Rhetoric, Reality, and the Wrongful Abrogation of the Collateral Source Rule in Personal Injury Cases

Article excerpt

I. INTRODUCTION .......................................................................... 99

II. RHETORIC DIRECTED AT THE APPLICATION OF THE COLLATERAL SOURCE RULE IN PERSONAL INJURY CASES ............................ 104

A. Illusions and Windfalls .................................................... 108

B. Evidence of Rhetorical Themes in Case Law and Legislative Notes Addressing Recovery of the Negotiated Rate Differential .............................................................. 1 14

C. Rhetorical Themes of Illusory Medical Bills and Windfall Gains in States Without Legislation Modifying or Abolishing the Collateral Source Rule in Personal Injury Cases ............................................................................... 117

D. Rhetorical Themes of Illusory Medical Bills and Windfall Gains in States with Legislation Modifying or Abolishing the Collateral Source Rule in Personal Injury Cases ..... 124

III. THE POWER OF A WINDFALL AND THE ILLUSION OF ILLUSORY MEDICAL BILLS ...................................................................... 133

IV. A PROPOSAL TO MAINTAIN APPLICATION OF THE COLLATERAL SOURCE RULE ......................................................................... 141

V. CONCLUSION ........................................................................... 145

I. INTRODUCTION

"A lie told enough times becomes the truth." Vladimir Lenin

There are few certainties in litigation, but one that any injured plaintiff with health care insurance can rely on is that a defendant tortfeasor will argue that the plaintiffs health care bills are illusory, and that the plaintiff will recover a windfall if he is allowed to recover the full amount of those bills as economic damages. This strategy is repeated so often, it's a cliché:

Ms. Lopez slipped and fell at a grocery store, suffering various injuries.1 Her medical bills totaled $59,700.2 Ms. Lopez's health care providers were contractually bound to accept significantly reduced amounts by her health care insurer as full payment and satisfaction for those bills.3 Accordingly, the health care providers wrote off approximately $42,000 and the health care insurer paid the remaining balance of $16,837.4 Before trial, the defendant tortfeasor moved in limine to prohibit Ms. Lopez from presenting evidence of the amount of the medical bills above what was actually paid by her health care insurer and accepted by the healthcare providers in satisfaction of billings. The defendant tortfeasor argued that Ms. Lopez should only be able to present evidence of the $16,837, because the medical bills reflecting $59,700 "had nothing to do with anything because they were largely illusory or phantom," since neither she nor her medical insurer actually had to pay them.6 The defendant tortfeasor argued that recovery of the $59,700 would be a windfall gain to Ms. Lopez.7

Like many states without legislation on point, the court in Lopez reasoned that the negotiated rate differential - the difference between the billed rate for medical care and the actual amount paid by the insurer as negotiated between the medical provider and the insurer - was a collateral source benefit and applied the common-law collateral source rule.8 Specifically, the Arizona Court of Appeals reasoned that the collateral source rule was well established, and without legislative modification, it was bound to apply the doctrine.9 In doing so, the court permitted Ms. Lopez to recover the entire amount billed to her by her health care providers as economic damages,10 despite the defendant tortfeasor's characterization of the medical bills as "illusory"11 and the plaintiffs recovery of that amount as a "windfall."12 While the Arizona court did not adopt the defendant's characterizations of the plaintiffs medical bills as illusory or the plaintiffs recovery ofthat amount as a windfall, the skillful rhetoric, through repetition to courts and legislatures, is transforming these inaccurate labels into facts in many other states. …