A federal magistrate allows a medical malpractice plaintiff who is also a Medicaid recipient to introduce the full value of her medical bills into evidence under the collateral source rule, even though most of the bills were significantly written off by Medicaid. Wright v. Smith (W.D. Va., No 1:08cv00052, June 30, 2009).
Kandie Wright, a Medicaid recipient, sued Dr. David Smith after an unsuccessful appendectomy. When a doctor participates in the Medicaid program, he agrees to submit his charges to Medicaid, at which point the government reduces the charges and pays the doctor a lesser amount than the doctor originally billed. The difference between the amount billed and the amount paid by Medicaid is "written off" and not submitted to the patient. However, as part of her lawsuit, Ms. Wright sought to recover the entire amount of her medical expenses attributable to Dr. Smith's alleged negligence, including the portion of her medical bills that were written off by Medicaid.
Dr. Smith filed a motion in limine with the magistrate judge asking the court to exclude evidence of the original amount of Ms. Wright's medical bills. Ms. Wright argued that the collateral source rule (which prevents amounts received from third parties from reducing the damages caused by the wrongdoer) allowed her to introduce the full amount of her medical bills. Dr. Smith replied that such a rule would result in a windfall for Ms. Wright, since, as a Medicaid recipient, she was never going to have to pay the full amount of her medical bills in the first place.
The magistrate judge allows Ms. Wright to introduce evidence of her original medical bills before the Medicaid write-off. The judge admits that Virginia law in this area is unsettled, but posits that the Virginia Supreme Court's recent rulings expanding the scope of the collateral source rule probably apply to Ms. Wright. The judge quotes a recent Virginia case, Acur v. Letourneau (531 S.E. 2d 316), explaining that "to the extent that [the collateral source rule] provides a windfall to the injured party, we have previously recognized that consequence and concluded that the victim of the wrong rather than the wrongdoer should receive the windfall."
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