Personal Injury Damages Revisited

In previous articles I have written about the law of North Carolina personal injury damages. To recap, historically when someone was injured in a personal injury in North Carolina (car accident, slip and fall, wrongful death) and they incurred medical expenses for the treatment of their injuries, the at-fault (liability) insurance company was responsible for the medical expenses incurred.

North Carolina courts have examined the definition of “incurred” on a number of occasions over the past 60 years. The courts have unanimously held that the word incurred meant what it said, which is the original bill itself. In practice, if a person injured in a Charlotte car accident goes to Carolinas Medical Center Emergency Room and received a bill for ,000.00, the amount incurred was $1,000.00. The Courts found it irrelevant that the injured party may have had health insurance that paid the bill. Going back to our example, the injured party starts off with a bill of $1,000.00. Let’s assume their health insurance paid $600.00 to hospital and the hospital wrote off the $400.00 balance. Historically, the auto insurance was still responsible for the $1,000.00 bill. While there were a number of justifications for this, the obvious was that it would be unfair for the liability auto insurance company to benefit by the fact that the injured party had health insurance.

In 2010 the legislature of North Carolina changed, and along with it the priorities of said legislature. While there were a number of bills harmful to individuals in North Carolina which passed, one of them dealt directly with damages in personal injury cases. Rule 414, a rule of evidence, was enacted which limited the evidence which could be shown to a jury in a personal injury case. Using our above example to highlight the effect of the law, only $600.00 of the $1,000.00 hospital bill was now admissible in court. Insurance companies also used Rule 414 in pre-suit negotiations. The result of the law was a massive reduction of the value of cases and less money going to the injured party. Further, under the law there is no reimbursement by the liability insurance company to the injured party for the health insurance premiums, which the injured party was paying. The net effect is that people without health insurance end up with larger settlements than those with health insurance.

In 2015, a lawsuit was filed challenging the constitutionality of Rule 414. The North Carolina Constitution delineates and delegates the powers of each house of government, Executive, Legislative and Judicial. To protect the rights of North Carolina citizens the legislative branch was specifically limited in what it could do to take away specific rights from the Judicial Branch and citizens. The specific section in the North Carolina Constitution under debate is found below in Section 13(2).

Sec. 13. Forms of action; rules of procedure.
(1) Forms of action. There shall be in this State but one form of action for the enforcement or protection of private rights or the redress of private wrongs, which shall be denominated a civil action, and in which there shall be a right to have issues of fact tried before a jury. Every action prosecuted by the people of the State as a party against a person charged with a public offense, for the punishment thereof, shall be termed a criminal action.
(2) Rules of procedure. The Supreme Court shall have exclusive authority to make rules of procedure and practice for the Appellate Division. The General Assembly may make rules of procedure and practice for the Superior Court and District Court Divisions, and the General Assembly may delegate this authority to the Supreme Court. No rule of procedure or practice shall abridge substantive rights or abrogate or limit the right of trial by jury. If the General Assembly should delegate to the Supreme Court the rule-making power, the General Assembly may, nevertheless, alter, amend, or repeal any rule of procedure or practice adopted by the Supreme Court for the Superior Court or District Court Divisions.

In May 2016 arguments were held in front a three judge panel regarding whether the law, as written took away the substantive rights of a jury. Specifically, did the law take away the rights of citizens to determine damages in a civil courtroom? Plaintiff’s counsel argued that the legislature, by limiting what a jury could consider as damages, overstepped the bounds of what is constitutionally allowed. The defense argued that limiting the amount of damages was merely procedural and not substantive. On May 20th, 2016 the judges requested proposed Orders from the two sides. As of the writing of this article there has been no Order issued.

As an attorney who represents individuals injured in car accidents throughout North Carolina, I can say with complete certainly, that the law as currently written benefits no one but insurance companies. Further, insurance companies have taken the law further then it even may have been originally intended. For example, many North Carolina insurance policies contain medical payments coverage (med pay). This is coverage, requires the insurance company to pay for bills “incurred” following a car accident, regardless of fault. Over the past two years, since Rule 414, some insurance companies, like GEICO, have taken the position that they will only pay for the amount necessary to satisfy the bill as defined under 414. This interpretation stands reason on its head as there is no reason to put into evidence bills under 414 to get your med pay. Further, the plain language of policy means what it says, incurred, not what is necessary to pay off the bill. What makes this interpretation even worse, is that this is an insurance company attempting to reduce their benefit to their own insured.

Why are not the branches of North Carolina government not prohibiting these practices? There has been little push back from the North Carolina Commissioner of Insurance, even after evidence of wrong doing was brought to light. This has left only personal injury attorneys to stand in the way of insurance companies trying to run roughshod over citizens’ rights. While it is easy to point out numerous other issues with North Carolina personal injury law (contributory negligence, Underinsured set offs for liability payments, no intra underinsured policy stacking) Rule 414 has caused irreparable harm.

The harm caused by Rule 414 is not only felt by people injured in car accidents. They are felt by the medical providers who treat those injured in car accidents, including hospital emergency rooms, orthopedics, primary care physicians and the physical therapist who have seen their reimbursement rates drop. As a charlotte attorney who practices personal injury law I speak with medical providers on a daily basis. There is universal disdain for Rule 414.

If the people and medical providers of North Carolina have been hurt by Rule 414, why doesn’t the legislature change a very unpopular law? In this charged political climate it is unlikely the legislature will do much to roll back some of the laws that were enacted after 2010. This leaves only the constitutional challenge as the best hope for the people of North Carolina.