and shall not be defeated nor rendered ineffective as against any person that has been given the required notice because of failure to give notice to all those persons named in this Subsection. § 9:4753.
(3) If delivery of the notice required by this Section is made by facsimile transmission, and the sender fails to obtain a signed proof or receipt within seven days, then delivery shall be made by certified mail, return receipt requested, and costs of mailing shall be taxed as court costs. § 9:4753.
Comments: A health care provider, hospital, or ambulance that furnishes services to an injured person shall have a privilege for the reasonable charges or fees on the net amount payable to the injured party out of the total amount of recovery had, collected, or to be collected, whether by judgment, settlement, or compromise, for a responsible party. § 9:4752. Any party who has been given notice of the lien has the right to request, via certified mail, am itemized copy of all charges from the provider. If the request is not complied with within 30 days, the lien privilege is dissolved and ineffective. § 9:4755.
OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases
OCIP Law: There is no precedent governing the application of the Exclusive Remedy Rule and the status of statutory employer to members of an OCIP or CCIP.
Statutory Employer Law: Louisiana law does not have any specific restrictions with regard to suits against subcontractors or other related companies in third-party actions. However, a third party will be immune from suit by either the employee, employer, or workers’ compensation carrier under the Borrowed Servant and Statutory Employer Doctrines, if the worker is, in fact, a borrowed servant at the time of the injury. La. R.S. § 23:1032 and § 23:1061.
Comments: OCIP or “wrap-up” insurance programs are used for large construction projects and usually obtained by the owner to cover workers’ compensation and liability risks of specific parties to a construction project and risks associated with the job site. By obtaining an OCIP, the owner, or sponsor, procures insurance for himself, the general contractor, subcontractors, and employees working on the construction project, but the coverage is generally limited in scope and covers only risks associated with the specific project. Zeitoun v. Orleans Parish School Bd., 33 So.3d 361 (La. App. 2010).
Recovery Of Increased Workers’ Compensation Premiums By Employer
Recovery For Increased Premiums? No. Too speculative.
Statute/Case Law: Am. River Transp. Co. v. KAVO KALIAKRA SS, 206 F.3d 462 (5th Cir. 2000) (applying La. Law).
Rule Summary: An employer may not recover from a third party for an increase it suffers in its workers’ compensation premiums allegedly caused by accident. The company cannot recover for economic damages unconnected to an injury to a property interest. This prevents limitless liability for negligence and the filing of lawsuits of a highly speculative nature.
Which Workers’ Compensation “Benefits” Can Be Subrogated?
There is very little precedent or discussion in case law regarding whether nurse case management fees or other allocated costs which may benefit the employer and/or employee can be recovered in subrogation. Louisiana’s workers’ compensation subrogation statutes each describe a workers’ compensation carrier’s subrogation interest in a slightly different way:
- 23:1101: (employee can file third-party suit and still obtain comp benefits) “recover any amount which he has paid or becomes obligated to pay as compensation to such employee.”
- 23:1102: (settlement of third-party case) “the extent of the total amount of compensation benefits and medical benefits previously paid to or on behalf of the employee.”
- 23:1103: (3P cases tried to judgment) “reimburse the employer for the compensation which he has actually paid.”
A Court of Appeals decision says that the carrier or employer may recover necessary expenses paid by employer, although the statute does not specifically authorize employer to recover any amounts except compensation payments, attorneys’ fees and costs. Alford v. Louisiana & A. Ry. Co., 38 So.2d 258 (La. App. 1949). And while it is true that § 23:1101 does not specifically provide for the right of the carrier to recover anything except “compensation” which it has paid or become obligated to pay under the Louisiana Worker’s Compensation Law, it is clear that the term “compensation” includes, and the carrier can recover, all payments it is required to make under the Act. Carlisle v. Employers Mutuals of Wausau, 220 So.2d 152 (La. App. 1969).
Workers’ Compensation Subrogation Waiver Endorsements
Subrogation Statute: La. R.S. § 23:1101, et. seq.
Waiver Allowed? Yes. Sandborn v. BASF Wyandotte Corp., 674. So.2d 349 (La. App. 1996).
Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: If there is an express waiver of subrogation contained in either a contract or an insurance policy, there is no separate and independent statutory right to reimbursement that contravenes the expression of the waiver. Morgan v. Hercules Drilling Co., LLC, 2011 WL 3739053 (W.D. La. 2011).
Other Applicable Law: Louisiana has enacted the Louisiana Oilfield Anti-Indemnity Act which prevents an indemnitee from being indemnified for its own negligence in contracts dealing with the operation of a well. La. R.S. § 9:2780.
Statute of Limitations: 1 Year. La. R.S. § 23:1101, et.seq.
Can Carrier Sue Third Party Directly: Yes, with notice. The carrier must consent to the settlement.
Intervene: Must Intervene.
Recovery from UM/UIM Benefits: Employer’s Policy Only, unless UM policy excludes benefits to the workers’ compensation carrier.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: No.
Recovery Allocation/Equitable Limitations: First money reimbursed. It is reduced by the plaintiff’s contributory negligence. If settled, the carrier can recover max of 50% of the lien.
Employer Contribution/Negligence: Yes, the lien is reduced by the employer’s percentage of fault.
Attorney’s Fees/Costs: Moody Fees. Pro-Rata based on attorney’s activity.
Future Credit: Yes.
Auto No-Fault: No.
Workers’ Compensation Claims by Undocumented Employees
Statute: The statute is silent on “alien” or “illegal immigrant”, but is broad by using the phrase natural person who is paid for services. La. Rev. Stat. Ann. § 23:1015-1.
Case Law: Artiga v. M.A. Patout & Son, 671 So.2d 1138 (La. Ct. App. 1996).
Comments/Explanation/Other: Artiga held that illegal aliens are included in the definition of employed under the Workers’ Compensation Act.