A Changing Tide: The Effect of the Amendment to Louisiana’s Direct Action Statute
Changes to the Law
As of August 1, 2024, Louisiana’s Direct Action Statute (LA. R.S. 22:1269) was revised to remove a plaintiff’s ability to file a lawsuit directly against an insurance company. Under the prior law, a plaintiff had the option to pursue a direct action against the tortfeasor (insured defendant), against their insurer individually, or against both the insurer and the insured. The amendment shifts the focus from the insurance companies to the insured. The new change now prohibits a plaintiff from pursuing a direct claim against the insurance company unless one of seven circumstances applies.
The seven circumstances are as follows:
- The insured files for bankruptcy in a court of competent jurisdiction, or when proceedings to adjudge an insured bankrupt has commenced before a court of competent jurisdiction.
- The insured is insolvent.
- Service of citation or other process has been attempted without success, or the insured defendant refuses to answer or otherwise defend the action within 180 days of service.
- When the cause of action is for damages resulting from an offense or quasi-offense between children and their parents or between married persons.
- When the insurer is an uninsured motorist carrier.
- The insured is deceased.
- When the insurer is defending the lawsuit under a reservation of rights, or the insurer denies coverage to the insured, but only for the purpose of establishing coverage.
Additionally, the amendment stipulates that filing of a lawsuit against an insured halts the prescription period (statute of limitations) for all insurers whose policies cover the claims in question. It also prohibits the inclusion of an insurer’s name in the suit’s caption. In addition, the amendment also forbids the court from revealing the existence of insurance coverage to the jury and mentioning coverage in the jury’s presence, unless mandated by Louisiana Code of Evidence Article 411. It is important to note that the insurance company can be mentioned in the body of the petition.
Denied Coverage and/or Reservation of Rights
An insurer that denies coverage must:
(a) Send written notice of reservation of rights to assert a coverage defense to the named insured at their last known address via U.S. postal mail, a similar tracking method, commercial courier, or hand delivery, within 90 days of determining the existence of a coverage defense, but no later than 30 days before trial, and
(b) Notify all counsel of record in the action against the insured that a reservation of rights has been issued, providing this notice within 60 days of sending the initial notice, but no later than 30 days before trial.
This does not prevent a plaintiff from settling a coverage claim with one insurer while preserving a claim against another insurer of the same defendant in the same action.
Joinder of an Insurer after Settlement or Final Judgment
The changes to the statute do not prevent a liability insurer from being added as a defendant for the purpose of obtaining a final judgment or enforcing a settlement, subject to specific restrictions and the terms and limits of the policy. However, this does not apply if the insurer has timely denied coverage or reserved rights in accordance with the statute, unless there has been an adjudication in favor of coverage.
Application of the Statute Retroactively
Lack of Guidance from Louisiana Appellate Courts
One area where the Legislature and the vast majority of Louisiana Appellate Courts have not provided much guidance is whether the statute applies retroactively. Thus, we must look to the Federal Courts and one Louisiana Court of Appeals for guidance.
Direct Action Statute as a Procedural Right
The Louisiana Supreme Court has well established that the Direct Action Statute grants a procedural right of action against an insurance company where the plaintiff has a substantive right against the insured.[1] The Louisiana Civil Code supplies that “in the absence of contrary legislative expression… procedural and interpretative laws apply prospectively and retroactively…”[2]
Interpretation of the Statutory Amendment
The statutory amendment is silent as to whether the amendment applies retroactively. Thus, in accordance with La. C.C. art. 6, it could be argued that the statute applies retroactively and prospectively. In Howard v. J&B Hauling LLC, No. 2:22-cv-00993 (EDLA, September 26, 2024), the Honorable Judge Brown of the Eastern District Court of Louisiana opined that the amendment reflects a procedural change and, as such, applies retroactively, considering that there exists no legislative expression to the contrary.
The analysis of retroactivity does not end with the classification of the statute as procedural or substantive.[3] The court must also determine whether the plaintiff had accrued a vested right in their cause of action.
“A right is ‘vested’ when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest. It must be absolute, complete, unconditional, and independent of a contingency. The mere expectation of a future benefit or contingent interest in property does not create a vested right.” [4] While the procedural right to bring a direct action against an insurer is a “mere expectancy of a future benefit” until exercised, once that procedural right has been properly invoked, the plaintiff acquires a vested right in the pending action. [5]
In Rogers v. Griffin,[6] the Louisiana Fifth Circuit Court specifically addressed the Direct Action Statute Amendment. In the opinion, the court held that the plaintiff’s right is vested when the amending petition to name the insurance company was filed. The amending petition was filed prior to the effective date of the Direct Action Amendment. Thus, the plaintiff’s rights are vested to pursue a suit against the insurance company, and it cannot be divested retroactively. [7]
The mere fact that an accident occurred prior to the effective date of the Direct Action Amendment does not give rise to the vested right of action. [8] Rather, the catalyst for a vested right of direct action against an insurer solely hinges upon the timing of the filing of the claim against the insurer. [9] In Taylor v. Elsesser, the plaintiff was involved in a motor vehicle accident on November 11, 2023. [10] She filed suit on November 9, 2024. The suit named Country Preferred as the insurance carrier for the defendant. [11]
Defendants filed an exception of no right of action, citing that the suit was filed after the amendment to the Direct Action Statute, which precluded any right of action against Country Preferred. [12] The Court held that the plaintiff’s right to a direct action against Country Preferred had not vested at the time of the accident. [13] As such, when the suit was filed in November 2024, after the effective date of the amendment, the plaintiff no longer had a right to pursue a direct action against Country Preferred. Thus, the court sustained the exception and dismissed Country Preferred. [14]
Key Takeaways
The key takeaway is that if (1) if an accident occurred prior to August 1, 2024, (2) the suit or an amendment was filed prior to August 1, 2024, and (3) the suit or amendment named the insurance company, the plaintiff gained a vested right to bring the claim against the company, and such right cannot be taken away due to the amendment of the Direct Action Statute. As such, it is proper for a plaintiff to have named the insurance company and they cannot be dismissed under the statute.
Proactive Actions Prior to Service of the Petition
Case Overview: Hurel v. National Fire & Marine Ins. Co.
In Hurel v. National Fire & Marine Ins. Co.,[15] the plaintiff, Tanya Hurel, filed suit against National Fire & Marine, Insurance Company (“NFMIC”) for damages arising out of a January 13, 2023 motor vehicle accident involving NFMIC’s insureds, Holton Bus Company and Anthony Bush. On October 1, 2024, Ms. Hurel filed suit. Thereafter, NFMIC, filed an Exception of No Right of Action pursuant to the Direct Action Statute Amendment. The trial court overruled the exception stating that it was filed prematurely as National Fire & Marine Insurance Company had not yet been served with the suit.[16]
Appeal and Court Ruling
On Appeal, the Fourt Circuit held that the exception of no right of action is a peremptory exception and as such can be pled at any stage prior to the submission of a case for decision. [17] As such, the court held that it was not premature for NFMIC to file the motion.[18] Further, the court held that Ms. Hurel’s right of action against NFMIC “became operative only when, and if, the remedy served by the Direct Action Statute was invoked timely (i.e. before the amendment removed the procedural right of action against an insurer).
This means that Ms. Hurel had until July 31, 2024, to file suit against NFMIC. [19] Ms. Hurel failed to do so. Consequently, she had no right or interest in a direct action against NFMIC when she filed suit in October 2024. [20] Accordingly, the Fourth Circuit held that NFMIC’s exception should be granted and NFMIC should be dismissed. [21]
Key Takeaways for Insurers and Counsel
The crucial lesson from the Hurel case is that insurers and/or their counsel must be proactive in requesting that insurance companies be dismissed if the insurer was named in a suit filed after August 1, 2024, even if that is prior to being served with a copy of the Petition.
- Once an insurer receives notice or a courtesy copy of the petition, they should promptly be asking the counsel for the plaintiff to remove or dismiss them from the suit.
- If the plaintiff’s counsel refuses to do so, counsel for the insurer should be promptly filing an Exception of No Right of Action pursuant to the amended Direct Action Statute.
This approach ensures that insurers do not remain improperly named in lawsuits and can take immediate legal action to seek dismissal.
Written by Misha M. Logan-Johnson
[1] Soileau v. Smith True Value & Rental, 2012-1711 (La. 6/28/13), 144 So. 3d 771, 775; see also Green v. Auto Club Grp. Ins. Co., 2008-2868 (La. 10/28/09), 24 So. 3d 182, 184
[2] La. C.C. art. 6.
[3] Smith v. Fortenberry, 2024 WL 4462332 (E.D. La. Oct. 10, 2024)
[4] Matter of American Waste and Pollution Control Co., 597 So. 2d 1125, 1129–1130 (La. Ct. App. 1st Cir. 1992); see also Smith v. Bd. of Trustees of Louisiana State Employees’ Ret. Sys., 2002-2161 (La. 6/27/03), 851 So. 2d 1100, 1106; Sawicki v. K/S Stavanger Prince, 2001-0528 (La. 12/7/01), 802 So. 2d 598, 604; Smith v. Fortenberry, No. CV 24-1647, 2024 WL 4462332, at *4 (E.D. La. Oct. 10, 2024
[5] Baker v. Amazon Logistics, Inc., No. CV 23-3991,2024 WL 4345073 (E.D. La. Sept. 30, 2024); Smith v. Fortenberry, 2024 WL 4462332 (E.D. La. Oct. 10, 2024),
[6] Rogers v. Griffin, 24-537 (La. App. 5 Cir. 12/20/24)
[7] See also Baker v. Amazon Logistics, Inc., No. CV 23-3991, 2024 WL 4345073 (E.D. La. Sept. 30, 2024)
[8] Taylor v. Elsesser, No. CV 24-2888, 2025 WL 471807, (E.D. La. Feb. 12, 2025)
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id.
[14] Id.
[15] Hurel v. National Fire & Marine Ins. Co. 2025-C-0049 (La. App. 4 Cir. 03/11/25)
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
