In Illinois and other states, the collateral source rule is a much debated legal issue and deals with whether or not a plaintiff in a personal injury case can recover money for their medical bills, including those paid by their insurance. The Illinois Supreme Court’s recent decision in Wills v. Foster (2008 WL 2446696 (Ill. June 19, 2008), has not only established a clear interpretation of these issues, but also laid out how the rule applies to individual personal injury cases in Illinois.
The collateral source rule’s initial purpose was to ensure that a plaintiff’s medical bills in a personal injury case are not diminished by the court or jury because of evidence that those bills were paid by a collateral source, such as an insurance company. For example, if a person was injured and his insurance paid part of his or her bills, that information could not be presented to the jury in order to argue that the plaintiff should then receive less.
However, the rule wasn’t that simple. Questions arose, including whether a plaintiff could recover for free medical services, if Medicare and Medicaid were governed by the rule, and if the amount refers to the initial bill or only to the amount the insurance company paid.
In Wills, the plaintiff sued for injuries sustained in an automobile crash. The plaintiff’s medical bills totaled $80,000, but only about $19,000 was Medicaid and/or Medicare paid. The trial court denied the defendant’s motion to introduce only the amount of medical bills that were actually paid, as opposed to the total billed. The jury awarded the full amount of medical bills. However, the trial court then granted the defendant’s post-trial motion reducing the amount of the award to reflect the amount actually paid.
Plaintiff appealed this reduction to the Illinois Appellate Court who affirmed the holding. They based their decision on the fact that because the plaintiff received benefits “free of charge” from Medicare and Medicaid, the case was governed by Peterson v. Lou Bachrodt Chevrolet Co., which excepted free medical services from the collateral source rule.
Yet in their decision in Wills , the Illinois Supreme Court reversed the lower courts’ rulings and in the process overruled Peterson. When reviewing Wills, the Court’s criteria was whether the bills were a “reasonable value”, meaning that the bills can be entered into evidence as long as they are reasonable. According to this principle, plaintiff can recover the reasonable value of medical services regardless of whether they were covered or paid by a private insurance or by a government medical program, such as Medicare.
In order to establish that a bill is “reasonable”, each side must bring their own qualified witness to testify that the bills are usual and customary for the services rendered. And while each side is able to cross examine the other’s witnesses, defendants are not allowed to introduce any evidence showing that the plaintiff’s bills were settled for less than the initial amount billed.
Yet none of this was necessary in Wills, where the defendant stipulated that the bills were fair and reasonable. Therefore the plaintiff no longer had the burden of establishing the reasonableness and the bills were then admitted into evidence without any contest.
And since in Wills the Court subjected bills paid by Medicaid and Medicare to the same rules governing those paid by a private insurance company, Illinois now no longer distinguishes the amount that can be stipulated to according to how the bills were paid. Instead the collateral source rule applies to all personal injury cases.
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