Over the years, plaintiff’s lawyers have been able to pocket a lot of money by recovering medical expenses for their clients at the full “retail” amount of billed charges and then only reimbursing their favorite doctors the “wholesale” discounted charges for client medical care. The difference between the “retail” and “wholesale” charges paid was a windfall to plaintiffs and their counsel until the recent Louisiana Supreme Court decision of Hoffman v. 21st Century North America Insurance Company and Carolyn Elzey, No. 2014-C-2279 (La. S.C. 10/2/2015).
The Hoffman case involved an auto collision in which the plaintiff suffered minor personal injuries. In a bench trial, plaintiff presented evidence that she had $4,528.00 in “retail” billed charges for her medical treatment related to the accident. Her attorney negotiated a “wholesale” discount of those charges (using his “frequent-plaintiff” discount) to $2,478.00. The trial court only awarded plaintiff the “wholesale” medical charges plaintiff actually paid, and she appealed the ruling (in a dispute of less than $2,000) to the Louisiana Supreme Court.
The Hoffman court ruled that:
1.) The collateral source rule is not applicable to an attorney-negotiated discount or write-off of billed charges in a personal injury case;
2.) Any recovery of damages for medical bills beyond the amount the plaintiff paid would be a windfall to the plaintiff if her attorney had negotiated the discount for her; and
3.) A plaintiff’s attorney who fails to disclose an attorney-negotiated discount for billed charges with a health care provider may have exposure for making a fraudulent statement.
The Hoffman decision is a victory for defendants who would be wise to include specific written discovery to plaintiffs in all pending and future cases requiring the plaintiff to disclose if there has been or will be any attorney-negotiated discounts or “write-offs” in their cases. And, a subpoena duces tecum to the plaintiff’s health care providers should disclose all discounts and “special deals” between a plaintiff’s counsel and physicians in personal injury litigation.
Note: The Hoffman case is a “small” victory because, under Louisiana law, defendants are liable to a plaintiff for the full “retail” amount of billed medical charges, except when Medicaid – not Medicare – pays the medical charges, Bozeman v. State, 879 So.2d 692, 698 (La. 2004) or insurers pay a plaintiff pursuant to med-pay provision in a liability insurance policy. Hoffman v. Travelers Indemnity Co., 144 So.3d 993 (La. 2014).