Louisiana’s Toxic Relationship with Lawsuit Abuse
For years, lawsuit abuse has dragged down Louisiana’s competitiveness, acting as a hidden tax on families, consumers, and businesses across the state. Frivolous claims, inflated damage awards, and politically motivated lawsuits undermine justice and contribute to Louisiana’s long struggle with excessive and opportunistic litigation, especially against important job-creating industries like energy, manufacturing, and insurance.
This issue took center stage during Louisiana’s 2025 Regular Legislative Session, as soaring insurance costs intensified calls for reform. A principled, free-market approach necessitates a balanced and transparent legal system that underscores fairness and accountability while curbing lawsuit abuse. Several bills that were filed and signed into law this past spring, such as HB 431 (Act 15), HB 450 (Act 18), HB 434 (Act 16), and HB 291 (Act 176), mark important steps toward a fairer, more balanced legal system. However, significant reform is still needed in how medical expenses following an accident are handled. Juries remain unable to consider the true cost of medical services actually paid to medical providers, often prompting inflated judgements through overestimation. This distortion is a major reason Louisiana has three times the number of bodily injury claims and twice the number of losses when compared to the national average.
Looking ahead, Louisiana must resolve this issue in order to reduce premiums, attract more carriers, and improve affordability through greater market competition.
Lawsuit abuse has also played a central role in Louisiana’s broader economic decline. The state’s share of U.S. GDP has fallen from 1.4% in 2009 to 1.1% in 2024, amounting to more than $600 billion in lost economic activity. Much of this decline stems from litigation risk that has deterred investment in high-wage industries like oil and gas. As highlighted in the recently released The Cost of Lawsuit Abuse report, a surge of coastal lawsuits beginning in 2013 contributed to a sharp decline in offshore drilling, costing Louisiana millions annually in lost output and royalties and thousands of well-paying jobs. Since then, the state has suffered steep declines in offshore reserves, production, energy-sector GDP, and wages—far worse than national trends—as companies redirect investment to states with more predictable legal environments.
Because oil and gas employment is nearly four times more concentrated in Louisiana than in the nation as a whole, every lost well carries disproportionate consequences for workers, local economies, and public revenues. In effect, lawsuit abuse operates as a “shadow tax” on investment, discouraging the very projects that drive growth. Unless Louisiana reduces this legal uncertainty, it will continue to fall behind, especially at a time when global reinvestment in energy is accelerating.
Preventing lawsuit abuse is one of the most cost-effective strategies Louisiana can pursue to rebuild long-term prosperity. By adopting reforms that promote fairness, transparency, and predictability in the legal system, Louisiana can reduce unnecessary costs, attract new industries, and create a more competitive environment for families and businesses alike.
