Tort reform benefits insurance companies at expense of victims

Billed Vs. Paid evidence rule can severely impact a plaintiff's case

In October 2011, the North Carolina General Assembly and the Governor passed House Bill 542, also known as Tort Reform for Citizens and Businesses, into law. While backers of the bill claimed that the proposed legislation was designed to reduce legal costs, the new rules introduced by the bill actually help auto liability insurance companies at the expense of people injured in personal injury cases. To understand the law's impact on personal injury cases, it is important to understand the difference between billed and paid medical expenses at the center of the legislation.

Prior to the law

Prior to the bill passing into law, if someone was struck by another driver, for example, and was billed $10,000 by the hospital, that $10,000 bill could be presented as evidence to a jury in court.

Under the old law, it was irrelevant who paid the actual bill, whether the source was Medicare, Medicaid, or a health insurance company. The jury in the case understood that the medical expenses incurred by the victim of the accident were $10,000 and awards were based at least partially on that billed amount.

Billed Vs. Paid

HB 542 changed that rule considerably. Now, Rule of Evidence 414 that was passed into law by HB 542 says that "Evidence offered to prove past medical expenses shall be limited to evidence of the amounts actually paid to satisfy the bills that have been satisfied, regardless of the source of payment." In other words, what the jury in a personal injury case will see now is not the $10,000 medical bill, but whatever amount was paid by the health insurance carrier plus any co-pays you paid and any balance remaining. The auto insurance company gets to take credit for any health insurance adjustments. You do have the duty under our laws to mitigate your damages by filing any available health insurance on your bill. Because health insurance carriers typically pay much less in order to cover a medical bill, the insurance carrier in this example may have only had to pay $5,000 to cover the $10,000 bill.

The law unfairly penalizes the victims in a personal injury case since it is they, and not the at-fault party, who are required to reveal their health insurance coverage. Furthermore, the law affects how much a jury may be willing to award a victim. Continuing with the above example, a jury that can only see evidence of medical expenses totaling the $5,000 paid rather than the $10,000 billed is likely to award a lower amount of compensation to victims under the new law, thus effectively giving the at-fault driver's insurance company a discount on how much they have to pay.

Legal representation

HB 542 significantly tips the scales in favor of the auto insurance companies in personal injury lawsuits, but it also shows why now more than ever people who are injured in an accident need the help of a qualified personal injury attorney. Without legal representation, victims in personal injury cases can find themselves largely at the mercy of the big auto insurance companies. It is imperative to have a diligent and experienced attorney fighting to make sure his client gets the compensation he or she deserves following an accident by maximizing the settlement under our new laws.

We also have experience in negotiating reductions of your health insurance/ ERISA liens. We can also file for your medical payments benefits as a courtesy to you to offset the effects of Billed Vs. Paid.