Attorney-Negotiated Medical Discounts Reduce Tort Victim’s Recovery

The Louisiana Supreme Court has issued the first ruling from a state’s highest court on the issue of whether a tort victim’s potential recovery in a lawsuit is diminished when her attorney negotiates medical discounts on her behalf. The court ruled that tort victims can only recover the lower rate for medical services they actually pay.

The case, Hoffman v. 21st Century N Am. Ins. Co., No. 14-2279, 2015 La. LEXIS 1962 (La. Oct. 2, 2015), dealt with the collateral source rule. Under the collateral source rule, a tortfeasor may not benefit and an injured victim’s tort recovery may not be reduced because of payments received by the victim from sources independent of the tortfeasor’s procuration or contribution. Accordingly, payments received by the victim from an independent source are not deducted from the damages award due from the tortfeasor.

The collateral source rule is often disputed in cases where a tort victim’s medical expenses have been contractually adjusted, or written off, based on an insurer or program’s agreement with the participating health care provider. In Hoffman, the specific issue was whether medical write-offs obtained by the victim’s attorney were a collateral source not available to reduce the tortfeasor’s liability.

The court held that, in general, the victim does not receive a windfall if she has somehow paid for the benefit she receives from the outside source (e.g., insurance premiums). But where the victim’s attorney negotiates medical discounts on her behalf, the victim has not paid for the benefit. Thus, attorney-negotiated medical discounts are not subject to the collateral source rule.