The Affordable Care Act’s Potential to Subrogate Future Care Portion of Economic Damages in Medical Liability Verdicts
By Michael Matray
Editor of the Medical Liability Monitor
While political partisans and healthcare pundits have been arguing over the constitutionality and/or practical effectiveness of the Patient Protection & Affordable Care Act since it was enacted six years ago, the medical professional liability insurance industry has been closely watching the U.S. court system as medical malpractice defendants have both successfully and unsuccessfully argued that provisions of the Affordable Care Act should impact a plaintiff’s ability to recover the cost of future medical expenses.
When a negative medical outcome occurs, the lion’s share of economic damage to a plaintiff is most often the costs pertaining to his or her future medical care. Depending on the age of the patient and the severity of the medical injury, the cost of future healthcare needs can easily stretch into the millions of dollars. Traditionally, it has been generally assumed that 100 percent of these medical expenses would be paid for out-of-pocket by the plaintiff. Life care plans – usually developed by a medical doctor and an economist for the plaintiff – have rarely, if ever, taken into consideration the benefits of the plaintiff’s health insurance that would abrogate many of the projected expenses. This is because – prior to the Affordable Care Act – healthcare insurance almost always carried preexisting condition exclusions as well as annual and lifetime expenditure limits.
Savvy medical liability defense attorneys have recognized that the Affordable Care Act has removed preexisting condition barrier and expenditure limits as well as requiring all Americans to obtain some basic level of healthcare insurance. If this is the case, they contend, why can’t the defense argue that future medical expenses will never be fully paid by the plaintiff out-of-pocket, and as such, the healthcare insurance they are required to carry should be considered as a collateral source of recovery and subrogate portions of the total cost of economic damages?
Rather than paying the total cost of the plaintiff’s life care plan, these defense attorneys argue, the defendant should only be required to pay for the premium costs of obtaining the plaintiff healthcare insurance as well as any associated co-pays and deductibles. This argument has had mixed results so far in the American court system.
In court decisions that have barred consideration of the Affordable Care Act’s potential to offset the itemized cost of a life care plan, the most common reasoning has been that the Affordable Care Act’s future is too unsettled. Judges have opined that with the heated politics surrounding the Affordable Care Act, the healthcare reform legislation could be struck down in one of the many lawsuits challenging its constitutionality or repealed when the balance of power shifts in Washington, D.C. – especially when one political party has been campaigning almost exclusively on doing just that. This was the reasoning in a 2012 case in Alabama, a 2013 case in Illinois and a 2014 case in Pennsylvania, among others.
Courts in Arizona, California, Hawaii, Illinois and Michigan have allowed the subrogating effect of the Affordable Care Act to be admitted into evidence.
In one Ohio case, the court reduced an $8 million future damage award to $2.9 million by offsetting amounts covered under the Affordable Care Act, but allowing recovery for premiums, out-of-pocket costs and expenses for transportation, home care and housing. In a Hawaii case, the defendant was allowed to cross-examine the plaintiff’s life care planner on the setoff effect of the Affordable Care Act on future medical expenses. In a Michigan case, the court found that “insurance provided under the Affordable Care Act is reasonably likely to continue into the future and that its discussion before the jury is not precluded.”
It’s hard to get a unifying handle on all the cases where defendants have successfully admitted the Affordable Care Act as evidence when arguing true economic damages. This is because of variations in state law as to collateral source rules, but as the Affordable Care Act grows greater roots in the American healthcare delivery system and state legislatures advance collateral source rule reforms in light of the Affordable Care Act, it is almost certain that more and more courts will allow such evidence.
The Affordable Care Act’s potential effect on economic damage recovery in medical professional liability lawsuits is huge. With some courts already accepting the healthcare reform legislation’s provisions as a collateral source of recovery and others not, it is likely one such decision, someday soon, will make its way before the U.S. Supreme Court where the result would set precedent.