Folks:

I wrote you back in February and made mention that there was a listing of various bills pending in the House and Senate which impacted tort reform here in Missouri.  Some of those bills mentioned have passed and others have not.  I wanted to bring to your attention a couple of bills which have come to fruition, which have been signed by the governor, and go into effect on August 28, 2017.

MEDICAL BILLS PAID

Plaintiffs' claimed medical expenses will be limited to amounts actually paid for medical care. This could be significant in that, as you all well know, the amount paid is generally always less than the amount billed.  In fact, the difference between the two figures can be great. The statute making this change is the re-written Mo. Rev. Stat. § 490.715. [1] While this may be a very good negotiating tool for you when dealing with claimants and their attorneys please keep in mind that our opponents on the plaintiffs' side will always try to come up with an option to maximize their recovery.  One trick that will probably be adopted by them, when the bills are relatively small, is that there is nothing that prevents plaintiffs from not even submitting their medical bills to the jury.  There could be cases where the injury itself might be "worth more" by not putting in any mitigating factor of relatively minor bills.  For instance, coming up with examples that immediately come to mind, someone may have a concussion, which only had some treatment in the emergency room, an MRI, and some follow-up office visits with the neurologist where the medical bills are less than $15,000, however, the effects of that concussion continue to linger and the injured party is having ongoing complications.  We could go on and on with different examples but my point is that you will be getting different arguments now about why the value of a particular claim is still "worth more" even though bills paid will be the proper amount admissible at trial.

To rebut these scenarios, from our side, in a situation where the plaintiff does not submit any bills at trial, we, as the defendant, may elect to interject plaintiff's bills into the case to demonstrate why our suggested offer is appropriate. 

537 AGREEMENTS AND ”SHAM TRIALS”

A second positive reform measure that will go into effect on August 28 pertains to our well-known "537 agreements" and the "sham trials" that result.  The statute dealing with an insured's ability to enter into a settlement with a plaintiff when the insurance company has declined to defend without reservation has been rewritten. [1] The statute still allows a claimant with a personal injury claim against your insured to enter into a contract with your insured to "settle" the case or, more appropriately, agree to enter into a "sham trial" where your insured puts on no evidence opposing liability or damages (“lay-down trial”) and you are faced with a monstrous judgment against your insured.  That avenue is still available but only after you have been given the opportunity to defend without reservation and you decline to remove your reservation of rights.  This codifies the requirement that the insurer must be given the right to remove the reservation of rights defense. [2] Further, the insurer must be provided with written notice of the contract that your insured entered into and the insurer has thirty days after receipt of the notice to intervene in the underlying lawsuit as a matter of right.

Although this is a tremendous advancement be careful before you break out the balloons, cake and ice cream.  Your insured still has the ability to enter into one of these 537 agreements.  The statute only allows an insurer to intervene in the underlying case as a matter of right—not a permissive intervention at the discretion of the court.  Just because an insurer has the opportunity to intervene in the underlying case does not mean that the multi-million dollar verdicts can still be avoided.  For example, consider a relatively bad case with questionable liability in which the insurer is defending under a reservation of rights.  Ultimately, the insured makes demand that the reservation of rights be removed and the insurer elects not to remove the reservation of rights.  Your insured discharges his retained defense counsel and the insured and the claimant agree to a sham trial to be heard in fifteen days.  Notice is given to the insurance company immediately.  The insurer contacts me to intervene in the lawsuit on behalf of the insurer.  I do so.  I am then provided with a copy of the file and it is reams and reams of pages as twenty-five depositions have been taken with twelve different experts and a mountain of medical records.  There is no way I can adequately review all the material and be prepared to try that case in less than two weeks.  I ask for a continuance from the trial court on behalf of the insurer (who has now intervened in the case) and the trial court denies that continuance.

Another example, under the same fact pattern, even assuming I can get up to speed and to adequately try the case for you after I have intervened does not mean that the judge will listen to our position in turning down a request for a multi-million dollar judgment even under questionable facts.  The court may decide not to entertain our arguments and still find liability against your insured, find facts and draw conclusions of  law triggering coverage, and impose a multi-million dollar verdict.  These findings can still be paralyzing on any subsequent garnishment action against the insurer.  At least the carrier will now have the opportunity to be heard rather than being completely ignored or silenced which was all too frequently the case, however, just because the statute is giving us a dog in the fight does not mean that the judge will listen to that new dog.

This statute, however, should be great help in ending the practice of triggering 537 agreements whenever a demand is rejected by the carrier while defending an insured or in not being able to respond adequately to a time-sensitive demand—see next heading following.