Medical Expense Write-Offs Not Recoverable, Says Louisiana High Court

15
Oct

Medical Expense Write-Offs Not Recoverable, Says Louisiana High Court

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The Louisiana Supreme Court recently announced a “bright-line” rule that a write-off from a medical provider, negotiated by the plaintiff’s attorney, is not covered by the collateral source rule and cannot be recovered by the plaintiff. In Hoffman v. 21st Century North America Ins. Co., 2014-2279 (10/2/2015), the Court considered a case with clear evidence that the plaintiff’s attorney had “an arrangement” with the medical provider and only had to pay a significantly discounted amount for the provider’s services. The bill from the medical provider was $3,000; the plaintiff’s attorney paid $950; the remainder was an “adjustment” by the medical provider of $2,050. The Court accepted the case to decide what it considered the res nova issue of whether the written-off portion of a medical bill falls under the collateral source rule. In this case, plaintiff asked the jury to recover the full amount of $3,000; whereas the defendant claimed that only the actual paid amount of medical expenses should be recoverable by plaintiff.

The Court explained that the collateral source rule prevents a tortfeasor from benefitting from the “victim’s foresight in purchasing insurance and other benefits.” The Court considered its prior precedent and stated that the rule should apply whenever the victim paid for the extra benefit or suffered some diminution in his or her patrimony because of the availability of the benefit. The Court determined that an attorney-negotiated write-off implicated neither of these concerns: “First, allowing the plaintiff to recover an amount for which he has not paid, and for which he has no obligation to pay, is at cross purposes with the basic principles of tort recovery in our Civil Code. The wrongdoer is responsible only for the damages he or she has caused. La. Civ.Code art. 2315. The plaintiff has suffered no diminution of his patrimony to obtain the write-off, and, therefore, the defendant in this case cannot be held responsible for any medical bills or services the plaintiff did not actually incur and which the plaintiff need not repay.”

The Court also stated that it adopted this “bright-line rule” to avoid a number of evidentiary and ethical dilemmas for attorneys. Interestingly, the Court noted that no other jurisdiction has decided this exact issue. It found one California case where the recovery of discounted medical bills was considered, and that court held that the collateral source rule does not apply to those discounted bills.

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