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Why Should A Bad Driver, A Dangerous Doctor, Or An Unsafe Employer Get A Benefit From Your Health Insurance?

A recent Ohio Supreme Court decision allows defendants in personal injury cases to introduce evidence that the plaintiff’s medical providers “wrote off” charges for the plaintiff’s care.   Most health insurance companies have agreements with medical providers that the medical providers will accept a reduced amount as payment in full for procedures.  For example, in the Ohio case, the plaintiff was billed $21,874.80 for care.  This is the amount that the provider would have charged a patient without insurance.  However, because of the insurance contract between the patient and the provider, the insurance company paid $7,483.91 and wrote off the rest.

The Ohio trial judge said only allowed evidence of the full $21,874.80 in charges, but the Ohio Supreme Court said that the evidence of the write off should have been admitted.  The opinion is here. 

A number of other states have held the opposite.  How do we deal with it in Texas?  Frankly, no one is sure.

Historically, Texas has not allowed in evidence of the write offs.  But in the 2003 legislative session, the legislature adopted a rule that reads:

In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.

What does that mean?  Without defining “paid” or “incurred” the statute is a model of poor draftsmanship.  Despite the statute being around for seven years now, courts still haven’t come to a good conclusion of what it means.  I can tell you that in most Travis County courts the judges aren’t allowing in evidence of the write off, but they will reduce the jury’s award for medical expenses after the verdict is rendered to equal the amount that was actually paid, including insurance payments, co-pays, etc.

The result of this is that in two hypothetical cases — one where a driver runs over an employed person with insurance and one where a driver runs over the same employed person without insurance — there will be two very different results due to the existence of health insurance.

But all of this begs the question, “Why should a bad driver, a dangerous doctor, or an unsafe employer get a benefit from your health insurance?”

When there are write offs, there are two possible outcomes.  First, the plaintiff could be awarded the full amount of the medical charges even though some are never paid due to the reduction.  This would be a benefit to the plaintiff.  Second, the plaintiff could be awarded the reduced amount, which would mean the defendant gets a benefit from the health insurance reduction.

So we’re faced with deciding which of two sides gets a benefit:  the side that purchased health insurance or had an employer purchase health insurance or the side that committed the wrong that resulted in the suit.  If you’re choosing between the two, why should the wrongdoer get the benefit of the insurance?  I’ve had a discussion about this law with a number of different people, and I’ve yet to hear any good reasons why benefits of health insurance should not go to the innocent party, but should instead go to the wrongdoer.  If you have suggestions, let me know.


And a h/t to Nashville, Tennessee injury lawyer John Day & his blog Day on Torts for the link to the opinion.

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