“Plaintiff seeks phantom damages 6 times greater than actual costs”

by Walter Olson on April 30, 2011

According to the Colorado Civil Justice League, the decision by the state’s high court last fall in Volunteers of America v. Gardenswartz prohibits juries from learning the amounts actually paid, as opposed to “billed,” for medical services whose reimbursement is demanded in accident cases. The distinction is important because those who cover medical bills in practice (e.g., health insurers with their bulk buying clout) often pay much lower sums than the “rack rates” that hospitals and others officially charge (more on HB 1106, which would restore the evidence of paid as well as billed amounts).

P.S. As Jack Leyhane notes, the Colorado controversy is related to, though not identical with, the longstanding controversy over the “collateral source” rule, which provides that payments by third parties to a plaintiff over an injury will not reduce or offset the liability of a tortfeasor. “It is the lien or subrogation rights of third parties — [which] vary widely from state to state — that make sweeping generalities about the collateral source rule difficult to formulate.”

{ 9 comments }

1 Bumper 04.30.11 at 2:48 am

The the real world to claim you were billed more than you actually paid would be considered fraud. So the CO Supreme Court is assisting plaintiffs in perpetrating fraud while under oath.

2 Bumper 04.30.11 at 2:51 am

Sorry about the double “the” and the lack of an “In,” guess it really is past my bedtime.

3 Max Kennerly 04.30.11 at 7:40 am

If we’re going to start telling juries about the plaintiff’s insurance then fairness would demand we tell juries about the defendant’s insurance.

4 NaS 04.30.11 at 9:12 am

So, if someone injures you, but you are fully insured, there should be no damages?

5 nevins 04.30.11 at 10:38 am

So perhaps the hospital, which billed $260,000 but so far received only $40,000, should sue the lucky plaintiff for the difference. Since his lawyer likely took something like $80,000 of the $260,000, he will wind up in the hole for his over-reach. Justice.

6 Ryan 04.30.11 at 4:42 pm

I briefed this issue several times when I was a defense lawyer in Denver.

@nevins – This issue primarily comes up when health insurance has paid most of the medical bills. Hospitals can’t sue the plaintiff for the difference because of their agreements with the health insurance providers. If that weren’t the case, hospitals would go after everyone with insurance because health insurance never pays the amount billed by the doctors.

@NaS – This only applies to medical costs as a particular item of damage. Plaintiffs still sue for pain and suffering, lost wages, etc. etc.

@Max Kennerly – Its not about telling juries about insurance. Its about being able to say the “plaintiff actually paid $___ for the medical treatment.” This is fair when Plaintiff submits only the standard hyper inflated medical invoices that they never had to pay, and were never liable to pay in the first place.

7 E-Bell 05.02.11 at 8:36 am

This is a contentious issue in Florida as well. The defense usually argues that the plaintiff shouldn’t be able to use the inflated numbers to garner more sympathy. The plaintiff argues that it should be entitled to show those numbers to the jury but then the defense would be entitled to an offset after the verdict.

8 David Schwartz 05.02.11 at 8:38 am

It is certainly proper to withhold from the jury that the damages were covered under a private arrangement. It is not proper for the jury to consider how the damages are paid for –n on either side. However, it is wholly improper to represent to the jury that the tortfeasor caused damages that *nobody* actually suffered or that costs were incurred that nobody was ever responsible for.

Suppose you damage my car. I go to a repair shop and he says “We charge $5,000 to fix that damage. Here’s a written statement. Oh, but we’ll fix it for $100.” Then I pay the $100 (or my insurance does). How much should I be able to sue you for? The $5,000 that reflects nothing at all? Or the $100 that was actually paid to the repair shop to fix the car?

9 Ron Miller 05.02.11 at 2:56 pm

Right Max. Let’s tell them about the fact that Defendant has insurance to pay for the loss. I can’t tell you how often a jury says to me after a verdict, “Poor Mr. Smith is not paying for this, is he?” While we are at it, let’s explain that there are legal fees so the client will really only get X when all is said and done.

It is easy to wrap yourself up in the flag of the fairness of full disclosure but they stuff the flag in a drawer when there are things that you don’t want to disclose.

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