LEGAL WATCHDOG URGES COMMITTEE TO RECOGNIZE “PAID VS. INCURRED” PROPOSAL AS PERSONAL INJURY LAWYER SCAM

I am a founding trustee of Citizens Against Lawsuit Abuse:

Citizens Against Lawsuit Abuse (CALA) today urged the Texas House Committee on Judiciary and Civil Jurisprudence to recognize the “paid vs. incurred” proposal as nothing more than a personal injury lawyer windfall that will increase costs for all Texans.  The Committee is considering the issue as part of its interim charges.

“During the 80th Legislature, personal injury lawyers pushed a proposal that would allow them to recover damages for expenses that never happened,” said Bob Parker, Chairman of the Board of Directors of Bay Area Citizens Against Lawsuit Abuse.  “The bill had no logical or legal justification.  It was and is a sham and a shame.”

Added Michelle Martin with CALA Houston, “Governor Perry was wise to veto this misguided measure in 2007.  We hope to show others as well that this proposal is not about protecting consumers, it’s about creating a financial windfall for a handful of aggressive personal injury lawyers.”

The following example demonstrates how proposals like those included in H.B. 3281 could drive up the cost of insurance:

Person A is injured by Person B in a car accident. Person A presents their health insurance card at the hospital.  The hospital charges are $100,000, but because of discounts associated with the health insurance contract with the hospital, the actual expenses paid by the health insurer are $75,000. Under current law, Person B's auto insurance would reimburse the health insurer for $75,000. Under HB 3281, personal injury lawyers could have sued the auto insurance company for the full $100,000, an amount that exceeds the actual costs incurred. The additional $25,000 would be a windfall.

“Allowing personal injury lawyers to sue for costs that were never incurred by their client doesn’t help consumers and it doesn’t help injured Texans – it simply enriches their legal counsel,” said Diane Davis with East Texans Against Lawsuit Abuse.  “Texas consumers would bear the brunt of this sham via increased insurance premiums.”

Stephanie Gibson with CALA of Central Texas noted that the only Texans testifying in support of this measure during the 80th Legislature were the very personal injury lawyers who stood to gain financially from its passage.  Supporters of the measure tried to pass the bill again in 2009 but it never came before the full House or the Senate for a vote.

“Texas needs laws that promote common sense and fairness in our courts, not laws that create new avenues to line the pockets of personal injury lawyers,” added Veronica Villegas, with the Rio Grande Valley CALA.  “We hope members of the Texas House Committee on Judiciary and Civil Jurisprudence see ‘paid vs. incurred’ for the scam that it is.”

Thanks!

Michelle Martin
Executive Director