An issue of increasing contention in injury lawsuits is what impact collateral source payments have on a plaintiff’s ultimate recovery.  This is significant not only for claims which go to trial, but also in settlement negotiations.  The law in this area varies considerably from state to state, and this article will address the current state of the law in Ohio, Kentucky, Indiana, and Michigan.


OHIO

Traditionally, Ohio courts took the position not only was the existence of collateral sources and their payments inadmissible, but also it could have no bearing whatsoever on the amount of damages a plaintiff could present.  In other words, a plaintiff could present the total amount billed by a medical provider, without regard to what amount the provider actually accepted for payment, and regardless of whether or not the collateral source had a right of subrogation.

Ohio law changed substantially on this issue with the decision of Robinson v. Bates, 112 Ohio St. 3d 117, 2006-Ohio-362.   This decision did not directly address whether collateral source payments were admissible; it permits parties to present evidence of not only the actual amount billed by their medical provider, but also if a lesser amount was accepted as payment in full, that amount could be presented as evidence also.  The difference in such instances is at times very compelling, as many medical providers have contracts with health insurers obligating them to accept a substantially reduced amount as payment in full.  Robinson v. Bates left it for a jury to decide whether to award a plaintiff the total amount billed, the amount accepted in payment, or a figure somewhere in between.  To date, the application of this decision has not been explored in detail in any appellate decisions.

Complicating the situation even further in Ohio, is the implementation of R.C. 2315.22.  This statute is part of Senate Bill 80, and applies to claims which arose on or after April 7, 2005.  Under this statute, in any tort action, a defendant may present evidence of any payment made to or on behalf of a plaintiff for injury or property damage by a collateral source, so long as the collateral source has no right of subrogation.  The statute further provides if a defendant does present such evidence, plaintiff may in turn provide evidence of what they paid or contributed for the collateral source benefit in question.

A remaining unsettled issue is whether Robinson v. Bates applies to claims which arose on or after April 7, 2005.  At this time no Ohio appellate court has yet addressed this issue, and it is certainly one which bears watching in 2008.


KENTUCKY

The law on this issue is more clear and settled in Kentucky.  The governing authority is Baptist Healthcare Systems, Inc. v. Miller, 177 S.W. 3d. 676 (2005).  The Supreme Court of Kentucky was presented with virtually the same issue Ohio faced in Robinson v. Bates, and reached a very different result.  They determined evidence of payments by collateral sources was inadmissible and the only evidence regarding medical bills which could be presented to a jury was the actual amount billed by the provider, and the fact that the provider may have accepted a lesser amount in payment, was not relevant or admissible.


INDIANA

In Indiana, this issue is addressed largely by statute.  Indiana Code 34-44-1-2 and 3 directly addressed when collateral source evidence may and may not be considered.  In order for evidence of a collateral source payment to be admissible, it may not fall under any of the following categories:  life insurance payment; death benefit; insurance benefit directly paid for by plaintiff or a family member of plaintiff; or payments made by any governmental body, agency, or entity.  Under this section of the code, evidence may also be presented of the amount a plaintiff is required to pay as a result of receiving the benefit.  Evidence may also be presented as to the cost to plaintiff (or plaintiff’s family) of the benefit in question.

Indiana Code 34-44-1-3 provides that proof of such payments can be considered by a court in reviewing verdicts which are alleged to be excessive.


MICHGIAN

Michigan also addresses collateral source payments by way of statute.  Pursuant to M.C.L.A. 600.6303, evidence of collateral source payments is admissible only after a verdict is rendered and before the matter goes to judgment.  The trial court must then reduce the portion of the verdict which was for economic damages, by the corresponding amount of collateral source payments.  The amount of the deduction though, will be reduced by the amount paid by plaintiff, plaintiff’s family, or plaintiff’s employer for premiums for the collateral source.

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