The Louisiana Department of Insurance this week ordered most New Orleans-based bail bond companies, along with their insurance underwriters, to repay nearly $6 million in illegal profits they took from as many as 50,000 low-income residents and their families.
Yesterday’s order follows a complaint the SPLC filed in September 2017 with the state insurance department, which regulates the bail bond industry. The SPLC filed its complaint after discovering that the companies routinely charged premiums to low-income defendants, and their families, that were more than the legal limit of 12 percent of the bond amount.
“For more than a decade, most New Orleans-based bail bond companies have thumbed their noses at state law and cheated tens of thousands of low-income people and their families out of millions of dollars,” said Micah West, senior staff attorney for the SPLC. “This casual and routine thievery ends today thanks to the order by the Louisiana Department of Insurance, which found that these bail bond companies routinely overcharged defendants and which requires them to return their ill-gotten profits by no later than June 1, 2019.”
The SPLC’s complaint asked the Louisiana Department of Insurance to impose the maximum penalty for each violation and to suspend or revoke the operating licenses of any company found to have engaged in unfair or deceptive practices.
Yesterday’s directive from Louisiana Commissioner of Insurance James J. Donelon warns bail bond companies that they could be subject to the state’s criminal theft laws if they do not return the ill-gotten profits. It also warns the companies that they could be fined or have their bail bond licenses suspended.
The SPLC estimated that, on average, the companies overcharged defendants and their families $100 each to underwrite a bail bond. Collectively, the overcharges amount to about $6 million over nearly 14 years.
“We believe the commissioner’s directive demonstrates why money should not be a factor in determining who is detained or released pretrial, as it creates perverse incentives for bail bond companies hungry for profits to take advantage of the most vulnerable people in our communities,” West said.
The commissioner’s order directed the companies to identify and refund the amount of the overcharges to everyone who was affected since 2005.
“It has come to my attention that many criminal bail bond producers and commercial sureties operating in Orleans Parish are charging thirteen (13%) percent premium. This is not permissible,” Donelon wrote in his letter to all licensed bail bond producers and commercial sureties. “Any criminal bail bond premium collected from consumers in Orleans Parish in excess of twelve (12%) percent of the liability written is in violation of the Louisiana Insurance Code. Any excess premium collected must be returned to the payer.”
An SPLC investigation found that at least 21 bail bond companies in New Orleans, and the associated insurance companies, routinely charge a 13 percent premium to underwrite a bail bond.
The vast majority of defendants in Orleans Parish who are released from jail under financial conditions purchase bail bonds.
State laws allow bail bond companies to charge defendants a premium of up to 12 percent of the face value of the bond imposed by a judge, in exchange for a promise to pay the full amount to the court if the defendant doesn’t show up for trial.