House advances tort reform bill that would impact medical payouts in personal injury cases

A bill that would limit the amount of damages a plaintiff could receive from insurance companies for medical expenses in personal injury cases passed the Arkansas House of Representatives on Wednesday.

The proposal, House Bill 1204, resembles "tort reform" bills passed or proposed in other conservative states in recent years, such as neighboring Texas, Missouri, Oklahoma and Mississippi. Proponents of the legislation, including lead sponsor Rep. Jon Eubanks (R – Paris), argue that it will bring down insurance premiums, promote economic growth and prevent individuals from profiting off of the healthcare system. But its opponents say it privileges insurance companies at the expense of ordinary people.

The legislation limits recovery of damages "for past necessary medical care, past necessary medical treatment or past necessary medical services received" to include "only those costs actually paid by or on behalf of the plaintiff or that remain unpaid and for which the plaintiff or any third party is legally responsible."

Eubanks told House members Wednesday that the intent of the legislation is for plaintiffs to only receive the amount of money in damages that was covered by an insurance company for medical care. For example, if medical bills from a car accident totaled $100,000 but an insurer negotiated a final payment of $50,000 with a health care provider, like a hospital, then the plaintiff would receive the latter amount.

"We know that when we go to a doctor or a hospital, we all receive bills, and they agree to accept as full payment what was agreed upon by insurance [companies] or Medicare or Medicaid," Eubanks said. "The purpose of this bill is to limit those damages to that amount, not the billed amount, but the amount actually agreed upon as the full and final payment."

Eubanks said the bill would not necessarily impact a plaintiff's ability to collect other types of damages, such as past or future lost wages, property damage or non-economic damages, like past and future pain and suffering.

"It does not affect the plaintiff's ability to recover amounts paid from collateral sources," he said.

But opponents said that the bill only benefits insurance companies while punishing individual consumers who pay for insurance plans.

Rep. Ashley Hudson (D – Little Rock) said that the bill could result in people who are uninsured receiving much higher levels of compensation versus those who are insured.

"When we talk about fairness, the responsible plaintiff is being penalized because they carried insurance and paid for their injuries," Hudson said. "At the end of the day, we do not want to punish people for maintaining their own health insurance. It will create a situation where Arkansans are treated differently, in particular those who carry good insurance, and then bad actors who will not be responsible for costs when they ought to be."

Hudson said the bill would also impact plaintiffs with medical bills in all sorts of civil cases, not just car accidents. "It applies to someone with a civil case because they were sexually assaulted or because they were human trafficked," she said. "It applies across the board."

Rep. Matthew Brown (R – Conway), a supporter of the bill, drew an analogy to shopping at a clothing store. "If you go to Kohl's or JCPenney and buy a shirt and the suggested retail price is $199 but there is a yellow sticker marking it down, that is what you actually pay for," Brown said. "If I take the shirt back because it doesn't fit me, do I get reimbursed how much I paid for it or how much the [original] sticker price was?"

"Everyone knows the answer," Brown said. "It's how much I pay for it."

Rep. Jimmy Gazaway (R – Paragould) spoke against the legislation.

"If you are an insurance company, it's great for you. Why? They are going to make a lot more money when this bill passes," Gazaway said. "Where the rubber hits the road, it means less for your constituents. It means more for the insurance companies, more for the special interests, more for the wealthy business interests, all the people who hire lobbyists who spend millions of dollars to influence your decision on this. It is great for them. It is terrible for your constituents."

House Bill 1204 passed 71 – 18 and will advance to the Senate Judiciary Committee.