In Ohio, the Ohio Supreme Court gave the insurance companies a huge gift when they decided Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362. An injured plaintiff can no longer recover the gross amount of the medical expenses incurred (the old rule), but only the amount that was actually paid.
Especially for our personal injury clients, it is important to understand the significance of the Robinson v. Bates case. In order to understand Robinson, you first must understand the Collateral Source Rule.
What is the Collateral Source Rule?
Suppose you are injured in an auto accident caused by the negligence (carelessness) of another driver. You go to the emergency department, and incur $5,000 in medical expenses. Your health insurance company pays $3,500, and the hospital accepts this as full payment of the bill (you owe the hospital nothing more). (By the way, this happens all the time). Remember, you will have to reimburse your health insurance company if you get a settlement or win at trial–this is called subrogation.
Now your case is before a jury, and you wish to be reimbursed for all of your losses. Are you entitled to $5,000 or $3,500? (We’re not addressing pain and suffering in this Post).
The old “collateral source rule” – which most of us were taught in law school – meant that the injured party can recover $5,000 for his / her medical expenses, even though the hospital accepted $3,500 as payment in full. When the medical expenses get very high, and the reimbursement is a small fraction of the bill, the differential can be significant. Suppose, for example, that the medical bills are $100,000, and the Medicaid reimbursement is only $20,000. Should the plaintiff recover $100,000 or $20,000? That makes a significant difference in evaluating the case.
In Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362, the Ohio Supreme Court decided to give the jury the original medical bill ($5,000), tell them the amount that was actually paid ($3,500), and then let the jury decide how much to award the plaintiff (as if a jury is better suited to decide this issue than simply imposing a fair rule of law). Justice Lundberg Stratton wrote separately that the original bill should be given to the jury (to show the severity of the injury), but the plaintiff should only recover the actual amount paid ($3,500).
Old Rule: Before Robinson, a plaintiff could submit all of his / her medical bills to the jury for consideration and compensation, regardless of whether the healthcare providers accepted a lesser amount as full payment. That was standard practice under the old collateral source rule.
Robinson v. Bates Rule: Now we give the jury the medical bills, tell them how much of the bills were actually paid, and then let them decide how much is fair. As a practical matter, most juries will award the lesser amount (the amount accepted by the provider).
Almost all auto accidents that go to trial involve defendants who have automobile liability insurance. The negligent driver (and his / her insurance company) is responsible for all damages s/he causes. The plaintiff is entitled to all losses caused by the careless driver’s negligence. The hospitals and doctors who treat the injured person should be able to recover the full, fair market value of their services. One could argue that the fair market value of the services provided by the doctors and hospitals is the negotiated amount paid by the health insurance company. But since the automobile liability insurance company is ultimately paying the losses (not the health insurance company), the hospitals and doctors should recover the full fair market value of their services, not the negotiated rate paid by the health insurance. The negotiated rate is fine for general health care (outside the auto accident situation) because it is based on a large number of insured people who get better rates if they negotiate as a group.
Ask yourself this: What is fair? Pretty much everyone would agree the plaintiff should be held harmless, meaning s / he should not be “out-of-pocket” anything as a result of an accident that was not his/her fault. In our hypothetical, the plaintiff is held harmless if s / he only recovers the $3,500. Allowing the plaintiff to recovery $5,000 would be a windfall since the hospital agreed to accept $3,500 for its services. But I would allow the health care providers to recover the full fair market value of their services, instead of the negotiated amount. The way it is now, the auto insurance companies are essentially getting the advantage of rates negotiated by health insurance companies.
Note, RC 2315.20 (effective 4/7/05) changed the collateral source rule again (Robinson was based on Ohio law before the effective date of 2315.20). Under RC 2315.20, the defendant may not introduce evidence of any amount payable as a benefit to the plaintiff if the collateral source has a right of subrogation. Almost all collateral sources these days have a right of subrogation, so the new rule says: The defendant may not introduce evidence of any amount payable as a benefit to the plaintiff. This raises the question: Under RC 2315.20, is the plaintiff entitled to the original amount of the medical bills, or the amount the providers accept as full payment? This question will need to be answered by the courts.
Doctors and hospitals often “write off” medical expenses for a variety of reasons (charitable and otherwise). The Supreme Court has stated that any medical expense that is written off by the provider is not recoverable by a plaintiff. Fair enough. But should the automobile liability company (who is liable for all medical expenses and other losses) get the benefit of a charitable or accounting writeoff? I think not. So we are encouraging doctors and hospitals to not write off any medical bill in the context of a motor vehicle accident.
In Jaques v. Manton, 125 Ohio St.3d 342, 2010-Ohio-1838, the Ohio Supreme Court held that a defendant may share with the jury the fact that a healthcare provider wrote off certain medical expenses. The jury then can decide the fair market value of the medical services provided. So, again, medical providers are encouraged not to write off invoices in the automobile accident context.