Members of the WCJC executive committee had an editorial on collateral source legislation, Senate Bill 22 / Assembly Bill 29, published in the Milwaukee Journal Sentinel.
Let Jury Decide on Reimbursement
Under current Wisconsin law, plaintiffs and their attorneys reap significant windfalls in personal injury cases because the jury never gets to see evidence of the amount actually paid to the medical provider for the plaintiff’s injuries. Instead, due to a number of Wisconsin Supreme Court decisions, the jury is only allowed to see the billed amount, which is typically significantly more than what was actually paid.
Medical bills are analogous to the price of a car. Consumers almost never pay the full sticker price of an automobile; instead, they pay a lesser, negotiated amount. This is also the case with medical expenses. Medical providers and health insurers typically have negotiated rates, and, therefore, the amount actually paid to the medical provider by the insurer is typically less than the amount billed.
Legislation (Senate Bill 22 / Assembly Bill 29) introduced by Sen. Paul Farrow (R-Pewaukee) and Rep. André Jacque (R-DePere) allows for greater transparency in the courtroom by allowing the jury to see both the amount billed by the medical provider and the amount actually paid. Based on this evidence, the jury is then allowed to determine how much the plaintiff should be reimbursed for medical expenses.
Many other states have begun to end this practice of hiding the evidence from the juries. In fact, courts and legislatures in other states have gone much further than Wisconsin’s proposed law by stipulating that the plaintiff should only be reimbursed the amount that was paid to the medical provider. Those states include California, Connecticut, Massachusetts and Florida, to name just a few. Roughly half the states have adopted this approach.
Wisconsin currently has a law similar to the proposed legislation in the area of medical malpractice. In cases where a plaintiff incurs medical expenses due to injuries caused by medical malpractice, the jury is allowed to see evidence of the amount paid to the medical provider. SB 22 and AB 29 would extend that law to all personal injury cases.
The purpose of economic damages in personal injury cases is to make the plaintiff whole – that is, to ensure that the plaintiff is reimbursed for out-of-pocket expenses incurred as a result of the accident. Economic damages are not intended to enrich the plaintiff and his or her attorney.
Plaintiffs are, however, typically entitled to extra compensation through non-economic damages, such as pain and suffering, and even punitive damages in certain cases. These extra damages are on top of the out-of-pocket damages a plaintiff receives in the same accident.
Unfortunately, Wisconsin law continues to allow plaintiffs and their attorneys in personal injury cases to receive windfalls by concealing from the jury the true cost of the plaintiff’s medical expenses. Some courts have referred to these windfalls as “phantom damages,” because the plaintiff never has to pay the full billed amount yet the plaintiff and his or her attorney is awarded the full sticker price.
This is bad public policy. Everyone who purchases insurance ultimately pays higher premiums when plaintiffs and their attorneys are paid these phantom damages. The legislation promotes transparency in the courtroom and allows the jury to decide how much plaintiffs should be reimbursed for their medical expenses.
Please contact your legislator and ask that he or she support SB 22 and AB 29 to help keep insurance costs low for all consumers.
Bill G. Smith is the Wisconsin state director of the National Federation of Independent Business. Jerry Deschane is executive vice president of the Wisconsin Builders Association. Scott Manley is vice president of government relations for Wisconsin Manufacturers & Commerce. All three are executive officers of the Wisconsin Civil Justice Council Inc. (www.wisciviljusticecouncil.org).
Click here to read additional information on WCJC’s effort to limit phantom damages.