Senate Bill 181 (sponsored by Sen. Bob Gardner and Rep. Yeulin Willett) tackles "phantom damages" and passed on a vote of 20-15. The bill addresses
an obscure law which keeps Colorado juries in the dark when evaluating the amount of reimbursement to which an injured victim is entitled.
Let's say someone injured in an auto accident receives an initial bill for $140,000 for medical costs. The injured party's insurance company settles
the bill for a negotiated amount of $40,000. But when the injured party sues the at-fault driver for other damages - like pain and suffering
or physical impairment - he will begin by claiming the full $140,000 in damages for medical costs. That's because current law says that juries
cannot be told that those bills were actually settled for $40,000.
The $100,000 difference is called "phantom damages" because it represents costs that were never truly owed and never paid. SB 181 would allow the
jury to consider both amounts when deciding what reimbursement to award.
Senate Bill 191 (Sen. Jack Tate, Reps. Yeulin Willett & Cole Wist), which passed 22-13, tackles a second anachronism in Colorado law by setting
interest rates on judgments at 2% above the federal rate. Under existing law, not only can someone claim phantom damages (as above), but they
are entitled to receive 9% interest on those phantom damages.
So why settle a lawsuit and put that money in the bank to earn 1% interest (or less) when you can drag it out and continue to earn 9% interest?
On a $140,000 judgment, the difference just in interest in four years' time is $40,000.
So the injured party suffered $40,000 in actual paid medical bills, which over four years at 3% interest, would accumulate to $45,020. But under
existing Colorado law, they would be entitled to $197,621 - because the law doesn't reflect the real facts!
Yet, Colorado drivers and homeowners must pay higher insurance premiums to cover these unjustified costs.
SBs 181 and 191 preserve the right of an injured party to be fully and properly compensated for their injuries, while sparing Colorado drivers
and homeowners the burden of paying for phantom damages and ridiculous interest rates.
This week on Wednesday, the Senate Business, Labor & Technology Committee will consider Senate Bill 204, another bill to curtail abusive litigation
and rein in rising insurance premiums.
Sponsored by Sen. Kevin Priola and Rep. Polly Lawrence, SB 204 would prevent lawsuits by third-party vendors that sue insurance companies for payment
without authorization of the insured consumer or for work that wasn't covered by the consumer's insurance policy.