When insurance payments are used to compensate the plaintiff’s medical providers, they reason, limiting the plaintiff’s recovery to only the amount paid by the insurance company to the medical provider simply permits the plaintiff to recover no more than he has expended. Such damages paid by a collateral source are also pejoratively referred to by the tort reform advocates as “phantom damages.” The Restatement of Torts, Second, defines the CSR in § 920A(2): § 920A Effect of Payments Made to Injured Party. “Reasonable Value.” With this approach, plaintiffs may recover the “reasonable value” of their medical expenses, regardless of whether the plaintiff is privately insured. Moreover, the types and number of “collateral sources” available to plaintiffs have multiplied. The interplay between the CSR and the recovery of the full, undiscounted amount of medical expenses, can be set forth by statute, through common law and case decisions, and frequently through a combination of both. The purpose of the collateral source rule is to exclude evidence of payments made to the plaintiff by sources other than the defendant when the evidence is offered for the purpose of diminishing the defendant tortfeasor's liability to the injured plaintiff. The leading case on the “actual amount paid” approach is the California case of Howell v. Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Cal. . Few other courts have chosen to follow this approach. Under Connecticut law, the answer is yes, with certain qualifications. Adam S. Kutner Personal Injury Lawyer. Or, something in between? There are 1,068 for-profit hospitals in the U.S. A for-profit hospital is owned by investors, distributes profits to its investors, raises capital through investors, and must pay income and property tax. 15-13851 Feb. 7, 2018] ___ F.3d ___ (11th Cir. care negligence cases to amounts what collateral source ahs already paid. A medical billing expert witness should have a strong basis for their opinion. The collateral source rule is somewhat complicated and difficult for the average person to understand. Tennessee recently established its long-awaited rule in Dedmon v. Steelman, 2017 WL 5505409 (Tenn. 2017). The purpose of the collateral source rule is to exclude evidence of payments made to the plaintiff by sources other than the defendant when the evidence is offered for the purpose of diminishing the defendant tortfeasor's liability to the injured plaintiff. The billed vs. paid challenge is but one of many ways to try and reduce recoverable damages based on the amount billed by a Plaintiff’s medical provider. As one court noted, reducing an insured plaintiff’s recovery by the negotiated rate differential “overlooks the fundamental purpose of the [collateral source] rule, … to prevent a tortfeasor from deriving any benefit from compensation or indemnity that an injured party has received from a collateral source.” Acuar v. Letourneau, 531 S.E.2d 316 (Va. 2000). Both approaches violate the CSR and result in plaintiffs with insurance being treated quite differently from plaintiffs without insurance. To recover damages for past medical expenses in a personal injury lawsuit, a plaintiff must present evidence and prove that the medical expenses incurred were both “reasonable” and “necessary.” For more than 100 years, this simple formula was the least complicated aspect of a plaintiff’s personal injury case. A few states have even declared their CSR to be unconstitutional. At the time of the Dedmon decision, three federal district courts in Tennessee had concluded that the West rule applied in personal injury litigation as well. So, the best way for them to get paid is to put anything that might be reimbursed by any payer on every bill. Connecticut enforces what is known as a “collateral source rule” with respect to personal injury judgments. In that earlier post the Nevada Law Blogs predicted that the Nevada Supreme Court could not allow the trial court’s decision to stand. . Notwithstanding the Collateral Source Rule, “double recovery” by plaintiffs occur infrequently because, upon payment, the insurer is subrogated to the rights of the insured as against the defendants who caused the injury, or the insurer may seek a refund from its insured. States began to enact collateral source statutes which significantly modified or altered the common law rule. Despite becoming a firmly established principle of tort law in most states, many questions have arisen concerning the scope of the CSR: Does it apply to free medical services? Arizona applies the collateral source rule, giving plaintiffs an opportunity to secure medical expenses damages despite having healthcare insurance coverage. The collateral source rule bars the admissibility of evidence at trial to show that a plaintiff’s losses have been compensated from other sources, such as the plaintiff’s insurance or workers compensation. CSR doctrine states that if an injured party in a civil lawsuit receives benefits from an insurance policy those are collateral benefits. 1478 (1966). Critics of the collateral source rule argue that an injured person should not receive a double recovery. A diagnosis of Ataxia-Telangiectasia will get a fixed Medicare payment regardless of how long the patient stays in the hospital, what tests are ordered, or what treatment is given. Arizona; NEWS. It states that if an injured party (plaintiff) in a civil lawsuit receives benefits from an insurance policy or some other source independent of the third-party tortfeasor (defendant), such “collateral” benefits will not be revealed to the jury or introduced into evidence, and will not be deducted from the total damages awarded to the plaintiff. This is especially true with regard to recovering reasonable and necessary damages in personal injury litigation. % of people found this article valuable. Each defendant is jointly and severally liable. Fed.R.Civ.P. It was adopted in the U.S. in 1854. ; Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name. Tenn. 2016); Keltner v. U.S., 2015 WL 3688461 (W.D. He seeks to clarify the German law on the collateral source rule. health insurance, worker's comp., defense and liability insurance, etc.). cmt. However, evidence of collateral source payments is admissible in medical negligence cases, subject to the plaintiff’s right to introduce evidence of any liens against the plaintiff’s claim. Under the so-called “collateral source rule” in Arizona law, a plaintiff may recover from a tortfeasor the full amount billed for their medical treatment, even if – as is often the case – the amount actually paid is less because the provider accepted a lesser amount. A. March 8, 2013. First, there are those States who follow the common law rule and amounts paid are generally inadmissible: Arkansas (collateral source rule statute was declared unconstitutional) Colorado (statute reinstated collateral source rule) Georgia Hawaii Kentucky (collateral source rule statute … Please tell us what we can do to improve this article. Managed care has further distorted pricing for health care services, as the deep discounts demanded by the MCOs require providers to offset those discounts by charging higher prices to other patients. $65,000? 3. This “collateral source rule” prohibits tortfeasors from avoiding liability for damages in situations in which an injured party has been compensated by a third party. Can a plaintiff submit to the jury the amount initially billed for medical services, as opposed to a discounted amount that her private insurance company paid to her health care providers? They take the position that limiting plaintiffs’ recovery to the amount paid to the medical provider is not contrary to the Collateral Source Rule (CSR) because the rule is not implicated. However, that is rarely what happens in today’s complex health care and insurance environment, where a complex web of negotiated rates, explanations of benefits, contractual relationships, health care coding, hundreds of different billing procedures, and the involvement of Medicare and Medicaid government billing requirements, render the process incomprehensible. COLLATERAL SOURCE EVIDENCE 5 12-2321. Tucson, Arizona 85718 Phone: (520) 790-5600. Ct. App. Thank you! In any medical malpractice action against a licensed health care provider, the defendant may introduce evidence of any amount or other benefit which is or will be payable as a benefit to the plaintiff as a result of the injury or death pursuant to the United States social security act, any state or … Today’s health care providers almost always accept a lesser amount in satisfaction of the bill pursuant to these contractual relationships. The impetus for changing the rule came from the perceived crisis in medical costs when medical malpractice litigation proliferated over the past three decades, and medical malpractice litigation was blamed by some as a significant cause. Mar. In this example, what is the reasonable value of medical services? In addition, the court ruled that the liens were a collateral source and could not be introduced into evidence without violating Proctor v. Castelletti, 112 Nev. 88, 911 P.2d 853 (1996). It eliminated a well-established feature of the common law, the collateral source rule, with clarity. Universal Citation: AZ Rev Stat § 12-565 (2014) 12-565. Posted by Matt Schmidt | Oct 15, 2019 | 0 Comments. Balance billing for in-network providers is generally illegal. States in favor of the rule--the majority--rationalize that the wrongdoer should have to compensate the plaintiff for the full value of the injuries he or she has caused irregardless of what contractual protection plaintiff has obtained from someone else and has paid for in advance to cover any losses. Before there were significant “collateral sources” such as health insurance, workers’ compensation, auto insurance, etc., there was no need for the rule. The law regarding what evidence can be used to prove medical expenses and the amount of medical expenses that can be recovered by a plaintiff in cases involving personal injury has been changing from state to state at light speed. (2) Payments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or a part of the harm for which the tortfeasor is liable. The plaintiff sues the defendant and wants to recover $200,000 as the reasonable and necessary medical expenses which he “incurred” and was billed for. Some social legislation benefits eschew the traditional fee-for-service model in favor of pool payments or a set “capitation” amount for all treatment of a single patient. If the plaintiff has obtained and paid for medical insurance, he should receive the benefit of that bargain: the plaintiff’s insurance should not indemnify the defendant. “Amount Paid.” The “actual amount paid” approach limits a plaintiff’s recovery to the amount paid to the medical provider, either by insurance or otherwise. There are 2,894 non-profit hospitals in the U.S. Most of these courts ground their decision on the common law CSR. They feel that limiting damages will help the liability insurance industry and help the business economy of their state. The Vermont Supreme Court described the rule in terms similar to those used by the U.S. Supreme Court in Mollison, but the Vermont Court for the first time characterized insurance proceeds received by the plaintiff as “collateral” to any recovery from the wrongdoer. Proving the reasonable value of medical services has become both controversial and confusing; and every state has gone its own way in dealing with the issue. Certain exceptions exist to the collateral source rule, however. The CSR ensures that the liability of similarly situated defendants is not dependent on the good fortune of the way each plaintiff’s medical expenses are financed. States such as Tennessee have abrogated the CSR through legislation, but only in health care liability and workers’ compensation cases. The unpaid balance of $135,000 is either written off, billed to the patient in a practice known as “balance billing”, and/or passed on to other patients in the system in the form of inflated charges. The “billed only” rule applies in Arizona, Colorado, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Mississippi, Oregon, South Carolina, South Dakota, Virginia, and Wisconsin. Under the collateral source rule, any evidence of a plaintiff's alternative or additional sources of payment for expenses or losses for which damages are sought in a civil action, such as insurance coverage, is excluded as irrelevant. We will get back to you shortly. A typical example is when the injured party uses their own medical insurance to cover … Over time, and especially during the recent era of tort reform, the CSR has received unfavorable press. Olague, 119 Ariz. 73, 73, 579 P.2d 577, 577 (App.1978) (“The so-called ‘collateral source rule’ states that total or partial compensation for an injury which the injured party receives from a collateral source wholly independent of the wrongdoer does not operate to reduce the … This source is known as a collateral source and is often a health insurance company. These courts adhere to the traditional CSR. Established in 1995, our firm has a long history of success, as seen in our many victories. Any subrogated provider of a collateral source not separately represented by counsel shall pay the same percentage of attorney fees as paid by the plaintiff and shall pay its proportionate share of the costs. The collateral source statute does not apply to tort claims seeking recovery for damage to property. View chart (begins on page 7) that provides an overview as to the law in all 50 states regarding the treatment of “reasonable” medical expenses, write-offs, and the collateral source rule. Terms Used In Arizona Laws 12-565. The defendants argue that the medical bills are not “reasonable” because they were reduced or written off by the insurance provider, who accepted insurance payments; thus, defendants argue that the injured plaintiff’s reasonable medical expenses and damages should be limited to sums “actually paid” by the insurer and proof of the full medical charges that were billed (either written-off or paid by insurance) should be excluded. They must invest all profit in the organization, are exempt from paying state and federal taxes on income and property, and must report “community benefits” offered by the facility. Thank you! See Lopez v. Safeway Stores, Inc. , 129 P.3d 487, 496 (Ariz. 2006). Being treated by a doctor may seem like a two-party interaction, but, it’s part of a large, complex system of information and payment. 152 (1854). “The collateral source rule is well established in Arizona tort law.” Michael v. Cole, 122 Ariz. 450, 452, 595 P.2d 995, 997 (1979); see also S. Dev. The collateral source rule, or collateral source doctrine, is an American case law evidentiary rule that prohibits the admission of evidence that the plaintiff or victim has received compensation from some source other than the damages sought against the defendant. The collateral source doctrine is an evidentiary rule prohibiting admission of evidence that a plaintiff has received compensation from some source other than the damages sought against a defendant. Tenn. 2015). Arizona Court of Appeals Division Two Holds That the Collateral Source Rule Applies to the Full Amount of Charged Reasonable Medical Expenses Without Any Deduction for Amounts Written Off by Healthcare Providers in the Context of a Negligence Slip and Fall Case. This allows insured plaintiffs to get a double recovery, to the extent that their medical bills and lost wage claims have already been paid by their insurance carrier. 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