It is not uncommon for medical providers and insurance companies to take medical write-offs in connection with medical services provided to an injured individual with a personal injury or wrongful death claim. This article takes a summary look at how an injured party can benefit from a medical write-off when pursuing a personal injury or wrongful death claim against the tortfeasor that caused the injury or death.
What is a medical write-off?
A medical write-off is simply an agreement by a medical provider to accept less than the full amount billed in full satisfaction of the provider’s bill. Medical write-offs can be voluntary, forced, or statutory. For example, a hospital may bill an injured party $100,000.00 for treatment resulting from a motor vehicle accident. The injured party may have Medicare. Under the terms of Medicare, medical providers are often required to accept an amount as payment in full that is less than the $100,000.00 billed. Thus, Medicare may pay the hospital $60,000.00 as full and complete payment of the $100,000.00 medical bill. The hospital will write-off the balance of $40,000.00, and the injured patient will have no further responsibility for the bill.
The Collateral Source Rule.
An individual with a personal injury or wrongful death claim is entitled to recover from the at-fault party the amount of all economic damages incurred, including medical expenses. For example, a person who incurs $50,000.00 for medical treatment for injuries sustained in a car accident can seek to recover that $50,000.00 from the at-fault driver who caused the accident and the injuries. At trial, the jury will hear about the $50,000.00 in medical expenses and can award the full $50,000.00 to the injured party. However, for years, defense attorneys were successfully persuading judges to reduce the $50,000.00 jury award by the amount of any medical write-offs taken. For example, if the injured party incurred $50,000.00 in medical bills ($30,000.00 of which was paid by insurance and the other $20,0000.00 was written-off), and the jury awarded the injured party the full $50,000.00, defense attorneys were successfully convincing judges to reduce the award to $30,000.00 post-trial.
The argument advanced by defense attorneys typically revolved around the collateral source rule and the notion that plaintiffs would receive a double recovery if a reduction for medical write-offs were not enforced. The collateral source rule is codified as Oregon Revised Statute (“ORS”) 31.580, which states:
(1) In a civil action, when a party is awarded damages for bodily injury or death of a person which are to be paid by another party to the action, and the party awarded damages or person injured or deceased received benefits for the injury or death other than from the party who is to pay the damages, the court may deduct from the amount of damages awarded, before the entry of a judgment, the total amount of those collateral benefits other than:
(a) Benefits which the party awarded damages, the person injured or that person’s estate is obligated to repay;
(b) Life insurance or other death benefits;
(c) Insurance benefits for which the person injured or deceased or members of that person’s family paid premiums; and
(d) Retirement, disability and pension plan benefits, and federal Social Security benefits.
(2) Evidence of the benefit described in subsection (1) of this section and the cost of obtaining it is not admissible at trial, but shall be received by the court by affidavit submitted after the verdict by any party to the action.
The collateral source rule has three built-in exceptions under which a reduction of the damages awarded cannot be had. However, these exceptions do not directly address medical write-offs.
How can an individual with a personal injury or wrongful death claim benefit from a medical write-off?
The Oregon Supreme Court and the Oregon Court of Appeals have recently issued decisions which expand the exceptions to the collateral source rule. These new exceptions apply to medical write-offs taken as a result of payment by Medicare, Medicaid, and the Oregon Health Plan. In White v. Jubitz Corp, 347 Or. 21 (2009), the Oregon Supreme Court ruled that, contrary to the defense contention, the collateral source rule does not prohibit a plaintiff from obtaining a double recovery. Further, the Oregon Supreme Court decided that Medicare benefits are included in federal Social Security benefits, and thus are excluded from the collateral source rule under ORS 31.580(1)(d). Likewise, in Cohens v. McGee, Or.App. 78 (2008), the Oregon Court of Appeals decided that the Oregon Health Plan, which is part of Medicaid, is also considered a Social Security benefit and is therefore exempted under the collateral source rule.
What do these court rulings mean for a person with a personal injury or wrongful death claim? It means that the injured individual will be entitled to recover the full amount of all medical bills incurred regardless of any write-offs taken by the medical provider due to Medicare, Medicaid or the Oregon Health Plan. For example, if an individual incurs $100,000.00 in medical bills after being struck by an inattentive driver, and Medicare pays $60,000.00 of the bills and the $40,000.00 balance is written-off, the injured party still gets to recover the full $100,000.00. Of course, the injured party will likely be required to reimburse Medicare the $60,000.00 that Medicare paid, but the injured party also gets to keep the $40,000.00 that was written-off by the medical provider. When taken together with all of the other damages a person with a personal injury or wrongful death claim may have, such as damages for pain and suffering, this additional $40,000.00 might be a substantial boost to the overall recovery for the injured party.
Article by Attorney Keith R. Shepherd
These articles have been prepared by attorney Keith R. Shepherd as means to provide general information regarding personal injury and/or wrongful death claims. Each case should be evaluated individually on its merits by a competent attorney, and in no way should these articles be construed as specific legal advice or as the basis for the formation of a legal relationship with White & Shepherd, LLP. For a free consultation regarding your case, please email Keith R. Shepherd at keith@whiteandshepherd.com or call 503-922-2028. Please also visit our website at http://www.beavertonpersonalinjurylawattorney.com/
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