ACIC Vows to Continue Fight Against SB 494

August 13, 2004

Following Assembly approval of SB 494, the Association of California Insurance Companies (ACIC) vowed to continue its fight against the bill – which would financially benefit trial lawyers at the expense of California consumers and businesses.

“We are deeply disappointed that SB 494 was narrowly approved yesterday on a 41-33 vote – the bare majority needed for passage,” said Sam Sorich, president of ACIC. “This bill represents bad public policy and we will wage a vigorous fight as it moves to the next and final phase of the legislative process.”

The next stop for SB 494 is the Senate, which will be asked to concur in Assembly amendments. If approved by the Senate, SB 494 by Sen. Martha Escutia (D-Los Angeles) will go to the governor.

Sorich said the legislation would increase the liability insurance costs for “all California consumers and businesses. At the same time, the bill would be a financial loss for many injured Californians. The financial winner would be trial lawyers.”

The bill would allow a medical care provider to file a lien in a lawsuit when a Medi-Cal patient brings the lawsuit. The lien would allow the medical care provider to recover fees that are significantly higher than the Medi-Cal fee-for-service rate agreements.

Under SB 494, the medical care provider could take a bigger share of the recovery, which would make less money available, under the insurance policy limits, to pay the injured person for loss of wages, out-of-pocket expenses or pain and suffering.

The higher settlements and judgments would, in turn, create a bigger pot of money from which trial lawyers could take their contingency fees, which usually range from 33 percent to 50 percent of the injured person’s recovery.

“This bill undermines the public policy goals of containing insurance costs and assuring fair compensation for injured parties,” said Sorich.

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