Coal In Everyone’s Stockings –
Collateral-Source Rule Analyzed And Applied
Robinson v. Bates (2005), 112 Ohio St.3d 17
This Newsletter carefully reviews the decision of Robinson v. Bates (2005), 112 Ohio St.3d 17, the long awaited case dealing with the application of the collateral-source rule in the context of original medical bills versus an amount accepted as full payment by the medical care provider. The First District Court of Appeals for Hamilton County had authored its opinion reasoning that the appropriate measure of damages the plaintiff could claim was the full amount of the medical bills even if a lesser amount had been accepted as full payment. In Robinson, supra, the plaintiff had incurred medical bills in the amount of slightly less than $2,000, stipulated that her insurance company had negotiated the amount of those bills to approximately $1,300 and, hence, no monies were due and owing for the medical bills inasmuch as a lesser amount had been agreed upon by her insurance company and the medical care provider. The defense in Robinson argued unsuccessfully that the appropriate measure of damages would be the amount that had been paid by the insurance provider as “payment in full.” As will be more fully developed, an argument exists that everyone’s stocking (plaintiff and defense) has been filled with coal (in keeping with the holiday spirit) inasmuch as this particular decision renders claim handling, settlement pre-suit as well as litigation potentially confusing in light of the holding of the Court. Therefore, the Newsletter is limited to this particular case.
The Ohio Supreme Court began its analysis by tracing the purposes of the collateral-source rule. The Court also undertook a national analysis on the topic, noting that ten states have concluded that the plaintiffs could recover the full amount of reasonable medical bills, including any amounts that had been written off from the bills “pursuant to contractual rate reductions.” Id at para. 12. The Court further noted other states’ courts had limited recovery to the amount actually paid by the plaintiff’s insured. Id. at para. 13.
The Court’s decision basically turned on the premise that if monies were “written off” by a medical care provider, same did not constitute a payment and hence did not fall within the aegis of the collateral-source rule. At paragraph 16 of its opinion, the Court stated the following:
“The collateral-source rule does not apply to write-offs of expenses that are never paid. The written-off amount of a medical bill differs from the receipt of compensation or services addressed in Pryor. The collateral-source rule excludes only ‘evidence of benefits paid by a collateral source.’ ... Because no one pays the write-off, it cannot possibly constitute payment of any benefit from a collateral source. ... Because no one pays the negotiated reduction, admitting evidence of write-offs does not violate the purpose behind the collateral-source rule. The tortfeasor does not obtain a credit because of payments made by a third party on behalf of the plaintiff.”
The Court thereafter articulated its holding and stated in paragraph 17 – 18 of its opinion the following:
“Because different insurance arrangements exist, the fairest approach is to make the defendant liable for the reasonable value of plaintiff's medical treatment. Due to the realities of today's insurance and reimbursement system, in any given case, that determination is not necessarily the amount of the original bill or the amount paid. 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 jury may decide that the reasonable value of medical care is the amount originally billed, the amount the medical provider accepted as payment, or some amount in between.” (emphasis added)
It is anticipatable that this standard may create confusion in settlement negotiations as well as litigation. By way of example, a situation could exist wherein the plaintiff incurred $5,000 in medical bills yet the insurance company negotiated the amount of the bill down to $2,800. From the last sentence of the Court’s holding (underlined above), the jury could determine that the plaintiff’s reasonable value of medical care is the “amount originally billed” ($5,000), the amount the medical provider accepted as payment ($2,800), or some amount in between.
The first question that needs to be asked is why would a jury award $5,000 in medical bills if in fact the jury was told that the medical bills had been compromised and completely resolved for the payment of $2,800? Would counsel for the plaintiff seriously wish to raise that argument or would he/she avoid that argument for fear of alienating the jury by “overreaching”? If the answer to the foregoing question is in the affirmative, it basically renders as a nullity the portion of the holding which allows a plaintiff to seek the “amount originally billed” which, as previously noted, would be a difficult argument to advance on the part of the plaintiff. However, if the determination of “reasonable value of medical care” is to be determined by the jury, why does that figure necessarily have to be between the amount originally billed and the amount the medical provider accepted as payment? Alternatively phrased, why can not the reasonable value of medical care be a figure less than the amount the medical care provider accepted as payment?
Robinson, supra, does not involve the issue of proximate cause. It will be important to differentiate, in dealings with counsel for the plaintiff, that the Robinson decision does not stand for the proposition that the measure of the plaintiff’s damages (for medical bills) lies somewhere between the amount billed and the amount accepted by the medical provider. Robinson was strictly limited to the concept of what is the “reasonable value of medical care” and has absolutely nothing to do with proximate cause. However, from a logical point of view, one may raise the question that why can not the “reasonable value of medical care” be determined to be a number less than the amount the “medical provider accepted as payment.” Simply stated, if the jury is the ultimate arbiter of this question, why is it necessary to give the jury a range (amount originally billed and amount accepted as payment) in order to determine their award?
The case also is problematic inasmuch as no liability insurance carrier, in settlement negotiations with counsel for the plaintiff, would ever be inclined to offer the total amount of medical bills if in fact it was known that the medical bills had been compromised and settled in their entirety. Regrettably, it is further anticipated that counsel for the plaintiff will argue that Robinson does allow him/her to seek the reasonable value of the amount “originally billed” which, from a technical point of view, the case does so indicate. However, insurance carriers would likely raise the point that there is no logical basis to pay the amount originally billed because a jury would presumably never award that amount in the setting of evidence presented to them that the bills had been substantially compromised for an amount less than the figure originally billed.
The foregoing examples are merely offered to illustrate the confusion that may ensue with regard to this decision. The Ohio Supreme Court concluded its opinion by noting that any changes in the collateral-source rule should be determined by the Ohio General Assembly and not the Supreme Court. On paragraph 19 of its opinion, the Court stated the following:
“It may well be that the collateral-source rule itself is out of synch with today's economic realities of managed care and insurance reimbursement for medical expenses. However, whether plaintiffs should be allowed to seek recovery for medical expenses as they are originally billed or only for the amount negotiated and paid by insurance is for the General Assembly to determine.”
The concurring and dissenting opinion accurately noted that the majority’s decision creates confusion inasmuch as it, on one hand, notes that the measure of damages is a jury question but also concludes by noting that the General Assembly should resolve the issue which the Court had previously pronounced was indeed a jury question. Id.
The information contained in this newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.
Coal In Everyone’s Stockings –
Collateral-Source Rule Analyzed And Applied
Robinson v. Bates (2005), 112 Ohio St.3d 17
This Newsletter carefully reviews the decision of Robinson v. Bates (2005), 112 Ohio St.3d 17, the long awaited case dealing with the application of the collateral-source rule in the context of original medical bills versus an amount accepted as full payment by the medical care provider. The First District Court of Appeals for Hamilton County had authored its opinion reasoning that the appropriate measure of damages the plaintiff could claim was the full amount of the medical bills even if a lesser amount had been accepted as full payment. In Robinson, supra, the plaintiff had incurred medical bills in the amount of slightly less than $2,000, stipulated that her insurance company had negotiated the amount of those bills to approximately $1,300 and, hence, no monies were due and owing for the medical bills inasmuch as a lesser amount had been agreed upon by her insurance company and the medical care provider. The defense in Robinson argued unsuccessfully that the appropriate measure of damages would be the amount that had been paid by the insurance provider as “payment in full.” As will be more fully developed, an argument exists that everyone’s stocking (plaintiff and defense) has been filled with coal (in keeping with the holiday spirit) inasmuch as this particular decision renders claim handling, settlement pre-suit as well as litigation potentially confusing in light of the holding of the Court. Therefore, the Newsletter is limited to this particular case.
The Ohio Supreme Court began its analysis by tracing the purposes of the collateral-source rule. The Court also undertook a national analysis on the topic, noting that ten states have concluded that the plaintiffs could recover the full amount of reasonable medical bills, including any amounts that had been written off from the bills “pursuant to contractual rate reductions.” Id at para. 12. The Court further noted other states’ courts had limited recovery to the amount actually paid by the plaintiff’s insured. Id. at para. 13.
The Court’s decision basically turned on the premise that if monies were “written off” by a medical care provider, same did not constitute a payment and hence did not fall within the aegis of the collateral-source rule. At paragraph 16 of its opinion, the Court stated the following:
“The collateral-source rule does not apply to write-offs of expenses that are never paid. The written-off amount of a medical bill differs from the receipt of compensation or services addressed in Pryor. The collateral-source rule excludes only ‘evidence of benefits paid by a collateral source.’ ... Because no one pays the write-off, it cannot possibly constitute payment of any benefit from a collateral source. ... Because no one pays the negotiated reduction, admitting evidence of write-offs does not violate the purpose behind the collateral-source rule. The tortfeasor does not obtain a credit because of payments made by a third party on behalf of the plaintiff.”
The Court thereafter articulated its holding and stated in paragraph 17 – 18 of its opinion the following:
“Because different insurance arrangements exist, the fairest approach is to make the defendant liable for the reasonable value of plaintiff's medical treatment. Due to the realities of today's insurance and reimbursement system, in any given case, that determination is not necessarily the amount of the original bill or the amount paid. 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 jury may decide that the reasonable value of medical care is the amount originally billed, the amount the medical provider accepted as payment, or some amount in between.” (emphasis added)
It is anticipatable that this standard may create confusion in settlement negotiations as well as litigation. By way of example, a situation could exist wherein the plaintiff incurred $5,000 in medical bills yet the insurance company negotiated the amount of the bill down to $2,800. From the last sentence of the Court’s holding (underlined above), the jury could determine that the plaintiff’s reasonable value of medical care is the “amount originally billed” ($5,000), the amount the medical provider accepted as payment ($2,800), or some amount in between.
The first question that needs to be asked is why would a jury award $5,000 in medical bills if in fact the jury was told that the medical bills had been compromised and completely resolved for the payment of $2,800? Would counsel for the plaintiff seriously wish to raise that argument or would he/she avoid that argument for fear of alienating the jury by “overreaching”? If the answer to the foregoing question is in the affirmative, it basically renders as a nullity the portion of the holding which allows a plaintiff to seek the “amount originally billed” which, as previously noted, would be a difficult argument to advance on the part of the plaintiff. However, if the determination of “reasonable value of medical care” is to be determined by the jury, why does that figure necessarily have to be between the amount originally billed and the amount the medical provider accepted as payment? Alternatively phrased, why can not the reasonable value of medical care be a figure less than the amount the medical care provider accepted as payment?
Robinson, supra, does not involve the issue of proximate cause. It will be important to differentiate, in dealings with counsel for the plaintiff, that the Robinson decision does not stand for the proposition that the measure of the plaintiff’s damages (for medical bills) lies somewhere between the amount billed and the amount accepted by the medical provider. Robinson was strictly limited to the concept of what is the “reasonable value of medical care” and has absolutely nothing to do with proximate cause. However, from a logical point of view, one may raise the question that why can not the “reasonable value of medical care” be determined to be a number less than the amount the “medical provider accepted as payment.” Simply stated, if the jury is the ultimate arbiter of this question, why is it necessary to give the jury a range (amount originally billed and amount accepted as payment) in order to determine their award?
The case also is problematic inasmuch as no liability insurance carrier, in settlement negotiations with counsel for the plaintiff, would ever be inclined to offer the total amount of medical bills if in fact it was known that the medical bills had been compromised and settled in their entirety. Regrettably, it is further anticipated that counsel for the plaintiff will argue that Robinson does allow him/her to seek the reasonable value of the amount “originally billed” which, from a technical point of view, the case does so indicate. However, insurance carriers would likely raise the point that there is no logical basis to pay the amount originally billed because a jury would presumably never award that amount in the setting of evidence presented to them that the bills had been substantially compromised for an amount less than the figure originally billed.
The foregoing examples are merely offered to illustrate the confusion that may ensue with regard to this decision. The Ohio Supreme Court concluded its opinion by noting that any changes in the collateral-source rule should be determined by the Ohio General Assembly and not the Supreme Court. On paragraph 19 of its opinion, the Court stated the following:
“It may well be that the collateral-source rule itself is out of synch with today's economic realities of managed care and insurance reimbursement for medical expenses. However, whether plaintiffs should be allowed to seek recovery for medical expenses as they are originally billed or only for the amount negotiated and paid by insurance is for the General Assembly to determine.”
The concurring and dissenting opinion accurately noted that the majority’s decision creates confusion inasmuch as it, on one hand, notes that the measure of damages is a jury question but also concludes by noting that the General Assembly should resolve the issue which the Court had previously pronounced was indeed a jury question. Id.
The information contained in this newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.