The legislative committee room was packed with lawyers fighting for and against Senate Bill 212 as though it were a high-dollar court case and the senate panel were a jury deciding the fate of their clients—because, in a way, that’s what it was.
SB212 would change the interest rate that accrues for future special-damage payments awarded in personal-injury cases ranging from on-the-job accidents to drunken-driver suits. Currently, injury victims who prevail in court collect damages with interest that accrues starting at the time of their injury. SB212 would change the statute so that interest would only begin to accrue 90 days after a lawsuit has been filed.
Personal-injury lawyers say the change would force their industry to file more lawsuits instead of first seeking settlement. Clients could also lose out on significant cash payouts—in some cases, it’s months or even years before a lawsuit is filed. Sen. Ralph Okerlund, R-Monroe, presented his bill as a simple fix to bring prejudgment interest rates into fairness with the market. Currently, injury victims collect a static 7.5 percent interest rate on their prejudgment interest. Under SB212, the interest rate would float and stay one point above the prime federal interest rate of the calendar year in which the lawsuit is filed. If a lawsuit were filed in 2013, the rate would be roughly 4.25 percent.
Andrew Wright, an attorney and lobbyist for the Utah Defense Lawyers Association, which represents hospitals and insurance agencies, supported the proposed change, blasting the current interest rate as “not realistic and non-economically based.”
Charles Thronson, a Salt Lake City medical-malpractice attorney and member of trial lawyers lobby group Utah Association for Justice, recalled one client who suffered a neurological injury and could rely on only one medication to treat it. Over a decade, his prescription cost him $1 million in out-of-pocket expenses. Luckily, Thronson’s client was the CEO of a major corporation and could afford it—but not everyone in a personal-injury case is a CEO. Thronson and others were especially outraged considering that when clients face outstanding medical debts for their injuries, the interest they owe health-care providers ranges from 12 to 18 percent, a rate that pushes many into medical bankruptcies.
“It is unfair to take the people who are most vulnerable in our state, reduce the chance they have to get fair compensation and reduce the chance they have to pay back people they owe money to—hospitals and doctors—[for] the benefit of large out-of-state insurance companies,” Thronson testified.
He also argued that the result of this bill would likely be more lawsuits clogging the system, as plaintiffs will say, “I’m not going to negotiate, I’m just going to file.”
Steve Sullivan, an attorney with Robert J. DeBry & Associates, challenged the bill as allowing defendants to duck responsibility. “The most serious medical bills are incurred in the first couple of weeks after an injury,” Sullivan said.
Members of the committee, such as Sen. Peter Knudson, R-Brigham City, an orthodontist, however, felt changing the interest rate to match market rates was fair and that health-care providers were not punitive in the rates they charge on outstanding bills. He said his business often negotiates interest rates with customers.
“I do that in my practice, and I know many of my friends in medicine do the same thing,” Knudson said.
Committee Chair Sen. Aaron Osmond, R-South Jordan, also supported the interest-rate-change component of the bill, but cautioned that he would like to later amend the section of the bill that delays the time from when interest begins accruing, arguing that it would be unfair to Utahns. Ultimately, the bill passed out of committee in a 5-2 vote. The bill now goes to the Senate floor for full debate.
During the debate, the issue often seemed like a battle between lawyers, with Sen. Stuart Reid, R-Ogden, comparing the debate to “watching two sides fight over the same bone.” But Roger Griffin, an attorney with Craig Swapp & Associates, said the policy debate was overlooking the victims.
“We’re losing sight of the citizens of this state, who, through no fault of their own, are the victims of drunken drivers, the victims of people who aren’t paying attention and texting on their cell phones, or speeding, or driving recklessly, and are now incurring bills that would never have happened but for the actions of others,” Griffin testified.