Article first published in Insurance Day

US Affordable Care Act shows promise as a way to expose inflated life care plans and demonstrate a plaintiff’s actual and reasonable future care costs

The US has recently seen a rise in enormous judgments, often as a result of excessive damages awarded for future medical expenses in personal injury actions. The plaintiff’s life care planner – a retained expert with no past, present or future role in the plaintiff’s care – will create a projection of future medical “needs” and “costs” regardless of crucial data, such as the actual cost of care to date or the reasonable costs of procuring medical care in the future. However, the Patient Protection and Affordable Care Act (ACA) has begun to show promise as a way to expose the fiction of inflated life care plans and to demonstrate a plaintiff’s actual and reasonable costs of future care.

In its simplest form, ACA provides all legal US residents must have health insurance. Three pillars of ACA are of particular interest to defendants. First, all legal residents are required to purchase insurance. Second, all qualified health insurance plans must provide “minimum essential benefits”. These benefits include ER services, hospitalisation, prescription medication, mental health and substance abuse services, rehabilitation services, lab services and chronic disease management. Third, insurance companies are prohibited from denying coverage to people with pre-existing conditions, charging higher rates to people based on their medical histories and cancelling coverage.

The costs of purchasing health insurance under the ACA are generally low. Depending on the plan, premiums are limited to roughly $8,000 a year (and often much lower). "Co-pays" – amounts which the insured must pay under the policy – are limited to roughly $6,850 a year. In other words, a plaintiff’s maximum expenses (premiums plus co-pays) are limited to roughly $14,500 a year. Multiplying that by, say, a 20-year life span, results in total future damages of $290,000. Stated differently, a plaintiff will never incur the millions in costs often identified by life care planners.

While that simple multiplication sounds great, careful planning is required in implementing an ACA defence strategy. Hiring sound experts in life care planning and ACA, determining appropriate care and then identifying the cost under the ACA has proved a successful strategy in reducing damages in a number of recent cases. Last year defence attorneys facing a $14.5m verdict in Jones v Metrohealth Medical Center used ACA to reduce $8m in future medical expenses to $2.9m.

Even more promising, the relevant parts of this judgment were affirmed by the Court of Appeals of Ohio on July 7, 2016. Additional courts in California, Ohio, Hawaii, Arizona, Georgia and Arkansas have permitted ACA evidence to reduce alleged damages and some have allowed ACA evidence to provide for a post-trial collateral source offset. Others have allowed evidence of ACA and Medicare-related offsets. Furthermore, courts have allowed discussions of the ACA insofar as it affects reasonable costs of medical services.

Many plaintiffs’ attorneys will argue ACA coverage is speculative. As one court has highlighted, opponents of the ACA have sought to repeal and/or undermine the ACA more than 50 times (see Pannacciulli v Beloff). These arguments were made in Jones and rejected. Additionally, it may prove politically difficult to remove coverage from the 16.4 million US residents who have signed up under ACA – meaning there will be years ahead to untangle the implications of this law and the increased possibility it can yield fruit for US defendants.