Since being signed into law just five years ago, the Patient Protection and Affordable Care Act (referred to as the Affordable Care Act or “ObamaCare”) has been a hotly contested issue across the nation and its precise application has been subject to interpretation. Despite a total of fifty-six attempts to repeal the Affordable Care Act, it looks as if the law is here to stay at present, which has commentators and lawyers now turning to the Act’s effects and implementation. While not of particular import to the general public, the Act may have an interesting effect on the way personal injury lawsuits are litigated and some lawyers have already taken notice.
For more than a century, the common law collateral source rule has prevented the reduction of a tortfeasor’s liability on the basis of a benefit or payment from a third-party. In the modern era, this third-party role has typically been played by insurance companies. In its purest form, the collateral source rule precludes an adverse party from attempting to reduce an award of damages by any amount of money that may have already been paid by another person or entity, rather than by the claimant herself. In 2003, the State of Texas loosened the common law collateral source rule by allowing the reduction of liability to only the amount “paid or incurred by or on behalf of the claimant” and codified this rule as Texas Civil Practices and Remedies Code Chapter 41.0105. This rule excludes those medical costs that may be listed at a higher price yet billed to the patient or insurance at a discounted price, with the difference being written off.
Now, the Affordable Care Act may inadvertently be loosening the collateral source rule even further. Because the Act provides a minimum level of health insurance for all Americans, several commentators have argued that the collateral source rule has been rendered moot. All possible personal injury claimants would have this health insurance available to them. As one commentator has phrased it, courts will soon be faced with “whether it remains fair to continue to force the fiction upon the jury that future medical expenses . . . will be paid 100% out-of-pocket [by the claimant], when in the post-ACA world, that will be the case for almost no one.”1
Throughout the coming weeks and months, The Bassett Firm will continue to analyze this peculiar intersection of the Affordable Care Act, the collateral source rule, and personal injury litigation. In addition to this general overview, we will evaluate the arguments on both sides of this issue and attempt to speculate as to which direction courts may choose to take. The effect of the Affordable Care Act on calculating future medical expenses in personal injury litigation is a burgeoning topic and The Bassett Firm strives to provide in-depth analysis and updates as they develop. Subscribe to The Bassett Bulletin to make sure that you don’t miss any of our continuing coverage of litigation issues and insights!