Don’t you just love the legal industry? When something can be said simply, the legal eagles choose to use a Latin phrase. If it could be said in three words, lawyers use 10. Not only is this annoying, but it can lead to confusion for the very people the law is supposed to protect.
Recently, I was asked, “What does the Colorado tort law mean?” Good question! (And no, it does not mean we have a cake-based system. That is a “torte.”) OK, I’ll stop being an annoying lawyer and explain what it means.
The United States has two different legal systems setup for damage recovery after an accident. They are:
No-Fault: In a no-fault state, a person’s own automobile insurer will pay some or all of their medical bills and lost earnings if they get into a car accident, regardless of who was at fault for the accident.
Tort (also called “at-fault”): If an accident happens in a “tort” or at-fault state, the at-fault driver’s insurer will typically pay for repairs, medical expenses, and other losses, like pain and suffering and lost wages, through that driver’s liability coverage.
Basically, “tort” is defined as a legal term meaning, “If you hurt someone, you owe them.”
Can you imagine being the victim in a horrible car accident and being told that you couldn’t see the primary care specialist you’ve had for years?
The Issue with the No-Fault System
Fifteen years ago, Colorado used to be a no-fault state. So, regardless of whose fault an accident was, your own insurance company had to pay for your medical bills, lost wages, and more – up to your policy limits. The benefit of this system was that people were paid relatively quickly by their own insurance companies for their injuries and other losses.
However, we live in a society where we want the “bad guys” to pay for the damages they cause, right? So, this system was tough for a lot of people to swallow. Worse, in order to manage this no-fault system, auto insurance companies decided to set up a wide-reaching health care organization, like an HMO, into which they paid for their customers’ medical costs. Through this HMO, the insurance companies had control over whom their customers could see for their medical needs! Can you imagine being the victim in a horrible car accident and being told that you couldn’t see the primary care specialist you’ve had for years? It’s like being victimized twice. Or imagine your auto insurance company having the authority to determine when you’ve had enough care for your injuries. (I could tell you horror stories about people who were still in pain from their injuries, but their medical care was cut off thanks to insurance company decisions.)
Another problem with the no-fault system is that victims could not sue for pain, suffering and lost wages unless the medical bills reached or exceeded a predetermined amount, or if the injury was considered severe by state law. You can imagine how not-fun this would be for victims: “I’m terribly injured, but not injured enough to sue the other driver to cover my costs.”
With all the wrangling between victims, at-fault drivers and the insurance companies, the last ones to be paid were the first responders.
Yet, another problem with the no-fault system was rampant fraud. Check out this excerpt from a Fox Business article:
Drivers in no-fault states are required to buy personal injury protection (PIP) insurance, which covers their medical expenses – and those of passengers – up to a certain level. The amount and terms of coverage vary by state.
For example, Florida’s PIP insurance provides up to $10,000 in coverage for medical expenses.
“It was a humanitarian approach to allow people who did not have health insurance to get treatment,” says Walter Dartland, executive director of the Consumer Federation of the Southeast and a former deputy attorney general in Florida.
However, requiring drivers to purchase PIP had a negative unintended consequence, Dartland says.
“It created a pool of billions of dollars to be taken advantage of at $10,000 a shot,” he says.
As a result, Florida now is the nation’s staged-accident capital. Crime rings smuggle people into the country and have them work off their debt by participating in staged accidents.
Ron Poindexter, a National Insurance Crime Bureau director in Florida, says. “Where there’s money, there’s theft. Where there are millions of dollars, there’s organized crime.”
Needless to say, a lot of people felt like the system wasn’t looking out for their best interests. Further, it was very expensive for insurance companies to run.
Colorado Switches to Tort Law System
So, Colorado switched to a tort-base (or at-fault) system. Now, if you cause an accident, you and your insurance company are responsible for all of the other driver’s harms and losses. The way our legal system works, the injured person is required to be responsible enough to get the care that he or she needs, and the at-fault party (and/or their insurance company) is required to pay for it.
This just seems more reasonable, doesn’t it? And that awful insurance-run health care organization was dissolved.
Is There a Downside to the Tort Law System?
There was one unfortunate development after Colorado switched to the tort law system: first responders (such as ambulance companies) weren’t getting paid! With all the wrangling between victims, at-fault drivers and the insurance companies, the last ones to be paid were the first responders.
Therefore, Colorado insurance companies are now required to offer all of their customers something called Medical Payments Coverage, or MedPay. You can decline to buy MedPay, but you shouldn’t! MedPay coverage pays for first responders, emergency room bills, co-pays, deductibles, doctor visits, chiropractors, massage therapy, physical therapy… Basically, it may cover a lot of things that your health insurance doesn’t.
When people have MedPay coverage, they don’t stiff the first responders!
Now, as much as the at-fault (tort) law system makes sense, it does have its drawbacks. For one, it can clog the legal system. Of course, a LOT of people like to say that they didn’t cause an accident when they did. Then, it’s up to the victim to prove that the other driver caused the accident. These cases can take a lot of time and, in the meantime, victims need to receive care. It can be very stressful for victims to wait for funding to cover the care they’ve received. But, overall, the tort law system does seem to protect victim’s rights better.