ACTUAL V BILLED COSTS

Tort reform has shifted focus from non-economic damages to economic damages. There is evidence to show large number of future costs of care for plaintiff in order to avoid caps to damages request for non-economic damages.

 

Tradition has been that plaintiff develops the damages. Typically, defense is not involved in those early stages of development and is focused on challenging liability through standard of care or causation.

 

That is because common wisdom has been if we spend too much time on damages, it will undermine the standard of care or causation defenses.

 

Life Care Planner purposely ignore past actual costs such as medical expenses, attendant care and service costs, average lifetime costs for cerebral palsy and other developmental disabilities, and Individualized Economic Plans specific to the plaintiff in the case.

 

Problems arising out of this situation are:

  • The actual value of the Plaintiff’s needs are lost and the jury is only focused on the numbers put in front of them.
  • There is increased exposure to defense to pay high cost of future care based on inflated prices by Plaintiff
  • There is a risk of reliance solely on plaintiff’s numbers
  • Exaggerated damages are killing the system – Plaintiffs provide inflated numbers
  • Economic damages are being wildly exaggerated

 

This is important, because the “forensic economist” (as well as plaintiff and defense counsel) incorrectly speaks of inflating “cost.”

 

We Are NOT Talking About Inflating Cost – We Are Only Talking About Inflating PRICES. Correct Rate of Escalation is the Correct Price.

 

In order to develop the value we have to know that quality care has been given and show the costs and comprehensiveness of that care. Then, we need to demonstrate that it is different than what is asked for in the Life Care Plans.

 

First, determine what are the actual costs versus the billed costs. In the medical and health world, the stated price is not the real price. The law allows for real damages, not speculative or fictitious damages.

 

Then, develop the future needs with actual medical providers, school IEP and other programs. Confirm with family members of the Plaintiff that they have not asked for anything new. Undermine the plaintiff proof by showing exaggerated future costs of care. Undermine the Life Care plan.

 

Finally, compare future costs and the past need and show what the actuals real costs have been.

 

Use the Affordable Care Act to show value. In its simplest terms, the ACA provides that all persons in the United States be afforded health insurance, regardless of health or financial situation. It varies state by state, but has the potential to change how future damages in bodily injury and medical malpractice actions are calculated. The Key Components of the ACA are as follows:
1. Individual Mandate
a. Every “applicable individual” must obtain minimum essential coverage or pay a penalty
2. Guaranteed Issue Requirement
a. Prohibits denial of coverage based on pre-existing conditions b. Prohibits lifetime and annual spending limits
3. Minimum Essential benefits
a. These vary by state, insurance exchanges (State and Federal) b. At a minimum, a health insurance policy must cover:
i. Emergency Room Services ii. Hospitalizations iii. Ambulatory Services iv. Laboratory Services v. Maternity Care vi. Mental health and substance abuse treatment vii. Prescription drugs viii. Pediatric Care ix. Preventative/wellness services x. Rehabilitative Services
c. Maximum out-of-pocket costs for 2021: $8,550 per individual

 

When applying ACA, this means the true measure of future care damages is:

  • Premium for health insurance plan
  • Deductibles/Co-Pays (subject to maximum)
  • Cost of uncovered care and treatment
  • Lump Sum invested for unanticipated needs and fluctuation in premiums/plans

 

With all of this, we may reach our final goal – to establish the REAL value of the case’s Economic Damages.

 

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