Understanding No-Fault and Tort Insurance Laws

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This theory would work as follows: The automobile insurer, learning that the claimant received the payment of his wages while incapacitated from a collateral source, would be required to seek out the institution or individual paying this money. A lien—a hold on claim proceeds for wage payments—would be used to refund the money obtained from this source.

The amount of the lien would be set off against what was eventually recovered by the victim. Because the double payment has placed an added burden on the cost of automobile accidents, by permitting the injured to collect twice for the same damage, ending double wage-recovery would bring about a real gain.

Medical expenses is another weak area in the law of damages. At present, a victim is entitled to be compensated for the fair and reasonable amount of medical expense associated with his injury. No-fault has blindly followed this path without even a token attempt at changing this standard.

No Fault Auto Insurance Laws

Proposals such as the AIA plan call for payment of unlimited medical charges based upon the indefinite standard of the “fair and reasonable.” Because some no-fault plans have tied the amount of a victim’s medical bill to his right to be compensated for pain and suffering, a demand has been created for a fixed price list of medical services. For example, such routine procedures as examinations, suturing, and so forth could all be assigned a predetermined medical cost. Price and services rendered would be measured objectively.

At the same time that accident benefits paid to victims are being drastically reduced and reformers are clamoring for the removal of legal fees from insurance costs, the medical profession has been given a blank check to charge whatever it deems reasonable and fair for its services.

The law needs changing and so do the methods by which the law is administered. The bar’s lack of success in opposing the no-fault movement is in large measure due to media- stimulated disapproval of its stake in the perpetuation of the tort system. The contingent fee, exploited by the no-fault reformers, has called into question the bar’s motivation in opposing no-fault and contributed to the bar’s ineffectiveness in gaining support for its position.

Tort Insurance Laws

The contingent fee was fostered by the idea that even the poorest man could afford the best lawyer if he did not have to pay him from his own pocket—the lawyer would wait until his case was decided, when he could pay. It was on this promise that lawyers were able to represent indigent clients. The plaintiff benefited from the contingent fee, because, if he were unsuccessful, he owed his attorney nothing.

A better method of handling the contingent fee could be formulated. It is the policy of the American Trial Lawyers Association that every client be offered a choice of engaging a lawyer on a contingent-fee basis or on the basis of an hourly charge. The Cotter plan, originating in Connecticut and later adopted by Illinois, limits the amount of the contingent fee to 25 per cent. The Hart-Magnuson proposal for a national insurance system treats the problem of legal fees by restricting contingent fees to non-economic recoveries; for economic losses, an hourly rate must be charged.

But the solution is not a legislative matter alone. The time has come for the American bar to recognize that ordinary lawsuits should not entail contingent fees in excess of one- third of the gross recovery. Fee arrangements should be reasonable. In setting the fee, careful consideration should be given to all factors, including the size of the recovery and the complexity of the lawsuit. Find direct car insurance online.


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