Billy Wright In August 2024, significant revisions went into effect to Louisiana’s Direct Action Statute. The law used to permit direct actions against an allegedly negligent party’s insurance carrier. Now, the statute essentially prohibits plaintiffs from directly naming liability insurers, unl ess: The insured files for bankruptcy or when bankruptcy proceedings have been commenced against an insured. 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 because of 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. There is a growing consensus among Louisiana state and federal courts that the last day on which a plaintiff could directly name an insurance company was July 31, 2024 – the day before the revision’s effective date. This is true regardless of whether the alleged injury or accident occurred before August 1, 2024. There are several recent cases that back up that consensus, including the decisions in Baker v. Amazon Logistics, Inc., 2024 WL 4345073 (E.D. La. 2024); Hurel v. National Fire & Marine Insurance Company, 2025-0049 (La. App. 4 Cir. 3/11/25), — So.3d –; Taylor v. Elsesser, 2025 WL 471807 (E.D. La. 2025); Smith v. Fortenberry, 2024 WL 4462332 (E.D. La. 2024); Rogers v. Griffin, 2024-537 (La. App. 5 Cir. 12/20/24); — So.3d –. However, courts have not addressed how effectively eradicating the right of direct action will impact Gasquet settlements. Further, this issue was understandably not the focus of the Louisiana Legislature when it amended the Direct Action Statute. Gasquet settlements are those that occur within the context of insureds who possess excess (sometimes called “umbrella”) liability coverage, over their “primary” liability insurance coverage. Taking its name from a 1980 case that first addressed this type of settlement agreement, a Gasquet settlement releases the individual insureds from personal liability, including liability for excess exposure. The primary insurance carrier is also released. However, the plaintiff reserves rights to seek recovery against all other available insurance – typically excess insurance, up to the limits of the excess policy. The insureds remain “nominal parties” in the suit, and the excess carrier receives a credit on any future judgment, in the amount of the underlying policy. Finally, the attorneys representing the insured and primary insurance policy nearly always withdraw from the case, leaving the excess carrier and its attorney the option to pick up the defense of the nominal party. A Gasquet release is an attractive resolution tool. For primary insurers, it ends their obligation to pay defense costs, with the chance to save money on the policy limit. For insureds, it eliminates the risk of personal liability for an excess judgment. For plaintiffs, they get paid and can pursue an excess policy. However, the revisions to the Direct Action Statute are silent regarding Gasquet releases or how excess carriers are treated under the statute. Are Gasquet Releases Still Viable Post-Revision? Based on longstanding (and, perhaps, even previously unconsidered) application, such a release contemplates direct action against an excess carrier, which is foreclosed after August 1, 2024. Still, there is nothing in current law precluding Gasquet releases, and there is significant public good in continuing to use them. Despite the lack of prohibition of Gasquet releases, the revision to the Direct Action Statute does raise questions regarding their future functionality. Indeed, depending on the policy language, excess carriers may not have a duty to defend the insured. Rather, these policies provide the excess carrier the “right” to provide a defense. Under the old Direct Action Statute, plaintiffs had the ability to bring excess carriers into the case to defend the insured after a Gasquet; but as of Aug. 1, that option appears to be gone. So, if there is nothing forcing the excess carrier into the case, must it provide the nominal defendant with a defense after a Gasquet? Especially where a primary carrier tenders full policy limits and enters a Gasquet release, its duty to defend, with the associated legal expenses, should be satisfied. However, if the primary insurer pays less than policy limits via a Gasquet, where typical primary policy language provides that exhaustion of the policy limit terminates the duty to defend, could the primary carrier be forced to continue to provide a defense? The answer is unclear, and it is likely dependent on the policy language. Providers of primary liability insurance may want to review their policy language – and possibly include a Gasquet amendment or Gasquet-specific endorsement – to account for this issue. Conclusion Moving forward, it makes sense for excess carriers to provide a defense – without being named in the lawsuit – for its insured, now a “nominal party,” after a Gasquet release, despite the lack of direct action. It offers the excess carrier more control over the defense of the case. Regardless, there is a new wrinkle in how excess insurers implement their defense strategy in Louisiana. Although the “deadline” by which parties are permitted to name insurers after the revision to the Direct Action Statute appears to have been satisfactorily addressed by Louisiana courts, there is no direction regarding how the amendments affect the rights and responsibilities of plaintiffs, insured defendants, primary carriers, and excess carriers in the context of Gasquet settlements in lawsuits covered by insurance. We will monitor these issues as they develop. Research assistance by Adams and Reese Associate Jack Pontin and contributions provided by Adams and Reese Partners Chris D’Amour and Kyle Potts. Disclaimer: The information in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter.   ...read more read less