The Adjudication of Affordability

The Affordable Care Act

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA). Colloquially referred to as “Obamacare,” the ACA was a contentious piece of legislation. In committee, the bill was constantly being pulled in two different directions. Republicans, by and large, flatly opposed the bill, arguing that it was an unlawful extension of federal power. Democrats, conversely, opposed passing a “paper tiger” piece of legislation that would not, in their view, adequately address the numerous problems that plague the American health care system.

While the politicians fought a political crusade on the Hill, those within the health care industry were holding their collective breath. The passing of the ACA would radically change the environment in which health care providers, insurance carriers and businesses operate. Like the quagmire in Congress, there were a multitude of opinions and critiques that stemmed from those within the industry. Some stood to lose a significant amount of market power and leverage, while others were provided with windows of opportunity. In turn, pressures from the health care industry added to the battle in Washington, intensifying the already laborious drafting process.

The public's support and perception of the bill was difficult to assess. During the 2008 election, President Obama and his campaign drew a stark contrast with his opponent, Sen. John McCain (R-AZ) over health care reform. McCain, like Obama, supported general health care reform, but refused to support legislation that would create universal health care in America. The Obama campaign leveraged this difference. On the campaign trail, the would-be President frequently cited a 2007 Gallup poll that reported there were roughly 30 million Americans without any form of medical coverage. (This data did not take into account individuals responding to survey questions who qualified for insurance, but due to a number of factors, including individualized negligence, did not have medical coverage.) Health care reform became a significant component of Obama's campaign, creating a seeming public mandate with his historic election later that year.

However, when Barack Obama publically lobbied for the ACA, he was met with conflicting reports. Throughout 2009, public support for the bill wavered ' peaking at 52% and bottoming out at 37%. When Americans were asked if they supported universal health care, however, support ranged from 63% and 44%.

Still, despite wavering public support, a political schism in Congress, and intense pressure from the health care industry, the ACA was signed into law on March 23, 2010. The ratification of the ACA, regardless of its normative value, was perhaps the most significant legislative accomplishment in American history; the ACA put in place a federally funded insurance marketplace, legislative mandates for all Americans to obtain a form of coverage, and created minimum standards for health insurance policies.

The Effects of the ACA on Damages Litigation

The changes outlined within the ACA were set to occur incrementally, providing time for citizens, businesses and health care providers to prepare for the new mandates and guidelines. The greater majority of the law's regulations became the gold standard in 2014, leaving us with less than two years of data to use in critiquing it. While still in its infancy, the ACA remains ambiguous on a multitude of issues, a number of which have been contested at various judicial levels.

Theoretically, this new law also provided a new tool in the defense attorney's arsenal ' a method by which to cap the damages for future care by purchasing an age-rated policy in the marketplace created by the ACA. The fact that pre-existing conditions were not a barrier to affordable coverage and that renewal was guaranteed fostered the opinion that the ACA could provide a cap on the largest component of damages.

Almost immediately, experts popped up, opining that for a typical catastrophically injured party, Cadillac insurance coverage could be purchased for a lifetime of care for between $900,000 and $1.8 million, well under the usual estimates in Life Care Plans, which often reached $20 to $30 million or more. The experts would canvass the available coverage in the marketplace to secure the annual cost and project that forward, providing a very compelling argument for damage reduction in front of the jury.

However (and not surprisingly), this new argument was met with resistance from the plaintiff's bar. Seizing on conservative rhetoric that Obamacare should or will be repealed, the lawyers argued that the longevity of the ACA is in doubt. The argument goes that if the ACA is repealed or significant parts are altered ' as often happens with controversial legislation ' plaintiffs could be left without sufficient recovery to cover their future needs.

This tension continues, as the goal of litigation is to provide adequate and just compensation to make the plaintiff whole, not bestow a windfall. This issue is now beginning to reach judicial decisions with some mixed results. The questions under consideration are whether an expert on the ACA will be permitted to testify, whether the jury gets to assess damages based upon the conflicting opinions or whether it is adjudicated on post-trial motions.

One Case in New Jersey

At least one case in New Jersey has determined that ACA testimony to a jury will not be permitted, as it was too speculative.

In Pannacciulli v. Beloff, 2016 N.J. Super. Unpub. LEXIS 179 (2016), the court considered a defense motion to limit the plaintiff's claim for and evidence of future medical expenses. The motion was premised on the fact that the injured minor plaintiff was eligible for coverage under the ACA and, at the time, was covered under her parents' health insurance. The Defendants contended that under the ACA, for a fixed annual cost, insurance could be procured that would cover all extraordinary care and that the invoiced figures compiled by the Life Care Planner bore no relationship to what the provider would actually receive. The opposition asserted that the plaintiff's right to receive benefits under the ACA was speculative as it was subject to policy changes ' especially in light of the upcoming presidential election.

After reviewing the moving papers, the Pannacciulli court sided with the plaintiff in this case of first impression in New Jersey. The court ruled that the benefits under the ACA were speculative, essentially adopting the plaintiff's argument against the motion. Further, the court held that a negligent professional should not be exculpated by subsidized coverage under the ACA.

According to the New Jersey Collateral Source Rule (N.J.S.A. 2A:15-97):

In any civil action brought for personal injury or death ' if a plaintiff receives or is entitled to receive benefits for the injuries allegedly incurred from any other source other than a joint tortfeasor, the benefits, other than workers' compensation benefits or the proceeds from a life insurance policy, shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award recovered by the plaintiff, less any premium paid to an insurer directly by the plaintiff or by any member of the plaintiff's family on behalf of the plaintiff for the plicy period during which the benefits are payable. Any party to the action shall be permitted to introduce evidence regarding any of the matters described in this act.

In Parker v. Esposito, 291 N.J.Super.560, 567 (App. Div. 1996), it was found that “future collateral benefits are deductible only to the extent that they can be determined with reasonable certainty.” In a similar case, Puzio v. Mimms, N.J. Super. Unpub. LEXIS 821 (App. Div. Jan. 20, 2006), the defendants argued that the jury was improperly instructed, as the plaintiff's medical expenses did not take into account collateral sources of reimbursement, such as private health insurance, Medicare, Medicaid and Social Security. The court ultimately denied this motion as well, opining that “with respect to government benefits, only those future benefits that are neither contingent nor speculative nor subjective to change or modification may be included. Future collateral benefits are deductible only to the extent that they can be determined with a reasonable degree of certainty.” Like in Parker, the court in Pannacciulli predicated the decision on the fact that the amount of potential benefits the plaintiff would receive from the government was undefined.

The future medical expenses the plaintiff was expected to incur with a conservative life expectancy figure were a tangible, deducible quantity. The amount of compensation or reimbursement the child and her family might expect to receive from the ACA, on the other hand, were not, according to the court. Based on this disparity and the aforementioned rulings, Judge Robert Wilson did not find sufficient evidence that the ACA would serve as an acceptable form of coverage under New Jersey's Collateral Source Rule.

The court's previous findings in Parker and Puzio played a significant role in the court's ruling, but there was another factor. In his opinion, Judge Wilson discussed at length the viability of the ACA, and the uncertainty that surrounds it. “The longevity of the [bill]“, he wrote, is “overwhelmingly called into question by the [pending] governmental election.” He added:

[The child's] right to receive such benefits is likely subject to policy changes, as Congress has sought to repeal and/or undermine the ACA over fifty times ' Furthermore, even if, arguendo, the ACA remains in effect for thirty (+) years, [the child's] entitlement to receive such benefits and the amount that she may be entitled to receive is merely speculative.

Analysis

In drafting his opinion, Judge Wilson took into consideration the long-term viability of the ACA. This inclusion begs several important questions. First, is this component of Judge Wilson's decision a political statement? The pending presidential election should not play a role in judicial determinations. The ACA is the law of the land and the principles of stare decisis should control the interpretation of extant laws. Suggesting that the law is subject to change is equally speculative. Every law is subject to change but that does not prevent courts from making decisions premised upon them on a daily basis.

Other trial courts, in other states, have differed in their interpretation of the right to utilize the ACA as a measure of damages in civil lawsuits. The court in Pannacciulli referred to a conflicting unpublished trial court decision in California, as well as to cases in other jurisdictions. Since each state has its own Collateral Source Rule, differing interpretations should be expected. However, there has yet to be a significant reported case from an upper level appellate court on these issues. We can expect that, once that occurs, this will become more settled.

Ironically, the New Jersey decision in Pannacciulli stands in contrast with the actions taken by the High Court of the United States. As promised, lawsuits were filed in almost every jurisdiction across the country once the ACA was ratified. It was only a matter of time before the question of the validity of the law reached the U.S. Supreme Court (SCOTUS), where its fate would be decided. The cases of National Federation of Independent Business v. Sebelius (NFIB) and Florida v. United States Department of Health and Human Services were brought before the Supreme Court after the issuance of a writ of certiorari. In what has become one of the most controversial decisions in the history of our country, the SCOTUS upheld the ACA. In a 5-4 decision, Chief Justice John Roberts cast the deciding vote.

In the words of the late Antonin Scalia, the Court's ruling in NFIB and Florida was “nothing short of jiggery-pokery.” By what many consider a technicality, due to the sanctions and fiscal provisos in the law, the Court interpreted the ACA to be a tax, deeming it Constitutional under the Commerce Clause. When asked about his decision at the time, Chief Justice Roberts believed firmly that he had made his decision in line with the Constitution. When asked more recently, however, Roberts admitted that the gravity of the decision did play a role in his ruling.

Conclusion

There is no doubt that the ACA will continue to be attacked by those with a vested interest in its repeal. However, experience has shown that it is rare indeed to remove such a large and affecting piece of legislation once passed. Similar criticisms were laid at the foundation of The New Deal, with its socially engineered entitlements, many of which remain with us today. However, the ACA remains the governing law and its principles should be enforced. How that ultimately plays out in substantial personal injury cases remains to be developed, as this large statute and its interpretation remains in its infancy.

That being said, it is a virtual certainty that the Court will play a significant role in the future of ACA and in its implementation moving forward. The trajectory of the ACA may in fact be determined by the decisions made within the courtroom, as opposed to in the legislature. With the contentious environment surrounding the law and the bitter partisanship on the Hill, it is unlikely that the federal government will make any changes to the ACA directly. Accordingly, the Supreme Court may ultimately take the lead on sculpting the ACA through judicial review. Should this be the case, the law may transform and function in ways it was not originally intended to do.

The Court's ruling in Pannacciulli has set persuasive (but not binding) precedent in the State of New Jersey, but it also has larger implications. Judge Wilson's opinions may in fact influence the decisions of other courts both within and outside the state. As mentioned earlier, this may have a direct and tangible effect on how the ACA functions and on how it is implemented. It may also play a role in how this landmark legislation may be used in medical malpractice and other personal injury actions throughout the country. When put into this context, the decision in Pannacciulli was an important first step. Where those steps on this particular staircase lead has yet to be resolved.

Gary Riveles, a member of this newsletter's Board of Editors, is a partner in the Cedar Knolls, NJ, firm of MacNeill, O'Neill & Riveles, LLC. Alessio Faiella is employed by the firm and is a master's candidate at Brown University.