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"A Plaintiff May Claim Medical Bill Discounts and Write-offs as Part of His/Her Damages in West Virginia"
John N. Kenney v. Samuel C. Liston
A West Virginia personal injury plaintiff may claim the full amount of his/her medical bills as damages, regardless of whether the medical providers have discounted or written off portions of those bills as part of health insurance payments.
On June 4, 2014, the Supreme Court of Appeals of West Virginia released its opinion in John N. Kenney v. Samuel C. Liston (No. 13-0427) holding in Syllabus Point #7 that "[w]here an injured person's health care provider agrees to reduce, discount or write off a portion of the person's medical bill, the collateral source rule permits the person to recover the entire reasonable value of the medical services necessarily required by the injury." Thus, "[t]he tortfeasor is not entitled to receive the benefit of the reduced, discounted or written-off amount."
In the Kenney case, the plaintiff was injured in a rear-end accident by a drunk driver. Liability was clearly against the defendant. The plaintiff claimed medical bills in excess of $70,000 at trial. West Virginia law permits a plaintiff to recover the necessary and reasonable medical expenses incurred for an injury caused by a tortfeasor. Proof that a medical bill was incurred is prima facie evidence that the expense was necessary and reasonable under W.Va. Code 57-5-4j (1981). Blue Cross/Blue Shield paid a portion of the plaintiff's medical bills and, by agreement, the plaintiff's medical providers adjusted the plaintiff's medical bills in return for these health insurance payments (i.e. the unpaid portions of the medical bills were "written off" by the medical providers). The defendant moved the circuit court to prohibit the plaintiff from claiming the full amount of his medical bills at trial since he was ultimately responsible for only a portion of those bills. Relying upon West Virginia's collateral source rule, the circuit court denied the defendant's motion finding the discounts or write-offs were in the nature of a collateral source payment. The circuit court also prohibited the defendant from presenting any evidence that the plaintiff's medical bills were reduced by the provider or paid at a discounted rate by the health insurer.
On appeal, the defendant challenged the circuit court's rulings on discounts and write-offs. Specifically, the defendant argued that he should be allowed to present evidence of the health insurance discounts and write-offs to establish the reasonable value of the medical services claimed by the plaintiff. The plaintiff countered that the collateral source rule protects the entire amount initially billed, provided it was necessary and reasonable, because any discounts or write-offs resulted from a collateral source - the plaintiff's health insurance - from which the defendant should receive no benefit. Applying the collateral source rule as both a rule of evidence and a rule of damages, the Supreme Court of Appeals of West Virginia found that medical bill discounts and write-offs are protected because both are benefits of the plaintiff's bargain with his health insurance carrier and, ultimately, his medical provider. Thus, the defendant/tortfeasor should not benefit from these private arrangements. The Supreme Court observed that "a creditor's partial forgiveness of a tort victim's medical bills via a write-down is properly considered a third-party 'payment,' evidence of which is barred by the collateral source rule." Thus, "a tortfeasor cannot offer evidence that part of the bill was discounted or written off" and the "plaintiff may recover the full amount of his or her reasonable and necessary medical expenses, even if those expenses were later discounted and a portion written off by the health care provider."
The Supreme Court of Appeals of West Virginia's holding in Kenney is consistent with recent holdings in several other jurisdictions, including McConnell v. Wal-Mart Stores, Inc., ___ F.Supp.2d ___, 2014 WL 464799*4 (D. Nev. Feb 4, 2014).
Please share this information with others in your office and let us know if you have any questions about how this new case will affect your claim handling and claim evaluation in West Virginia.