House Judiciary Committee

January 28, 2025

 

Representative Carol Dalby [00:00:00] The chair sees a quorum. For those of you who are coming to our committee maybe for the first time or you come often, we're only hearing one bill today. That bill is going to be House Bill 1204 by Representative Eubanks. Before we get to that, members, I want to give you, in case we go a little long today and I get busy and not tell you what I'm anticipating that we're going to hear on Thursday-- and of course, I will text this out to you also-- but we're going to hear House Bill 1067, House Bill 1007, Senate Bill 13. 

Now, if for some reason we go in extra early, listen and watch the website. We may come in, our committee may come in at 9:30 just so we make sure we get through these bills. But I'll let you know. But right now, it's going to be 10:00. The chief justice is scheduled to be here on Thursday at 10. And so we will hear from the chief justice first. And that may bump a bill over till Tuesday, but we shall see. Cecily has gotten with me, we need to have a picture retake. And so we will be looking at hopefully next week or so. 

They have decided they want all the pictures taken in front of the House steps. So we will be picture retaking. So I'll let you know when to put your bib and tucker on for that day. All right. First and only bill that we will be hearing today is House Bill 1204. Representative Eubanks, you're recognized to go the end of the table and present your bill.

 

Representative Jon Eubanks [00:01:50] Thank you, Madam Chair. With your permission, I'd like Justin Allen to join me at the end of the table.

 

Representative Carol Dalby [00:01:55] Certainly. Mr. Allen, you're recognized to join Representative Eubanks at the end of the table. If you'll introduce yourself, then, Representative Eubanks, you'll be ready to proceed.

 

[HB 1204: Limiting Medical Damages to Amount Actually Paid]

[Outcome: Passed] 

 

Representative Jon Eubanks [00:02:06] Representative Jon Eubanks, District 46.

 

Justin Allen [00:02:09] Justin Allen. I'm a partner with Wright, Lindsey and Jennings.

 

Representative Jon Eubanks [00:02:15] Thank you, Madam Chair, members. And I know you've been bombarded from both sides on this bill for several days and are probably more versed with it than I am. But I'm going to try to keep this as short as possible as far as what the opening is, because I guess for me, it's kind of common sense and black and white. Now, I'm sure that the questions and the testimony that we're going to hear is going to change that. But anyway, House Bill 1204, it's five lines long, basically the meat of the bill. 

And it is an act to establish recovery of damages for necessary medical care treatment or services rendered. I was asked to insert some language into the bill. It was actually just one word and it was inserted in three different places. And I'll just go over that briefly since, like I said, the meat of the bill is basically just five lines. It states that recovery of damages under subsection A of this Section for past-- and that was the word that was inserted-- necessary medical care, past necessary medical treatment or past necessary medical services received includes only those costs actually paid by or on behalf of the plaintiff or that remain unpaid, and for which the plaintiff or any third party is legally responsible. 

You know, Representative Richmond ran this bill last session. I was a co-sponsor on that bill. Prior to starting any work on this, I approached Representative Richmond to see if he was intending on pursuing this again. He indicated that he was not. And I asked permission to take a run at it. And he said, by all means. He signed on to the bill and, of course, wished me good luck. After seeing everybody in the room, I understand why he said that. I don't want to make light of this, but it feels like the playoff game I watch Sunday with everybody here. I don't know how I particularly find myself in these situations, but here I am. 

This is an issue that I've been interested in for a number of years, even going back prior to when I ran for public office. In fact, the person that ran my campaign is a contract lobbyist for the opposition. So, I mean, he knows what my position was with regard to tort reform. It was something that I felt strongly about, and I think it's something that it's actually good for the benefit of the state as a whole. Now, I understand that it impacts parties differently. I certainly don't want to deprive an injured party of any just recovery of damages. I really don't. 

But for this particular issue on the recovery of the medical bills, it just seems that what is accepted as full and final payment should be the amount that they receive. And currently, Arkansas courts allow the plaintiff to recover the billed amount, even though something less was accepted. That honestly just doesn't make any sense to me. I mean, this bill doesn't affect other categories of damages. If they're entitled to additional damages of some sort, then it should be in those areas. And I don't feel like it should be in this particular area. I mean, the bill makes clear that personal injury case, the plaintiff's recovery for medical services, it was actually accepted as full and final payment. 

We've all had hospital bills. We know what the billed amount is. And we have seen, at least in my case and I would suspect most of you here, that they accept a reduced amount. I don't know why that is the case, but that is the reality that we deal with currently. And so, like I said, I think they just should recover the actual amount that was accepted as full payment. You know, it doesn't impact the other categories of damage and it doesn't affect the ability of the plaintiff to recover amounts paid for by a collateral source. If they have insurance and it pays that bill, the plaintiff can still recover the amount and they get to keep that. So anyway, that's the long and short of it. 

And I know that this has garnered a lot of attention and a lot of controversy and, unfortunately, I think it's a policy issue that we need to deal with. And with that, I will attempt to answer any questions. I suspect I will be deferring to Mr. Allen for a lot of the questions, especially coming from the attorneys on the committee.

 

Representative Carol Dalby [00:07:58] Are there any questions? Representative Hudson, you're recognized for a question.

 

Representative Ashley Hudson [00:08:03] Thank you, Madam Chair. Representative Eubanks, thanks for being in the hot seat for us today. You said that you thought, quote, that this is good for the benefit of the state as a whole. Can you explain a little bit how this benefits the state?

 

Representative Jon Eubanks [00:08:21] Yes, I have some reports, many of which are from the U.S. Chamber of Commerce, and it shows the impact, the economic impact that tort has on the general public as a whole through increased costs with regard to either health care or premiums or products and the such. And in particular, with regard to Arkansas, it's estimated that the impact on the household is approximately $2,900. So whereas I do not think this bill is going to solve that problem, at least it will not add to what these higher prices are and what's causing them.

 

Representative Ashley Hudson [00:09:12] Follow up.

 

Representative Carol Dalby [00:09:12] You're recognized.

 

Representative Ashley Hudson [00:09:12] Okay. So I looked at the experience of several other states who enacted some version of this before we came in today. And it looks like in Maryland, despite a cap on damages, it's a little bit different, of course, but premiums rose by 70% after that was enacted. In Missouri, they enacted some legislation in 2003, and they had an increase of 121% between 2000 and 2003. In Florida, Ohio, Oklahoma, Mississippi, Nevada, Texas, all of these states experienced significant rate hikes following enactment of some version of a cap on damages or some version of what you're trying to do here with the medical damages. So why do you think our experience in Arkansas is going to be different than all of these states, including several that surround us?

 

Representative Jon Eubanks [00:10:20] Well, I think you know as well as I do that there are a lot of variables that go into what causes these increases. Inflation just in and of itself is one reason. I contend that by trying to do something, you're limiting the amount of what that increase would be. Now, that would certainly be hard to, I guess, prove empirically. But if you're reducing the amount, it may be a small effort in order to contain costs but it's an effort nevertheless. And I think when you're talking about what the estimated impact is on Arkansas families, I think it's significant.

 

Representative Ashley Hudson [00:11:03] One last follow up.

 

Representative Carol Dalby [00:11:04] You're recognized.

 

Representative Ashley Hudson [00:11:05] Are you familiar with the term subrogation?

 

Representative Jon Eubanks [00:11:09] I wasn't.

 

Representative Ashley Hudson [00:11:11] Okay. Are you aware that insurance companies today, today can subrogate claims and get reimbursed in the event that a plaintiff recovers for medical damages? That the insurance companies can make a subrogation claim today and get reimbursed for their costs?

 

Representative Jon Eubanks [00:11:29] I've heard that, and I think I'm going to defer to Mr. Allen to further answer that question.

 

Justin Allen [00:11:41] Can you hear me okay? Certainly. Representative, on the books and in theory, subrogation is a right that a plaintiff's insured has. As a practical matter, it happens very, very little because of the obstacles that are associated with it. In the made whole doctrine it says that the insurance company cannot subrogate to the payments from the defendant unless the plaintiff is made whole. And there are several practical obstacles with that, including that the plaintiff's insurer has to file a separate lawsuit against the plaintiff and the defendant has the burden of proving that the plaintiff was made whole and also now has the danger as a result of a recent court of appeals case of having to pay the plaintiffs attorney's fees if they fail to prevail. It's anecdotal, I'll admit I can't give you a list. But all the information I have is it's rare that a plaintiff's insurer even attempts to subrogate, much less is successful with the court.

 

Representative Carol Dalby [00:12:43] Members, any other questions? Representative Shepherd, you're recognized for a question.

 

Representative Matthew Shepherd [00:12:48] Thank you, Madam Chair. So a few questions that I have just in how this law, if enacted, would operate in the real world. And some of these I've asked you all in the past. But I guess my first question is this. This was enacted back in 2003 through the Civil Justice Reform Act and was subsequently struck down. Is that correct?

 

Representative Jon Eubanks [00:13:17] A version of it.

 

Justin Allen [00:13:18] It was very similar. The primary difference between House Bill 1204 and the provision in the Civil Justice Reform Act is the provision spoke directly to what could and could not come into evidence. This bill doesn't address that.

 

Representative Matthew Shepherd [00:13:32] Okay. And as we all well know and have been reminded many times that the General Assembly, we don't have the ability to determine court rules or process or procedure. As I read this bill, this is strictly restricting what can actually be recovered. But the court rules could be adjusted or a judge could continue to allow the full amount of medical bills incurred, could continue to allow those to be presented to the jury. Isn't that correct?

 

Justin Allen [00:14:08] Yes, that's true. This will be up for the courts to decide how to implement this in terms of discovery and evidence. And roughly half the states in this country have adopted a policy, the court made or legislatively similar to 1204. And their courts and their supreme courts have come at it in different ways.

 

Representative Matthew Shepherd [00:14:28] And so a court might allow, or I guess the Supreme Court by rule or rule of evidence might just continue to allow everything to be submitted and then either through some type of special verdict or interrogatory, some verdict form, ask the jury to tell them how much they're awarding for medical bills. And then the judge might could look at what was actually paid and reduce that.

 

Justin Allen [00:14:53] That's how it's done in Maryland.

 

Representative Matthew Shepherd [00:14:54] And you believe that that would still be allowed here under this bill?

 

Justin Allen [00:14:58] It will be up to the courts. But I think if you look, again, using Maryland as an example. Its policy, its bill is effectively the same as House Bill 1204. And its Supreme Court made the decision, we're going to allow the full amount of the bill to come into evidence. The jury's not going to be told of a reduction. The jury will render verdicts based on interrogatories. And if they award what you would expect, if there's liability, the full amount of that bill, if it's a hospital bill, the judge would then remit it post verdict.

 

Representative Matthew Shepherd [00:15:27] Well, and I just want to be clear that it's not the position that anything in this bill would preclude that.

 

Justin Allen [00:15:36] That's correct.

 

Representative Matthew Shepherd [00:15:37] And then finally, if I may, just a few questions about specific instances. A bill that is reduced due to health insurance, that there's a negotiated rate, whatever the health insurance company has paid, that would be recoverable.

 

Justin Allen [00:15:54] That's correct.

 

Representative Matthew Shepherd [00:15:55] If an amount is written off by a hospital and the hospital subsequently sends out a 1099 to an injured party for the value of what was written off, whatever they're owed, whatever that liability that they owe for taxes, if that's the case-- and I've seen different instances-- but if that's the case, they could recover the amount of tax incurred on what was written off.

 

Justin Allen [00:16:22] I think that's right.

 

Representative Matthew Shepherd [00:16:23] And then I think my final question, well, come back to me in a minute.

 

Representative Carol Dalby [00:16:40] We'll put you back in the queue. No problem. We will put you back in the queue. Representative Gazaway, you're recognized.

 

Representative Jimmy Gazaway [00:16:46] Thank you, Madam Chair. So there are numerous points that I want to talk about. I think it's going to take some time to address each point. And so I'll start with what Representative Shepherd just talked about and I'll get back in the queue to come back to the other points that I would like to discuss. But let's talk about kind of some of the points that Representative Shepherd just made. 

The 2003 Civil Justice Reform Act, I think, as you acknowledged, did something very similar to what you're attempting to do here. And it was declared unconstitutional by the Supreme Court. And that was because that ruling said that it essentially infringed upon the court's power over policy, practice and procedure because it addressed evidentiary issues which are in the sole province of the court. Is that a fair and accurate assessment of what happened with the 2003 law and why it was declared unconstitutional?

 

Justin Allen [00:17:38] I would say that's a fair assessment of Johnson versus Rockwell, which did strike that provision.

 

Representative Jimmy Gazaway [00:17:42] Yes. Okay. Thank you. And so what you've done this time, which is clever and typical of a lawyer, typical lawyer move, if you will, is you took that same language essentially and instead of mentioning the word evidence, instead of talking about how it affects evidentiary procedures, you put it in the definition of what is reasonable and necessary medical care. 

So the collateral source rule, which is existed to prevent knowledge about insurance available to a plaintiff in these cases, which has historically been not allowed, the way you've kind of worked your way around what the Court's ruling from the 2003 law is, you put it in the definition of reasonably necessary medical care to try to make it definitional. Is that kind of fair about what you've done here?

 

Justin Allen [00:18:47] I would say we've written it this way to address concerns with regard to Amendment 80 and separation of powers. No question about that. But I think that I would suggest to you or say to you that this is a policy issue and it is for you guys and your colleagues and the 135 up here to decide what are recoverable damages. 

And it is appropriate for you to address it in this form. Now, some of you are going to disagree that that's the right policy. But I see no problem or issues with this setting forth the policy as drafted in House Bill 1204 and we'll see if the majority of the body agrees.

 

Representative Jimmy Gazaway [00:19:27] Follow up, Madam Chair. So in the case where these similar provisions were declared unconstitutional, the court held that it was both evidentiary and substantive. And I'm not sure that you can separate the fact that the collateral source rule operates both as an evidentiary matter and as a substantive matter. And what you're trying to do here, which I completely understand, is you're trying to make this solely a substantive matter. 

But the fact remains that when you put it definitionally in the definition of reasonably necessary medical care, you are affecting the evidentiary standards, the evidentiary aspect of the court and how these damages are submitted. You can't get around the evidentiary effect that this will have or the effect that this will have on the way evidence is submitted. It's a rose by any other name is still a rose.

 

Justin Allen [00:20:25] No, I agree with you completely.

 

Representative Jimmy Gazaway [00:20:28] And that is what you're doing here. I mean, is it not?

 

Justin Allen [00:20:30] Yes. This will have an impact on how cases get worked up and tried and what comes into evidence. But in the Edwards versus Thomas case in 2021, while the majority did not overrule Johnson versus Rockwell, where at least one concurrence said we just did and we need to say that, the majority of the court in 2021 involving a case where a young child unfortunately was ejected in a tractor trailer accident. Her father did not have her secured in her required child seat. 

There's a law on the books that remains there today that says the non use of the child seat  shall not be used as evidence. The word evidence is in that statute, that code section of comparative fault on the part of the parent. The Arkansas Supreme Court in Edwards versus Thomas upheld that statute and said the bright line of Rockwell is not the way to go. 

The General Assembly and setting policy is inevitably going to touch on things that impact pleading, practice, procedure and evidence. We just adopt a weighing test of is this more substantive? Is this more policy? Or is this more procedure or evidence? I think that the Court, can't speak for them, but I feel very confident that the court would look at House Bill 1204 that this is a clear statement of policy by the General Assembly.

 

Representative Jimmy Gazaway [00:21:42] And I appreciate that. I think that's just a point that we're just going to disagree on. I have one other line of questioning based on Representative Shepherd's questions. One of the things that I heard Representative Shepherd say when he talked to you about that the court would still have the ability-- and I appreciate Representative Shepherd's point, certainly-- the court would still have the ability to allow the full bill to come into evidence and then would simply, just by remittitur, reduce it following the verdict. 

And what he said there, and we talked about the court developing rules, is that they might-- and then he said it again-- they might. And then he said it would be allowed. And you said it would be up to the court. The point is I'm not comfortable operating on mights and what would be allowed. If that's the case and that's what we want to do, why don't we just put that in the bill?

 

Justin Allen [00:22:40] Well, for the very reasons we just discussed. Because we all know that if this becomes law, it will get challenged and plaintiffs will contend that it is unconstitutional, despite the Edward versus Thomas case, that they will try to get the court to go back to Johnson versus Rockwell. And that if we start putting in specific evidentiary guidance restrictions on the court, there is a very good chance the court will rule it unconstitutional. And we will have undermined the entire policy effort that this bill is designed to get at.

 

Representative Carol Dalby [00:23:09] You're recognized. Go ahead.

 

Representative Jimmy Gazaway [00:23:11] Then I'll get back in the queue.

 

Representative Carol Dalby [00:23:12] That's alright. I'm going to let it kind of be free flowing today so we get all the questions out.

 

Representative Jimmy Gazaway [00:23:16] Appreciate the latitude, Madam Chair. Thank you. And so, you know, one of the examples that you mentioned was that the Maryland courts did this. Can you tell me the last time Arkansas followed Maryland on anything?

 

Justin Allen [00:23:29] I haven't done that research, Representative.

 

Representative Jimmy Gazaway [00:23:33] I would guess, to say if you did you find that it's--

 

Justin Allen [00:23:36] But I would note that, interestingly, both California and New York have adopted policies along the same lines of this is that your recovery is limited to what was paid and accepted.

 

Representative Jimmy Gazaway [00:23:48] That's even, I think, a further point to my argument that when was the last time we ever followed anything California or New York? But nevertheless, if I've got a little bit more latitude on this point, I will say--

 

Representative Carol Dalby [00:24:01] Yeah, if you get to a question.

 

Representative Jimmy Gazaway [00:24:02] And I am. And Representative Shepherd mentioned that the amount could be written off and there could be a 1099 if that's the case. And so the problem is, and I want to get your opinion on this, if that's the case, but the issue is when a provider, a medical provider accepts money from my insurance company, the agreement is that they accept that money as payment in full. That's just the insurance companies make them do that when they accept the money. And so the point is there's not going to be that extra amount of money out there to claim on a 1099 or whatever, because when they accept it, they accept this payment in full. Wouldn't you agree?

 

Justin Allen [00:24:51] Yeah. And maybe I was confused by Representative Shepherd's question. My understanding of it is that if an insurer for a plaintiff negotiates a lesser payment with a health care provider such as a hospital, that reduced amount will not be taxable to the plaintiff. There's IRS guidance on that.

 

Representative Jimmy Gazaway [00:25:14] I'll get back in the queue.

 

Representative Carol Dalby [00:25:15] I'm not sure we have anybody. Representative Shepherd, you want to get back in now?

 

Representative Matthew Shepherd [00:25:19] Thank you. Thank you, Madam Chair. And just before I get to the question, to clarify, when I'm talking about a 1099, I'm talking about an instance where there's not health insurance involved, where a provider writes it off just unilaterally or because it was negotiated. I have seen instances where those providers attempt to send a 1099. And whatever is taxable or the amount of tax owed would still be recoverable under this bill.

 

Justin Allen [00:25:45] That's right.

 

Representative Matthew Shepherd [00:25:46] And the reason I'm asking these questions and I have a couple of more here, is I think that on both sides of this issue, there's a lot of theories about what it is and isn't. And so I think it's helpful to ask these things. If medical bills are owed at the time of trial and they have not been written down, it's whatever the bill is, that clearly is still recoverable under this bill.

 

Justin Allen [00:26:15] I would agree with that.

 

Representative Matthew Shepherd [00:26:17] And then finally, with regard to future medicals, I know that Representative Eubanks talked about that, that maybe the draft of the bill was changed to make clear it's all on past. But nothing here impacts future recovery for future medicals.

 

Justin Allen [00:26:33] I would agree with that.

 

Representative Matthew Shepherd [00:26:34] That's all the questions I have. Thank you.

 

Representative Carol Dalby [00:26:36] Representative Gazaway, you're recognized.

 

Representative Jimmy Gazaway [00:26:37]  Thank you, Madam Chair. So I want to go to another line of questioning. I appreciate that part of the debate, but I would like someone to explain to me, Representative Eubanks, how this actually benefits the average Arkansan who goes to work every day, has an insurance policy that they paid for for themselves and their families, $550 a month that they pay their insurance provider to negotiate and pay these bills for them in the event that they're ever hurt. How does this bill really help them if they're injured? I'd like to hear that.

 

Representative Jon Eubanks [00:27:24] Well, as I stated earlier, I can quote you some findings from different sources. I know they would be argued that they're probably biased, but the economic impact that this has on society as a whole increases cost. You know, you're specifically referring to people with insurance, correct? Okay. Now, it's my understanding that if you have insurance and the insurance pays the medical bill, you can still recover the amount of the claim. So is that not correct? If you want to--

 

Representative Carol Dalby [00:28:08] Mr. Allen, would you like to opine on what Representative Eubanks just stated?

 

Justin Allen [00:28:15] An observation I would make, Representative Gazaway, is that, and Representative Hudson got to this earlier, and that is what's this going to do for the average Arkansan and for her family? And one thing I would say is any one of us could be a defendant as easy as we could be a plaintiff, whether that's us individually or our businesses or our employers. So we have to consider that as well. And second is, will this in and of itself drive down the cost of insurance for individuals or businesses? Probably not. 

But what I would say to you is I don't think it would be a good strategy for the General Assembly to throw up its hands and say, the heck with it, there's nothing that we can do that is going to impact insurance costs. I think that if you have a bill in front of you that makes sense, it's fair and it's good policy, and it should and it could impact those costs, you should move forward with that. And there's a lot of stuff in the stew of what's driving the insurance cost. This is just one of them. It's not a panacea. It's not going to be a flip of the switch. 

But it certainly makes sense from a math standpoint and from an insurance standpoint and actuarial standpoint that if the insurance companies on behalf of their defendants are not paying these amounts over and above what the health care payer provided, that the cost of insurance goes down. Can I guarantee that? Of course not. Of course not.

 

Representative Jon Eubanks [00:29:36] And if I could give you an example that I've experienced, that at least was relayed to me. I've been a farmer most of my adult life, and I have a farm implement company in my district. And every spring they have a sale that's mainly selling hay equipment. So they have a sale on net wrap and blades for mowers, etc., etc. And they'll have some of their equipment dealer reps there to showcase maybe new machinery. And this happened prior to ever being elected to the General Assembly. 

And this particular piece of equipment was manufactured in Europe. You know, we were having a conversation. I said, why are all these things being made out of country now? And of course, this was this individual's opinion. But he says it's because of liability. And so, I can't say definitively that by passing this we're going to prevent manufacturing from moving offshore. But if we're adding to the cost of doing business, whether it's small business or large business, I think we ought to be taking steps to try to reduce those costs. 

And, Like I said earlier, I can quote this information from the US Chamber of Commerce and from the National Federation of Independent Businesses, but they estimate that tort burden per household in Arkansas is $2,942. Now, the cost of living in Arkansas is low. Wages are not that high. I would just suggest that $2,900 is a substantial amount. You know, we've tried to cut taxes to try to reduce the burden on families and everything. So this is just another burden on families, I believe.

 

Representative Carol Dalby [00:31:45] Representative Hudson, you're recognized for a question.

 

Representative Ashley Hudson [00:31:48] Thank you, Madam Chair. So we've talked a lot about how this would actually benefit Arkansans. And I'm going to come back to this idea of tort burden. But what do you make of the fact that we're now going to create multiple classes of plaintiffs? So if I am in a car accident with Representative McCullough and I have no insurance, Representative McCullough has insurance, and maybe Representative Beaty was also injured in the accident. 

And he's got different insurance than what Representative McCullough has. I'll get the most, right, because I don't have any insurance. I'm going to recover more than either of these two by virtue of the fact that I am uninsured because I don't have an insurance company negotiating on my behalf. So I'll have big bills. And then Representative McCullough may have just a basic plan, and so she may recover a little bit less than me but more than Representative Beaty, who's got a Cadillac plan.

 And so we're all going to be treated differently in the case of all three being injured in the exact same way, in the exact same accident based upon what type of insurance we have or if we're uninsured. So what benefit does this really give to insured Arkansans when really the best place to be in this scenario, I guess, is to be uninsured? Is that right?

 

Justin Allen [00:33:18] So first, I would take issue if you're saying that in every single instance that an uninsured pays the full amount of the bill. I've got plenty of resources here that speak to that issue. But here's a 2021 statement from the American Hospital Association that says, quote, The uninsured pay little or nothing.

 

Representative Ashley Hudson [00:33:38] I think you misunderstand. If I'm injured by a tortfeasor and the tortfeasor is insured, you know, I don't have insurance that's paying any of my claims. So I'm going to have a big bill. It's not that the Tortfeasor is uninsured.

 

Justin Allen [00:33:52] I understand. You're saying the plaintiff is uninsured. And what I'm saying is, while in some cases the uninsured may have to pay that full amount of that bill, that is not the case in every instance. Again, the American Hospital Association is saying the uninsured pays little to nothing. Now, that still creates, in your scenario, differing plaintiffs under similar circumstances. What I'd simply say to you is what's different among each of them is what they paid for their medical bills. And what they paid for their medical bills, this bill would be saying is what you recover from the defendant.

 

Representative Ashley Hudson [00:34:25] And perhaps a difference in what they paid in premiums, correct?

 

Justin Allen [00:34:29] That could impact the negotiations. Sure. But I don't have any data to suggest that. But yes, if you're insured with Blue Cross, they're going to have an opportunity to negotiate with the hospital, unlike an uninsured would.

 

Representative Ashley Hudson [00:34:42] But I'm not, if I'm an insured plaintiff in this scenario, I'm not going to get a reimbursement of my premiums either, am I? So if I got the Cadillac plan, I'm paying more for my premiums and I'm getting less for my medical bills than somebody who paid less. And I'm not getting anything out of this.

 

Justin Allen [00:34:59] I would say you would get 100% of your medical bills because they paid the hospital and the hospital accepted it as final payment.

 

Representative Ashley Hudson [00:35:05] But you're agreed we're going to create different classes of plaintiffs, correct?

 

Justin Allen [00:35:09] Yeah. We could come up with some hypotheticals with that. Sure. On both extremes.

 

Representative Ashley Hudson [00:35:13] Okay. I want to go back to the idea of the tort burden. How is that calculated? How is it calculated that my household is affected in the amount of $2,900 a year? Where does that come from?

 

Representative Jon Eubanks [00:35:27] Well, it came from the US Chamber of Commerce. How they made those calculations, I do not know. Or how the National Federation of Independent Businesses, those figures as well, I'm not privy to the calculations that they made or how they arrived at those.

 

Representative Ashley Hudson [00:35:40] Don't you think that's important information for us to be able to assess? I mean, if you're going to say that something costs me $3,000 a year and it's costing every Arkansan $3,000 a year, I sure like to know how it's calculated, wouldn't you?

 

Representative Jon Eubanks [00:35:53] I would suspect that we accept the numbers or calculations from different organizations all the time in this body. And so I also believe that I could probably inquire and find out what those calculations were and how they were arrived at.

 

Representative Ashley Hudson [00:36:09] Thank you. I'd be interested in getting those.

 

Representative Carol Dalby [00:36:13] Representative Collins, you are recognized for a question.

 

Representative Andrew Collins [00:36:17] Thank you. Representative Eubanks, I want to come back to something you were talking about with regard to the farm equipment and the burden of compliance with liability requirements. You know, if you're talking about the burden of liability on companies and the amounts they have to pay, if we reduce the amounts they have to pay, who is getting less?

 

Representative Jon Eubanks [00:36:48] Well, I suspect that if companies have moved out of the country, then we have less employment. So I think we as citizens are getting less because we have less opportunities. But am I suggesting that the price of the equipment is less?

 

Representative Andrew Collins [00:37:06] No, that's not really what I'm getting at. Sorry. Let me rephrase it. When you talk about liability and what a company has to pay when they are liable, they pay that to an injured person. So wouldn't it be true that the injured person is getting less if you have higher liability costs? That's what we're talking about when we talk about liability. If you reduce the cost of liability, you reduce the amount that can be recovered by injured people. Isn't that right?

 

Justin Allen [00:37:40] If it's okay, I'll try to address that. And this may not be speaking, Representative Collins, to what you're saying, but I think it may be. Under House Bill 1204, if it is enacted as law, what plans in Arkansas have traditionally been recovering will go down in cases where medical bills are discounted or negotiated. I acknowledge that the plaintiff will recover less. But of course, the argument here is that that plaintiff should be recovering less because those amounts don't even exist as damages. But I acknowledge it will decrease that recovery.

 

Representative Andrew Collins [00:38:11] So I guess to tie back to Representative Gazaway's question, an ordinary Arkansan who gets injured will not really benefit under this bill except in the broader sense that there's, what you're saying about overall cost.

 

Justin Allen [00:38:26] They will recover less.

 

Representative Carol Dalby [00:38:28] Represent Gazaway, you're recognized for a question.

 

Representative Jimmy Gazaway [00:38:32] And that's my exact point. So I want to go back to that because I asked the question, I think very clearly, how will this benefit the average Arkansan who pays their insurance premiums every month who are ultimately injured in a wreck? And I love you both, but you sat down there for five minutes and I never once heard a straight, direct answer to that question. 

You talked about the macro effect it was going to have maybe on the overall economy, statistics nationally from the Chamber of Commerce. My question, which was very clear, and I'll give you another opportunity to answer on the micro, not the macro level, the micro level. How does this help the Arkansan out there who pays their health insurance premiums, who is injured in a wreck? How does this benefit them?

 

Justin Allen [00:39:26] The hope from this-- and we've discussed this as it relates to insurance costs-- the hope is this, that it will bring reality to what damages are and that will impact the economy. It will impact the average Arkansan's employer, their small business, their insurance premiums, God forbid the day they might end up being a defendant that this will all spread around and help out, again, families, business owners, employees, and setting the level straight, the field level that your damages in this category of health care bills are what was paid and accepted. 

Now can I detail for you how much money it is going to save me or you or anybody? No, I can't give you that data. But again, I would go back to the principle of I think that this makes good sense. I think it's good policy. I think it is designed to help with those costs and the cost of living. Will it get us there in one fell swoop? No, of course not.

 

Representative Carol Dalby [00:40:29] You're recognized.

 

Representative Jimmy Gazaway [00:40:30] Thank you, Madam Chair. And you made this statement a couple times. I meant to talk about it, that a person can be a defendant as easily as they can be a plaintiff. Well, the fact of the matter is, I think you would have to agree with me, this bill only benefits defendants. This bill does not benefit plaintiffs. This bill restricts what plaintiffs are allowed to offer in terms of their medical bills. They can only offer what was paid by insurance. This bill only affects plaintiffs. This bill does not affect defendants. Would you agree with that?

 

Representative Carol Dalby [00:41:06] Turn your microphone on, please.

 

Justin Allen [00:41:08] It affects both. But yeah, I follow what you're saying is that if this is implemented as the policy, the defendant will only have to pay what was paid and accepted, which is less than what is being paid under current law.

 

Representative Jimmy Gazaway [00:41:19] Yeah. So it benefits the defendants. But let me say this. One of the arguments that I've heard, it's a fair point. One of the arguments that I've heard is that we should do this out of transparency. Okay? Because the fact finder, the jury should know if there's insurance available that the plaintiff has that's paid a bill, that it's only transparent to let them be aware of the fact that there was insurance that paid a bill for the plaintiff. And that's what this bill does, right? I mean, it limits what a third party is paid.

 

Justin Allen [00:41:56] It limits your recovery for past medical care to what was paid and accepted, whether that's paid by the plaintiff or their insurance company.

 

Representative Jimmy Gazaway [00:42:04] But what this bill does not do-- so that's on this side of the equation. Let's look at the other side of the equation. The defendant also has insurance, too. And you know as well as I do-- I've tried jury trials where the mere mention of the word insurance, if you breathe the word insurance, it's a mistrial. And what this bill does not require, it requires transparency for the plaintiff, but it does not require transparency for the defendant. 

In other words, it does not let the fact finder know that the defendant is sitting over there with a $25,000, $50,000, $100,000 policy of insurance to cover any damages that they may be responsible for. It doesn't create transparency for the defendant to let the fact finder know that that attorney that they're sitting over there next to, that they didn't have to come out of pocket to pay that attorney, but that in fact, that attorney's fees are being paid for by the insurance company. It does not create transparency on that side of the equation. It only creates transparency, if you will, on the side of the equation for the plaintiff. Would you agree with that?

 

Justin Allen [00:43:17] Well, I think there's an assumption in there, I think, respectfully, that I would disagree with, which is that as a result of this bill, the jury will be told that the plaintiff has insurance and that that insurance negotiated a lower bill. That will not happen. The jury still will not be told that the plaintiff has insurance and the jury will not be told-- and if I can, Texas, this bill is very similar and actually modeled after the Texas law and the Texas Supreme Court in interpreting and upholding its law. 

Again, it looks pretty much like this, says, quote, 'Of course, the collateral source rule continues to apply to such expenses and the jury should not be told that they will be covered in whole or in part by insurance. Nor should the jury be told that a health care provider adjusted his charges because of insurance.' So maybe the word transparency, representative, has been thrown around a little loosely. But again, it's going to be fair on both sides, in my opinion, with regard to the collateral source rule. Once again, this bill is simply saying, when it comes to your past health care damages, you recover what the hospital or the health care provider accepted as full and final payment.

 

Representative Jimmy Gazaway [00:44:25] Follow up, Madam Chair.

 

Representative Carol Dalby [00:44:26] You're recognized.

 

Representative Jimmy Gazaway [00:44:26] So I agree with you, I think the word transparency has been thrown around loosely. But if we're going to use it, I mean, do you have any objection to transparency? For me it means transparency for thee, that you'll agree that we're going to have transparency for the plaintiff in terms that they can only submit the amount-- I know what your answer is going to be-- but they can only submit the amount of medical damage that was paid for by their insurance, which they've paid premiums for.

 For the insurance company to negotiate that bill down for them, we're going to limit that. Would you agree to allow transparency for the defendant and let the fact finder know that they've got a $25,000 policy of insurance to pay the damages and that their attorney who's sitting over there next to them is being paid for by the insurance company and they didn't have to come out of pocket and go hire a lawyer? I mean, it seems only fair to me.

 

Justin Allen [00:45:21] Well, again, this bill, I respectfully submit, doesn't take away any of those protections for the plaintiff. But if you want to knock down the collateral source rule for both sides, let's have that conversation.

 

Representative Jimmy Gazaway [00:45:33] Which I do think would be a fair conversation. Last point. So Representative Hudson brought up this idea, part of what I think the argument is, is that the collateral source rule exists so that everyone-- because one of the arguments I've heard for this bill is the idea of fairness and that this bill creates fairness. 

But part of the rationale behind the collateral source rule is that it treats every plaintiff equally, whether I'm insured, whether I'm not insured, whether I've got Blue Cross Blue Shield, Medicaid, Medicare, Tricare, no care. The fact of the matter is, as a plaintiff, I get to introduce the full bill, which we've come to equate with the value of reasonably necessary medical care. The full bill is what I get to introduce, regardless of whether I'm insured or whether I'm not.

 

Justin Allen [00:46:34] That's the current law, yes.

 

Representative Jimmy Gazaway [00:46:35] This changes that, so that if I'm insured and I pay my premiums every month, $550 for me and my family, plus I go to work every day to get the discount. I pay my premiums every month. I'm going to be limited to the amount that my insurance company paid for my medical bill. Meanwhile, the person who doesn't have insurance gets to introduce the whole bill. That will be the effect if we pass this.

 

Justin Allen [00:47:07] That assumes that the uninsured has to pay the full bill. I've got numerous sources that say that is not the case. But yes, I would submit that it's treating everyone fairly when it comes to this one category of damages that you recover what was accepted. Can that result in these outlier situations that you and Representative Hudson are talking about? Yes, it can. 

But I don't think that's going to be the typical case. But yes, that can occur where somebody with a similar injury under similar circumstances have differences in what their past health care bills were because of the decisions made by health care providers, primarily hospitals, and most often as a result of negotiations with insurance.

 

Representative Jimmy Gazaway [00:47:49] Well, and the point-- Madam Chair? Thank you. The point that I would make is that in your calculus of this situation about limiting, in terms of fairness, limiting what a plaintiff can introduce to the value that insurance paid for them ignores the fact that they have paid for that benefit month after month of whatever the full bill may be. The fact that they had another source that pays that, number one, is not relevant. 

But number two, I think the argument is that they paid for that because every month they paid $550 a month for their insurance, which you know as well as I do, you may not use for 15 years. I may pay my insurance $550 a month every month for 15 years and never use it. But the time that I use it, they're going to limit me on my medical bill damages to only the amount that my insurance company paid, which why I paid those premiums was for them to negotiate me a good deal. 

Therefore, I shouldn't be limited to only introducing that amount. I should be able to introduce the full amount of the bill. What's your response to that? Because it seems that every time I hear an answer to this, it ignores the fact that the plaintiff has been paying premiums every month.

 

Justin Allen [00:49:09] And the plaintiff got every benefit of those premiums because the insurance company paid the hospital bill.

 

Representative Jimmy Gazaway [00:49:17] Okay. Well, I just have to disagree. Thank you.

 

Representative Carol Dalby [00:49:21] Members. Any other questions? Seeing no further questions, we did have some individuals who signed up on this bill. The first person to speak against this bill is Justin Minton. Mr. Minton, if you'll come to the end of the table, identify yourself, you'll be recognized to speak against the bill. Be sure to turn the microphone on.

 

Justin Minton [00:49:52] I believe it's on.

 

Representative Carol Dalby [00:49:52] Okay, great. You're recognized to introduce yourself and you'll be recognized. You're recognized to speak.

 

Justin Minton [00:50:00] Thank you, Madam Chair. My name's Justin Minton, and I'm an attorney in Saline County. I do mostly personal injury cases. Also, I handle a lot of construction defense type cases. I'm also a former senior insurance adjuster. Worked for Progressive for seven years. So for over 20 some odd years, I've been on all sides of the insurance industry. So I feel like I have some specialized knowledge in this area to inform me on how this bill would work in the real world. 

And if you look at it just kind of on its face and it sounds reasonable that, hey, we're only going to pay the actual damages. I mean, if you stop right there, that sounds really sensible, but that's not exactly what happens in the real world. I would submit to you, one, that the bill is unnecessary to begin with, and in reality it has a huge negative ripple effect against Arkansans. When I talk about it being unnecessary, the Arkansas model jury instructions, it's 2204, in fact, actually already states that defendant does not owe a medical bill that is not reasonable. So if the charges on a medical bill are unreasonably high, they can already reduce that bill. They don't have to pay it if it's unreasonable. 

Likewise, even if the bill is reasonable, if the treatment was unnecessary, they don't have to pay it at all. So that's already the law. So I don't really understand what this law is trying to fix. But as a former insurance adjuster, I've evaluated thousands and thousands of claims, so I know how this will actually affect people 98% of the time. Because we're talking about going to trial on some of these cases. That's maybe 2% of the time. The other 98% of the cases, this is what's really going to happen is it's putting into effect Marxist price controls. 

And I understand that there have been comments that the bill does not affect noneconomic damages such as pain and suffering and the like. And that's just not true. Because me, as an insurance adjuster, when I'm evaluating a case and I'm looking at it, if the charges are reasonable and necessary, I'm going to use that base amount of the meds as a multiplier. 

So, for example, I have two victims hit by a drunk driver, one of them 100% service connected disabled veteran, has Tricare and Medicare. His bills get reduced from 30,000 to 10,000. If I use a multiplier on his case of 1.5 to 2, his case is worth 15,000 to 20,000. I take another victim that is completely uninsured, same medical bills, same injuries. His bills get reduced from 30,000 to nothing because they're uninsured. That case is worth 45,000 to $60,000. And the reason for that is because our veteran paid a service to his country and received Tricare and Medicare in exchange for that service. 

Let's say there's another victim. Let's say there's a single mother works two jobs, one of which is just to have UnitedHealthcare so that she can have health insurance for her kids in the event something like this happens. Now, the health care may pay a little bit more than Tricare, but it's still going to reduce those bills from, say, 30 to 20. And when the adjuster is evaluating that case with the same multiplier, her case is worth 30 to 40. So is the uninsured's case is worth 2 to 3 times more than the others? 

And I know there's been some talk about, well, the bill is going to get negotiated. Maybe it is. Maybe it isn't. Nobody knows at that point in time. But the question is, why would mom even pay for health insurance? She never even meets her deductible anyway. And then something like this happens. So why even have the health insurance to begin with? So in reality, the bill does two things. It without a doubt, 100% of the time, penalizes responsible, socially productive people by anchoring the amount of their noneconomic damages to a lesser number. 

And two, and probably even worse, is it rewards bad behavior by allowing bad actors, for example, a drunk driver, to take credit for our veterans' service or our single moms' health insurance premiums. I mean, that's it. That's how it works in the real world. And I represent a lot of law enforcement, a lot of veterans, the two groups of people that get run over the most, law enforcement and postal workers because they're on the side of the road half the time. 

And there's been some talk about subrogation and Not Made Whole and all that. And I just want to point out, subrogation happens all the time. Most plans in Arkansas, and I don't want to get into federal versus state law too much, but Not Made Whole doctrine is an Arkansas law. If somebody has a federally funded plan, we have to pay that back. A matter of fact, if we don't pay that back, they can come in and freeze our assets. They can freeze my law firm's assets for not paying that back. I've had that threat before. 

So subrogation happens all the time. My veteran's case, for example, his case gets devalued from 30 to 10 and we got to pay that $10,000 back to Tricare. That is a federally funded plan. They are not subject to Arkansas' Not Made Whole doctrine. So I just want to point out that that happens every day. There's only maybe 2 or 3 plans in Arkansas, I think, Blue Cross Blue Shield of Arkansas, QualChoice and Health Advantage that are subject to the Not Made Whole doctrine. 

And not all of those are subject to Not Made Whole because, for example, your postal worker is going to have a federally funded plan that has to be paid back. That's how it works in a nutshell. And I'm happy to take questions if anybody has any.

 

Representative Carol Dalby [00:56:07] Representing Shepherd, you're recognized for a question.

 

Representative Matthew Shepherd [00:56:10] Thank you, Madam Chair, and thank you, Mr. Minton, for your testimony, because you've touched on what's really the issue here. You would agree, with regard to medical expenses, that's not the meat of the case. That's not where the real value is, correct?

 

Justin Minton [00:56:28] Right.

 

Representative Matthew Shepherd [00:56:28] It's the other damages that are recovered. And you've talked about the multiplier that attorneys on both sides, plaintiffs and defendants, evaluate cases based on in part based on the medical expenses. But you would agree that's not in law.

 

Justin Minton [00:56:48] Right.

 

Representative Matthew Shepherd [00:56:49] There's nothing in the law that says that those damages are based in any way on the medical expenses.

 

Justin Minton [00:56:56] Correct.

 

Representative Matthew Shepherd [00:56:57] What are those damages, for the benefit of the committee, what are those damages really based upon?

 

Justin Minton [00:57:02] The noneconomic damages?

 

Representative Matthew Shepherd [00:57:04] Yes.

 

Justin Minton [00:57:05] Well, I mean, there has to be some sort of damages. I mean, it could be it's the nature and extent and duration of the injury. Liability, was there some sort of aggravating factor, DWI are drugs, texting? And then to me, the witness potential of the party, which is why I'm happy to represent a lot of law enforcement and veterans, because they make my job easy, because they make good witnesses. So those three things is basically what you value a case on. And to me, I just adjust the multiplier up or down depending on the severity of the injury, the witness potential of the party and any aggravating factors.

 

Representative Matthew Shepherd [00:57:46] In that would also include pain and suffering, mental anguish. There are other recoverable damages, right?

 

Justin Minton [00:57:52] Correct.

 

Representative Matthew Shepherd [00:57:53] And you would agree insurance adjusters are familiar with the laws of the various states in which they're evaluating cases, correct?

 

Justin Minton [00:58:00] Yes.

 

Representative Matthew Shepherd [00:58:00] And so I mean, I think you've touched on an issue that that this bill undoubtedly, should it pass, probably the onus will be on attorneys no longer to evaluate cases in the same way.

 

Justin Minton [00:58:16] Correct.

 

Representative Matthew Shepherd [00:58:16] Yeah. And that the medical expense to be recovered, as you touched on previously, under the law, you're just entitled to the reasonable medical expenses. And the point of the law is to put you back to the point that you would have been had you not had the injury.

 

Justin Minton [00:58:33] Correct.

 

Representative Matthew Shepherd [00:58:34] And this bill, again, it kind of goes back to there's a lot of things being said on both sides as to what it ultimately ends up doing. But still, under this bill, you're able to recover the expenses that you're out of pocket on the medical expenses, that your clients are out of pocket.

 

Justin Minton [00:58:55] Well, under this bill, I would not be able to recover my client's health insurance premiums or anything like that.

 

Representative Matthew Shepherd [00:59:04] Correct. But you can recover the amount of what is actually paid or owed.

 

Justin Minton [00:59:12] I mean, most insurance companies are going to reduce the bills regardless.

 

Representative Matthew Shepherd [00:59:17] And also, not to, since you're at the end of the table to ask the question that this is also not just about insurance. This could be about any reduction in what is owed by a hospital or any other provider.

 

Justin Minton [00:59:34] Yes.

 

Representative Matthew Shepherd [00:59:35] That's all the questions I have.

 

Representative Carol Dalby [00:59:37] Representing Gazaway, you're recognized for a question.

 

Representative Jimmy Gazaway [00:59:39] Thank you, Madam Chair. So I want to follow up on some things that Representative Shepherd said. With regard to the medical bills, he said that this is not where the real value of the case is. Now, you've been an insurance adjuster, right?

 

Justin Minton [00:59:56] Right.

 

Representative Jimmy Gazaway [00:59:57] And now you're an attorney.

 

Justin Minton [01:00:00] Correct.

 

Representative Jimmy Gazaway [01:00:01] You've kind of seen both sides of this, right?

 

Justin Minton [01:00:04] Yes, sir.

 

Representative Jimmy Gazaway [01:00:05] And would you agree with me that the insurance company's modus operandi is essentially deny, delay, defend. Is that right?

 

Justin Minton [00:00:08] Yes.

 

Representative Jimmy Gazaway [00:00:08] And what the real value of a case is depends-- you can agree with me or not. I'm asking your opinion. What the value of the case is sometimes depends, and the only real money that may be in a case that you could make would be based on some of what the medical damages are. I mean, these things vary.

 

Justin Minton [00:00:32] Yeah. I mean, a lot of times there may be $30,000, $40,000, $50,000 in medical bills. And the state minimum required auto insurance limits is only $25,000. So most of the time clients are not going to be made whole as it stands.

 

Representative Jimmy Gazaway [00:00:52] So my point is, I guess in some cases, it may be the only real recovery that you're going to see is the combination of doing a lot of different things in order to try to maximize the value of that case and get the injured person some money. Because the insurance companies, we know how they do business. And if you've had a claim, it all sounds good. We're all in good hands. I know. But until you have to make a claim. 

And the next thing is, Representative Shepherd mentioned that the medical expenses, you're only entitled to the reasonable medical expenses. Well, that's almost right. But it's the reasonable value of those medical expenses, not necessarily what insurance paid. Because what insurance pays does not represent necessarily what the reasonable value of that service was. I would guess, I would venture to guess and you know better than me, so I'm asking you your opinion. 

If you asked a doctor who had to do an emergency surgery that the insurance company paid $3,000 to if that's the reasonable value of the service they provided, they wouldn't agree with that. But they take it. Go ahead. I'd like to hear your thoughts on it.

 

Justin Minton [00:02:17] Well, I mean, it gets a little bit convoluted because then you if you want to bring in health insurance, for example. I mean, health insurance, hospitals and doctors all the time agree to reduced rates to be paid by health insurance, but they do that to be put in their network. I mean, health insurance is a collective bargaining agreement whereby an insurer agrees to insure a group of people and they say, hey, doctor or hospital, we're going to put you on our network and send you all of our business. In exchange, we want a reduced rate in the hospital or the doctor will negotiate a reduced rate that's profitable for them as well. But they can't enter into that profit sharing agreement without my client's insurance premiums. I hope I'm answering your question.

 

Representative Carol Dalby [00:03:09] Speaker Evans, you're recognized for a question.

 

Speaker Brian Evans [00:03:12] Thank you, Madam Chair. Mr. Minton, I wasn't quite clear on something you said early on. I want to go back to Representative Gazaway or Representative Hudson, who questioned some of the data that Representative Eubanks had provided. As far as the amount of savings, I believe Representative Gazaway mentioned at a macro level, they were questioning him on the formulations of how that data was computed. You made mention in your testimony of a multiplier and I believe Speaker Shepherd said that's not something that's in law. So can you explain to me, give me clarity on where does that multiplier come from?

 

Justin Minton [00:03:59] That's just how insurance companies and adjusters value claims. I mean, they start most of the time by putting medical bills into a system. Allstate uses, for example, Colossus. Progressive has one. I forget the name of it. But they basically just run these medical bills through a computer and it spits out a number. But the minute a suit is filed or an attorney gets involved, they pull it out. And I don't know where the 3 times the medical bills came from.

 

Speaker Brian Evans [00:04:34] That's a formula that you have used in trying to compute a settlement.

 

Justin Minton [00:04:39] Yeah. I mean, it's not a--

 

Speaker Brian Evans [00:04:41] Bad for the insurance, but good for the one who's going to benefit from the increase.

 

Justin Minton [00:04:47] No, I mean, it's fair all the way around.

 

Speaker Brian Evans [00:04:49] Okay, so speaking of fair, I don't know that I've ever been referred to as a Marxist. So I would like for you to explain what you meant when you said what this what he does is establish Marxist pricing.

 

Justin Minton [00:05:03] Well, basically what it does is it takes my clients' health insurance premiums and redistributes it to a bad actor.

 

Speaker Brian Evans [00:05:17] Could you expand on bad actor? I think what we're talking about here is what is owed, what is paid and nothing on the top of that. So if the ones involved in this and negotiated this, it's paid in full, then who becomes the bad actor?

 

Justin Minton [00:05:36] Well, a drunk driver, for example. I mean, let's say a drunk driver hits my client, my single mom, who's been paying premiums for five years, never met her deductible. Her insurance has that collective bargaining agreement with some hospital based on her premiums. And they reduce her medical bills where there's no element of damages anywhere in Arkansas law where we can recover our client's premiums.

 

Speaker Brian Evans [00:06:05] So you should be able to figure out what the up charge is to that with this arbitrary multiplier formulation. Yes?

 

Justin Minton [00:06:12] I'm not 100% sure I'm following you.

 

Representative Carol Dalby [00:06:17] Representative Hudson, you're recognized for a question.

 

Representative Ashley Hudson [00:06:19] Thank you, Madam Chair. I want to go back just for clarity sake, for the members of the committee, when you talk about the three times or one and a half times multiplier, I mean, that's industry custom, correct? That's not a number that you've made up or that attorneys here in Arkansas made up. That's what the insurance industry uses. Is that correct?

 

Justin Minton [00:06:41] Yeah. So they'll a lot of times use a multiplier. I mean and like I said, there's no specific rule of thumb on that. They adjust it up or down depending on damages, liability, witness potential of the parties.

 

Representative Ashley Hudson [00:06:54] Sure. Because they'll pay more if a child gets hurt. You know, they'll pay more. That's worth a little bit more for you. But if it's an older person, the insurance company is going to want to pay less. So, the value of a life is certainly part of this as far as insurance companies. Representative Gazaway asked earlier to Representative Eubanks how this benefits Arkansans. Because you've had experience as an adjuster, I'd like to ask you sort of the flip of that. How does this bill benefit insurance companies?

 

Justin Minton [00:07:33] Well, I mean, it cuts down on the overall payout at the end of the day because, I mean, and State Farm already does this. You know, the law already is that they only owe a reasonable amount of medical bills. So as an adjuster, when I get the medical bills and I'm running those bills through a system, some insurance companies, we use Mitchell Medical. And what it'll do is that will look for those contractual rights that are out there with insurance companies, figure out what the fair charges are in the geographic region, and then we'll go ahead and adjust down those bills as it stands. But remind me what your question is again? I don't feel like I'm answering.

 

Representative Ashley Hudson [00:08:13] How does this bill benefit insurance companies?

 

Justin Minton [00:08:16] I mean, it's going to lower their payouts dramatically and it's going to do that at the expense of people who have paid health insurance premiums or have served their country, have some sort of health insurance. And that's going to do that 100% of the time. It may or may not affect people who are uninsured. Who knows? I mean, sometimes providers reduce bills. Sometimes they don't.

 

Representative Ashley Hudson [00:08:45] Are these insurance companies primarily based in Arkansas?

 

Justin Minton [00:08:49] No.

 

Representative Ashley Hudson [00:08:49] So this bill would essentially benefit insurance companies that are based out of state.

 

Justin Minton [00:08:55] Sure. Yeah. I mean, State Farms is in Missouri, Travelers in Minnesota. I mean, Lloyd's of London is in England.

 

Representative Ashley Hudson [00:09:03] Are most injured parties, are they from Arkansas that you work with?

 

Justin Minton [00:09:09] 99% of them. Yeah.

 

Representative Ashley Hudson [00:09:11] Okay. Thank you.

 

Representative Carol Dalby [00:09:12] Members, any other questions? Seeing no further questions, thank you, Mr. Minton, for your time here today. You're dismissed. Thank you. We have no one who signed up to speak for the bill. So the next person to speak against the bill, and I see Stephen, but, Stephen, you need to go back to grammar school and learn how to write your last name. So I can't read the last-- Ferguson, maybe? Stephen Finnegan. 

Mr. Finnegan, if you'll come to the end of the table, I apologize for making a quip at you. I'll make that quip at Mr. Minton. Mr. Minton, you need to go take a handwriting lesson. [Off mic] Sure. That's our way of keeping people from knowing exactly what we're writing about. You're not. You're not. We're a good group. You're recognized to come have a seat, turn your microphone on. State your name for the record, and then you may make your statement.

 

Stephen Finnegan [00:10:24] Yes, ma'am. My name is Stephen Finnegan. Many of you might know me by my other moniker on the radio, Steve Finnegan from the Steve Finnegan Show on KARN. And, Madam Chair, with your permission, may I address the Speaker?

 

Representative Carol Dalby [00:10:39] No, we address--

 

Stephen Finnegan [00:10:41] I just actually--

 

Representative Carol Dalby [00:10:42]  No, no, we address the committee as a whole.

 

Stephen Finnegan [00:10:44] I wanted to thank him for something, actually.

 

Representative Carol Dalby [00:10:46] Well, are you okay with that, Mr. Speaker? We'll find out. Mr. Finnegan, you may address--

 

Stephen Finnegan [00:10:57] The first time I had the pleasure of participating at the state government level was after I came back from being mobilized for Operation Enduring Freedom and Governor Beebe put together a very bipartisan group of citizens and legislators to do a veteran's Yellow Ribbon task force. And I was one of the members of that task force. 

And for years, since 2008, we've been asking for a separate committee to address veterans and military issues in the state of Arkansas. And I know you were on with Toby this morning, and you're the first speaker to do that. So, sir, I applaud you. I was the commander of the American Legion post here in Little Rock and the state base commander. So I'm very passionate about veterans issues, obviously. And I just wanted to say thank you for that.

 

Representative Carol Dalby [00:11:49] Mr. Finnegan, Mr. Speaker will always take a compliment on the record. So he's got it now for posterity sake. So we'll probably see that again at some point in time.

 

Stephen Finnegan [00:11:59] Same thing, you know, it's-- I don't get too many Democrats that will come on the show with me. But Representative Hudson came on. Although we might disagree with policy issues, I certainly consider her a friend. So you other Democrats who are on the committee, don't be afraid of me. You could come on, too.

 

Representative Carol Dalby [00:12:18] Thank you. Thank you, Mr. Finnegan. With that--

 

Stephen Finnegan [00:12:20] Let's get to the heart of the matter.

 

Representative Carol Dalby [00:12:23] I'll ask you to get to your point. Thank you.

 

Stephen Finnegan [00:12:24] Yes, I may have been that person that Justin Minton was just referring to because I served active duty. Actually, all three components, the Army, Active National Guard and Army Reserve. So when I retired, I qualified for Tricare. I also managed, with the help of the Army, to break myself. And I'm also 100% service connected, disabled vet. And I am absolutely grateful from the bottom of my heart, and I've said this on the radio many times, to the American taxpayers that fund the health care that I received from central Arkansas VA health care system. 

With that said, I had an accident, and I don't want to get in trouble like President Trump did because I signed a non-disclosure agreement as well. On 430, I had a person rear end me that was texting and this person had minimal coverage, and I was treated by the VA. And if you go to the VA right now and pull medical records, which I just had to do. On top of every veteran pulling medical records or anybody that's requesting medical records from the VA will get a letter that says, 'We want to protect the American taxpayer. If this involves any type of subrogation, you are required by federal law to do that.' So that is indeed what Mr. Minton was just talking about, because we had that and the federal government doesn't care. They've got oodles of attorneys that, you know, to go up against a smaller firm. The VA has their own legal staff as well as the Department of Justice backing them up. 

So they certainly have the legal firepower that may not be available to the average citizen. They spoke about the collateral source rule and the offset of medical bills and that exactly applied to me because the government is going to do what the government's going to do, and there's not really anybody that can stand up to them. And that includes, you know, the states. Constitutionally, the federal law supersedes state laws. So that, again, this would be a harmful bill to veterans.  Arkansas has a higher per capita of veterans than most states in the union. And when you add the VA disabilities or and, God bless you, the legislature that took their retirement pay because our neighboring states didn't have an income tax on that. And you make veterans want to retire and stay in Arkansas. Most of them are older like I am. 

So they don't have children in school that are using the school system, but they're paying taxes. And the velocity of the money that the veterans spend into the state economy is quite helpful. It comes down to fundamental fairness, I suppose, is really where I thought about this, that equal protection under the law is a hallmark of American jurisprudence and that this bill will set up different classes, like Mr. Minton pointed out. Probably those of us that are receiving care from the VA are going to get the least amount because of the multiplier. And I understand that, you know, insurance companies are in the business to make money and the less pay out, the better it is for them. 

So I would ask the committee, you know, to take into consideration all the veterans that are in Arkansas. And please don't pass this. You know, this is a system that has worked well. The insurance company has attorneys that are going to look after their interest. And we have attorneys that are going to look after ours. And Mr. Minton, for the record, is my attorney that helped me through this automobile accident. So I've dealt with this firsthand and experienced this. The guy who hit me was very under-insured. And frankly, $25,000 is a hiccup in the medical bills today, with everything as expensive as it is. 

And even the cost of vehicles have gone up so much. You know, I certainly don't carry the minimum, that's for sure. And anyway, I appreciate the opportunity to appear before the committee and to share this experience that I've had firsthand and how it will detrimentally affect the veteran community of Arkansas.

 

Representative Carol Dalby [00:16:57] Mr. Finnegan, I don't see any questions. If there are any questions, are you willing to take them?

 

Stephen Finnegan [00:17:02] Absolutely.

 

Representative Carol Dalby [00:17:03] Okay, Members, any questions of this witness? Seeing no questions, thank you, Mr. Finnegan, for your time and for appearing before the committee.

 

Stephen Finnegan [00:17:12] Thank you. And thank you again, ladies and gentlemen, for the opportunity to talk to you. No, this isn't in there. It really hurts up and down.

 

Representative Carol Dalby [00:17:34] Members, we have one other person who has signed up to speak against the bill, Mr. Alan Lane. Excuse me. If you come to the table, identify yourself, you're recognized to make your statement.

 

Alan Lane [00:17:49] Hi, I'm Alan Lane. I'm an attorney in Fayetteville, Arkansas. I've talked to many of you about this bill, and I appreciate your time and your conversation about the bill. I'm here against the bill, as Madam Chair said, and really for a number of reasons. My law firm represents injured people all around the state of Arkansas. I think a couple of things that I appreciate really, Mr. Allen, in the conversation with Representative Eubanks, I feel like at least that the conversation down here and the statements and sort of the comments they made were on par, very fair and balanced. 

I think what I wanted to start with in talking about this issue is just sort of put to bed, just put this to bed in your mind. There is nothing that's going to happen if you pass this bill that you can say for sure to anyone in your district, you are going to be better off, your rates are going to be lower, the economy is going to be better, a job has been created, a new business is coming to our state. There is nothing to suggest that's going to happen. In every state that has passed something similar, in fact, we know that has not changed or not happened. Now, certainly, as was said, there are lots of components, lots of factors to this, and that will continue to be the case no matter what happens here today. So I appreciate that conversation. 

And let's just start with that. So it really comes down to, as was discussed, sort of a policy issue. Is this the policy, the new policy for Arkansas? Do we think this puts people in our state in a better position than they are currently? Do we think this is more fair for those people or businesses who find themselves on the other side of a lawsuit because of some unfortunate, unsafe act that may have occurred? Not that they intended to hurt anyone, but they did. But they did. 

Do we think those people in Arkansas that are on that side of the table, that side of the courtroom, that side of the claim, do we believe those people in our district are raising their hand and asking this body to give them a pass, to give them a break, to somehow not make them accountable in full for the damage and harm they've caused? I don't think so. I don't think so. All right. And if that's what they're asking for, then we should be questioning that, having a conversation with them more deeply and more detailed about where they're coming from or why they think they should be entitled to that. Okay. 

And the other thing I want to bring up a little bit is that, of course, this is always talked about in the context of a car wreck. All right. This is always talked about in terms of a car wreck. But please understand, if you pass this bill, it affects every single civil claim that's made. Understand who that is. Understand that that's people that are victims of child sexual abuse. Those perpetrators and their insurance corporations are going to get a break, intended or not. All right. 

Victims of sex trafficking, we're seeing in the news a lot. A lot of that is happening in our state. And our state is doing great things to try to combat it and fix it and fight it and stamp it out. But those people that are involved in those claims are going to get a break and their insurance corporations are going to get a break. All right. That's not what Arkansas is about. That isn't the policy we should be seeking to implement. It's just not. 

The system in Arkansas and civil justice claims is not broken. The state's never been better in our economic activity and our economic growth. We've heard from everybody when this session started that the state of the state is good. The state of the state is strong. The state of the state is good and the state of the state is strong because we have policies in place to protect people fairly. 

So it comes down to this question of there's some belief that there's some windfall, some extra that's going into the pocket of the injured party. Right. And so that's the question. If you believe that, you believe that. Okay. If you believe that, I'd ask that you sort of recheck those sources where you're getting that information. But if you believe that, that's fine. Believe that. The policy of this state has been to this point, up until this day the policy of this state is that windfall more fairly belongs into the pocket of the injured party than the pocket of the person who caused that harm or injury. That is the policy of the state. That is the policy you will be changing if you choose to change it. 

I submit to you that there's not one person in your district that is asking you to change this policy. There's not one person in your district that would benefit if you change this policy. All right. We know this is not an issue that's brought forward by your individual constituents in your district. This is a special interest bill. That's okay. We understand that we have an industry association that a lot of you have heard from over the last several days. We get that. No problem with that. 

I don't have any problem with the business or a business owner or a corporation or any other type of resident in Arkansas looking to try to improve their lot, improve their life. But not at the expense of someone they've harmed. That isn't how we should do business in Arkansas. And that shouldn't be the policy of Arkansas. That's all the comments I have, Your Honor. Madam Chair, thank you.

 

Representative Carol Dalby [00:23:30] I see no questions. But if there are questions, are you willing to take them?

 

Alan Lane [00:23:34] Sure.

 

Representative Carol Dalby [00:23:36] Members, any questions of this witness? Seeing no questions, thank you, Mr. Lane, for your time before the committee.

 

Alan Lane [00:23:41] Thank you, ma'am.

 

Representative Carol Dalby [00:23:42] Committee, we have no one else who has signed up to speak for or against. Representative Eubanks, you're recognized to go to the end of the table and close for your bill.

 

Representative Jon Eubanks [00:23:59] Thank you, Madam Chair. Members, this is not a topic that I was, or an issue or a bill that I was asked to file and to run by any organization, by any individual, by any company, whether an insurance company or any association. I stated earlier that this was an issue that I felt strongly about for a number of years, even prior to being elected. 

And I have to disagree with my friend Alan because actually there have been constituents in my district that have talked about tort reform and the importance of it. And for full disclosure, his mother lives in my district, and he was in attendance at my first fund raiser at her home. So I've known Alan for a number of years, and I appreciate the comments he made. I appreciate the comments and all the testimony that I've heard here today. You know, over half the states, or close to half the states in the country have adopted something similar to this. And the world didn't end. 

You know, there's a number of organizations that are supporting this bill. The Arkansas Association of Defense Counsel. Arkansas Farm Bureau. Arkansas Health Care Association. Arkansas Hospital Association. Arkansas Medical Society. Arkansas State Chamber of Commerce. Arkansas Trucking Association. National Federation of Independent Business. And the Poultry Federation. I mean, I think Speaker Shepherd brought this up that this is really not about the medical damages here. It goes far beyond that. 

And we heard the discussion about the multiplier effect and everything. And that's not in rule or statute anywhere that requires that to be taken into consideration. I firmly believe that any injured party needs to recover what they deserve. I have no personal interest, business or other investment otherwise where I would benefit because of whether this bill passes or it doesn't. I do believe that it does affect the overall economy of our citizens. 

And finally, I'm just going to say that the Arkansas jury instructions on damages for medical bills provides for the reasonable expense of any necessary medical care, treatment and services received. And I contend, what is more reasonable than what was accepted as full and final payment? And I move do pass.

 

Representative Carol Dalby [00:27:04] Members, Representative Eubanks has closed for his bill and has made a motion to do pass. We have a motion to do pass on the table. Is there any discussion of the motion? Seeing no discussion of the motion, all in favor please say aye. All opposed say no. The ayes have it. The motion carries. Congratulations. You have passed your bill. 

With that, members, our next meeting will be Thursday. Right now we have it set at 10:00. I remind you that the chief justice of the Arkansas Supreme Court is scheduled to be here. And I have identified the three bills. Watch for your text messages. Thank you for your attentiveness this morning. With that, we are adjourned.