The Arkansas General Assembly is back at it again this week, attempting to pass legislation that fattens insurance bottom lines while sticking it to their own constituents. You might remember two years ago during the 2015 legislative session, when then-Rep. Micah Neal (R - Springdale) attempted to introduce HB 1907, which would gut what is known as the "made whole" doctrine. Due to a groundswell of opposition, Rep. Neal tabled the bill and it died a justifiable death. Right now, Rep. Neal has bigger legal fish to fry.
Never ones to be outdone, Rep. Charlie Collins (R-Fayetteville) and Senator Jason Rapert (R-Bigelow) have revived this bill, which is being championed and pushed by big insurance companies. You know, good government groups like Allstate, State Farm, Shelter, and Farmers. All those friends of the people. These insurance companies must be struggling financially, because this bill would allow them to reach into their customers' pockets. Here's how "made whole" works:
Oftentimes, when a person is injured by the negligence of a third party and no fault of their own, the injured party's insurance company pays benefits for the health care the injured party receives. Makes sense, right? You paid your premiums for health insurance in case something bad happens, and something bad happened. That's what it's there for, right? But we all know that insurance companies don't really like paying claims, do they? So they often seek "subrogation," where they step into the shoes of their insured and seek to have those benefits reimbursed by the negligent third party's insurance carrier.
The made whole doctrine provides that unless and until the injured party is "made whole," the insurance has no right of subrogation. Unless the person who is injured has been fully paid for all of the injuries, lost wages, pain and suffering, etc, then and only then does the health insurance carrier have any right to be reimbursed or to "subrogate." Makes sense again, right? Been the law in Arkansas for years and years and years . . . until the 90th Arkansas General Assembly got together.
This bill would do away with the made whole doctrine and provide that the first entity that had to be paid out of any settlement or jury verdict is . . .who? The injured party? Nope. Your insurance carrier. Oh, but the health insurance carrier has to repay all the premiums they collected from you, right? That would only be fair, right? Nope. They get to collect your premium payments and stick them in their pocket AND take money out of any settlement or verdict to repay them for the benefits they paid. They get paid on both sides of the equation. It's a classic double dip.
Why is this bad? Several reasons.
1. It requires ordinary folks who purchase insurance with their hard earned money to act as their insurance company's collection agency. They get your premiums on the front end, and then you are pressed into service to get that same insurance company's money on the back end. Didn't you pay them in the first place to cover you if something happens? Guess what? You now work for them and your insurance company gets a windfall.
2. It's free to the insurance companies. You and your lawyer pay through the nose. The bill provides that no cost of collection or attorney's fees are payable to either the insured or their attorney. Again, the insurance carrier hits the jackpot and you foot the bill.
3. Cases can never settle if this passes. If you know you have to repay your insurance company every single dime before you ever see a dollar of any settlement or verdict, no one will ever have the impetus to settle a case. The result will be even MORE litigation, MORE expense, and MORE uncertainty. It will hardly ever make sense to settle a case, because it will almost universally go to your insurance carrier. There will also be MORE dollars pumped into the insurance company's bottom lines.
4. This applies to all kinds of insurance. Not just health insurance. Homeowners, MedPay or PIP, car insurance. Everything. All coverage. You will now have a second job as a collection agency for every single insurance company you have coverage with if, God forbid, they actually have to pay something when you make a claim.
This is slot machine legislation. Insurance companies take your premiums hand over fist every month and when they have to pay back, they enslave you and your lawyer to go get it back for them. This is bad policy. This is bad law. Contact your legislator and urge them to vote against HB 1753. The In-Session House number is (501) 682-6111. The In-Session Senate number is (501) 682-2902. Here are the sponsors' contact information. Contact them DIRECTLY:
Rep. Charlie Collins. (479) 283-9303. clcollins6@cox.net
Sen. Jason Rapert. (501) 336-0918. jason.rapert@senate.ar.gov