Opinion ID: 1059606
Heading Depth: 2
Heading Rank: 2

Heading: medical expenses written off

Text: We now address the question whether those portions of Letourneau's medical bills that his health care providers wrote off can be submitted to the jury. We decide this issue because it will likely arise again in a new trials. [6] See Shelby Ins. Co. v. Kozak, 255 Va. 411, 416, 497 S.E.2d 864, 868 (1998). We begin with a discussion of the collateral source rule, the applicability of which is central to this issue. The collateral source rule is a long-standing principle in Virginia tort law and has been applied in tort cases for more than a century. [7] See Schickling v. Aspinall, 235 Va. 472, 475, 369 S.E.2d 172, 174 (1988); Johnson v. Kellam, 162 Va. 757, 764-65, 175 S.E. 634, 636-37 (1934); Baltimore & Ohio R.R. Co. v. Wightman's Adm'r, 70 Va. (29 Gratt.) 431, 446 (1877), rev'd on other grounds sub nom. Railroad Co. v. Koontz, 104 U.S. 5, 26 L.Ed. 643 (1881). The meaning of the collateral source rule and its rationale are found in the following passages from several of our prior cases: The law seems quite well settled that damages, recoverable for personal injuries inflicted through the negligence of another are not to be reduced by reason of the fact that the injured party had been partly compensated for his loss by insurance which he has procured and for which he has paid. The reason for this rule is that the defendant, who by his negligence, has injured another, owes to such other compensation for the injuries he has inflicted and the payment for those injuries from a collateral source cannot relieve the defendant of his obligation. Kellam, 162 Va. at 764, 175 S.E. at 636. Accord Burks v. Webb, Adm'x, 199 Va. 296, 304, 99 S.E.2d 629, 636 (1957). Pursuant to the rule, compensation or indemnity received by a tort victim from a source collateral to the tortfeasor may not be applied as a credit against the quantum of damages the tortfeasor owes. Schickling, 235 Va. at 474, 369 S.E.2d at 174. A person who is negligent and injures another owes to the latter full compensation for the injury inflicted[,]... and payment for such injury from a collateral source in no way relieves the wrongdoer of [the] obligation. Walthew v. Davis, Adm'r, 201 Va. 557, 563, 111 S.E.2d 784, 788 (1960) (citing Webb, 199 Va. at 304, 99 S.E.2d at 636). With regard to the issue concerning the medical expenses that were written off, Acuar first points out that the purpose of compensatory damages is to make a plaintiff whole. See F.B.C. Stores, Inc. v. Duncan, 214 Va. 246, 251, 198 S.E.2d 595, 599 (1973). Relying on Sykes v. Brown, 156 Va. 881, 159 S.E. 202 (1931), Acuar argues that a plaintiff may recover medical expenses only when the plaintiff is liable for the debt incurred. Id. at 887, 159 S.E. at 204. Continuing, she asserts that, based on this Court's decision in State Farm Mut. Auto. Ins. Co. v. Bowers, 255 Va. 581, 500 S.E.2d 212 (1998), the portions of medical bills that are written off by health care providers are not incurred expenses because a plaintiff is never legally obligated to pay those amounts. Thus, Acuar contends that the collateral source rule is not applicable to the present case because Letourneau is not, and never will be, legally obligated to pay those portions of his medical bills that were written off, nor were those amounts paid on his behalf. According to Acuar, the amounts written off by health care providers are not benefits derived from a collateral source, and to allow Letourneau to recover such amounts as damages in this tort action would create a double recovery or windfall in his favor. In opposition, Letourneau asserts that the collateral source rule does apply and that therefore Acuar cannot reduce the amount of damages for which she is liable by deducting the amounts written off by Letourneau's health care providers. Letourneau points out that his health care providers wrote off certain portions of the medical expenses because of agreements between them and his health insurance carrier, and that such agreements are part of the benefits that Letourneau obtained in exchange for the consideration, or premium, that he paid for his health insurance coverage. Letourneau maintains that, if Acuar's position were adopted, she would derive a benefit from Letourneau's health insurance without having paid any consideration for such a benefit, thereby creating a windfall for Acuar. However, based on this Court's decision in Schickling, Letourneau asserts that the law favors a windfall for the tort victim rather than the wrongdoer. In deciding this issue, we first note that our decision in Bowers is not dispositive. That case involved a contractual dispute between an insured and his automobile liability insurance carrier regarding coverage under the medical payments provision of the policy at issue. Bowers, 255 Va. at 583-84, 500 S.E.2d at 212-13. Under the terms of that provision, the insurance carrier agreed to pay on behalf of each injured person, medical expense benefits as a result of bodily injury caused by accident. Id. at 583, 500 S.E.2d at 212. The policy defined medical expense as all reasonable and necessary expenses for medical ... services ... incurred.... Id. Accordingly, to answer the coverage question, we focused on the meaning of the term incurred, as defined by this Court in Virginia Farm Bureau Mut. Ins. Co. v. Hodges, 238 Va. 692, 385 S.E.2d 612 (1989). In Hodges, we said that lain expense can only be `incurred' ... when one has paid it or become legally obligated to pay it. Id. at 696, 385 S.E.2d at 614. Thus, we concluded in Bowers that the medical expenses Bowers [had] `incurred' were the amounts that the health-care providers accepted as full payment for their services rendered to him and did not include the amounts written off by such providers. [8] Bowers, 255 Va. at 585-86, 500 S.E.2d at 214. Even though that case, like the present one, involved medical expenses that health care providers had written off, we were construing the specific terms of an insurance contract in. Bowers. Thus, neither the tort policy of this Commonwealth nor the collateral source rule was implicated. By contrast, in the instant case, we are reviewing a tort claim, not a contractual one, by an injured party against a wrongdoer. We also point out that Hodges likewise involved the interpretation of a medical payments provision. Hodges, 238 Va. at 693, 385 S.E.2d at 612. In that case, the plaintiff sought to recover the cost of surgery under the medical payments provision of her automobile insurance policy even though she had not yet undergone the surgery and had not entered into a contract with the doctor to perform the surgery on some future date. Id. at 694-95, 385 S.E.2d at 613. This Court concluded that the plaintiff had not incurred that surgical expense within one year from the date of the accident as required by the terms of the insurance policy. Id. at 696, 385 S.E.2d at 614. By way of contrast, if the plaintiff in Hodges had brought a tort action against the negligent driver who caused her injuries, such as the present case filed by Letourneau, she undoubtedly would have been allowed to recover the cost of future medical expenses as an element of damages. See Hailes v. Gonzales, 207 Va. 612, 614, 151 S.E.2d 388, 390 (1966) (award for future medical expenses is appropriate when evidence supports such an award). The question whether such future expenses had been incurred would not have been an issue. Likewise, this Court's decision in Sykes does not provide controlling precedent for purposes of the issue before us. There, the plaintiff sought damages for personal injuries sustained when she was struck by an automobile. Testimony from a doctor associated with the hospital where the plaintiff had received treatment established the approximate amount of her hospital bill and the balance due on the bill. Sykes, 156 Va. at 886, 159 S.E. at 204. One of the errors assigned was the trial court's refusal to instruct the jury that it could not consider any expenses incurred for hospital care, nursing, medical or surgical treatment. [9] Id. at 886-87, 159 S.E. at 204. In support of the instruction, the defendant argued that the evidence failed to show that the plaintiff had paid any part of her medical expenses. Id. at 887, 159 S.E. at 204. In holding that the instruction was properly refused because the record established that the plaintiff owed another doctor for services rendered as a result of the accident, this Court stated that [p]ayment of the expense of treatment is not essential to a recovery. If plaintiff is liable for the debt incurred, that is all that is necessary. Id. The decision in Sykes focused on whether it was necessary for the plaintiff to have paid her medical expenses before she could claim them as part of her damages. The application of the collateral source rule was not at issue. Thus, we are not persuaded by Acuar's argument, based on the previously quoted language from Sykes and the definition of the term incurred used in Bowers, that the collateral source rule does not apply to the present case because Letourneau did not incur the medical expenses that his health care providers wrote off. That argument overlooks the fundamental purpose of the rule, explained above, to prevent a tortfeasor from deriving any benefit from compensation or indemnity that an injured party has received from a collateral source. In other words, the focal point of the collateral source rule is not whether an injured party has incurred certain medical expenses. Rather, it is whether a tort victim has received benefits from a collateral source that cannot be used to reduce the amount of damages owed by a tortfeasor. Letourneau is entitled to seek full compensation from Acuar. See Walthew, 201 Va. at 563, 111 S.E.2d at 788. Based on the cases cited above dealing with the collateral source rule, we conclude that Acuar cannot deduct from that full compensation any part of the benefits Letourneau received from his contractual arrangement with his health insurance carrier, whether those benefits took the form of medical expense payments or amounts written off because of agreements between his health insurance carrier and his health care providers. Those amounts written off are as much of a benefit for which Letourneau paid consideration as are the actual cash payments made by his health insurance carrier to the health care providers. The portions of medical expenses that health care providers write off constitute compensation or indemnity received by a tort victim from a source collateral to the tortfeasor.... Schickling, 235 Va. at 474, 369 S.E.2d at 174. This conclusion is consistent with the purpose of compensatory damages, which is to make a tort victim whole. However, the injured party should be made whole by the tortfeasor, not by a combination of compensation from the tortfeasor and collateral sources. The wrongdoer cannot reap the benefit of a contract for which the wrongdoer paid no compensation. Baltimore & Ohio R.R. Co., 70 Va. (29 Gratt.) at 446. The extent of Acuar's liability to Letourneau cannot be measured by deducting financial benefits received by [Letourneau] from collateral sources. Owen v. Dixon, 162 Va. 601, 608, 175 S.E. 41, 43 (1934). In other words, it is the tortfeasor's responsibility to compensate for all harm that he [or she] causes, not confined to the net loss that the injured party receives. Restatement (Second) of Torts § 920A cmt. b (1977). To the extent that such a result provides a windfall to the injured party, we have previously recognized that consequence and concluded that the victim of the wrong rather than the wrongdoer should receive the windfall. Schickling, 235 Va. at 475, 369 S.E.2d at 174. We explain the rationale for that result by repeating the following explanation of the collateral source rule: The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is entitled to compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer. Id. at 474-75, 369 S.E.2d at 174. For these reasons, we hold that Letourneau may present evidence at the new trial of the full amount of his reasonable medical expenses without any reduction for the amounts written off by his health care providers. Reversed and remanded.