Death Knell for the Obamacare Defense

Until Congress began taking steps to dismantle the Patient Protection and Affordable Care Act (ACA), the health care law enacted in 2010 potentially afforded defendants involved in lawsuits a novel way to reduce claims for future medical expenses. The “Obamacare defense,” in its simplest form, argued that judges and juries should not award plaintiffs large sums of money for future medical damages because Obamacare would help pay for a plaintiff’s future care. Because repealing and replacing Obamacare is a priority for the new Republican administration, however, defendants should now consider alternative strategies.

ACA Out

President Trump’s vigorous opposition to the ACA casts doubt on the continued viability of using it as a defense. While it remains uncertain which elements of the ACA—if any—will be preserved, the president has signed an executive order allowing federal agencies to unravel it, and the new Republican-controlled Congress already has begun the legislative process of repealing parts of the law using a complex process known as budget reconciliation. With repeal likely, the Obamacare defense likely has lost its appeal for juries considering the appropriate values of life care plans. 

These developments do not mean that all hope is lost for defendants in search of new and creative strategies to reduce damage awards in personal injury lawsuits. As we will discuss, creative options still are on the table, and it is even possible that some form of a modified Obamacare defense may survive. 

What Survives?

While one of President Trump’s well-known campaign promises was to repeal and replace Obamacare, Republicans have yet to coalesce around a replacement plan. Different plans have been offered by Speaker of the House Paul Ryan, Kentucky Senator Rand Paul, and President Trump’s nominee for director of the Department of Health and Human Services, Tom Price.   

The most recent proposed replacement plan to surface has been offered by Republican Senators Bill Cassidy (Louisiana) and Susan Collins (Maine). Their plan, which was announced on Jan. 23, 2017, and is referred to as the Patient Freedom Act, would give the states three options with respect to paying for health care, including keeping the ACA. The Patient Freedom Act also would preserve three of Obamacare’s most popular protections: (1) insurers would be barred from discriminating against those with pre-existing conditions; (2) insurers would be prohibited from enacting annual and lifetime caps in their coverage; and (3) young people would be allowed to stay on their parents’ plans until age 26. 

It remains to be seen whether the Cassidy and Collins’ plan will carry the day, or what the parameters of any replacement plan will be. Until an ACA replacement exists, however, defendants and liability insurers should consider alternative strategies for reducing damages in their personal injury lawsuits.

New Focus on Cost and Location

A traditional approach is to challenge the plaintiffs’ assumptions on the “reasonable cost” of care. Such assumptions can be challenged in several ways.

Directly attack the “reasonable cost” of the case. In most jurisdictions, plaintiffs must prove that the medical bills they submit to the jury—both past bills and future projections—are reasonable. Unfortunately, it is widely known that medical bills, before they are discounted by insurance, are not reasonable at all. 

The reasonableness of medical bills can be attacked in several ways. First, in many jurisdictions, it is permissible to address the fact that medical providers often accept deep discounts from insurance companies and the government on a regular basis. In other words, the medical providers themselves do not expect their billed rates to be paid. In fact, as many courts have observed, the billed rates of medical providers are “grossly exaggerated,” “fictitious,” and “insincere.” According to some estimates, the full charges actually are paid less than five percent of the time. 

In many jurisdictions, all of this information is fair game and can be used to persuade the jury that the real reasonable cost of medical care is much lower than what the plaintiff has suggested. Other methods of attacking the reasonable cost of care include proving that other similar providers charge less for the same services or by exposing the medical providers’ internal cost structure. Defendants and their insurers should seek venue-specific guidance as to the viability of these arguments in particular jurisdictions. 

Where care will be delivered. Defendants also should consider the possibility that the plaintiff may receive care outside the U.S. in a market where the cost of care is much lower. This issue can come into play when the plaintiff is an illegal immigrant and could potentially face deportation proceedings (a seemingly more likely scenario under the new Trump administration). 

For example, in a recent case pending in Florida, a plaintiff who was illegally in the U.S. faced potential deportation to Haiti. The recommended care for the plaintiff was not in dispute. However, the plaintiff proposed a life care plan assuming treatment in the U.S. When the life care plan was corrected using the currency of Haiti, where the future care was possible or likely to be delivered, the value of the life care plan was reduced by several million dollars. The location of care matters (even within the U.S.) and is a factor that should be considered in cutting life care plans down to size.  

Creative and critical thinking from counsel and experts. A tried-and-true method of reducing damages in personal injury cases has been for defendants to hire their own experts (e.g., doctors, life care planners, and economists). The defense experts typically review the life care plans prepared by the plaintiff’s experts, criticize them, and offer viable alternatives. Such a practice is time-honored for a reason and should remain part of the defendant’s arsenal. However, it is equally important that the defense engage in creative and critical thinking, and not just go through the motions. 

As an example, has your life care planner considered physical therapy as an option to help your plaintiff become more functional and, therefore, less reliant on the expensive cost of “aide and attendant care”? Has your economist used the correct life expectancy? If the plaintiff is a Haitian male, his life expectancy is 61.5 years, while the life expectancy of a U.S. black male is 78.2 years. Consider other particulars that may be important, too. For instance, why use the life expectancy of a healthy nonsmoker when your plaintiff is a heavy smoker and has a life expectancy nearly 10 years lower? Creative thinking and attention to seemingly small details can save millions of dollars.     

With the Obamacare defense on the ropes (down, but not yet out), defendants need to be more vigilant than ever in thinking of new and creative ways to keep damages low in personal injury lawsuits. Successfully challenging life care plans usually requires a multidisciplinary approach using experts from areas including medicine, life care planning, medical billing, and economics. Defendants need not accept unreasonably large claims for future medical expenses. Regardless of what health care law is in effect, various strategies are available to seek reduction of such claims to more realistic levels that meet the expected needs of the plaintiff.