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New Tort Reform Bill Proposed on Collateral Source Payments Hurts Responsible People
Recently, the Republicans in the State House and Senate have proposed yet another radical change to the landscape of Wisconsin law. This proposal, AB-539/SB-405, risks the benefits of every Wisconsin citizen across the state who pays for insurance. What does “collateral source” mean and why is it important?
If you are injured in an accident by another party, whether it be a person or a business, you are entitled to be compensated for your medical bills that were incurred due to the accident. Now, if you have insurance through your job or have paid out of pocket for health or car insurance, those premiums you have paid require the insurance companies to pay some or all of your medical bills in accordance with your policy agreement. Your insurance companies often have negotiated agreements or other deals with healthcare providers to provide discounts in exchange for their payments (and presumably network approval of their facility). That is a benefit the consumer reaps by fulfilling their personal responsibility in obtaining and maintaining insurance.
Take this as an example: Imagine you have been injured in a car accident and you were charged $10,000 for your medical bills. Your health insurance (which you have paid for the last 10 years) paid for all of those bills. But, because of your insurance company negotiating the rates with the healthcare provider, a benefit you pay for, your insurance only has to pay $7,500 of those bills. Your attorney decides to make a claim against the at-fault driver, who caused the accident, and its liability insurance carrier. The at-fault driver refuses to pay you for the $10,000 amount that you were charged along with any damages for pain and suffering and forces the matter to a trial.
As the law currently stands, the “collateral source rule” prohibits the at-fault driver’s lawyer from arguing at trial that you are only entitled to compensation for the $7,500 worth of damages that your insurance carrier paid, instead of the full $10,000 of what was initially charged by your healthcare provider. The at-fault driver’s insurance company is seeking to reap the benefit of your negotiated rate that you gained by fulfilling your responsibility in buying and maintaining insurance and paying all those insurance premiums over the years. In essence, not only did the other driver inconvenience you and injure you in the accident, but that driver’s insurance carrier is taking the hard-earned benefits you have paid for and attempting to compensate you less than what you deserve. That is just not fair to the injured consumer.
Sadly, it also appears that this law will allow for certain life insurance death benefits to be admitted as evidence to defray the potential responsibility of the at-fault driver. If the victim in that automobile accident passes away and was responsible enough to buy life insurance, the at-fault driver’s insurance company will attempt to take advantage of that benefit in negotiations and at trial. The at-fault driver’s insurance company will make some form of this argument to a jury: “Look, this person was well- insured and his or her family taken care of financially, so our insurance company should bear less of the responsibility financially to his or her family.”
It’s just not fair to those family members to have the responsibility of their deceased loved one used to prejudice their claim against the at-fault driver’s insurance company. The family should gain the benefit of responsibility, or even charity, not the at-fault driver’s insurance company.
The “collateral source rule” benefit that is given to consumers is being attacked again. Contact your legislator and tell them to vote “no” on any changes to the current law. You have worked hard to be responsible and get benefits for your insurance policy payments. Now it is time to work hard to keep them.
Contact your state representatives and senators below and tell them to protect your hard work and benefits your premiums have earned you.
Sources:
https://docs.legis.wisconsin.gov/2015/legislators/assembly
https://docs.legis.wisconsin.gov/2015/legislators/senate
