Senate committee passes tort reform bill to limit medical damages paid to injured plaintiffs

After a more than three-hour long hearing that included emotional testimony from the public, the Senate Judiciary Committee voted Wednesday to advance a tort reform bill that opponents argue only benefits insurance companies at the expense of Arkansas citizens seeking damages in personal injury lawsuits.

In and of itself, House Bill 1204 seems simple. The proposed legislation seeks to limit damages a plaintiff can receive for medical bills to only the amount paid by an insurance company, or to "only those costs actually paid by or on behalf of the plaintiff that remain unpaid and for which the plaintiff or any third party is legally responsible."

Its sponsors, which include more than 40 senators and representatives, say its intent is to prevent plaintiffs in personal injury suits from profiting off of excessive insurance payouts and that it will lower insurance premiums. Proponents of tort reform say reining in excessive damage awards from personal injury lawsuits is pro-business and will promote economic growth.

The legislation would not prevent individuals from seeking other types of damages, such as lost wages, damage to property or non-economic damages, like past and future pain and suffering, sponsors say. Opponents argue it would force victims to spend more on lawyers and spend more time in court to claim other damages that are not medically related.

"The language of this bill is simple and it's clear," Sen. Missy Irvin (R-Mountain View), a lead sponsor, said during the committee hearing. "It seeks to ensure the scales [of justice] are balanced based on facts and the exchange of actual damages incurred and paid."

Similar legislation has been adopted in more than two dozen states, according to Justin Allen, an attorney and lobbyist with Little Rock law firm Wright Lindsey Jennings who presented alongside lead sponsors at Wednesday's hearing. Last June, Louisiana Gov. Jeff Landry, a conservative Republican, vetoed near-identical legislation out of concern that it only served the interests of insurance companies.

The Arkansas bill, like the Louisiana one, has widespread support from the private sector. Supporters include Arkansas Farm Bureau, the Arkansas Healthcare Association, the Arkansas Medical Society, the Arkansas Trucking Association, the Arkansas State Chamber of Commerce and the Arkansas Poultry Federation, among others.

In theory, this is what the tort reform proposal would do: If someone is hit by a car and has medical bills totaling $200,000 but the individual's insurance provider negotiates a payment of $90,000 to the health care provider, the injured person would only be entitled to $90,000 in damages instead of the total amount.

"The medical side of the damages should be limited to what the actual payments were, limited to what was actually agreed upon as full and final payment," Rep. Jon Eubanks (R-Paris), another sponsor, said. "If they [a plaintiff] deserve additional compensation for pain and suffering, then by all means, I believe they should get that."

But opponents say the bill could have many unforeseen consequences, such as unfairly punishing those who have paid for insurance plans while benefitting those who have not.

If a plaintiff were uninsured, for example, and incurred tens of thousands of dollars in medical bills, that individual would seemingly receive a higher amount in damages than an individual with bills paid by an insurance provider.

If the legislation passes, "it would be a disincentive to get health insurance," Sen. Clarke Tucker (D-Little Rock), a member of the committee, said. "The amount you can recover will vary depending if you have insurance or the type of insurance you have."

Some attorneys also said the bill could impact civil cases involving victims of sexual assault or human trafficking.

The bill's sponsors could not provide any data from other states that the bill would lower insurance rates for Arkansans. "This body passes laws all the time with the desire for impact," Allen, the Wright Lindsey Jennings attorney, said. "Sometimes it does have an impact, and sometimes it does not, but this is a fundamental fairness issue. In Arkansas, plaintiffs are recovering amounts [of money] for past medical expenses that do not exist."

Denise Hoggard, an attorney with Little Rock law firm Rainwater Holt & Sexton, urged the committee during public testimony to vote against the bill.

It is unclear whether a jury in a personal injury case would know the total amount of medical bills or the amount an insurance company paid, which could impact a plaintiff's ability to collect other damages, Hoggard said. A jury might interpret a lower hospital bill to mean a car accident or work injury is not as serious as it is, she said.

"I can see clearly who gets hurt by this bill," Hoggard said. "It goes into the pockets of the insurance company. What do we get in exchange? We do not get anything."

There are two purposes to the "remedy of tort," Hoggard said. "To make the victim whole and as a deterrent effect. The wrongdoer is held to accountability and others see what happened and know to change their behaviors."

Reducing the overall financial recovery for victims reduces the deterrent effect, Hoggard said.

Beth Wyatt, a teacher from Arkadelphia, shared a heartwrenching story of a head-on collision that resulted in the amputation of both of her legs, severe burns over most of her body, massive damage to internal organs, loss of sight in one eye, a traumatic brain injury, the limited use of her hands, the removal of her spleen and limited use of her left arm.

"I am here because I want to help you see past the lobbyists, and the talking points, of the real-life results of this legislation," Wyatt said. "All I heard this morning is that it would benefit doctors, hospitals and insurance companies but it would cause me to go to court many times over."

The insurance provider of the individual responsible for the collision only paid Wyatt damages of $25,000. Even with her own insurance, Wyatt said her medical bills were at least $3 million, if not $4 million. She said she spent 10 months battling the defendant's insurance company, which used "every delay tactic possible to get out of paying what they owed."

If this bill were to pass, Wyatt said, a person in her situation would have an even harder time getting compensation.

"I have ongoing expenses and will for the rest of my life," Wyatt said, at times fighting back tears or having to pause from physical weakness. "This bill punishes victims over and over again. The law is now hard enough on victims. This change truly hurts them even more."