Tort reform measure clears House Judiciary panel
by January 28, 2025 5:08 pm 485 views
A bill that would only allow an injured plaintiff to recoup the medical bills that are paid by an insurer was debated and approved in a special order of business on Tuesday (Jan. 28) in the House Judiciary Committee. HB 1204 was introduced by Rep. Jon Eubanks, R-Paris.
Under the current system, a plaintiff can seek the full amount charged by a medical provider even if the insurance company negotiates a lesser amount to be paid. Plaintiffs can also seek to have medical insurance premiums paid.
Supporters of the bill said HB 1204 addresses what are known as “phantom damages” and the bill would increase transparency and fairness in the calculation of damages during litigation.
Medical providers, especially hospitals, almost always reduce bills for their care whether they are paid by Medicaid, Medicare, commercial insurance or in cash, according to testimony from the bill’s supporters. When a plaintiff in a lawsuit recovers the amount on the initial bill, rather than the amount actually paid, it inflates recoveries and increases costs for businesses of all sizes and their customers.
Advocates for HB 1204 argue that the bill makes clear that the amount to be recovered by the plaintiff is actually what was paid and accepted as full payment. The bill is modeled after a 2003 Texas law that has been upheld by the Texas Supreme Court.
The bill’s supporters noted that it does not impact the recovery of future medical costs, lost wages, property damage, or non-economic damages, such as pain and suffering, disfigurement, mental anguish, loss of life and punitive damages.
Eubanks admitted the bill would lower the amount of money awarded to injured victims, but this type of tort reform is needed to help align medical insurance costs. Tort costs, as a whole, not just related to medical lawsuits, impact the average household in Arkansas by about $2,900 per year, he said.
“It’s common sense. It’s black and white,” Eubanks said.
He faced vigorous opposition from committee members. Rep. Ashley Hudson, D-Little Rock, noted the bill would create different classes of people based on whether they have insurance or what type of insurance they have. For instance, if two people had the same injury and it cost $10,000 to cover the expenses, someone with insurance might only be able to seek $5,000 if the company negotiated the payment down with the provider. The other person who doesn’t have insurance could seek the full $10,000.
Rep. Jimmy Gazaway, R-Paragould, asked Eubanks and attorney Justin Allen, who testified for the bill, how this will impact citizens in the state.
“How will this impact the average Arkansan who pays their health insurance?” he said. “I (as a plaintiff seeking compensation for injuries) should be able to present the whole bill (medical).”
Gazaway also noted the bill would inevitably redefine how evidence is presented in the court cases. The legal standard in the state has been that the legislature cannot dictate procedures in a courtroom, he said.
Eubanks said he’s not sure how much positive impact it would have on the overall tort costs for the average person in the state.
Saline County attorney and former insurance adjuster Justin Minton said the bill would have effects on other parts of monetary settlements. Enacting it would be akin to installing “marxist price controls,” he said.
Other aspects of a lawsuit such as pain and suffering are not covered by the bill, but insurance companies use multipliers to determine how much they are willing to pay for things like pain and suffering and those would inevitably go down, he said.
The bill passed out of the committee on a voice vote and will be considered next by the full House chamber.