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Open enrollment for health insurance offered by the Affordable Care Act (“ACA”) recently wrapped up.  Initial reports indicate 7.1 million people have signed up for health insurance through the exchanges since the ACA enrollment started.  Many personal injury lawyers, myself included, are curious to see what effect the ACA will have on our clients.  Back when open enrollment first started, I made a number of practical predictions about how the ACA will affect our clients and practice.  Last week, the nonprofit, nonpartisan RAND Corporation issued a new report predicting the effect the ACA will have on different types of liability insurance, such as automobile insurance.  While some of the information in the report is insightful, much of the analysis has limited application to the DC metropolitan area.

Before I start summarizing the report, it is important to remember that healthcare costs are like a long balloon that a magician uses to make animal shapes.  The balloon contains a specific amount of air.  Squeezing one segment can make it smaller, but it simultaneously makes another segment larger.  For healthcare costs, the segments are (a) consumers, (b) medical care providers, (c) health insurance companies, (d) liability insurance companies that pay for injuries, and (e) the government.  Giving one segment a benefit will impose a cost on at least one other segment.  For example, reducing the price that consumers pay for a doctor’s visit causes the doctor’s revenues to decline.  Broadly speaking, the RAND report discusses how the ACA will inflate, or deflate, the liability insurance segment of the healthcare cost balloon.  Deflating the liability insurance segment does not mean that the costs disappear, just that they are borne by another balloon segment.

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Congress 1

Chuck Berry, one of the pioneers of rock-and-roll, used to say, “Don’t let the same dog bite you twice.”  Although he probably wasn’t referring to legal liability, the quote closely resembles the common law “One Bite Rule.”  The rule says that the owner of a dog isn’t liable for injuries caused when the dog bites someone, so long as the dog had never bitten anyone before.  Put another way, every dog gets one free bite.  Until a dog bites someone, so the logic goes, the dog’s owner has no reason to think the dog would bite someone.  Last week, the Maryland legislature passed a new law that makes it much harder for any Maryland dogs to get a free bite.

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No Idling 3

Numerous factors go into determining the value of an injured client’s case.  Initial injuries, cost and duration of medical care, long-term injuries, and the limitation of a person’s activities are just a few of the factors to consider in determining the value of a personal injury claim.  How about the injured person’s FICO credit score?  It’s not a factor that we consider.  However, the insurance industry is adopting new methods to search for just this kind of unconventional connection.  They call it predictive modeling and it is Big Data’s latest promise to the insurance industry.  Since most personal injury cases involve insurance adjusters and defense attorneys hired by insurers, predictive modeling will have a significant impact on the future of personal injury law.

What is Predictive Modeling?

Predictive modeling is the process of using statistical methods and large sets of data to look for hidden connections in the data.  The idea is that the hidden connections may be useful predictors of an individual customer or claim outcome.  For example, an insurer can collect data on an individual driver through a telematics device, look for predictors of the likelihood of claims within that data, and then set the price of the policy.  The same method can be applied to claims too.  As data becomes easier to collect and analyze, insurers are learning to search for anything that would allow them to predict the outcome of claims quickly or reduce costs.

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 President Signs 2

Numbers have a strong pull on our judgment.  If a law says, “Don’t drive a car unreasonably fast,” it is difficult to know exactly what that means.  Every person on earth could argue at length justifying their own definition of “unreasonably fast.”  But change that law to say, “Don’t drive a car faster than 70 miles per hour,” and all judgment collapses to the single question of whether a car’s speed exceeds 70 mph.  Call it simplicity, efficiency, or laziness, but we love rules based on numbers.  They make decisions easy.  Because numbers mesmerize us, when a law incorporates both a number element and an extra “reasonableness” element, it’s easy to focus on the number part and forget about the rest of the rule.

Take punitive damages, for example.  In State Farm v. Campbell, 538 U.S. 408 (2003), the U.S. Supreme Court laid out just such a mixed rule for the ratio between compensatory and punitive damages:

We decline again to impose a bright-line ratio which a punitive damage award cannot exceed.  Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. Id. at 425.

Even though couched as a non-rule, the Supreme Court effectively stated that punitive damages should not exceed a 9:1 ratio with compensatory damages, unless there is some good reason for a higher ratio.  For example, the Court says that larger ratios may be proper when “a particularly egregious act has resulted in only a small amount of damage.”  Id. But that phrase “single-digit ratio” has been stuck in everyone’s mind ever since.

Recently, the Virginia Supreme Court decided Coalson v. Canchola, a case that highlights the allure of the “single-digit ratio” part of this punitive damage rule, and the disinterest received by the other, less easily quantified factors.

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Sunderland 1

Following my post last week on Hubb v. State Farm, I’ve been thinking about how complicated PIP and MedPay claims can get in the Washington, DC, Maryland, and Virginia area.  It’s not complicated because the laws themselves are complex, but rather, it’s complex because each jurisdiction’s laws are different and many accidents involve more than one jurisdiction (e.g. a DC accident involving a Virginia resident).  One of the issues we face in deciding whether to file a PIP claim for one of our clients is whether the insurer has subrogation rights (and/or the right to be reimbursed) for PIP benefits.  This post will explain how each jurisdiction treats PIP or Med Pay subrogation.

First, a note about terminology.  Personal Injury Protection (“PIP”) and Medical Payments (“Med Pay”) coverage under an automobile insurance policy are very similar in a lot of ways.  Both are intended to cover medical expenses of the policyholder.  There are some differences between the two, but they are not important for this article.  Each jurisdiction’s statutes deal only with one of the two (so the rules for the other type depend solely on the policy language).  DC law deals only with PIP.  Virginia has no provisions for PIP, but policies may offer Med Pay.  Maryland requires PIP to be offered, but has no statutory guidance about Med Pay.  Likewise, the terms “subrogation” and “right of reimbursement” are related concepts that have different definitions.  The differences are not too important for this article.  Courts and legislators sometimes don’t respect the different meanings, anyway.  For this discussion, consider both terms to mean that an injured person has to repay her own insurance company for the PIP benefits received.

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Foggy Bottom Metro Sign

Last week, the DC Court of Appeals decided Hubb v. State Farm, a case involving subrogation of personal injury protection (“PIP”) benefits under Washington, DC law.  The Court held that PIP insurers in DC have the right to subrogate (or be reimbursed) from the proceeds received by an injured person from the wrongdoer.  This is not a groundbreaking result.  In fact, I think even if the Court had adopted Hubb’s argument in this dispute, there was not going to be a repeatable benefit for other injured people in the future.  But what is noteworthy about Hubb v. State Farm is the reasoning employed to derive the result.  It turns out statutory construction, like statistics, can be used to prove almost anything.

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Washington Monument in Distance - Ed 2

Back when I was an undergraduate, my friends and I sometimes took spontaneous road trips.  Three or four of us would pile into a car with an odd assortment of backpacks, snack foods, and musical instruments.  Since these trips often involved hundreds of miles through multiple states, paying for gas became a group responsibility.  Though the rule was unwritten, everyone in the car seemed to instinctively agree that each should pay a share of the gas money.  We didn’t spend a lot of time discussing this because it just struck everyone as the fairest way to take a road trip.  Each of us felt obligated to pay a share for the benefit that was being provided by the car.

Nearly every personal injury case includes claims, in addition to the injured person’s, for the money recovered from the wrongdoer.  You can think of these claimants as the passengers of a vehicle on a road trip.  Everyone in the car is trying to get to the same place; a successful settlement or judgment for the injured person.  Sometimes these claimants are other insurance companies.  For example, companies that provide health coverage or personal injury protection coverage.  Other times there are unpaid medical bills or unpaid expenses, and doctors or hospitals claim the right to be paid from the proceeds of the case.  These claims can arise because of language in a contract, a state statute, or because of equitable principles in the law. 

No matter how the claim for payment arises, or what it is called, the claimant expects to be paid from a settlement or trial verdict in favor of the injured person.  In fact, in many cases, the claimant has no way to be repaid except through money recovered from the wrongdoer.  In these situations, it seems fair that each claimant should share in paying attorney’s fees in proportion to the amount each is owed.  The common fund doctrine is the legal principle that anyone who benefits from a settlement or verdict (which includes both the injured person and the claimants) proportionally share in the cost of the attorney’s fees required to get the settlement or verdict.

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 Wash Cir 3

The Supreme Court of Missouri recently decided Nevils v. Group Health Plan, Inc., holding that FEHBA does not pre-empt Missouri’s anti-subrogation law.  Google informs me that Jefferson City, Missouri, where the Supreme Court of Missouri is located, is roughly 930 miles away from the Washington DC area.  Despite the distance, Nevils could have a significant impact in our area, both for Virginia residents and for federal employees.  This is not to say that the analysis laid out in the Nevils decision is new.  In fact, I think the Missouri Supreme Court just said what we’ve all been thinking (or, at least, what many local lawyers who routinely have to deal with FEHBA liens have been thinking).

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 Dupont Circle Pic

Ridesharing services such as UberX, Lyft, and Sidecar have been getting a lot of attention in the press lately. Ridesharing services are essentially just taxi services with a technological twist without the regulations ensuring passenger safety. They utilize smartphone apps to connect car owners (usually amateur drivers) with people looking for a ride. The potential passengers drop a pin showing their location, and any drivers logged into the app respond, pick up the potential passenger, and ferry them to their destination.

These ridesharing services only started operating in the D.C. area early last year, but have quickly gained a strong following of city-dwellers who have sworn off traditional cabs completely. Because of the open questions surrounding the service’s liability, it would benefit anyone utilizing these services, or anyone representing someone injured in a collision involving s ridesharing vehicle to pay attention as these questions are answered.

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Potomac - Frozen 8

It’s somewhat rare to have breaking news in the world of personal injury law.  But this week, we have something close to it.  On Monday, the Department of Transportation announced that it intends to move forward with laws that enable cars to talk to each other on the road.  The program, currently dubbed Vehicle-to-Vehicle Communication Technology (“V2V”), promises to make driving safer, eliminate traffic, save the environment, and boost the economy.  This probably overstates the program’s benefits, but I do get the distinct feeling that this program is going to fundamentally change the way Americans drive.

Your Car is a Know-It-All Back-Seat Driver

The first wave of V2V safety applications are intended to allow a vehicle to send and receive information about itself to other nearby vehicles.  So your car will constantly broadcast its own speed, position, and direction as you drive along.  Your car will also listen for other cars broadcasting speed, position, and direction information.  Your car will take this information and try to determine whether there is an imminent threat of collision with nearby cars.  If your car determines that there is a collision threat, it will warn you.  There is no short-term plan to have the car take action itself, only to present some kind of visual or audio warning to the driver.

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