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Court Rules Collateral Source Statute Does Not Bar Evidence of Write Offs on Plaintiff’s Medical Bills

Where Reduced Fees are Result of Plaintiff’s Medical Insurance Coverage

2009-0820.  Jaques v. Manton, Slip Opinion No. 2010-Ohio-1838.
Lucas App. No. L-08-1096, 2009-Ohio-1468.  Judgment of the court of appeals reversed, and cause remanded to the trial court.
Lundberg Stratton, O'Connor, O’Donnell, Lanzinger, and Cupp, JJ., concur.
Pfeifer, J., dissents.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-1838.pdf

Video clip View oral argument video of this case.

(May 4, 2010) The Supreme Court of Ohio ruled today that the defendant in a personal injury lawsuit is not barred by Ohio’s collateral source statute from introducing at trial evidence of “write offs” accepted by medical service providers that reduced the actual cost of the plaintiff’s medical treatments to a lower amount than those providers originally billed for their services. 

The Court’s 5-1 decision, authored by  Justice Terrence O’Donnell, reversed a ruling by the 6th District Court of Appeals.

Richard Jaques was injured in a December 2005 traffic accident for which the other driver, Patricia Manton, admitted liability. When the parties could not agree on the amount of damages, Jaques filed suit against Manton seeking recovery for his medical injuries, lost wages and pain and suffering. During pretrial proceedings, Jaques sought and was granted a motion barring Manton from informing the jury that while he had been billed a total of $21,874 for medical treatments arising from the accident, his health care providers had accepted $7,484 as payment in full for those services, having “written off” $14,390 from their original bills based on their contractual agreements with his health insurance provider, Medical Mutual of Ohio.

At trial, the jury was able to consider only the amount billed by the medical providers, not the amount accepted as full payment. The jury subsequently awarded Jaques damages totaling $25,000, with $15,500 of that amount designated for medical expenses. Manton moved for a new trial on the basis that the judge had erred in not allowing her to introduce evidence about the write-offs on Jaques medical bills. The trial court denied the motion and certified the jury’s verdict.

Manton appealed.  The 6th District Court of Appeals affirmed the trial court’s evidentiary ruling, holding that evidence of the write-offs was barred by the state’s collateral source statute, R.C. 2315.20.  Manton sought and was granted Supreme Court review of the trial and appellate courts’ decisions.

Writing for the majority in today’s decision, Justice O’Donnell noted that in a similar case decided in 2006, Robinson v. Bates, the Supreme Court held that under the common law collateral source rule in force prior to the enactment of R.C. 2315.20, a defendant was permitted to introduce evidence of write offs that reduced the amounts of the plaintiff’s medical bills. In this case, he observed, the pivotal question is whether the legislature’s enactment of R.C. 2315.20 effective in April 2005 compels a different conclusion with regard to the admissibility of similar evidence.

Justice O’Donnell wrote: “The general collateral-source-rule provision in R.C. 2315.20

pertains only to ‘evidence of any amount payable as a benefit to the plaintiff.’  This formulation is no different substantively from the common-law rule described in Robinson ... as excluding only: ‘evidence of benefits paid by a collateral source.’ ...  Our common-law analysis from Robinson applies equally in the context of the statute.  Both versions of the collateral-source rule are concerned with actual payments made by third parties to the benefit of the plaintiff, but the focus of the statute is to prevent a double-payment windfall for the plaintiff while the focus of the common-law rule was to prevent the defendant from escaping the full burden of his tortious conduct. Write-offs are amounts not paid by third parties, or anyone else, so permitting introduction of evidence of them allows the fact-finder to determine the actual amount of medical expenses incurred as a result of the defendant’s conduct.  This result supports the traditional goal of compensatory damages—making the plaintiff whole.”

Justice O’Donnell acknowledged Jaques argument that R.C. 2315.20 prohibits trial evidence about insurance benefits received by a plaintiff when those benefits are subject to subrogation (reimbursement of the insurer from any damages recovered by the plaintiff  through a lawsuit against the at-fault party), and that admitting evidence of the care providers’ write-offs would allow jurors to calculate the amount Jaques received in insurance benefits that were subject to subrogation. He wrote, however, that: “While Jaques’ concerns may not be unfounded, we see no indication of those concerns in the language of the statute. We are required to apply the plain language of a statute when it is clear and unambiguous. ... A write-off indicates only that the provider accepted less than the amount originally billed for its services. While this may typically occur due to an insurance agreement, that is certainly not always the case. R.C. 2315.20 does not indicate a legislative intent to bar such evidence.”

“Because R.C. 2315.20 does not prohibit evidence of write-offs, the admissibility of such evidence is determined under the Rules of Evidence. A plaintiff is entitled to recover the reasonable value of medical expenses incurred due to the defendant’s conduct. ... The reasonable value may not be either the amount billed by medical providers or the amount accepted as full payment.  ‘Instead, the reasonable value of medical services is a matter for the jury to determine from all relevant evidence.  Both the original medical bill rendered and the amount accepted as full payment are admissible to prove the reasonableness and necessity of charges rendered for medical and hospital care.’  The trial court and court of appeals both erred in refusing to admit evidence of write-offs by medical providers relating to Jaques’ care.  R.C. 2315.20 does not apply to write-offs, and therefore, our conclusion from Robinson controls—evidence of write-offs is admissible to show the reasonable value of medical expenses.”

Justice O’Donnell’s opinion was joined by Justices Evelyn Lundberg Stratton, Maureen O’Connor, Judith Ann Lanzinger and Robert R. Cupp. 

Justice Paul E. Pfeifer entered a dissent stating that in his view the majority failed to apply R.C. 2315.20 according to the plain terms of that statute. 

He wrote: “At issue in this case is whether a defendant may introduce evidence of a write-off.  In this case, Jaques was billed $21,874.80 for medical expenses. The medical provider accepted $7,483.91 as payment in full, effectively writing off $14,390.89. Jaques understandably wants the jury to think that he incurred $21,874.80 in medical expenses; Manton understandably wants the jury to think that Jaques incurred only $7,483.91 in medical expenses.  R.C. 2315.20(A) answers the question before us:  evidence of the amount payable may not be introduced because ‘the source of the collateral benefits has a ... contractual right of subrogation.’ Jaques did not negotiate the write-off, neither did Manton.  The provider of Jaques's medical care did not initiate the lesser payment. Who is left to be the source of the collateral benefits?  It can only be Jaques’s insurance company. They initiated and negotiated the write-off and they have a contractual right of subrogation. Accordingly, evidence of the collateral benefits may not be introduced.” 

Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in the case.

Alan B. Dills, 419.249.7100, for Patricia Manton.

Michael D. Bell, 419.843.2001, for Richard Jaques.

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