Arkansas’s HB 1204 took effect in August 2025. The law adds one sentence to Section 16-64-120 of the Arkansas Code. This one sentence will limit compensation for medical expenses in personal injury claims, changing the outcome of thousands of cases per year for injured people and their families.
If you’ve been injured in Arkansas, it’s important to understand this new rule. To better understand how the rule affects your specific situation, speak to an experienced Arkansas personal injury lawyer. The team at the Law Office of Jason M. Hatfield can help.
New Limits on Medical Expenses Compensation
HB 1204 adds a subsection to Section 16-64-120 of the Arkansas Code. The added subsection reads:
Recovery of damages under subsection (a) of this section for past necessary medical care, past necessary medical treatment, or past necessary medical services received includes only those costs actually paid by or on behalf of the plaintiff or that remain unpaid and for which the plaintiff or any third party is legally responsible.
The new rule limits medical compensation in personal injury cases. In the past, an injured person could recover the amount they were billed, even if it wasn’t the amount they or the insurer actually paid. Under the new rule, the injured person can recover only the amount actually paid. The rule does not apply to any costs for expected future medical care.
The “Collateral Source” Rule
The new rule replaces the old “collateral source” rule, which the Arkansas Supreme Court adopted in Montgomery Ward & Co., Inc. v. Anderson. That rule, adopted in 1998, states that an injured person must be compensated for the “total harm done,” even if the costs are paid by a third party (also known as a “collateral source”). A few exceptions existed, most of which focused on how attorneys and parties could rebut testimony during trial.
Under the collateral source rule, “total harm done” was typically calculated by looking at the total amount billed for medical care. For example, if an injured person’s medical bills totaled $100,000, then $100,000 was the “total harm done” in past medical expenses. The court would consider the “total harm done” to be $100,000, even if the insurance company negotiated the bill down or the hospital agreed to forgive some part of the bill.
The collateral source rule is related to another longstanding Arkansas rule: the “made whole” rule. Under the “made whole” rule, most third party – such as non-ERISA health insurers – can only collect from an injured person if that person was “made whole” by compensation from a settlement or verdict.
Opponents of the new rule argue that it prevents an injured person from being made whole and unfairly allows the negligent party to benefit from the injured party’s insurance benefits. For example, the injured party paid premiums to have health insurance, and the negligent party now gets to reap the benefits of the injured party’s insurance benefits as opposed to being responsible for the “total harm done.”
How the New Rule May Affect Arkansas Personal Injury Claims
The new rule will likely lower the total compensation an injured person can receive in Arkansas. Here is an example.
Suppose that, as above, an injured person’s total past medical bills equal $100,000. However, an insurance company negotiates with the hospital to pay only $30,000. The injured person also pays $2,000 out of pocket in copays and deductibles.
Under the old rule, the injured person could receive $100,000 in compensation. Under the new rule, however, the injured person can receive only $32,000 in compensation for these bills.
An insurance company might also use the new rule to argue that the injured person’s settlement amount should be lower. Insurance companies have historically evaluated pain and suffering awards in terms of the cost of medical services. If the medical services were $100,000, then insurance companies award a higher amount for pain and suffering. Conversely, if the medical services were $32,000, then the negotiated award for pain and suffering will be less. In essence, responsible citizens that pay premiums for health insurance will receive lesser settlements than uninsured citizens. Those who are on Medicaid or Medicare are especially likely to see steep decreases in the medical compensation they can receive, because both Medicare and Medicaid substantially adjust medical bills down from the actual billed amount.
Speak to an Experienced Personal Injury Lawyer Today
Personal injury claims are often complex. They’re even more challenging when you’re already struggling to recover from serious injuries. As the Arkansas legislature demonstrates, the rules can change.
For help protecting your rights and securing compensation, talk to an experienced personal injury lawyer in northwest Arkansas. The Law Office of Jason M. Hatfield is here to provide the thorough, personalized legal representation injured Arkansans need. Contact us today to schedule a free, confidential case evaluation.
