Lead Opinion
The opinion of the court was delivered by
This civil interlocutory appeal concerns the possible application of the collateral source rule to medical bill write-offs.
Facts and Holding
The essential facts are straightforward. On July 23,2005, plaintiff Karen Martinez slipped and fell while shopping at defendant’s business in Lyons, Kansas. She underwent back surgery at Wesley Medical Center and was ultimately billed $70,496.15. The hospital accepted $5,310 in satisfaction of the bill: $4,689 from plaintiff s private health insurance company, Coventry Health Systems (Coventry), and $621 from plaintiff as her deductible and co-pay. Pursuant to its contract with Coventry, the hospital wrote off the balance of $65,186.15.
In plaintiff s suit for recovery of damages, defendant filed a motion in limine asking the district court to prohibit plaintiff from claiming the full $70,496.15 as damages. The defendant apparently erred in its recitation of the specific amounts paid by each source to satisfy the bill, as well as the total amount paid to the hospital. Those errors apparently were repeated by plaintiff and the district court and by the parties in their briefs to this court. The facts and resultant parties’ arguments in this opinion have been modified to conform with the amounts stated in Coventry’s Explanation of Benefits, which was attached to defendant’s motion.
The court granted defendant’s motion, limiting plaintiff s recovery to those amounts actually paid by Coventry and plaintiff ($5,310) and preventing her from submitting evidence of medical expenses in excess of that amount. The court made the findings required by K.S.A. 60-2102(c) for an interlocutory appeal, and the Court of Appeals granted plaintiff s application. We transferred the case on our own motion pursuant to K.S.A. 20-3018(c).
Analysis
Collateral source rule and the parties’ arguments
Our analysis starts with this court’s past description of the collateral source rale as follows:
“ ‘At common law, the collateral source rule prevented the jury from hearing evidence of payments made to an injured person by a source independent of the tortfeasor as a result of the occurrence upon which the personal injury action is based. The court has stated the rule as follows: “Under the ‘collateral source rule,’ benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.’ ” (Emphasis added.) Rose v. Via Christi Health System, Inc.,279 Kan. 523 , 529,113 P.3d 241 (2005) (Rose II) (quoting Farley v. Engelken,241 Kan. 663 , Syl. ¶ 1,740 P.2d 1058 [1987]; Thompson v. KFB Ins. Co.,252 Kan. 1010 , 1014,850 P.2d 773 [1993]).
After a lengthy recitation of the Kansas appellate court decisions on the collateral source rale, plaintiff contends they create the following standard: “[W]hen an injured person has negotiated for, paid for or contributed in kind for a benefit that reduces his obligation to pay for injuries caused by a tortfeasor, that benefit should not be used to reward the tortfeasor or anyone responsible for his debt.” Consequently, she argues that the district court failed to apply the collateral source rale and, as a result, $65,186.15 of the original hospital bill, $70,496.15, would be incorrectly withheld from the jury’s consideration of her damages.
In holding that the collateral source rale is inapplicable to the $65,186.15 write-off, the district court explained:
*576 “The court finds the Collateral Source Rule is inapplicable in this case as that is set forth in Bates v. Hogg,22 Kan. App. 2d 705 (1996). The court finds this is a pretrial declaration of law that the plaintiff s recovery should be limited to the amount actually paid by the private insurance company. The court finds the proper measure of damages for medical expenses under these facts and circumstances is the actual ainount paid by the plaintiffs own private insurance company ... .To allow for the write-off amount is a misleading piece of evidence that did not actually occur as damage to the plaintiff. The evidence is the plaintiff cannot and will not be held responsible for the write-off, pursuant to the contract between the hospital and her own private insurance company. Therefore, only her actual medical damage is [$5,310].... To require the defendant to pay for some amount that was not paid would be giving the plaintiff the benefit of receiving more than their actual damages that is actually needed to reimburse the plaintiff to be made whole.” (Emphasis added.)
As the holding indicates, the court initially ruled that only the amount paid by plaintiffs insurance carrier ($4,689) could be recovered. But it later clarified that her actual medical damages, i.e., the amount recoverable, was $5,310, which included plaintiff s own payments of $621.
Defendant responds to plaintiffs position with three main points. First, defendant argues that the doctrine of restoration is fair and “[Requiring defendants to pay more than the amount necessary to satisfy the financial obligation... violates... fundamental fairness.” Second, it points out that under its theory, plaintiff would not be made “less than whole.” Finally, elaborating upon the district court’s decision, defendant argues that plaintiff is only entitled to recover the “reasonable value” of her medical care and expenses. Defendant contends that the reasonable value is necessarily the “agreed upon” value, i.e., the $5,310 offered by plaintiff and her carrier and accepted by the hospital in satisfaction of the bill. See, e.g., Bates v. Hogg,
Amicus Curiae — Kansas Association for Justice
Kansas Association for Justice (KsAJ) argues that write-offs and write-downs are collateral source benefits. Like plaintiff, it con
KsAJ relies heavily upon the principles of the collateral source rule as provided in the Restatement (Second) of Torts (1977): (1) deterrence, (2) compensation, and (3) determining wrongful conduct. See, e.g., Section 920A(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 hable.”) It contends that these principles were not intended to be oppositional but collaborative. Finally, KsAJ takes exception to the suggestion that plaintiffs receive a windfall under the collateral source rule; it suggests they instead obtain a “consequential benefit.”
Amicus Curiae Kansas Association of Defense Counsel
Kansas Association of Defense Counsel (KADC) fleshes out the defendant’s argument that simply restoring a plaintiff to his or her preinjury status is fair. KADC acknowledges Section 920A of the Restatement and how it effectively bars any argument that plaintiff s damages should be reduced by the $4,689 paid by Coventry to the hospital on her behalf. It argues, however, that the real issue before us is the value of plaintiff s medical expenses. It cites comment h of Restatement (Second) of Torts § 911 in support of its position that the appropriate compensation for injured plaintiff is the amount actually paid on the bill: here, $5,310. That comment states:
“When the plaintiff seeks to recover for expenditures made or liability incurred to third persons for services rendered, normally the amount recovered is the reasonable value of the services rather than the amount paid or charged. If, however, the injured person paid less than the exchange rate, he can recover no more than the amount paid, except when the low rate was intended as a gift to him.”
KADC next argues that plaintiff s benefit of the bargain concept does not apply to write-offs because the plaintiff plays no role in
KADC also points out that the basic principle of damages is to malee the plaintiff whole, not to grant a windfall. It observes that the collateral source rule itself operates as an exception to that basic principle, since it allows an injured party to recover damages which the party itself did not pay. According to KADC, however, allowing the plaintiff to recover not only the expenses paid by other sources but also expenses not paid by any source, amounts to a “super-windfall” for which there is no public policy justification.
KADC further takes exception to the suggestion that limiting the tortfeasor a windfall. It contends that the tortfeasor is still responsible for the entire amount of the plaintiff s medical expenses paid — whether or not these expenses were actually paid by the plaintiff, e.g., through private insurance. KADC argues that this result is fair because the amount originally billed by the medical provider is an inflated rate, not the reasonable value of services.
Finally, KADC argues that if the “sticker price” — the original amount billed — is admitted into evidence, then the amount actually paid to satisfy that bill should also be admitted. It contends that only then would the jury be able to determine the reasonable value of the services provided.
Standard of Review
This court generally reviews the granting of a motion in limine for abuse of discretion. See State v. Morton,
To better understand how the collateral source rule should be applied, if at all, under the circumstances of this case, we need to review the case law on the interplay of the rule with write-offs in Kansas.
Bates v. Hogg
Kansas appellate courts first considered the applicability of the collateral source rule to write-offs in Bates v. Hogg,
The question presented in Bates was the same one presented in the instant case except that the write-off was pursuant to a Medicaid contract rather than a private insurance agreement. The Court of Appeals panel first pointed out that the “ ‘purpose of awarding damages is to make a party whole by restoring that party to the position he [or she] was in prior to the injury.’ ”
“The fundamental principle of the law of damages is that a person who suffers personal injuries because of the negligence of another is entitled to recover the reasonable value of medical care and expenses for the treatment of his or her*580 injuries, as well as the cost of those reasonably certain to be incurred in the future.” (Emphasis added.)22 Kan. App. 2d at 704 (citing 22 Am. Jur. 2d, Damages § 197, p. 169).
The Bates panel concluded that the collateral source rule simply was not applicable to its facts. It reasoned that because medical providers, by agreement and contract, may not charge Medicaid patients for the difference between their “normal” charges and the amount actually paid by Medicaid, then “the amount allowed by Medicaid becomes the amount due and is the ‘customary charge’ under the circumstances.” Bates,
“ ‘It would be unconscionable to permit the taxpayers to bear the expense of providing free medical care to a person and then allow that person to recover damages for medical services from a tort-feasor and pocket die windfall.’ ”22 Kan. App. 2d at 706 (quoting Gordon v. Forsythe County Hospital Authority, Inc.,409 F. Supp. 708 , 719 (M.D.N.C. 1976).
In effect, the Bates panel endorsed limited application of the collateral source rule. Plaintiff was allowed to seek recovery of damages for the amount of medical expenses that was actually paid by a nonwrongdoer, i.e., from a source “collateral” to the wrongdoer. Plaintiff was not allowed, however, to seek recovery of damages for the amount written off because it was paid by no one.
Judge, now Chief Judge, Rulon dissented, opining that a plaintiff should be allowed to recover the reasonable value of medical services rendered to treat an injury regardless of what amount was actually paid.
Rose I
This court first examined the interplay between write-offs and the collateral source rule in Rose v. Via Christi Health System, Inc.,
The court then considered the hospital’s cross-appeal, in which it argued that the district court should have limited the evidence of plaintiff s medical expenses to those amounts actually paid and not include the amounts it wrote off.
“The purpose for the collateral source rule is to prevent the tortfeasor from escaping the full liability resulting from his or her actions by requiring the tort-feasor to compensate the injured party for all of the harm he or she causes, not just the injured party’s net loss.).” Rose I,276 Kan. at 544 (citing Bates v. Hogg,22 Kan. App. 2d 702 , 709,921 P.2d 249 , rev. denied260 Kan. 991 [1996] [dissenting opinion citing 2 Minzer, Nates, Kimball, Axelrod, and Goldstein, Damages in Tort Actions § 9.60, p. 9-88 (1991); Restatement (Second) Torts § 920A, comment b (1977)]).
The Rose I court then ruled that Bates’ holding was limited to cases involving Medicaid.
“Jackson, however, does not support this contention. In Jackson, the defendant sought to have die damage award for medical expenses reduced to the amount that had actually been paid by the plaintiff and a charity on Iris behalf. Finding no evidence to support the defendant’s request for remittitur, the Jackson court refused to reduce the plaintiff s damage award.263 Kan. at 151-52 ,947 P.2d 31 . However, the Jackson court did not address the application of the collateral source rule, so it is inapposite to the issue in this case.”276 Kan. at 546 .
The Rose I court appeared to acknowledge that its ruling would result in a windfall for plaintiffs. It held:
“Public policy in Kansas supports the theory that any windfall from the injured party’s collateral sources should benefit the injured party rather than the tortfea-sor, who should bear the full liability of his or her tortious actions without regard to the injured parties’ method of financing his or her medical treatment.”276 Kan. at 551 .
In short, given the court’s reliance upon case law holding that write-offs pursuant to private insurance and write-offs pursuant to Medicare were all covered by the collateral source rule, to date arguably only the Medicaid write-offs from Bates v. Hogg were excluded from possible recovery by injured plaintiffs.
Justice Luckert wrote for the dissent, arguing that applying the collateral source rule to “this portion of the judgment is contrary to the basic precept of the collateral source rule which is that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.”
This court granted a motion for rehearing in Rose I. Before release of our modified opinion in June 2005, earlier that year one panel of the Court of Appeals released two unpublished opinions dealing with the possible applicability of the collateral source rule to write-offs. The decisions essentially excluded recovery for write-offs in the contexts of both Medicare (contrary to Rose I) and private insurance.
First, in Fischer v. Farmers Ins. Co., No. 90,246, unpublished opinion filed February 18, 2005, the plaintiff was injured when her automobile was struck by a pickup. She settled with the defendant’s insurance company and sought recovery under her own policy s underinsured motorist coverage. Her insurer filed a motion in lim-ine to exclude evidence of that portion of Fischer’s medical expenses that had been written off by the medical provider pursuant to an agreement with Fischer’s own group health insurance carrier.
The trial court relied upon Bates to exclude the amount of the write-off from plaintiffs damages. The Court of Appeals panel agreed that the Bates majority holding “was not principally driven by the fact that the write-off was mandated by a Medicaid contract.” Fischer, slip op. at 4. It emphasized the doctrine of restoration, explaining that when the plaintiff is awarded damages equal to the amount actually paid to his or her health care provider pursuant to an agreement, the plaintiff is then restored to his or her exact economic preinjury status. While the plaintiff would not be able to pocket the write-off amount, neither would he or she owe anything for medical services. Fischer, slip op. at 2. The panel explained that this solution results in restoration and equal treatment for all plaintiffs:
“The principle of restoration should be applicable to all plaintiffs, regardless of whether they be uninsured, covered by Medicaid, covered by Medicare, covered by an employer’s group health policy, or covered by an individually purchased private insurance contract.... In short, applying Bates to all plaintiffs effects their restoration to pre-accident status without arbitrarily overcompensating some injured persons.” Fischer, slip op. at 5.
The Fischer panel inteipreted the Bates holding to mean that while the amount a plaintiff s health insurer actually pays to the
The Fischer panel also explained that the idea that a plaintiff should receive a windfall so that the tortfeasor can be held fully hable is fiction:
“The sentiment that public policy dictates giving a plaintiff a windfall in order to hold the tortfeasor fully hable for his or her tortious conduct is, in practice, an illusion. In most cases, a tortfeasor pays nothing personally; the plaintiff s judgment is paid by a liability insurance carrier. If the wrongdoer’s bodily injury liability insurance limits are inadequate to cover the plaintiff s injuries, it is common for the tortfeasor to confess judgment in return for a covenant not to execute. On other occasions, a tortfeasor discharges an excess judgment in bankruptcy.” Fischer, slip op. at 12.
The panel not only concluded that the collateral source rule was inapplicable to write-offs but also that the amount the provider agreed to satisfy its bill conclusively established the reasonable value of the services:
“In summary, we hold that the amount which a health care provider has, in advance, agreed to accept in full satisfaction for services rendered to a plaintiff is the measure of the reasonable value of medical care and expenses for the treatment of the plaintiffs injuries. Previously established nonrecourse discounts by health care providers are not a collateral source benefit within the ambit of tire collateral source rule.” (Emphasis added.) Fischer, slip op. at 13.
It then logically followed that “[t]he plaintiff cannot introduce evidence of the amount of the nonrecourse discounts as part of the plaintiff s economic damages.” Fischer, slip op. at 13.
In effect, Fischer extended the Bates holding and rationale— refusing to apply the collateral source rule to Medicaid write-offs by medical care providers — to private insurance write-offs by providers. And as in Bates, the rule still had some limited application: plaintiff could seek recovery of damages for the amount of medical expenses that was actually paid by a nonwrongdoer, i.e., plaintiff s carrier. Moreover, Fischer more clearly articulated the rule inherent in Bates’ result: the paid amount is “the measure of the rea
Two months later, the same panel released Liberty v. Westwood United Super, Inc., No. 89,143, unpublished opinion filed April 29, 2005, rev. denied
The Liberty panel explained that, for several reasons, applying the collateral source rule to write-offs in Medicare scenarios made little sense:
“The application of that rule to mandatory Medicare discounts requires a great deal of creativity. First, one must perceive that the nonconsensual, involuntary deductions from a person’s wages to fund the federally mandated Medicare program are akin to the premiums paid by the fiscally prudent and relatively affluent purchaser of private insurance. More importantly, however, one must fictionally characterize the mandatory contractual discount for Medicare patients as a ‘payment’ of medical expenses. The write-off is a volume discount allowed by medical care providers who want to tap into the pool of Medicare patients. No one is paid the discount, hut rather the discounted cost of services assists in keeping the amount that must be deducted from one’s paycheck at a manageable level.” (Emphasis added.) Slip op. at 13.
As the panel had done in Fischer, it also addressed the windfall argument in Liberty:
“Finally, the rationale of giving the injured person a windfall in order to avoid allowing the tortfeasor to reap a windfall simply ignores reality. One can perceive that in the vast majority of cases, the ‘windfall’ [to the plaintiff] is funded by a [defendant’s] liability insurance carrier, not the tortfeasor personally. The tortfea-sor is not taught a lesson via his or her pocketbook, but rather the rest of us must share the cost of the windfall through higher liability premiums.” (Emphasis added.) Slip op. at 13.
Rose II
At the same time the Court of Appeals panel was considering Fischer and Liberty, this court reheard arguments in Rose I—Rose v. Via Christi Health System, Inc.,
“Thus, we conclude that under the facts of this case, specifically where the Medicare provider, Via Christi, is the defendant and also the health care provider of the services which form the basis of the economic damages claim, the trial court did not err in allowing a setoff or credit against the portion of the economic loss attributable to medical expenses in the amount of the Medicare write-off, an amount not paid by the plaintiff, Medicare, or any third party, and which reflected a cost incurred by the defendant. The trial court’s ruling is a correct application of Kansas law . . . .” (Emphasis added.)279 Kan. at 533 .
Because this court upheld the trial court’s decision to allow a setoff or credit, it did not reach the cross-appeal question. That question was “whether evidence of medical charges that are written off by a health care provider pursuant to a contract with Medicare is admissible at trial as evidence of economic damages.”
Adamson v. Bicknell
Most recently, the Court of Appeals considered the collateral source rule and write-offs in Adamson v. Bicknell, 41 Kan App. 2d 958,
Recent Kansas case law, i.e., from Bates to date, is therefore synthesized chronologically as follows:
1. Medicaid write-offs are not covered by the collateral source rule per Bates;
2. Medicare write-offs are covered by the collateral source rule per Rose I;
3. Private insurance write-offs are not covered by the collateral source rule per Fischer;
4. Medicare write-offs are not covered by the collateral source rule per Liberty (contraiy to Bose I); and
5. Whether Medicare write-offs are covered by the collateral source rule is intentionally left unaddressed by the Supreme Court per Rose II.
Related case law from the Court of Appeals is further synthesized as follows:
Because write-offs by health care providers are not a collateral source benefit within the ambit of the collateral source rule, the issue regarding these write-offs instead becomes their possible relevance to the “reasonable value of medical care and expenses for the treatment of the victim’s injuries.” Liberty, slip op. at 13. And
Federal cases
The federal district courts in Kansas have uniformly held that the collateral source rule does not apply to write-offs by health care providers — whether via Medicaid as in Bates, via Medicare as in Liberty (contrary to Rose I), or via private insurance as in Fischer. Like Liberty and Fischer, the opinions are all unpublished.
In Strahley v. Mercy Health Center of Manhattan,
Judge Vratil quoted with approval Mitchell v. Hayes,
“ ‘Discounting is a reality of modem medical economics and it does no violence to the collateral source doctrine to bring the tort compensation system the same extended savings. By allowing the plaintiff to show the discounted medical expenses as evidence of his damages, even though he paid no part of them, but refusing any evidence of the write-offs that no one incurred, there is a proper balance of the competing interests at issue.’ ” Strahley,2000 WL 1745291 , at *2.
One year later, in Davis v. Management & Training Corp. Centers,
Finally, 1 year after Davis, in Wildermuth v. Staton,
“First, the write-offs were not a benefit that Plaintiff s were personally responsible for obtaining or that they individually bargained for. Rather, the write-offs are required by operation of federal law.”2002 WL 922137 , at "5.
He further rejected the plaintiff s arguments for admission of the write-offs as evidence of damages because the collateral source rule does not apply to write-offs of expenses that are never paid:
“Second, the Court sees no reason to distinguish between the type of benefits received. What is at issue is the write-off and not the Medicare payments itself. It does not matter whether the benefits received are from the Medicaid or Medicare programthe collateral source rule, by its express terms, simply does not apply to write-offs of expenses that are never paid. The collateral source rule only excludes ‘evidence of benefits paid by a collateral source.’ Wendtling v. Medical Anesthesia Servs.,237 Kan. 505 , 515,701 P.2d 939 (1985) (emphasis added). Because a write-off is never paid, it cannot possibly constitute payment of any benefit from a collateral source. [Citation omitted.]” Wildermuth,2002 WL 922137 , at “5.
Judge Waxse also addressed the windfall arguments:
“Moreover, as the Kansas Court of Appeals noted in Bates, allowing a plaintiff to recover the amount of charges written off would result in a windfall to the plaintiff. Permitting Plaintiffs in this case to enter into evidence medical bills for which neither Plaintiffs nor collateral source had any responsibility to pay and allowing Plaintiffs to recover that amount does not further the purpose of the*590 collateral source rule. The rule is intended to prevent a defendant tortfeasor from escaping from full liability for the consequences of his or her wrongdoing and to prevent a windfall to the tortfeasor, who would otherwise profit from the benefits provided by a third party to the injured party. It is not intended to provide a tmndfall to plaintiffs. As the Kansas Supreme Court has noted, ‘the basic principle of damages is to make a party whole by putting it back in the same position, not to grant a windfall.’ [Citation omitted.]” (Emphasis added.) Wildermuth,2002 WL 922137 , at *5.
Judge Waxse expressly rejected plaintiff s additional argument that Bates v. Hogg,
The parties’ arguments required Judge Waxse to go further than his federal colleagues, Judges Vratil and Rogers, and to review the reasonable value of the medical care and expenses for plaintiff s treatment. More particularly, defendant alleged that plaintiff had not met the threshold requirement of a reasonable value of $2,000 in economic damages, e.g., medical expenses, which would allow him or her to seek recovery of noneconomic damages in a motor vehicle tort action under K.S.A. 40-3117. Based upon Bates’ holding on Medicaid, he ruled that the reduced amount payable under the care provider’s agreement with Medicare conclusively established the “reasonable value” of the medical services under the statute:
“Finally, the [Bates] appeals court recognized that, pursuant to the provider’s agreement with Medicaid, the provider was required to accept a reduced amount for his or her services and could not charge the Medicaid patient for the full amount. That amount became the ‘customary’ and, therefore, ‘reasonable,’ charge. Id. at 705. Implicit in the appeals court’s decision is the holding that the reduced*591 amount pay able under the provider’s agreement with Medicaid should be deemed the reasonable value’ of the services under K.S.A. 40-3117.
“The Court finds that Bates is consistent with the ‘reasonable value’ standard set forth in K.S.A. 40-3117. The Court also finds that the Kansas Court of Appeals’ reasoning regarding the ‘reasonable value’ standard applies equally to Medicare write-offs. As is the case with Medicaid, the reduced amount a provider is obligated to accept pursuant to his/her agreement with Medicare should be deemed the ‘reasonable value’ of the services.” (Emphasis added.) Wildermuth,2002 WL 922137 , at “7.
At least in the context of K.S.A. 40-3117, Judge Waxse arguably foreshadowed the Liberty panel’s clarification 3 years later that “the issue presented is not the applicability of the collateral source rule, but the ‘reasonable value of medical care and expenses for the treatment of [the victim’s] injuries.’ ” Liberty, slip op. at 13.
In short, a synthesis of this case law from the federal district courts of Kansas is similar to the synthesis of recent Kansas Court of Appeals decisions as described above. Specifically, previously established write-offs by health care providers through Medicaid, Medicare, or private insurance are not covered by the collateral source rule. Strahley,
Now that we have examined the direction in which Kansas case law appears to lean, we look at other jurisdictions that have considered the question of the interplay, if any, between the collateral source rule and write-offs.
Other jurisdictions
The Louisiana Supreme Court has explained that other courts have applied three different approaches in determining whether to apply the collateral source rule to Medicaid write-offs. Bozeman v. State,
1. Reasonable value of services
According to the Bozeman court, some jurisdictions apply a reasonable value of services approach and some of those allow plaintiffs to recover the entire amount of medical expenses originally billed, including any amounts later written off by the healthcare provider. See Brandon HMA, Inc. v. Bradshaw,
“ ‘If the plaintiff was himself responsible for die benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself. If the benefit was a gift to the plaintiff from a third party or established for him by law, he should not be deprived of the advantage that it confers. The law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him.’ ” (Emphasis added.)879 So. 2d at 701-02 .
The Illinois Supreme Court recently addressed these three categories and adopted the reasonable value approach in Wills v. Foster,
The Wills court observed that Section 920A(2) states in relevant part that “[p]ayments 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.” Like the Bozeman court in Louisiana, the Wills court noted that under comment b “[t]he law does not differentiate between die nature of the benefits, so long as they did not come from the defendant or a person acting for him.”
The Wills court gave four basic reasons for adopting the reasonable value approach. First, the court noted the policy justification for the coUateral source rule that the tortfeasor should not benefit from “the expenditures made by the injured party or taire advantage of contracts or other relations that may exist between the injured party and third persons. [Citation omitted.]”
The Wills court acknowledged the obvious criticism of the reasonable value approach. Because it allows recoveiy of the entire amount of medical expenses billed, including health care provider
Some courts have taken a slightly different approach to determining the “reasonable value” of damages. In Robinson v. Bates,
The Robinson court sought to eliminate potential disparate treatment of plaintiffs by simply emphasizing the reasonable value of the medical services received. It ruled that both the amount originally billed and the amount ultimately paid may be considered by the jury in making that determination:
“To avoid the creation of separate categories of plaintiffs based on individual insurance coverage, we decline to adopt a categorical rule. Because different insurance arrangements exist, the fairest approach is to make the defendant liable [only] for the reasonable value of plaintiffs 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*595 of charges rendered for medical and hospital care.” (Emphasis added.)112 Ohio St. 3d at 23 .
The Robinson court acknowledged that the jury’s determination of the reasonable value could lie someplace in between the amount of the original bill and the amount accepted in satisfaction:
“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. Any difference between the original amount of a medical bill and the amount accepted as the bill’s full payment is not a ‘benefit’ under the collateral-source rule because it is not a payment, but both the original bill and the amount accepted are evidence relevant to the reasonable value of medical expenses.”112 Ohio St. 3d at 23 .
2. Actual amount paid
At least one jurisdiction only allows plaintiffs to recover the actual amount paid to the health care provider in full settlement of the bill. See Dyet v. McKinley,
3. Benefit of the bargain
The third approach, the benefit of the bargain, allows plaintiffs to recover the full value of their medical expenses, including the write-off amount, when the plaintiff has paid some consideration for the benefit of the write-off. Bozeman,
Similarly, the California Supreme Court’s explanation of the policy judgment behind the rule was that the court was in favor of
“encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds. . . . Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance.” Helfend,2 Cal. 3d at 10 .
The Illinois Supreme Court explained in Wills that “[u]nder this approach, courts allow plaintiffs who have private insurance to recover the full amount of their medical expenses because they have bargained for the benefits they received.”
Discussion
Plaintiff contends this court should apply a benefit of the bargain approach. In other words, we should allow plaintiffs to recover their full medical expenses, including the write-offs, when plaintiff has paid some consideration for the benefit of the write-off. Applying such an approach under Kansas law is problematic, however, for several basic reasons.
First, such an approach is contradicted by the very case law relied upon by plaintiff. In both Zak v. Riffel,
The Rose I language cited by the Zak panel is from an opinion of this court which cited no authority for the proposition that the collateral source rule applies to gratuitous payments. We observe, however, that in Lewark v. Parkinson,
The second problem with plaintiff s proposed benefit of the bargain approach is its possible violation of the equal protection provisions of the state and federal constitutions by effectively creating categories of plaintiffs. See Wentling,
A third problem with plaintiff s proposed approach is that Medicare beneficiaries do not truly “bargain with” Medicare. And even though insureds concededly may bargain with their private insurance companies, they typically do not negotiate with their health care providers for the write-offs. As Judge Waxse pointed out in Wildermuth v. Staton,
Lastly, but most important, Kansas courts do not reflexively order Hable defendants to pay the full amount billed by the health care providers to injured plaintiffs. Kansas courts instead have typically based the value of damages on the reasonable expense of treatment. See, e.g., Shirley v. Smith,
Based upon our review of this and other Kansas state case law on the reasonable value of medical expenses and our review of Kansas law on write-offs and the collateral source rule — both from state court and federal courts — we reach several conclusions in the instant case.
First, we reject plaintiff s benefit of the bargain approach because of the shortcomings previously listed. Second, the reasonable value approach to medical expenses remains valid, including when the medical services are self-administered or gratuitously provided by family members. See, e.g., Shirley v. Smith,
Fourth, and most important to resolving the issue in the instant case’s collateral source context, this other evidence relevant to determining the reasonable value of medical expenses may include write-offs or other acknowledgments that something less than the charged amount has satisfied, or will satisfy, the amount billed. Accordingly, neither the amount billed nor the amount actually accepted after a write-off conclusively establishes the “reasonable value” of medical services. We therefore expressly reject the Wild-ermuth court conclusion that the amount accepted in satisfaction “should be deemed the ‘reasonable value’ ” of the medical services. Wildermuth,
The Robinson approach — although rejected since its December 2006 release by Wisconsin (Leitinger v. Dbart, Inc.,
The Stanley court elaborated upon the rationale established by the Ohio Supreme Court in Robinson. Although Indiana, unlike Kansas, has a collateral source statute, like Kansas law the Indiana statute retained
“the common law principle that collateral source payments should not reduce a damage award if they resulted from the victim’s own foresight — both insurance purchased by the victim and also government benefits — presumably because the victim has paid for those benefits through taxes.” Stanley,906 N.E.2d at 855 .
Also like in Kansas, an Indiana “injured plaintiff is entitled to recover damages for medical expenses that were both necessary and reasonable.” (Emphasis added.) Stanley,
The Stanley court noted that while the proper measure of medical expenses is their reasonable value, that particular determination was difficult due to complexities of health care pricing structures:
“The complexities of health care pricing structures make it difficult to determine whether the amount paid, the amount billed, or an amount in between represents the reasonable value of medical services. One authority reports that hospitals historically billed insured and uninsured patients similarly. Mark A. Hall & Carl E. Schneider, Patients as Consumers: Courts, Contracts and the New Medical Marketplace, 106 Mich. L. Rev. 643, 663 (2008). With the advent of managed care, some insurers began demanding deep discounts, and hospitals shifted costs to less influential patients. Id. This authority reports that insurers generally pay about forty cents per dollar of billed charges and that hospitals*602 accept such amounts in full satisfaction of the billed charges. Id.” Stanley,906 N.E.2d at 857 .
The Stanley court observed the present tenuous relationship between medical charges and medical costs. Accordingly, it concluded that the reasonable value of medical services was not necessarily represented by either the amount originally billed or the amount actually paid:
“As more medical providers are paid under fixed payment arrangements, another authority reports, hospital charge structures have become less correlated to hospital operations and actual payments. The Lewin Group, A Study of Hospital Charge Setting Practices (2005). Currently the relationship between charges and costs is ‘tenuous at best. ’ Id. at 7. In fact, hospital executives reportedly admit that most charges have no relation to anything, and certainly not to cost. ’ Hall, Patients as Consumers at 665. Thus, based on the realities of health care finance, we are unconvinced that the reasonable value of medical services is necessarily represented by either the amount actually paid or the amount stated in the original medical bill.” (Emphasis added.) Stanley,906 N.E.2d at 857 .
After acknowledging that the focus was on the reasonable value of medical services, not the actual charge, the Stanley court held that the Robinson approach was also tire fairest. More specifically, the Robinson court avoided the problem of creating separate categories of plaintiffs based upon how their medical expenses were financed:
“The reasonable value of medical services is the measure used to determine damages to an injured party in a personal injury matter. This value is not exclusively based on tire actual amount paid or the amount originally billed, though these figures certainly may constitute evidence as to the reasonable value of medical services. A defendant is liable for the reasonable value of the services. We find this to be the fairest approach; to do otherwise would create separate categories of plaintiffs based on the method used to finance medical expenses. See Robinson,857 N.E.2d at 1200 (discussing how its rule avoided the creation of separate categories of plaintiffs based on individual insurance coverage).” (Emphasis added.) Stanley,906 N.E.2d at 858 .
The Stanley court recognized several methods, including those used in Kansas, for determining the reasonable value of medical expenses:
“Given the current state of the health care pricing system where, to repeat, authorities suggest that a medical provider’s billed charges do not equate to cost,*603 the juiy may well need the amount of the payments, amounts billed by medical service providers, and other relevant and admissible evidence to be able to determine the amount of reasonable medical expenses. To assist the jury in this regard, a defendant may cross-examine any witness called by the plaintiff to establish reasonableness. The defendant may also introduce its own witnesses to testify that the billed amounts do not represent the reasonable value of services.” (Emphasis added.) Stanley,906 N.E.2d at 858 .
See, e.g., K.S.A. 40-3117.
The Stanley court then approved the additional method permitted in Robinson for determining reasonable value, i.e., allowing evidence of discounted amounts, write-offs, or reimbursement rates:
“Additionally, the defendant may introduce the discounted amounts into evidence to rebut the reasonableness of charges introduced by the plaintiff. We recognize that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number of factors — not just the reasonable value of die medical services. However, ive believe that this evidence is of value in the fact-finding process leading to the determination of the reasonable value of medical services. ’’(Emphasis added.)906 N.E.2d at 858 .
The Stanley court concluded that “to the extent the discounted amounts may be introduced without referencing insurance, they may be used to determine the reasonable value of medical services.” (Emphasis added.) Stanley,
Robinson has been criticized. As mentioned, since Robinsons December 2006 release its approach has been rejected by Wisconsin (Leitinger v. Dbart, Inc.,
1. Impairment of Collateral Source Rule
The Wisconsin Supreme Court in Leitinger expressed the concern that admitting evidence of the discounts or reimbursement rates undermines the collateral source rule:
“[T]he tortfeasor is not to benefit from the fact that the medical sendees provider was paid less by a collateral source than the amount billed. If evidence of the collateral source payments were admissible, even for consideration of the reasonable value of the medical treatment rendered, a plaintiffs recovery of medical expenses would be affected by the amount actually paid by a collateral source for medical services. Such a ‘limitation’ on the plaintiffs damages contravenes tire view of the collateral source rule.” (Emphasis added.)302 Wis. 2d at 135-36 .
The Leitinger court further considered the argument that the defendant insurance company was not undercutting the collateral source rule because it was seeking to introduce as evidence only the amount actually paid for medical treatment, not the source of the compromised payments, and was not seeking “to reduce the damages by the amount of these collateral source payments.”
“The South Carolina Supreme Court evaluated an argument similar to [defendant’s], The court declared that ‘[w]hile facially appealing, this argument ignores the reality that unexplained, the compromised payments would in fact confuse the jury. Conversely, any attempts on the part of the plaintiff to explain the com*605 promised payment would necessarily lead to the existence of a collateral source.’ The South Carolina Supreme Court held that the collateral source rule is directly implicated and that a party cannot introduce evidence of the actual payment by a collateral source to challenge the reasonableness of the plaintiffs medical expenses.” (Emphasis added.)302 Wis. 2d at 137 .
Like the South Carolina Supreme Court, the Leitinger court then rejected the defendant insurance company’s argument, essentially holding that the defendant was trying to outflank the collateral source rule:
“Although claiming that the evidence assists the fact-finder in determining the reasonable value of the medical treatment and does not limit or reduce the damages, [the defendant], in essence, is seeking to do indirectly what it cannot do directly, that is, it is seeking to limit [the plaintiff s] award for expenses for medical treatment by introducing evidence that payment was made by a collateral source. [Defendant] ignores the fact that the collateral source rule protects against the ‘ever-present danger that the juiy will misuse the evidence [of collateral payments] to diminish the damage award. [Defendant] is trying to circumvent the collateral source rule.
“The collateral source rule prevents the fact-finder from learning about collateral source payments, even when offered supposedly to assist the jury in determining the reasonable value of the medical treatment rendered, so that the existence of collateral source payments will not influence the fact-finder.” (Emphasis added.)302 Wis. 2d at 137 .
Apparently, Wisconsin’s Supreme Court — and Illinois’ in Wills-would be concerned in the instant case that once the juxy hears that $5,310 was accepted to satisfy the hospital’s original bill to plaintiff of $70,496.15, it would perhaps not only fail to award the $65,186.15 but that it would also deduct the paid $5,310 (or at least Coventry’s $4,689) from its final damage award. In other words, the jury would not even award for the $4,689 because that amount had already been paid by a collateral source, i.e., “ ‘the jury will misuse the evidence of collateral payments to diminish the damage award.’ ”
The evidence admitted, however, need not necessarily be “evidence that payment was made by a collateral source,” e.g., private insurance or Medicare.
Stanley v. Walker,
Accordingly, we are unpersuaded that the “unexplained compromise payment” will cause ill effects. See Covington,
2. Jury Confusion
As mentioned, in Leitinger the Wisconsin Supreme Court also articulated concerns about confusion caused by admitting evidence of discounts and reimbursement rates. This particular concern apparently arises because discounts can be due to factors besides the value of medical services:
*606 “The admission in evidence of the amount actually paid in the present case, even if marginally relevant [to reasonable value of medical expenses], might bring complex, confusing side issues before the fact-finder that are not necessarily related to the value of the medical services rendered. Accordingly, [defendant insurance company] errs in insisting that the amount actually paid by a collateral source in the present case is a factor for the fact-finder in determining reasonable value of those services.” (Emphasis added.)302 Wis. 2d at 145-46 .
We observe, for example, that Kansas courts frequently admit evidence in criminal trials of a defendant’s prior crimes and civil wrongs under K.S.A. 60-455. This evidence is potentially quite prejudicial as improper proof of defendant’s propensity to commit the present, often egregious, crimes. But the evidence is nevertheless allowed provided that the jury receives limiting instructions about the narrow purposes for its admissibility, e.g., motive and knowledge. See State v. Gunby,
We turn now to the specific concern about introducing confusing side issues that are not necessarily related to the reasonable value of the medical services rendered. We observe that in Wisconsin medical malpractice actions, evidence of collateral source pay
Presumably, the Wisconsin trial courts take appropriate precautions when handling these malpractice cases and strike an acceptable balance between these competing considerations. Indeed, in Lagerstrom v. Myrtle Werth Hosp.-Mayo Health Sys.,
Several of our concurring colleagues criticize our rationale and holding. The following abbreviated responses are sufficient.
First, they contend that under our holding, the uninsured plaintiff is eligible to recover for the full amount of services billed while the insured plaintiff is not. They label this as discriminatory. We disagree. An uninsured plaintiff may herself pay her medical expenses at a negotiated price, e.g., steep cash discount upon her threat of bankruptcy. See Robinson,
Second, in today’s world we do not share the concerns of our concurring colleagues about the purported catastrophic results emanating from a jury’s “likely inference” about the existence of a plaintiffs collateral source, e.g., medical insurance. For example, for years Kansas has required motor vehicle liability insurance coverage — or self-insurance — and prohibited the owner of an uninsured vehicle from allowing it to be operated on highways or upon property open to use by the public. K.S.A. 40-3104. And for years Kansas has also required owner certification of the maintenance of insurance before applying for registration or renewal of registration of motor vehicles. K.S.A. 8-173(c). Because Kansas juries are often selected from drivers’ license rolls, our juries obviously contain Kansas drivers and motor vehicle owners. Accordingly, they will “likely infer” insurance coverage for defendants and plaintiffs in cases involving motor vehicle accidents. Yet we routinely entrust our juries with considering liability and determining resultant damage amounts.
The two-car accident case of Bott v. Wendler,
In rejecting defendants’ argument, we held that, among other things:
*610 “Furthermore, there is nothing in the record to suggest that the juiy’s question to the court concerning liability insurance was motivated by any reference to insurance at the trial, nor does such fact suggest insurance was improperly injected into the case. It is general knowledge that most drivers today have liability insurance, and neither party to a lawsuit should be prejudiced by a question which may be prompted by the jury’s own experience and common knowledge of the affairs of mankind.” (Emphasis added.)203 Kan. at 228 .
See also Kelty v. Best Cabs, Inc.,
We now turn to the Wisconsin Supreme Court’s last set of concerns.
3. Relevance
The Leitinger court also expressed relevance concerns with evidence of discounts and reimbursement rates:
“The evidence [defendant insurance company] proffers will not assist tire fact-finder as [defendant] claims, because a particular health insurance company’s negotiated rates with a health care provider are not necessarily relevant evidence of the reasonable value of the medical services in a tort action. . . . The reimbursement rate of a particular health insurance company generally arises out of a contractual relationship and reflects a multitude of factors related to the relationship of tire insurance company, and the provider, not just to the reasonable value of die medical services.” (Emphasis added.)302 Wis. 2d at 144 .
See, e.g., Radvany v. Davis,
The Indiana Supreme Court in Stanley v. Walker essentially acknowledged this concern but nevertheless found the evidence of discounts relevant to the reasonable value of medical services:
“We recognize that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number offactorsnot just the reasonable value of the medical services. However, we believe that this evidence is of value in the fact-finding process leading to die determination of the reasonable value of medical services.” (Emphasis added.) Stanley,906 N.E.2d at 858 .
Moreover, when such relevant evidence is withheld from the jury, the jury is inappropriately left to speculate on the reasonable value of the medical services. We agree with the Leitinger dissent:
“ ‘If the higher stated medical bill, an amount that never was and never will be paid, is admitted without evidence of the lower reimbursement rate, the jury is basing their verdict on “mere speculation or conjecture.” The difference between the stated bill and the paid charges ... is purely fictional as a true charge.’ [Citation omitted.]”302 Wis. 2d at 156 (Roggensack, J., dissenting).
The Leitinger dissent is consistent with this court’s long-stated concerns about awarding damages based upon speculative evidence:
“In a negligence action, recovery may be had only where there is evidence showing with reasonable certainty the damage was sustained as a result of the negligence. Recovery may not be had where the alleged damages are too conjectural or speculative to form a basis for measurement. To warrant recovery of damages, therefore, there must be some reasonable basis for computation which will enable the trier of fact to arrive at an estimate of the amount of the loss.” (Emphasis added.) McKissick v. Frye,255 Kan. 566 , 591,876 P.2d 1371 (1994).
Moreover, of this $70,496.15 awarded to plaintiff, not even the $4,689 actually paid by Coventry would be subject to subrogation. K.A.R. 40-1-20 provides:
“An insurance company shall not issue contracts of insurance in Kansas containing a ‘subrogation’ clause applicable to coverages providing for reimbursement of medical, surgical, hospital or funeral expenses.”
In conclusion, we reverse and remand to the district court for further proceedings. On remand the district court may allow into evidence (1) the original amount billed ($70,496.15), and (2) the amount accepted by the hospital in full satisfaction of the amount billed ($5,310). However, evidence of the source of any actual payments is inadmissible under the collateral source rule. The finder of fact shall determine from these and other facts the reasonable value of the medical services provided to plaintiff.
# # #
Concurrence Opinion
concurring: On the issue of medical care provider discounts, I remain convinced that Bates v. Hogg,
The existing precedent, i.e., Bates, Fischer, and Liberty, to which I adhere, would instruct the trial court to admit only the evidence of the amount which the medical care provider had contractually agreed to accept in full satisfaction of the bill for medical services (amount paid). Three of my colleagues would tell the district court that evidence of the amount the provider initially billed (predis-count amount) is admissible and the trial court risks reversal based upon a violation of the collateral source rule if any evidence is admitted on the amount actually paid or the amount of the discounts. The remaining three justices would affirm a trial court’s admission of any relevant evidence of the reasonable value of the medical services, which they believe could include both the pre-discount amount and the amount paid. In effect, the trial court would be told that one justice says only the amount paid, three justices say only the prediscount amount, and three justices say both the prediscount amount and the amount paid. What evidence could a trial judge admit without risking reversal?
I do not discern in my colleagues’ opinions any practical solution to the dilemma this appellate court deadlock would present to the district court upon remand. Therefore, to avoid a calamity of epic proportions, I will fall on the sword of pragmatism. I cast my vote with my colleagues who believe that both the prediscount amount and the amount actually paid are relevant, admissible evidence of damages. However, in a fit of self-pitying martyrdom, I feel entitled to indulge myself by setting forth some selected thoughts on the matter.
I begin by taking issue with Justice Nuss’ characterization of the first opinion in Rose v. Via Christi Health System, Inc.,
I am concerned about two possible misconceptions about Rose I. First, the majority’s repeated reference to the Court of Appeals’ decision in Liberty as being “contrary to [the Supreme Court’s] holding in Rose Í” seems to intimate a failure by the Court of Appeals to follow Kansas Supreme Court precedent. See Buchanan v. Overley,
With regard to the first concern, the majority fails to mention that both Fischer and Liberty acknowledged the existence of Rose I, but opined that, pursuant to the Supreme Court’s own rules, that decision was not binding precedent on the Court of Appeals at tire time Fischer and Liberty were decided and filed. I believe a review of the chronology of Rose I and Liberty in conjunction with the Supreme Court Rules will confirm that legal conclusion.
Rose I was filed October 31, 2003. Before the mandate was issued on that opinion, the defendant hospital, Via Christi, filed a timely motion for rehearing or modification on November 20, 2003. See Kansas Supreme Court Rule 7.06(a) (2009 Kan. Ct. R. Annot. 60) (motion for rehearing or modification to be filed within 20 days of decision date). The filing of the motion for rehearing or modification stayed the issuance of a mandate in the case, pending the determination of the issues raised in the motion. Rule 7.06(a). The decision was not an effective final order, because the mandate had not issued. Cf. K.S.A. 60-2106(c) (Supreme Court may by rule provide for postdecision motions for rehearing; when under such rule a decision of an appellate court becomes final, such court shall promptly cause transmission of its mandate). The Supreme Court granted the motion for rehearing on January 7, 2004. “If a rehearing is granted, such order suspends the effect of the original de-
The Liberty case was set for hearing in the Court of Appeals on February 13, 2004, after the effect of Rose I had been legally suspended. Some 14 months later, when Liberty was filed, the Court of Appeals panel noted that it was “not currently bound by [Rose Z], albeit we have afforded our high court the deference of delaying our decision in the hope that a rehearing decision would be forthcoming. However, we now choose to proceed, based upon Rates.” Liberty, slip op. at 12.
To reiterate, because the legal effect of Rose I remained suspended, that original decision was not binding precedent upon the Court of Appeals (or anyone else for that matter) when Liberty was filed. Indeed, if the Court of Appeals panel had been inclined to follow the rationale of Rose I, it could not have cited to that unmandated opinion for supporting legal authority. Perhaps the publication of the Rose I opinion in our official reports convinces the majority that it had precedential value. Nevertheless, at the time, there was no mandatory holding from the Supreme Court in tire Rose case to which Liberty could be “contrary”; rather, the only legally effective precedent was Rates. Moreover, even if Rose I could have been considered some sort of persuasive authority, the Supreme Court’s uncommon act of granting a rehearing in the case certainly provided “some indication the court is departing from its previous position.” Overley,
My second concern is with treating Rose I as part of the case law in this state on the issue of medical bill discounts. In my view, Rose I never became the law in Kansas. As the majority notes, when
To the contrary, Bates, Fischer, and Liberty, represent the case law from Kansas state courts on this issue. Ironically, the Supreme Court declined an opportunity to answer the question it left unanswered in Rose II or to reject the holding in Liberty on this issue when it denied the petition for review in Liberty on the same date that it issued the mandate in Rose II. Although one cannot read anything into a denial of a petition for review, one might ponder why the Supreme Court would let Liberty stand unabated if Rose I was Kansas law and Liberty was “contrary to [the] holding in Rose ir
Turning now to the concurrence, I note that my concurring colleagues are enamored with the fact that the collateral source rule has a “100-year-old history” in this state. With tongue in cheek, I would point out that the rule against perpetuities also has a long history in this state, but such longevity alone does not make the rule against perpetuities applicable to the question presented in this case. Likewise, the contractual write-offs must fit within the definition of a collateral source benefit, regardless of how long the collateral source rule has been applied in this state to insurance benefits that are actually paid, to the medical care provider. I wholeheartedly agree with preserving the century-old collateral source rule in this case by excluding evidence that the health insurer paid $4,689 of the $5,310 bill which was actually paid. I would not, today and for the first time in this state, extend the rule to the phantom portion of the bill designated as discounts or write-offs.
Looking further at the Wentling definition of the collateral source rule, recited by the concurrence, it states that “ ‘[t]he rule also precludes admission of evidence of benefits paid by a collateral source.’ ” (Emphasis added.) Wentling,
Of course, some of what I set forth here is drawn from Bates, Fischer, and Liberty. The concurrence perceives that the common threads in those three Court of Appeals opinions are: “(1) plaintiffs are limited to claiming only the cash amounts actually paid personally, [by] their insurance carriers, or [by] federal assistance programs; and (2) a belief that the question in these cases is not the collateral source rule, but the reasonable value of medical care and expenses for the treatment of plaintiffs’ injuries.” Interestingly, the concurrence challenges the efficacy of the first common thread, which is at the heart of the three opinions, with the one-sentence declaration: “As to the first point, this court has rejected it.” Apparently, the concurrence ascribes to the theory that a majority of votes trumps cogent thinking.
With respect to the second “common thread,” the concurrence believes the Court of Appeals decisions begged the question and answered the question by restating it. Apparently, the concurrence does not discern that there are two sides to this coin. On one side, the plaintiff is objecting to admitting evidence of the discounts because the plaintiff characterizes them as collateral source benefits. On the other side, the defendant is objecting to admitting evidence of the prediscount billing amount because it bears no rational relationship to the reasonable value of the provided medical services. The relevance or materiality of the allegedly inflated
Perhaps an analogy might be helpful. The assumptions are as follows: (1) a defendant has a liability insurance policy which includes coverage for the cost of defense; (2) the liability insurer has an agreement with a law firm to represent its insureds at the rate of $200 per billable hour, which will be paid by the insurer without any additional billing to the insured; (3) the trial court has determined that the plaintiff is hable to the defendant for certain attorney fees, e.g., as a discovery sanction, and the court directs the defendant to submit evidence of the amount of those fees; and (4) the law firm has prepared a billing statement for the insurer that is calculated on the basis of $1,000 per billable hour, but which then reflects a contractual discount or write-off of $800 per hour, to get to the agreed upon hourly rate of $200. The questions presented are: (1) Whether the defendant will be allowed to submit only the $1,000 per hour billing, excluding any evidence of either the $200-per-hour actual payment or the $800-per-hour discount on the theory that the discount or write-off is a collateral source benefit from the purchase of liability insurance; and (2) whether the plaintiff can successfully object to the introduction of the $l,000-per-hour billing because it is not the appropriate measure of the reasonable value of legal services.
The hypothetical reinforces my contention that the bargained-for benefit approach is unrealistic. The defendant contracted with the liability insurer to have competent legal representation to defend the insured against any lawsuit. In selecting an insurer, the insured might well have considered the amount of premium it would have to pay for the liability coverage and the reputation of the insurer. However, the insured is unconcerned about how much it will cost the insurer to fulfill its policy obligation to provide legal counsel; the insured just wants competent counsel defending the insured. Moreover, it defies imagination to believe that a liability insurance purchaser would contemplate the situation in which a wrongdoer would be reimbursing the cost of defense, and, accordingly, the purchaser would consider the insurer s contract with the law firm and the law firm’s billing policy.
My last comment on the hypothetical is that it supports the notion that people and entities should be free to make their own deals through valid and enforceable contracts, and that when they do so, the contract establishes the value of the goods and services involved. If the law firm feels that the reasonable value of its services is worth more than $200 per hour, it is free to decline to represent the insurance company. If the law firm believes that it must accept the $200 hourly rate in order to attract insurance company clients because other firms are willing to accept that amount, then that simply means that the reasonable value of legal services in that context is $200 per hour. To use another example, if I fist my house for $250,000, but actually get a purchase contract for $200,000, the value of my house is the sale price, not my estimate of what I think the house should be worth.
My final comments address the concurrence’s argument that even introducing evidence of the amount actually paid discriminates against those plaintiffs who are insured and the majority’s response that an uninsured plaintiff might also have a negotiated reduction of the amount billed. I find the concurrence’s argument to be inscrutable and the majority’s response to be incomplete.
The concurrence’s example assumes two plaintiffs have similarly broken legs and are billed $10,000 for the same medical services; one plaintiff is uninsured; and one plaintiff is insured by an insurer which has negotiated a $9,000 write-off, leaving $1,000 to actually be paid. The issue before us is the evidence which can be admitted to establish a specific category of damages, i.e., compensation for
Ironically, the concurrence’s example will serve nicely to point out that, within the category of economic damages, it is the uninsured plaintiff who gets the short straw regardless of what evidence we deem to be admissible. As the majority notes, under Kansas Administrative Regulations, an insurer is precluded from issuing a policy in this State that allows it to be reimbursed for the portion of die medical bill that the insurer pays. Therefore, if the insured plaintiff obtains judgment for $10,000 in medical services, he or she pockets all but the amount of deductible and copayment the insured personally paid. That would result in a windfall of over $9,000. Even if the insured plaintiff obtains judgment for only the
In contrast, I know of nothing that prohibits the hospital from collecting its bill out of an uninsured plaintiff s judgment. Therefore, even though the uninsured plaintiff might recover the entire initial hospital billing of $10,000 from the tortfeasor, that plaintiff still owes the $10,000 hospital bill and will pocket nothing.
Additionally, a rather significant factor absent from the concurrence’s hypothetical is any provision for the payment of the plaintiff s attorney fees. Presuming a 40% contingent fee arrangement, the uninsured plaintiff would actually net $6,000, less expenses. However, the uninsured plaintiff still owes a $10,000 hospital bill, of which $4,000 must be paid with personal funds unless he or she can personally negotiate a discount with the hospital. In contrast, so long as the insurer’s portion of the $1,000 actually paid for the insured plaintiff exceeds 40%, that insured still pockets money after paying his or her contingent attorney fees.
In other words, an insured plaintiff will always be in a better cash position than an uninsured plaintiff with respect to the economic damages. I can accept that circumstance with respect to the amounts that the insurer actually paid for medical services under the oft-stated theory that a person should reap the rewards of his or her prudence and foresight in purchasing insurance. However, in reality, the ability to be insured is seldom a function of prudence and foresight, but rather it depends too often on fortuitous circumstances, such as favorable employment or affluence acquired via family-provided opportunities. In that regard, I would note that the concurrence’s hypothetical omits a significant segment of our citizemy. Some persons, e.g., farmers or small businesspersons, are unable to afford to purchase health insurance from a blue-ribbon company that has the clout to extract huge discounts. The tradeoff for affordable premiums is that the health insurance policy has higher deductibles and copayments and the amount of services for which the insurance will pay is reduced. Therefore, the windfall for those who are underinsured will be less than the windfall for those fortunate enough to be fully insured. I can find no justification for exacerbating the difference in pocket money between
Nevertheless, as a practical matter, I feel compelled to hold my nose and join with the result reached in Justice Nuss’ opinion.
# # #
Concurrence Opinion
concurring in part and dissenting in part: We agree the district court erred in limiting plaintiff s recovery for medical expenses to only those cash amounts actually paid by plaintiff and her health insurance company. The jury must determine the reasonable value of medical services. But this determination should not depend upon how successful plaintiff s insurance company was at negotiating lower prices to benefit its insureds. For that reason, the district court’s ruling on the motion in limine must be reversed. We concur in this result.
We write separately to express our disagreements with our colleagues’ approach as to how the district court should proceed on remand. Our colleagues see this case as an opportunity to depart from this court’s long-standing limitations regarding collateral source evidence, which would bar the admission of those cash amounts actually paid by plaintiff or on her behalf by her health insurance company. These limitations derive from our case law dating back more than 100 years, and the majority’s method of departure is unnecessarily complicating. We discern no compelling reason now to alter the evidentiary landscape imposed by this court over these many years regarding a plaintiff s collateral source benefits.
We would not change this court’s historical collateral source principles. We would not permit a jury to be told the plaintiffs medical bills “might be satisfied” by a particular amount. We would continue to bar admission into evidence of the amounts actually paid to satisfy those charges. We would further bar admission of any billing write-offs secured under plaintiff s private medical insurance contract. These evidentiary facts exist only because of the relationship between plaintiff, her health care providers, and her private medical insurance carrier. This relationship was created when plaintiff procured her own health care insurance. Under this
Background Applicable to this Issue
In Kansas, personal injury plaintiffs are entitled to claim as damages the reasonable value of medical services necessary to recover from injuries caused by a wrongdoer. Shirley v. Smith,
Similarly, the alleged wrongdoer has a right at trial to challenge the reasonableness of the expenses plaintiff claims. Cansler v. Harrington,
This court agrees the district court was wrong to limit plaintiff s damages to the actual amount paid under her personal health insurance agreement. But the court’s members disagree on how the collateral source evidence should be handled on remand.
Three justices contend Milburn should be permitted to offer into evidence: (1) the actual payments made to plaintiffs health care providers under her personal insurance contract; and (2) the medical expense write-offs provided as a result of that insurance. They sanction a contrivance that would advise the jury that the plaintiff s medical bills could be “satisfied” by a payment that happens to coincide with the cash payments made by the plaintiffs health care insurance and plaintiff. There would be no mention that plaintiff actually had health insurance to pay for her care and treatment, although the implication is obvious. Any confusion this
We disagree with the majority approach and discern no reason why there should be any change to both litigants’ respective evi-dentiary obligations regarding the reasonable value and necessity of the medical services provided to plaintiff as defined by our existing law. Similarly, we believe imposing the majority’s new evi-dentiary methodology will most surely allow a jury to infer the existence of a plaintiff s insurance, which is forbidden by the collateral source rule; inject juiy confusion into what are already complex deliberations at trial; and ultimately lead to the demise of the collateral source rule itself. We dissent from that portion of the opinion by the majority as discussed below.
Analysis
The Collateral Source Rule in Kansas
Put simply, the collateral source rule is a common law tenet preventing the introduction of certain evidence. Farley v. Engelken,
The collateral source rule prevents the jury from hearing evidence regarding certain payments or gratuitous services provided for the plaintiffs benefit. The rule is frequently stated simply as an understanding that benefits received by a plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the plaintiff s damages otherwise recoverable from the wrongdoer. Farley,
This court has also said the collateral source rule “ precludes admission of evidence of benefits paid by a collateral source, except where such evidence clearly carries probative value on an issue not inherently related to measurement of damages.’ ” Wentling,
“The reasons generally given for the [collateral source] rule are that the contract of insurance and the subsequent conduct of the insurer and insured in relation thereto are matters with which the wrongdoer has no concern and which do not affect the measure of his liability.” (Emphasis added.) Rexroad,192 Kan. at 354-55 .
In other words, the overwhelming case law from this court has been that a defendant is entitled to challenge the reasonableness of a plaintiff s damage claim but may not introduce evidence derived from a collateral source to mate that challenge. Instead, de
Why Kansas has a collateral source rule
From its earliest beginnings, the purposes behind the collateral source rule were articulated by this court as being grounded in notions of equity, fairness, and inherent prejudice to the plaintiff if such evidence was presented to a jury. More recently, our cases evolved to emphasize the additional public policy interests of deterrence and accountability for tortfeasors. In Berry, one of our early cases on the subject, the defendant tortfeasor in a wrongful death action argued the heir’s damages should be reduced by the amount of her inheritance from the decedent. Characterizing this argument as “untenable,” this court stated: “Although it appears to have standing in the courts of some of the states, it does not address itself to the judgment of this court as being sound, legal, equitable, or fair, and [evidence of the inheritance] cannot be permitted to reduce the amount of recovery in any way.”
In Rexroad, this court said the plaintiffs insurance contracts were of “no concern” to the wrongdoer.
In Wentling, this court quoted with approval 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions § 17.00, p. 17-5 (1984), to describe the collateral source rule as follows:
“ ‘The collateral source rule permits an injured party to recover full compensatory damages from a tortfeasor irrespective of the payment of any element of those damages by a source independent of the tortfeasor. The rule also precludes admission of evidence of benefits paid by a collateral source, except where such evidence clearly carries probative value on an issue not inherently related to measurement of damages.’ ”237 Kan. at 515 .
In Harrier, we compared the prejudice caused by a plaintiff revealing to a jury that the defendant had insurance to satisfy the requested damages as the same prejudice a plaintiff would suffer from the introduction of collateral source benefits. We said: “The distinction is one without a difference.”
“The puipose of the collateral source rule is to prevent the tortfeasor from escaping from the full liability resulting from his or her actions by requiring the tortfeasor to compensate the injured party for all of the harm he or she causes, not just the injured party’s net loss. [Citations omitted.] A benefit secured by the injured party either through insurance contracts, advantageous employment arrangements, or gratuity from family or friends should not benefit the tortfeasor by reducing Iris or her liability for damages. If there is to be a windfall, it should benefit the injured party rather than the tortfeasor.”276 Kan. at 544 .
As the 100-year-old history of this court’s treatment of the collateral source rule illustrates, we have traditionally viewed the introduction of collateral source evidence with disdain. This court has characterized the potential admission of collateral source-related evidence as being inherently unfair and prejudicial because of the influence it can have upon the jury in determining the recoverable damages. We also have found it contrary to the important policy aspects of deterrence and accountability for tortfeasors, who are not entitled to have damages caused by them reduced because the persons whom they injure had insurance. See Davis,
In this case, it is agreed plaintiff s private medical insurance contract is wholly independent of and collateral to Milbum. Plaintiff s medical insurance did not come from Milbum or any person or entity acting for Milbum. Our issue only arises because Martinez had the foresight to secure for herself private medical insurance. Therefore, the evidentiary question advanced by our colleagues’ view is whether permitting Milburn to present to the jury tire cash payments and expense write-offs resulting solely from plaintiff s private medical insurance contract violates the collateral source rule as this court has traditionally articulated it. We believe it does.
Put another way, should the jury’s damage calculations for Martinez be different just because she has private health insurance from calculations for someone else who is uninsured? Under the collateral source mle and common sense, the question answers itself. The mle’s purpose is to ensure a party’s treatment is the same for all plaintiffs by not reducing the tortfeasor’s liability for
With our colleagues’ approach, an uninsured plaintiff would still be able to collect from a jury the original amount billed. But an insured plaintiff, under the same facts, would likely see a reduction in damages simply because he or she had the good sense to be insured. Likewise, the tortfeasor lucky enough to injure an insured plaintiff would be able to reduce its liability by seizing on the benefits available to the insured plaintiff, even though the tortfeasor did not contribute to the those insurance benefits. The justification for this disparate treatment is completely contrary to this court’s prior case law as discussed above.
This court looked at the interplay between the collateral source rule and actual cash payments and medical write-offs in only one case, which had to be reheard to produce a binding result by a divided court. See Rose I,
Accordingly, the only controlling principle on the subject emerging from this court to date is to exclude evidence of medical write-offs and actual payments, except when the medical provider is also the claimed tortfeasor. Those facts are not presented here, so the Rose II decision has no controlling precedential value in this case.
The Court of Appeals has addressed the write-off issue in four cases. We consider those next.
The first Kansas appellate court to consider the question of actual cash payments and medical write-offs w>as Bates in which a divided Court of Appeals panel considered whether an injured plaintiff could include in his economic damage claim amounts written off by a health care provider under the federal Medicaid program. The two-judge majority concluded that the collateral source rule was inapplicable under the circumstances and agreed further to limit plaintiffs claim to the actual amounts paid.
The Bates majority also expressed its agreement with the public policy reflected in a federal court decision in a similar North Carolina case, stating that it would be “ ‘unconscionable to permit the taxpayers to bear the expense of providing free medical care to a person and then allow that person to recover damages for medical services from a tort-feasor and pocket the windfall.’ ”
Judge Rulon vigorously dissented from the Bates majority view, taking the general position that our state’s case law required that a plaintiff recover the reasonable value of medical services regardless of the amount actually paid or written off because of the collateral source rule. Harkening back to our early collateral source jurisprudence, Judge Rulon noted:
“While the plaintiff can only recover the reasonable value of the medical services provided, there is no requirement in Kansas that it be shown that any amount was actually paid. Were it otherwise, there is no way an injured party could recover damages for services provided gratuitously by family members or charity.” Bates,22 Kan. App. 2d at 710 (citing Lewark v. Parkinson,73 Kan. 553 ,85 P. 601 [1906]).
Judge Rulon then observed the concepts of deterrence and accountability inherent in our rule, by stating: “The purpose of the collateral source rule is to prevent a wrongdoer from escaping from
“Thus, if the basic goal of tort law is only that of compensating plaintiff for his [or her] losses, evidence of these benefits should be admitted to reduce the total damages assessed against the defendant. At the same time, reducing recovery by the amount of the benefits received by the plaintiff would be, according to most courts, granting a ‘windfall’ to the defendant by allowing him [or her] a credit for the reasonable value of those benefits. Such a credit would result in the benefits being effectively directed to the torffeasor and from the intended 'party the injured plaintiff. If there must be a windfall, it is usually considered more just that the injured person should profit, rather than let the wrongdoer be relieved of full responsibility for his [or her] wrongdoing.” (Emphasis added.)
Later, the Rose I majority limited the Bates majority holding to cases in which a Medicaid contract mandated the nonrecourse discount. Rose I,
The next Court of Appeals panel to address the issue did so during the period of time between Rose I and the rehearing in Rose II. That panel declared it was not constrained to follow Rose I because the pending rehearing suspended the binding effect of the original decision, and it extended Bates to apply to a private insurance carrier being sued by its own insured under an uninsured motorist clause. Fischer v. Farmers Ins. Co., No. 90,246, unpublished opinion filed February 18, 2005. The panel determined it was proceeding with the case “based upon the currently effective precedent of Bates and upon our firm belief that the collateral source rule has no place in the determination of the proper measure of damages to be applied to all plaintiffs’ economic damages.” Slip op. at 11-12.
In Fischer, the tortfeasor was not a party to the dispute. The trial court limited Fischer to presenting to the jury only the cash
The same Court of Appeals judges who comprised the Fischer panel again sat as a panel to decide the next case in our series, Liberty v. Westwood United Super, Inc., No. 89,143, unpublished opinion filed April 29, 2005, rev. denied
More recently, a Court of Appeals panel in Adamson decided that write-offs under a private insurance contract providing personal injury protection to the plaintiff and a “self-pay” write-off for expenses charged directly to the plaintiff by a health care provider were admissible and should not have been excluded by the trial court under the Bates rationale. Adamson v. Bicknell,
In summary, the common threads running through three Court of Appeals’ decisions (Bates, Fischer, and Liberty) are these: (1) plaintiffs are limited to claiming only the cash amounts actually paid personally, their insurance carriers, or federal assistance programs; and (2) a belief that the question in these cases is not the collateral source rule, but the reasonable value of medical care and
Finally, the more recent Adamson decision conflicts with the other panels’ rationale as it concerns write-offs provided directly to a plaintiff or to plaintiff s private medical insurance carrier. In summary, we find little adherence to this court’s historical reading of the collateral source rule in the various approaches and rationales taken by the Court of Appeals.
Kansas Federal Court Decisions
Our colleagues reference three unpublished federal district court decisions they find reinforcing to their viewpoint. Wildermuth v. Staton,
First, all three decisions use the majority opinion in Bates v. Hogg,
As to Wildermuth specifically, we also note this court expressly l-ejects its conclusion that the cash amount paid to satisfy the medical bills should be deemed the reasonable value of those services. But in addition, we find Wildermuth’s reference to the Kansas collateral source rule as being limited to amounts actually paid on plaintiff s behalf ignores case law from this court dating back to 1906 applying the rule to gratuitous services benefiting plaintiff. See Lewark,
Points of agreement with our colleagues
At this juncture, we think it is important to reflect on our points of agreement with our three colleagues before discussing in greater detail our disagreements. We believe our common ground can best be described as follows: (1) Plaintiff is entitled to the reasonable value of the medical services necessary for plaintiff s recovery; (2) Plaintiff is entitled to seek recovery for the reasonable value of medical services even when they are self-administered or gratuitously provided; (3) Defendant is entitled to challenge both the necessity and reasonable value of the expenses plaintiff claims; (4) Amounts billed by health care providers for plaintiffs medical treatment expenses are not conclusive as to their reasonable value, but are probative evidence as to value; and (5) The results reached in Bates, Fischer, and Liberty are wrong when those Court of Appeals panels held as a matter of law that the amount paid by Medicare, Medicaid, or private health insurers are the only measure of
Our point of departure is the evidence our colleagues would authorize a defendant to use at trial in an effort to attack the reasonableness of plaintiff s claims for medical services. We discuss that departure next.
The Robinson approach from Ohio
Our colleagues distill from the case law and arguments a new course of action they impose for use by our trial courts grappling with this issue. They adopt the approach taken by an Ohio Supreme Court decision in Robinson v. Rates,
By our count, 22 courts in other jurisdictions that have considered one or more aspects of our colleague’s approach have rejected it. See Aumand v. Dartmouth Hitchcock Medical Center,
We also note with particular interest a recent opinion from the Ohio Court of Appeals that described its Supreme Court’s majority opinion in Robinson as a “perplexing decision” that “appears to both reaffirm the collateral-source rule in principle but eradicate it in practice.” Ross v. Nappier,
We find the collective analysis recited in these cases persuasive and far more consistent with the long-standing principles this court has espoused to support the traditional collateral source rule. This is particularly true in the context of the case before us now in which the private insurance benefits at issue were purchased personally by the plaintiff, i.e. they were not a derivative of a regulated public assistance program like Medicare or Medicaid.
We would summarize our disagreements with the Robinson approach as follows: (1) its implementation is highly lilcely to generate jury confusion and mistrials; (2) the result discriminates against plaintiffs on the basis of whether they are insured; and (3) it contradicts the underlying principles of the collateral source rule by allowing defendants to benefit from the plaintiff s foresight or the kindness of others. We next address each of those disagreements.
Our colleagues acknowledge the probability that presenting juries with collateral source evidence reflecting payments under an insurance policy will require trial court diligence and limiting instructions to prevent the jury from considering that plaintiff s insurance paid the medical bill when calculating damages. They suggest limiting instructions, such as those used in criminal cases under K.S.A. 60-455, may avoid prejudice, confusion, mistrials, and reversals. Our case law already foreshadows the difficulties such a system creates.
In Zak v. Riffel,
“ ‘Members of the jury, these two exhibits that we have just been talking about ... were received in evidence by me earlier this afternoon for the limited purposes that I have talked about before. They are merely being introduced for the purpose of laying a foundation to determine some calculations that have been made by an expert witness who will testify tomorrow. They are not received for the purpose of presenting evidence to diminish the amount of economic loss, if any, that the plaintiff has suffered as a result of the defendant’s negligence.’ ”34 Kan. App. 2d at 107-08 .
The Court of Appeals reversed, saying: “The jury could only have been confused by the limiting instruction.”
Furthermore, admission of other crimes evidence has not proven to be a simple issue in criminal cases. The comments to PIK Crirn. 3d 52.06, the K.S.A. 60-455 limiting instruction, recognize other crimes evidence “has proven to be one of the most troublesome areas in the trial of a criminal case.” This is reflected by the volume of appeals filed each year on this issue. We find the suggestion that limiting instructions will cure whatever ills result from our col
As noted above, this court traditionally has viewed the injection of insurance coverage into a trial as highly prejudicial to the insured party. See Rose II,
We also are concerned that, in cases where the only evidence presented will be the original amount billed and the amount paid, juries will be lured into simply splitting the difference between those two points on the evidentiary continuum. In that likely occurrence, the verdict will have to be thrown out and a mistrial declared since there would be no evidence upon which the jury could have based its compromise verdict. See State ex rel. Stephan v. Wolfenbarger & McCulley P.A.,
We appreciate that defendants have long sought to be able to introduce collateral source evidence on any alternative basis in or
2. Discrimination against insured plaintiffs
Our colleagues note their sensitivity to the prospects of discriminating between low income, public assistance plaintiffs, and private insureds under the so-called benefit-of-the-bargain approach, which has been used to justify the collateral source rule in other jurisdictions. But they do not address the obvious evidentiary schism generated by their approach between plaintiffs with private insurance benefits and uninsured plaintiffs.
As an example, assume we have two civil trials against the same defendant occurring across the hall from each other in any Kansas courthouse. Liability is admitted. Plaintiffs each suffered a broken leg. The issues in both cases are the reasonable value of the medical services provided to each plaintiff to heal the broken leg and plaintiff s noneconomic damages for pain and suffering. Each hospital billed $10,000 for those medical services. In the first courtroom, the plaintiff personally purchased for herself medical insurance. The insurance company settled the $10,000 billing for an actual cash payment of $1,000 and a negotiated write-off of $9,000. In the second courtroom, the plaintiff had no medical insurance, so there was no write-off.
Under our colleague’s approach, in the first courtroom, the jury would hear evidence of the $10,000 billing to the insured plaintiff, be told “the hospital will accept $1,000 to satisfy its bill of $10,000,” and some limiting instruction will be given that introduction of the $1,000 figure is not given to necessarily diminish plaintiff s none-conomic loss. Any attempt by the insured plaintiff to explain the compromised payment evidence will necessarily lead to disclosure
In the second courtroom, the uninsured plaintiff will have the jury consider the same legal questions but without the additional evidence about the $1,000 that would satisfy the hospital bill. The uninsured plaintiff s lawsuit also will have none of the complications or limitations outlined above for the insured plaintiff.
Common sense tells us the defendant is better off in the first courtroom against the insured plaintiff because there is a greater likelihood the uninsured plaintiff will obtain a higher jury verdict based on the original amount billed and a higher pain and suffering award. This result makes no sense. See Wentling v. Medical Anesthesia Services,
“If we were to permit a tortfeasor to mitigate damages with payments from plaintiff s insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums would have earned no benefit. Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance.”2 Cal. 3d at 10 .
In Farley v. Engelken,
Finally, we need to mention how our colleagues’ approach fails to recognize and apply the long-standing rationales underlying the collateral source rule. As discussed above, the collateral source rule, as articulated by this court over many years, is solidly grounded in notions of equity, fairness, relevance, inherent prejudice to the plaintiff, as well as deterrence and accountability for tortfeasors. We fail to detect those principles in the alternative approach our colleagues now require.
We believe the law is unmistakable. The injured party’s damages are not to be diminished simply by the fact that he or she is indemnified for his or her loss by insurance. The more recent clouds of compromise and needless complexity reflected in some courts’ decisions weaken the bright clarity of this principle. This erosive process has now continued to the point where the underlying principle is becoming so fundamentally altered that the collateral source rule is compromised beyond useful applicability. As noted by the Ohio Court of Appeals, we fear our colleague’s Robinson-based approach will eradicate the collateral source rule in practice. Ross,
Conclusion
We agree with our colleagues that the district court erred in limiting plaintiffs recovery for medical expenses to only those amounts actually paid by plaintiff and her health insurance company. The district court’s ruling on the motion in limine must be reversed. We agree further that the result reached in Bates, Fischer, and Liberty is wrong. But on remand, we believe the district court in this case should be directed to return to the long-standing principles previously articulated by this court underlying the collateral source rule. This would preclude the specific admission of the amount paid to satisfy the medical bills as a collateral source benefit, which would eliminate the need for any limiting instructions and the likelihood for jury confusion or misconduct on this highly prejudicial subject matter.
We concur in the result, which reverses the district court’s ruling on the motion in limine. We dissent from the majority’s adoption