What House Bill 1907 Means for Arkansas Citizens

The following is taken from the Arkansas Trial Lawyers Association’s response to Arkansas House Bill 1907:

1.         This Bill requires ordinary people who purchase insurance with their hard-earned dollars to act as “collections agencies” for those same insurance companies.  If a person is injured in a car wreck and her insurance company pays medical bills just as the contract  she paid for with the insurance company requires, the insurance company can sweep back in and take back those payments when the person who hit her pays for the wreck.  So, the injured person gets nothing for the insurance policy she paid for and the insurance company gets a windfall.

2.         What’s more, the insurance company gets to use the efforts of these ordinary people as collection agencies for free.  The insurance company does not have to pay ANYTHING to the injured person or her attorney for pursuing a case against the other driver who caused the injury.  Once again, the insurance company gets a windfall and the ordinary person foots the bill.

3.         The redefining of “made whole” for cases where it still applies is unfair to both plaintiffs and defendants because cases will not be settled.  An injured person who enters into a settlement is presumed to be made whole from the settlement, irrespective of the realities of the case.  For example, a person who is injured to a significant degree, say over $25,000 (the price of a moderate new car) by a driver who has only $25,000 in coverage, is a minimum wage worker, and who has no assets at all cannot accept the $25,000 in coverage, all that she can reasonably ever get, because doing so will create a presumption of being made whole.  Thus, the person who has no real assets will be forced to trial because the injured person cannot risk the made whole presumption.

4.         This scenario repeats itself in many areas.  Where a medical insurer pays any money under a bought-and-paid-for policy and the patient recovers from someone else, the insurance company gets to use the patient as a free collection agency and take money back even though the patient or the patient’s employer paid for the policy. The same applies if the policy of insurance is homeowner’s insurance and any number of other insurance policies.

5.         The bottom line is that this Bill allows insurance companies to take premiums and pay for nothing.

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