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Tennessee Tort Reform — Collateral Source Rule Necessary

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Collateral Source Rule is Fair, Just and Necessary

The Collateral Source Rule dates back to the 1800s in this country to prevent wrongdoers from benefiting at the expense of responsible citizens, health care providers, and the public at large. There is a current bill before the Tennessee legislature that is part of the Tennessee Civil Justice Act of 2011 and, if passed, would change the collateral source rule. The proposed Tennessee Civil Justice Act of 2011, specifically, under Section 6(f) reads

“ . . .in any tort action in which liability is admitted or established, the damages awarded may include, in addition to other elements of damages authorized by law, economic losses incurred by the claimant by reason of the injury. Economic damages shall not include charges to the extent they have been discounted or forgiven or subject to discounts or forgiveness for any reason, including, without limitation, discounts arising from a financial relationship with a health insurer or payor.”

A hypothetical example of how this bill is unfair to responsible citizens, healthcare providers, and the general public is as follows:

An individual whom we will call Hotrod, is driving his Porsche sports care at 100 mph down the interstate while texting his girlfriend. Hotrod slams into a father of 41 years of age, the mother who is 41 years of age, and their young son 7 years of age causing this innocent family to suffer significant injuries. Hotrod is insured in this hypothetical with Great Farmers Insurance Company and has one million dollars liability insurance. Ironically, the jury that would hear this case would never be allowed to know that Hotrod is insured and has one million dollars of coverage. However, this innocent family that suffered significant injuries, the 7 year old child suffers a permanent loss of vision in one eye, the 41 years old mother loses her arm, the father becomes totally disabled following back surgery and other injuries from this crash.

For purposes of this example, the father’s medical charges and expenses are $100,000.00, the mother’s medical charges are $100,000.00 and the young son’s medical bills are $100,000.00. The family has maintained and paid for health insurance for a number of years, and has paid in approximately $350,000.00 in premiums with Blue Cross Blue Shield.

The collateral source rule does not allow the jury to know that the family had health insurance, nor that the defendant was insured with liability of a million dollars. The health care providers, including the emergency room, primary care physicians, specialists and surgeons that treated this family are not paid from Hotrod’s (the defendant wrongdoer) liability insurance because they deny liability and refuse to pay the claim. The insurance company can drag this case out for as long as 4 to 5 years and the health care providers then have to wait that long to be paid anything at all as they are just attempting to serve this injured family who suffered injuries at the hands of the wrongdoer.

Unfairness to the victims (the innocent family in this example) would not be allowed to recover the full amount of the medical expenses incurred if their providers who could not be paid through the liability insurance carrier because that carrier denied liability and refused to pay the bills would be punished for being responsible and submitting these bills to the family’s health insurance carrier. This is grossly unfair, unjust and improper as this family has paid approximately $350,000.00 in premiums for this benefit and they are being punished and not being able to collect the full amount of their damages from this crash.

Ironically, if they were irresponsible and did not have health insurance, Hotrod’s liability insurance carrier would have to pay the full amount of their medical bills which is unjust, unfair and improper.

Unfairness to the Health Care Providers:
The health care providers were only having to treat this family and repair their crippled bodies due to the negligence and carelessness of Hotrod driving too fast (100 mph) while texting his girlfriend at the time of this crash. The wrongdoer’s liability insurance company should not be able to escape responsibility because the health care providers could not wait four years for this case to get before a jury and for a verdict to be returned to be paid and instead submitted these bills to the innocent family’s health care insurance company and were paid a reduced amount and rather then the $300,000.00 for the care of this family, they were paid $150,000.00. The jury should be able to award the full amount of the reasonable and necessary medical expenses and the health care providers should be able to recover the full amount of their services.

The doctors, nurses, therapists, and hospitals have done nothing wrong to cause the injuries to this innocent family but are being punished while the wrongdoer pays nothing. This is obviously hurting the honest, hard-working doctors, nurses, therapists and hospitals in this state while Hotrod’s liability insurance company is enriched and encouraged to deny these claims and string them out as long as possible.

In addition, in this hypothetical, if the victims are on TennCare, it is grossly unfair for the healthcare providers to be stuck with TennCare rates and if the Judge or Jury awards the full amount of the medical bills, the doctors and hospitals should be able to recover the full amount of their bills. Doctors and hospitals should be allowed to receive their full bill from the wrongdoer and their insurance carrier if the jury or Judge awards those damages, and not the reduced rates. Why should healthcare providers be punished while the wrongdoer and their insurance company hold onto their money for as long as they can drag it out. Under this law, healthcare providers who did nothing wrong are being punished.

This Bill Would Harm Charitable Organizations:
Under this hypothetical, if the family was uninsured and Hotrod’s insurance company denied liability (which is their standard operating procedure) if the family’s church raises money for the care of this family and found a doctor willing to treat this family for free and a hospital willing to provide charity to this family, then their medical bills could not be awarded against Hotrod and the charity dollars from the church, from the doctor, and from the hospital, would not be recoverable. This is wrong, unjust and unfair on many levels. With this bill, the victims who were minding their own business are being punished for being responsible. Charitable organizations such as churches are being responsible amd under this bill, doctors, hospitals and healthcare providers are being punished all at the expense of wrongdoers to enrich liability insurance carriers.

There is a good reason why the collateral source rule has been the law in this country since the 1800s and that is to prevent wrongdoers from escaping responsibility and their insurance carriers denying claims for 4 to 5 years after an innocent family suffers injuries and being able to benefit and abuse charity, doctors, hospitals, and the public at large.

The current bill pending before the legislature is wrong and the collateral source rule is just, fair and righteous.

If the negligent Hotrod and/or a drunken driver kills your spouse, should that driver get a break because you invested in life insurance?

If you are injured and cannot work, should the person responsible for your injuries and stripped your ability to work pay less because you invested in disability insurance?

If you are injured and must seek medical care, should the person who sent you to the emergency room gain a financial advantage simply because you invested in health insurance?

Should the doctors, hospitals and healers, who did nothing wrong, be punished by being stuck with a discounted fee because the wrongdoer caused the need for this treatment and delayed paying the claims?

Should churches and charities have to absorb the cost the wrongdoer caused because the liability carrier would not pay?

Obviously the answer to these questions should be a resounding “No”.

The collateral source rule has been around for hundreds of years because it is fair, just and based in righteous fairness. This proposed statute is not fair, just, or righteous.

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