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Brett Emison
Brett Emison
Attorney • (800) 397-4910

Did You Know… Defendants Can Receive Benefits of a Plaintiff’s Health Insurance?

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Did you know that some states have implemented tort reforms that provide defendants with the benefits of the plaintiff’s own health insurance when calculating damages? Evidence of this type of benefit, called a collateral source, has historically been excluded because it is the plaintiff who paid for this insurance coverage and not the defendant. Why should the defendant get the benefit of insurance coverage he or she did not pay for?

In medical billing, hospitals and doctors typically charge the full amount to an injured or sick patient. However, patients with insurance often receive reduced rates for medical procedures because of a number of factors that may include periodic payments to the physician by the insurance company regardless of the number of patients treated or economies of scale due to the insurance company’s large volume and purchasing power. Whatever the factors, the decreased charge is a direct result of the insurance premiums paid by the patient before the injury or illness occurs. Thus, a hospital stay that is billed at $2,000 and for which insurance pays $1,000 actually costs a great deal more than $1,000 when the underlying insurance premiums are included in the calculation.

Nevertheless, many states have tort reform statutes that provide negligent defendants with the benefit of the injured person’s insurance. The defendant may be entitled to an evidentiary presumption that the lower insurance bill is the "fair value" of the services rather than the value that the hospital or physician actually bills for their services. In this event, the jury is often never told that the lower amount is due completely to the plaintiff’s own insurance coverage and correlating premium costs.

Why should defendants get the benefits of a plaintiff’s health insurance? Shouldn’t the court also factor in the costs of that health insurance? Health insurance costs thousands per year in either premiums or Medicare taxes. This just seems like an area where tax payers and health insurance companies are subsidizing negligent conduct.

[More about tort reform and 7th Amendment Rights]

(c) Copyright 2011 Brett A. Emison