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Montgomery Ward & Co., Inc v. Anderson

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Brief Fact Summary.

Plaintiff fell during a shopping trip at defendant’s store. She sued defendant for damages. The trial court allowed plaintiff to introduce evidence of the total amount billed during her hospitalization for the fall. In reality, plaintiff had received a fifty-percent discount on her hospital trip. Defendant argued that the discounted amount should have been admitted into evidence instead.

Synopsis of Rule of Law.

“Gratuitous or discounted medical services are a collateral source not to be considered in assessing the damages due a personal-injury plaintiff.”

Points of Law - Legal Principles in this Case for Law Students.

The law rationalizes that the claimant should benefit from the collateral source recovery rather than the tortfeasor, since the claimant has usually paid an insurance premium or lost sick leave, whereas to the tortfeasor it would be a total windfall.

View Full Point of Law
Facts.

Shirley Anderson (plaintiff-appellee) was shopping at Montgomery Ward & Co.’s (defendant-appellant) store. While at the store, she suffered a fall and was badly injured. Store personnel sent her to the hospital, where her bill for surgical and other medical-services expenses totaled $24,512.45. She reached an agreement with the hospital to have her bill discounted by fifty percent. Anderson sued Montgomery Ward & Co. for damages. At trial, Anderson presented the bill for $24,512.45 (which did not reflect the discount) as proof of her medical expenses. Montgomery Ward moved in limine to prohibit Anderson from presenting the total amount billed by the hospital as evidence. Instead, Montgomery Ward requested that the evidence be limited to the amount that reflected the discount from the hospital. The trial court ruled that the negotiated discount from the hospital was a collateral source, and allowed the entire total amount billed to be admitted into evidence. Montgomery Ward appealed to the Supreme Court of Arkansas, arguing that the trial court’s ruling on its motion in limine was erroneous.

Issue.

Whether the forgiveness of a debt for medical services is inadmissible as evidence under the collateral source rule?

Held.

No, the forgiveness of a debt may be excluded from evidence. Here, the court was not obligated to admit evidence of Anderson’s discount on her hospital bill. The judgment of trial court is affirmed and Montgomery Ward & Co.’s motion in limine is denied.

Discussion.

Under the collateral-source rule, evidence of payments received by an injured plaintiff from sources collateral to the tortfeasor are inadmissible. The rule stands even though so-called double recovery may result. Likewise, the Restatement (Second) of Torts provides guidance that the tortfeasor is responsible for compensating for all harm, not just the plaintiff’s net loss. There are four exceptions to the collateral-source rule: (1) to rebut the plaintiff’s testimony that he or she was compelled to return to work prematurely due to financial need; (2) to show plaintiff attributed his or her condition to another cause; (3) to impeach the plaintiff; and (4) to show that plaintiff had actually continued to work. None of those exceptions apply in the matter at hand. Furthermore, as a matter of policy, the plaintiff (not the tortfeasor) should receive any windfall.


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