Louisiana Governor Jeff Landry has signed Senate Bill 231 into law, introducing new limits on how much money an injured person can receive in a personal injury lawsuit. The measure affects how damages are calculated in cases involving third-party payments, such as health insurance.
The new law revises the state’s approach to the “collateral source” doctrine. Under previous rules, juries could consider the full amount billed by a medical provider, even if insurers paid less. The revised law now permits juries to consider only the amount actually paid by an insurer, effectively eliminating what some referred to as “phantom damages.”
Governor Landry framed the legislation as a move to increase courtroom transparency and reduce car insurance premiums by aligning lawsuit awards more closely with actual medical costs. “This will once and for all prevent inflated, phantom charges but also protects the legitimate rights of those who are legitimately injured,” he said.
The Louisiana Association of Business and Industry (LABI) supported the bill, calling it a step toward restoring fairness in the civil justice system. LABI had previously criticized Landry for vetoing similar legislation in 2024 but praised his approval of this year’s measure.
Trial lawyers expressed opposition to the change. Brian Katz, president of the Louisiana Association for Justice, argued that the law limits injured plaintiffs’ ability to recover compensation beyond what insurers pay, leaving them without funds for insurance premiums or legal fees. “Tort reform does not reduce rates,” Katz said, criticizing the law as unfair to plaintiffs.
Senator Mike Reese, who sponsored the bill, said the intent is to lower auto insurance premiums by limiting awards to actual losses. He stated that the change would remove the ability for juries to award damages beyond amounts paid for medical treatment.
Governor Landry emphasized the law’s goal of streamlining litigation and potentially reducing legal costs. “The more efficient you make the litigation, the less you have to pay for lawyers, the lower your premiums should be,” he said.
The law took effect following Landry’s signature on June 30, 2025.
Get the latest insurance market updates and discover exclusive program opportunities at ProgramBusiness.com.