Yesterday, Iowa Governor Kim Reynolds (R) signed into law S.F. 2338, legislation that contains “phantom damages” reform and COVID-19 liability protections.
This legislation was largely based on the American Tort Reform Association’s white paper regarding COVID-19 liability and implements many of the policy solutions put forth by the association.
“We are pleased to see Gov. Reynolds put in place the necessary protections for those serving on the front lines, like our healthcare workers and manufacturers of personal protective equipment,” ATRA President Tiger Joyce said. “Taking action now places Iowa on more solid footing as the nation enters a new phase of economic recovery by protecting critical workers and industries from the unnecessary and overly burdensome costs of litigation.”
The legislation further reforms the system by which “phantom damages” are awarded as recoverable medical expenses in personal injury cases. “Phantom damages” are created when recoveries are calculated using billed charges rather than actual reimbursement. This creates a “phantom” cost which neither the patient nor their insurer ever paid, but inflates the overall cost of the judicial system.
This bill will help reduce costs to the system by requiring evidence of actual amounts paid instead of an often-inflated billed amount. Reforming the phantom damages system and correcting this discrepancy is a long-term priority of ATRA.
“We are grateful for the leadership of Gov. Reynolds, Senate Majority Leader Jack Whitver (R), Speaker of the House Pat Grassley (R), Sen. Zach Whiting (R) and Rep. Gary Carlson (R) and for the work put forth by the legislature in Iowa to create a more balanced judicial system where equal justice is available under the law,” Joyce said.
