For many years, there has been an ongoing dispute whether injured plaintiffs were entitled to recover the costs of medical services that were not actually paid by insurers but instead “written-off” by health care providers. The West Virginia Supreme Court of Appeals recently settled the dispute in Kennedy v. Liston. In this landmark decision for those injured by the negligence of others, the Court ruled that an injured plaintiff is entitled to recover the reasonable value of medical services, including services that were reduced, discounted, or written-off. The Court specifically held that
A person who has been injured by the tortious conduct of a culpable tortfeasor is entitled to recover from the tortfeasor the reasonable value of medical and nursing services necessarily required by the injury. This recovery is for the reasonable value of the services and not for the expenditures actually made or obligations incurred.
Where an injured person’s health care provider agrees to reduce, discount or write off a portion of the person’s medical bill, the collateral source rule permits the person to recover the entire reasonable value of the medical services necessarily required by the injury. The tortfeasor is not entitled to receive the benefit of the reduced, discounted or written-off amount.
Typically, a health care insurer, such as Highmark, Blue Cross/Blue Shield, or Medicare, will initially pay the cost for medical services provided to an injured person. These insurers have contractual agreements with medical providers whereby the insurer pays only a portion of cost for the medical services. The remaining portion is either reduced, discounted, or written-off.
For example, Dan is struck by Jim while crossing the street. Jim, the tortfeasor, is completely at fault for the accident. Dan is treated at Ruby Memorial Hospital for his injuries. The total cost of Dan’s medical services is $100,000. Dan’s health insurer, Blue Cross/Blue Shield, has a contractual agreement with Ruby Memorial Hospital whereby Blue Cross/Blue Shield only pays for 70% of the cost for medical services. The remaining 30% is “written-off” and not paid by anyone. Under Kennedy v. Liston, Dan is entitled to recover $100,000, which represents the reasonable value his medical services.
Depending on the insurer, it is not unlikely for as much as 50% of the cost of medical services to be written-off by health care providers. The Kennedy v. Liston decision ensures that injured victims are fully compensated for their injuries. Tortfeasors are no longer able to benefit from contractual agreement between insurers and health care providers.