Kenney v. Liston

Brief Fact Summary.

Liston drove while intoxicated, badly injuring Kenney. Kenney’s medical bills were $70,000. Liston admitted liability but argued damages should be limited to what Kenney actually paid because his medical bills were discounted.

Synopsis of Rule of Law.

A tort victim who incurs medical expenses, suffers lost wages, or experiences other compensable loss may sue the tortfeasor for the entire amount of the victim’s injuries even if those losses have been neutralized by first-party insurance, by the victim’s relatives, by the victim’s employer, or through the kindness of strangers.

Facts.

Liston drove while intoxicated, badly injuring Kenney.

Kenney’s medical bills from the injury were in excess of $70,000. West Virginia law permits a plaintiff to recover necessary and reasonable medical expenses for an injury from a tortfeasor. Proof of a medical bill is prima facie evidence that the expense was necessary and reasonable.

Liston admitted liability, so the trial concerned only damages. Liston argued that damages should be limited because Kenney only paid discounted portions of the total medical bill with the rest “written off” by his medical providers.

Issue.

Does the collateral source rule protect the amounts discounted from Kenney’s medical bill or written off by his medical providers?

Held.

Affirmed.

Yes, the collateral source rule protects the amounts discounted from Kenney’s medical bill or written off by his medical providers.

Dissent.

Justice Loughery

Kenney was never liable for the inflated bill because a different price was already agreed upon at the time services were rendered. The write off or discount does not primarily benefit Kenney and, to the extent it does, it was not intended as compensation for Kenney’s injuries.

Assuming that the amount billed reflects the reasonable value of that service is absurd given how health care pricing structures work. Because so many patients pay discounted rates, hospital bills have been called insincere in that they would yield enormous profits if those prices were actually paid all the time.

The collateral source rule is not appropriate in this case because the rule was intended to prevent tortfeasors from unfairly receiving a discount on damages simply because the victim had insurance. Requiring tortfeasors to compensate plaintiffs at the highest possible price just shifts the cost of hospital bills onto the public via higher insurance premiums.

Discussion.

The collateral source rule is both a rule of evidence and a rule of damages.

As a rule of evidence, the collateral source rule precludes evidence that some of a plaintiff’s damages have been paid by a collateral source because the likelihood of misuse by the jury outweighs the probative value of the evidence where the jury could reduce the damages based on the amounts received from collateral sources.

As a rule of damages, the collateral source rule precludes offsetting judgment against any receipt of collateral sources by the plaintiff because the defendant should not benefit from contracts or other relations that the plaintiff has.

Here, the discounts and write-offs Kenney received were a benefit to Kenney’s contract with his health insurance carrier and a gratuitous benefit from his medical providers. A creditor’s partial forgiveness of a tort victim’s medical bills via a write-down is a third-party payment precluded as evidence under the collateral source rule.