Senate bills tackle Colorado's 'lawsuit tax'

Wednesday, March 01, 2017

Colorado consumers frequently ask why premiums for auto and home insurance are rising so much. 

Answer: Colorado's lawsuit tax - obscure laws that drive up the cost of a lawsuit beyond the actual cost of damages.

Fortunately, several bills introduced in the Colorado General Assembly would rein in this lawsuit tax by conforming Colorado law to real-world facts.

Senate Bill 181 (sponsored by Sen. Bob Gardner and Rep. Yeulin Willett) 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 sometimes 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) 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.


CCJL takes position on SBs 53, 88 and HB 1173

Wednesday, February 22, 2017

Colorado Civil Justice League, the state's advocate for limiting lawsuit abuse, this week staked out its position on three bills:

Senate Bill 53 - Asbestos Litigation Transparency - SUPPORT

By requiring transparency between health care claims due to asbestos-related illness submitted in state courts and those submitted to asbestos bankruptcy trusts, the bill seeks to prevent "double-recovery" by unscrupulous plaintiffs and helps to assure the solvency of the trusts for those with future claims of asbestos-related illness. This legislation accelerates timelines for court proceedings to the benefit of plaintiffs with legitimate claims. Contrary to testimony in committee, this legislation is good for veterans, and similar legislation in Congress is supported by the American Legion.

Senate Bill 88 - Health Care Network Selection - OPPOSE

House Bill 1173 - Health Care Provider/Carrier Contracts - OPPOSE

CCJL's primary concern with both of these bills are their potential to increase litigation and interference with freedom of contract.

As introduced, SB 88 restricts freedom of contract between insurers and health care providers by creating additional contractual prohibitions in state statute. Further, after writing these provisions into statute, the bill defines these contractual violations as "unfair or deceptive trade practice(s)" - akin to false advertising or knowingly making false statements - inviting new opportunities for litigation. HB 1173 would seem to protect slanderous comments if provided as testimony to a governmental body or as "any other public activity in any forum." After inviting new litigation, the bill provides for one-way recovery of court costs and attorney fees (only for a prevailing plaintiff).

CCJL believes that contractual matters between private parties should be resolved privately and disputes resolved by negotiation rather than litigation.


CCJL announces support for bills to address construction litigation costs

Tuesday, February 07, 2017

Supports Senate Bills 45 & 156

Recognizing the importance of addressing Colorado's construction litigation problem, Colorado Civil Justice League is supporting both Senate Bill 45 (sponsored by Sen. Angela Williams, Senate President Kevin Grantham, Rep. Cole Wist and Speaker Crisanta Duran) and Senate Bill 156 (sponsored by Sen. Owen Hill, Rep. Lori Saine and Rep. Cole Wist).

"Both of these bills represent small steps toward resolving known factors that drive up construction costs and make homeownership unaffordable," stated CCJL executive director Mark Hillman.

"Neither bill is a panacea, and both may require amendment. However, it is vitally important to keep all potential solutions moving forward."

CCJL commends the sponsors of these bills for engaging in bipartisan efforts to help homeowners obtain satisfaction when they encounter a legitimate construction defect and to help contractors and subcontractors find relief from runaway litigation costs.