The Phantom Damages Elimination Act Exposed

The Phantom Damages Elimination Act was adopted by ALEC's Civil Justice Task Force at the 2011 Annual Meeting, approved by the Board of Directors October, 2011. (Accessed January 30, 2017).

ALEC Bill Text

Section 1 {Title} This Act may be known as the Phantom Damages Elimination Act.

Section 2 {Purpose} The purpose of this section is to prevent compensatory damage awards for medical expenses from including amounts that the claimant has not and will not pay for such medical care or treatment.

Section 3 {Recovery of Medical or Health Care Expenses} In an action to recover damages resulting from death or injury, the damages that may be recovered by a claimant for reasonable and necessary health care services or treatment received shall include only:

(A) amounts actually paid by or on behalf of the claimant; and

(B) amounts actually necessary to satisfy unpaid charges still due and payable to the health care service provider for which the claimant or a third party on behalf of the claimant has a legal obligation to pay.

Section 4 {Excessive Unpaid Charges} Unpaid charges under Section 3(b) shall not exceed amounts customarily accepted by health care service providers for the health care services or treatment at issue in satisfaction of their bills.]

Section 5 {Inadmissibility of Gross Amount Billed} The gross amounts of a claimant’s medical bills are inadmissible as evidence of damages where such gross amounts are not reflective of the actual amounts paid or that remain actually owed to satisfy those bills.

Section 6 {Rule of Construction} This Act is in addition to, and does not otherwise affect, any other limitation on damages.

Section 7 {Effective Date} This Act is effective upon enactment and shall apply to any action filed on or after the effective date of this Act.

Given the nuances in state law discussed above, legislators should contact the ALEC Civil Justice Task Force to evaluate the law of their states when developing legislation.