Medical Bill "Write-Offs" are Not Benefits
Under the Collateral Source Rule

Anne Marie Sferra
Jonathan T. Brollier
Bricker & Eckler LLP
January 2007

Full text of Robinson v. Bates

In a long-awaited decision, the Ohio Supreme Court ruled that evidence of medical bill “write-offs” are not barred by the collateral source rule. In a personal injury case, both the medical bill showing the amount originally charged, as well as evidence showing that the provider accepted a lesser amount as payment in full for those charges, are admissible in court. Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362. Thus a jury may consider both the amount that the provider billed, as well as the lesser amount that the provider actually accepted as payment in full, in its calculation of the reasonable medical costs that constitute part of a prevailing plaintiff’s damages.

At issue in the case was the application of Ohio’s common law doctrine known as the “collateral source rule.” The collateral source rule, recognized by Ohio courts since 1970, prevents a jury from learning about a plaintiff’s receipt of payment for plaintiff’s injury from a source other than the defendant. The rule was adopted to prevent a tortfeasor from benefiting from the plaintiff’s own efforts to recover from other sources, such as plaintiff’s own insurance carrier. 

The Supreme Court reasoned that the collateral source rule is not applicable to write-offs because they are not payments made by a third-party to the plaintiff. Instead, write-offs are just a reduction in the amount that the provider accepts for medical services provided to the plaintiff. Rather than identify either the amount billed or the discounted amount paid as the appropriate evidence to be submitted to a jury as the “reasonable value” of medical expenses, the Court ruled that all information could be submitted to the jury. Noting the wide variety of insurance plans and managed care plans available, the Court ruled that allowing a jury to determine the reasonable value of medical care is appropriate.

The Court also took note of the recent passage of Ohio Revised Code Section 2315.20, which became effective April 7, 2005. Because R.C. 2315.20 took effect after the cause of action in the Robinson case arose, the new law did not apply. However, application of R.C. 2315.20 should lead to a result that is consistent with the ruling in Robinson. Ohio Revised Code Section 2315.20 modifies the traditional collateral source rule to allow a jury to consider “evidence of any amount payable as a benefit to the plaintiff as a result of the damages that result from any injury.” 

Robinson v. Bates stands for the proposition that a jury may consider more, as opposed to less, evidence in its calculation of damages. This case constitutes a victory for insurers because it plainly explains “any difference between the original amount of a medical bill and the amount accepted as the bill’s payment in full is not a ‘benefit’ under the collateral source rule.” Thus, evidence of the negotiated rate accepted by the provider as payment in full will be admissible to juries. Insurers will welcome this judicial recognition that few insured injured people pay the amount that appears on the original medical bill due to providers’ decisions to accept a lesser amount through agreements with insurers and others. 

(Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362. Justice Lanzinger wrote the Court’s decision and Chief Justice Moyer and Justices Resnick, Pfeifer, and O’Connor concurred. Justice O’Donnell concurred in the Court’s judgment only, not in the written decision. Justice Lundberg Stratton concurred in part and dissented in part and would have held that the bill and the write-off are both admissible, but that a plaintiff may recover only the amount that was actually paid for the medical expenditures. This case summary follows Bricker & Eckler LLP’s analysis of the Court of Appeals’ decision, which appeared in Vol. IX No.4 of the Ohio Insurance Law Newsletter in Winter 2005.)