Made Whole

2019 Legislative Session Concludes - Several Problematic Bills Defeated - More Fights Ahead

The final vote on HB 1955, the Workers Comp Made Whole Bill.

The final vote on HB 1955, the Workers Comp Made Whole Bill.

As one of my last responsibilities serving Arkansans as the President of the Arkansas Trial Lawyer’s Association was working at the state capitol during the 2019 legislative session. I am happy to report a successful session defending the rights of injured Arkansans to seek justice against negligent actors and wrongdoers. Each legislative session, our legislature may refer out three proposed constitutional amendments to the voters. You may remember this is how Issue 1, the previous attempt at sweeping tort reform, was referred to the voters in 2017 before being removed from the ballot despite being widely unpopular in the polls and facing defeat at the ballot box. The same group of legislators tried again with another sweeping tort reform amendment. That provision (also called SJR8, the same bill number as in 2017) failed to gain any traction and never reached a vote in any committee.

However, this was not the only attempt at limiting the rights of injured Arkansans to seek justice. Here are a few bills that were defeated in the session:

HB 1955. The proposed workers compensation “made whole” bill. This bill, known colloquially as the “injured worker indentured servant act,” would have thrown out the doctrine of made whole in workers compensation cases. It would have placed the corporation BEFORE the injured worker if a settlement or verdict was returned in the injured worker’s favor. This was defeated twice in committee before it was rushed out in a quick and hurried vote when Rep. John Payton (R) declared “he was hungry.” That vote was short lived, because due to yeoman’s work by our lobby team, the bill was trounced on the House floor with only 35 yeas. It needed 67 to pass. You can read more about HB 1955 below.

In addition to HB 1955, a “made whole” bill that would have applied to a wider swath of cases, including auto med pay, was filed in the Senate as SB 566. However, after legislators on Senate Insurance and Commerce learned how much the bill would harm Arkansans, it never gained traction and was never brought to a vote.

SB 543, which would have changed the Uniform Contribution Among Tortfeasors Act, passed in the Senate, but went nowhere in the House and died in House Judiciary upon adjournment sine die. Likewise, SB 544, which would have done away with the collateral source rule, never gained traction in either chamber and died upon adjournment.

While it was a successful session for Arkansas consumers, vigilance is key. There will be further attempts at limiting rights in the future that must be addressed and defeated. Thanks to all friends and clients of the firm who reached out to legislators to communicate their opposition to these harmful bills. Your contributions are key and greatly appreciated.

HB 1753 - Bill to Abolish "Made Whole" Returns - More Insurance Giveaways that Harm YOU

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

Your Legislators Value Your Insurance Carrier's Bottom Line Over You - HB 1907

Representative Micah Neal (R) - Springdale recently filed HB 1907.  This bill seeks to obliterate what is known in Arkansas as the "made whole" doctrine.  Let me explain why this is a truly bad bill, and seeks to enslave Arkansans to work for multi-billion dollar insurance companies for FREE.

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 1907.