Recent Louisiana Supreme Court Collateral Source Ruling

On October 2, 2015 the Louisiana Supreme Court in Hoffman v. 21st Century North America Insurance Company, et al, considered a question of first impression – whether a write-off from a medical provider, negotiated by the plaintiff’s attorney, may be considered a collateral source from which the tortfeasor receives no set-off. Affirming the lower court’s ruling, the court found such write-offs do not fall within the scope of the collaterals source rule.

Plaintiff was injured in a rear-end motor vehicle accident incurring $4,528.00 in medical expenses for accident related medical care. Plaintiff’s attorney negotiated and secured a "write-off" of a significant portion of plaintiff medical expenses. No consideration was paid for the negotiated write-offs. At the conclusion of trial, the trial court awarded on $2,478.00 for special medical expenses. Plaintiff appealed arguing the trial court erred in failing to award the full amount of past medical expenses arguing that the entire bill rather than the amount actually paid should be recoverable under the collateral source rule.

Under the collateral source rule a tortfeasor is not in general entitled to benefit from funds received by a plaintiff from sources independent from the tortfeasor’s contribution. Any payments received by a plaintiff from independent sources procured at plaintiff’s expense or through foresight are typically not to be deducted from an award received or settlement reached.

The court declined to extend the collateral source rule to attorney-negotiated medical discounts obtained through the litigation process. Any such discount is not a payment or benefit that falls within the ambit of the collateral source rule. Allowing a plaintiff to recover an amount for which he has not paid, and for which he has no obligation to pay, is contradictory to the general rule that a wrongdoer is responsible only for damages they cause. Plaintiff incurred no additional expenses in order to receive or secure the attorney-negotiated write-off and suffered no reduction or diminution in his or her patrimony to secure the write–off. A tortfeasor cannot be held responsible for medical bills a plaintiff does not actually incur and which do not need to be repaid. Doing so would result in a windfall to plaintiff.