Liability damages may be limited by Ohio ruling

The state Supreme Court said evidence of discounted medical bills could be introduced to show a lower value for an award.

By Amy Lynn Sorrel — Posted May 24, 2010

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The Ohio Supreme Court handed a victory to physicians in a decision that is expected to limit damages in personal injury cases, including medical liability suits, in that state.

On May 4, the high court ruled that defendants may submit evidence showing the amounts actually paid for a plaintiff's medical bills, even when those costs are less than the amount originally billed. The decision turned on a state law -- known as the collateral source rule -- that plaintiff lawyers argued prevented defendants from presenting documentation of reduced medical costs when the patient is covered by health insurance. The rule applies when patients' contracts allow the insurer to collect for covered medical expenses recovered in litigation, plaintiff lawyers said. The law does not apply to the uninsured.

The case stemmed from a personal injury lawsuit Richard Jaques filed after he was hurt in a car crash in 2005. Patricia Manton, whose car collided with Jaques' car, admitted liability, according to court records.

The only issue left to be decided was damages, and Jacques sought to present to a jury his total medical bills, which were $21,875. But Manton argued that she should be able to submit information showing that Jaques' health insurance company paid only $7,484 for his treatment.

A trial court prevented Manton from admitting such evidence, however, and in 2008, a jury awarded Jaques $25,000 in total damages.

The state Supreme Court disagreed. Because nobody actually paid the difference between what was billed and what was paid -- so-called write-offs -- defendants may admit the evidence to show the reasonable value of damages to which plaintiffs are entitled, justices said.

"Write-offs are amounts not paid by third parties or anyone else, so permitting introduction of evidence of them allows the fact finder to determine the actual amount of medical expenses incurred as a result of the defendant's conduct," Justice Terrence O'Donnell wrote. "This result supports the traditional goal of compensatory damages -- making the plaintiff whole."

Justices sent the case back to a trial court to re-decide the issue.

Impact on medical liability judgments

Physicians said the decision has implications for medical liability judgments and will help keep such awards in check.

"It's a windfall to the plaintiff to only allow in these cases billed charges and exclude amounts health insurance paid to the provider," said Ohio State Medical Assn. General Counsel Nancy Gillette. OSMA, the Ohio Osteopathic Assn. and the Ohio Hospital Assn. jointly filed a friend-of-the-court brief in the case. The Academy of Medicine of Cleveland & Northern Ohio filed a separate brief.

"The calculation of damages in an injury case or a medical liability case ought to be a fair calculation based on amounts that would actually be paid," Gillette said. Physicians also were concerned that inflating award amounts could contribute to rising medical liability insurance costs.

But plaintiff lawyers said the decision goes against decades of legal precedent allowing patients to recover the full, fair-market value of medical services they received for an injury.

Patients do end up paying above and beyond any so-called write-offs when they pay for their insurance premiums, and instead, the ruling penalizes them for taking that responsibility, said John Van Doorn, executive director of the Ohio Assn. for Justice, formerly the Ohio Trial Lawyers Assn. The state trade group for plaintiff lawyers also filed a brief in the case.

Van Doorn said it is insurance companies that end up with a windfall, not patients. Lone dissenting Justice Paul E. Pfeifer echoed those sentiments.

"You don't get these discounts unless you have medical insurance," Van Doorn said. "Do you suppose we'll see reductions in insurance premiums? Don't count on it."

Physicians and trial lawyers expect the Ohio Legislature to address the court ruling.

"The bigger question now is, what is fair-market value? What is a doctor's reasonable charge?" Van Doorn said. "This case would lead a person to believe the discounted amount is the reasonable charge," which also penalizes doctors.

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Case at a glance

Can defendants in liability cases show that plaintiffs' medical bills were reduced by health insurers?

The Ohio Supreme Court said yes.

Impact: Physicians say the evidence helps ensure reasonable awards. Plaintiff lawyers say patients are entitled to the full value of compensation for an injury and should not be penalized for carrying health insurance.

Richard Jaques v. Patricia Manton, Ohio Supreme Court

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External links

Richard Jaques v. Patricia Manton, Ohio Supreme Court, including video of oral argument (link)

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