Opinion ID: 1952801
Heading Depth: 2
Heading Rank: 2

Heading: Collateral Source Issue

Text: Whether unpaid and written-off medical expenses can be recovered by a plaintiff as compensatory damages is an issue of first impression in the District of Columbia. In support of their argument in the trial court, appellants rely here, as they did in the trial court, primarily upon two cases applying Virginia law, State Farm Mut. Auto. Ins. Co. v. Bowers, 255 Va. 581, 500 S.E.2d 212 (Va.1998) and McAmis v. Wallace, 980 F.Supp. 181, 185 (W.D.Va.1997). Bowers involved a suit by an automobile insurance carrier against its insured for overpayments under a medical payments provision. 255 Va. at 583-84, 500 S.E.2d at 212-13. Bowers' policy provided for payment of reasonable and necessary expenses incurred. Id. at 583, 500 S.E.2d at 212. The Supreme Court of Virginia, interpreting the language of the policy under the case law of Virginia, concluded that the term incurred referred to those amounts that the health care providers accepted as full payment for their services, and not amounts written-off by the providers. Id. at 585-86, 500 S.E.2d at 214. In McAmis, a federal court held that the collateral source rule does not permit a plaintiff to recover medical expenses written-off by her health care providers pursuant to a contract with Medicaid, since she did not incur the written-off amounts. 980 F.Supp. at 185-86. The court reasoned that under Virginia law before the collateral source rule applies, the injured party must establish personal liability, at some time, for that amount. Id. at 185. Compensatory damages are intended to make a plaintiff whole under Virginia law, and for that to occur, [p]laintiff, need only receive the actual costs of medical care borne by Medicaid. Id. at 185. In McAmis, the court also rejected plaintiff's argument that she was entitled to recover the write-off as a benefit of paying taxes into the Medicaid system. Id. In making this ruling, the court recognized that Medicaid benefits do not derive from contract, but are dispersed under a social benefits program. Id. Subsequently, the Virginia Supreme Court, distinguishing its earlier holding in Bowers, supra, held that the full amount of reasonable medical expenses may be recovered from a tortfeasor without reduction for amounts written-off by health care providers. See Acuar v. Letourneau, 260 Va. 180, 531 S.E.2d 316, 321, 323 (Va.2000). In Acuar, the appellant, who admitted liability, sought to exclude from damages medical bills written-off by the injured party's health care providers. Id. at 317. The court held that the collateral source rule applied and that the amount of damages could not be reduced. Id. at 322-23. The court reasoned that: 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.... Those amounts written off are as much of a benefit for which [the injured party] 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. Id. at 322 (quoting Schickling v. Aspinall, 235 Va. 472, 474, 369 S.E.2d 172, 174 (1988)). The court distinguished Bowers, supra, as a case in which it construed the specific terms of an insurance contract and where neither the tort policy of this Commonwealth nor the collateral source rule was implicated. Id. at 321. In the case now before the court, the tort policy of the District of Columbia and the collateral source rule are implicated. The trial court was persuaded that the collateral source rule applies, and where the party pays the premium for insurance, she is entitled to the benefit of the bargain contracted for including any reduction in payments that the insurance carrier was able to negotiate. We agree. In reaching this decision, we are persuaded by our own longstanding collateral source doctrine and the sound reasoning of the Virginia Supreme Court in Acuar. Under the collateral source rule, payments to the injured party from a collateral source are not allowed to diminish damages recoverable from the wrongdoer. District of Columbia v. Jackson, 451 A.2d 867, 870 (D.C.1982) (citing Hudson v. Lazarus, 95 U.S.App. D.C. 16, 18, 217 F.2d 344, 346 (1954) (citation omitted)); Reid v. District of Columbia, 391 A.2d 776, 778 (D.C.1978). The rule is applicable when either: (1) a payment to the injured party came from a source wholly independent of the tortfeasor, or (2) `when the plaintiff may be said to have contracted for the prospect of a double recovery.' Jackson, 451 A.2d at 873 (quoting Overton v. United States, 619 F.2d 1299, 1307 (8th Cir.1980)). A reason for the rule is that a party should receive the benefit of a bargain for which he or she has contracted. Jackson, 451 A.2d at 871-73. This case is one in which the payments qualify as a collateral source under both of the above-mentioned criteria. [4] Appellee paid a private carrier to insure her for medical expenses. That contractual arrangement was totally independent of Dr. Hardi. Appellee contracted for them independently of Dr. Hardi, and therefore, Dr. Hardi is not entitled to a credit for those write-offs. See Jackson, supra, 451 A.2d at 872. These amounts are a benefit of appellee's agreement with her health insurance carrier, and constitute a collateral source to the tortfeasor. Acuar, supra, 531 S.E.2d at 322-23 (citation omitted). Dr. Hardi concedes that appellee is entitled to recover amounts actually paid by her or her insurance carrier, but argues that she should not be able to recover amounts not paid by anyone ( i.e., written-off amounts). In support of its argument, Dr. Hardi cites Reid, supra, 391 A.2d at 777 and Moorhead v. Crozer Chester Med. Ctr., 564 Pa. 156, 765 A.2d 786 (2001). Reid, as amended, does not address the issue now before us. See Reid, 391 A.2d at 777-81, as amended in Reid v. District of Columbia, 399 A.2d 1293 (D.C.1978). Regardless of any broad language in the opinion in Moorhead, that case involved medical services provided by the tortfeasor itself so that an application of the collateral source rule would have required, in effect, double payment. See 765 A.2d at 788. In Moorhead, the plaintiff sued the medical facility which had treated her for her injuries. Id. at 787. The medical facility was a voluntary participant in the Medicare program and had a contractual obligation under it to accept a limited amount for its services. Id. at 788, 790. The court held that [g]iven [the medical facility's] contractual obligations, the trial court did not err in determining that [plaintiff] was limited to recovering ... the amount that was paid and accepted as payment in full for past medical expenses. Id. at 790. Moorhead is not persuasive because there, it was the tortfeasor who provided medical services at a reduced cost pursuant to its own contract, as opposed to plaintiff's. Since the court allowed plaintiff's damages for the amount actually paid to the medical facility, and the facility itself provided services in the greater amount, it is fair to say that the medical facility actually made plaintiff whole for the full amount of the claimed medical expenses. It was the tortfeasor's contract that accounted for this result, not the plaintiff's, as far as we can tell. [5] Here, a private insurance carrier paid appellee's medical expenses. That source is wholly independent of appellants. Because any write-offs conferred would have been a byproduct of the insurance contract secured by appellee, even those amounts should be counted as damages. See Jackson, supra note 5, 451 A.2d at 871-73. Therefore, because any write-offs enjoyed by appellee were negotiated by her private insurance company, a source independent of appellants, they should be included in her damages. Under the collateral source rule, she is entitled to all benefits resulting from her contract.