Defense Digest

Victory For Defendants In Ohio

On December 20, 2006, the Ohio Supreme Court handed the defense bar and its clients a major victory in personal injury cases. In a unanimous decision, the Court held that evidence of the amount of medical bills actually paid pursuant to an insurance contract is admissible to prove the reasonableness of the medical expense. Thus, although a plaintiff may still present evidence of the amount originally billed by a provider, the defendant will have an opportunity to rebut the reasonableness of that amount by showing that the provider agreed to accept a reduced amount as full payment. The Supreme Court's decision in Robinson v. Bates, 112 Ohio St. 3d 17, will significantly impact, and should reduce, the amount of damages awarded in personal injury cases.

In Ohio, a plaintiff seeking damages for personal injury must prove that the medical bills sought are reasonable and necessary as a result of the injury caused by the tortfeasor. Under R.C. 2317.421, a written medical bill, itemized by date, type of service rendered and charge, is prima facie evidence of the reasonableness of any charges stated therein. Once the medical bills are admitted into evidence, a defendant may then present evidence to challenge their reasonableness. Prior to the Robinson ruling, defendants had little means to rebut the reasonableness of the amount billed due to the courts' application of the collateral-source rule.

Ohio has followed the collateral-source rule since 1970, when the Supreme Court held that the plaintiff's receipt of benefits from sources other than the wrongdoer is irrelevant and inadmissible. In applying the rule, courts have allowed plaintiffs to present evidence of the original amount of the medical bills, regardless of the fact that a lesser amount was accepted as full payment. This rule has allowed plaintiffs to recover amounts in excess of the actual out-of-pocket loss, and in many cases results in a windfall to plaintiffs. In the Robinson case, the Supreme Court concluded that the plaintiff's receipt of benefits from a health insurer is not a collateral source. Defendants will now have the ability to present evidence which will challenge the reasonableness of the bill.

The case of Robinson v. Bates was filed by Carolyn Robinson after she broke a bone in her foot when she fell at a rental property. The lawsuit was filed against the landlord, Helen Bates, seeking damages for the personal injury. At trial, Robinson proffered her medical bills, which totaled $1,919. There was a stipulation that Robinson's insurance company had paid only $1,350.43 for the medical services and the balance was "written-off" by the medical providers. The trial court refused to admit the original bills and allowed only evidence of the amount actually paid. The case was appealed to the Court of Appeals for Hamilton County, and that court reversed the judgment. With regard to the medical bills, the court held that the trial court erred in failing to admit evidence of the original medical bills. In so ruling, the appeals court relied on the collateral-source rule, stating that the plaintiff was entitled to seek recovery of the entire amount of the bills, not just the amount paid by the insurer.

In the Robinson case, the Supreme Court considered whether a defendant can present evidence of the amount accepted as full payment of a medical bill or whether the evidence is barred by the collateral-source rule. The Court held that the court of appeals improperly applied the collateral-source rule and found that both evidence of the amount of the original bill and evidence of the amount of the bill which was "written-off" are relevant and admissible evidence on the issue of the reasonableness of the medical charges. The Court held that the collateral-source rule only excludes evidence of benefits actually paid by a collateral source. The Court stated that "because no one pays the write-off, it cannot possibly constitute payment of any benefit from a collateral source....Because no one pays the negotiated reduction, admitting evidence of write-offs does not violate the purpose behind the collateral-source rule." In so ruling, the Court left the jury to decide whether the reasonable amount of the medical service is the amount originally billed, the amount accepted as full payment, or some amount in between.

Defense lawyers now have the opportunity to present strong evidence to rebut the presumption that the amount billed by a medical provider is reasonable. This decision will necessitate additional discovery to obtain the amounts of "write-offs." Defense lawyers will need to be prepared to present testimony and/or evidence from the health care provider regarding the amounts paid pursuant to their contracts. The medical audits presented by plaintiffs as evidence of damage now only tell half of the story. In order to evaluate our cases, we need to obtain information regarding whether the bills were paid by an insurer and, if so, how much was paid. This decision should significantly affect our evaluation of cases as there is no question it will significantly affect a jury's determination of damages. Most of us who have tried cases have seen that juries are interested in whether the bills were paid and, if so, who paid them. In today's climate, it should be easy to argue that an amount billed by a medical provider which is far in excess of the amount they have agreed to accept as full payment is not reasonable. While it is too soon to know all of the ramifications of this ruling, there is no question the Robinson ruling is a victory for defendants.

* Kimberly is a shareholder in our Akron, Ohio, office. She can be reached at (330) 255-0603 or kkwyss@mdwcg.com.