Billed vs. Paid: How Medical-Bill Write-Offs Affect Your Ohio Injury Claim After Moretz v. Muakkassa

Published November 13, 2013 · Ohio Supreme Court

Open the explanation of benefits from your health insurer after a hospital stay and you will see two very different numbers. The hospital billed $48,000. Your insurer paid $14,500, and the hospital wrote off the rest under its contract. Which number is your injury claim worth? For years Ohio defense lawyers and injury lawyers have fought over that question, and on October 24, 2013, the Ohio Supreme Court made the defense's job easier. Moretz v. Muakkassa, 137 Ohio St.3d 171, 2013-Ohio-4656, holds that a defendant may put the write-offs in front of the jury without hiring an expert to explain them.

The case

Larry Moretz had surgery in 2005 to remove a large mass from his pelvis. The surgery went badly, and he and his wife sued, among others, a neurosurgeon who they claimed should have scrubbed in and did not. A Summit County jury found the neurosurgeon negligent and set total damages at $995,428.73, including $125,869.13 in medical bills, $539,600 in noneconomic loss to Mr. Moretz, and $250,000 to Mrs. Moretz for her own loss. After applying Ohio's cap on noneconomic damages and a setoff for a prior settlement, the trial court entered judgment for $953,858.08.

Before trial, the Moretzes had persuaded the judge to bar the defense from arguing that the reasonable value of the medical care was the amount actually paid after write-offs unless the defense produced expert testimony on reasonable value. The judge reasoned that the statute making medical bills presumptively reasonable, R.C. 2317.421, said nothing about write-offs.

What the Court held

The Supreme Court reversed and ordered a new trial, based on three errors it found cumulatively unfair. Two of them, concerning a textbook illustration admitted as an exhibit and a jury interrogatory the trial court refused to submit, are mainly of interest to trial lawyers. The third is the one that affects every injury claim in Ohio.

R.C. 2317.421 says that in a personal-injury or wrongful-death case, an itemized written bill or statement "or any relevant portion thereof" is prima facie evidence of the reasonableness of the charges, as long as it is delivered to the other side at least five days before trial. The Court held that write-offs shown on a provider's statement are a "relevant portion" of that statement, and that the statute's reference to "the party offering" the bill means either side may use it. The syllabus states the rule plainly: R.C. 2317.421 obviates the need for expert testimony for the admission of write-offs reflected on medical bills as prima facie evidence of the reasonable value of medical services.

In reaching that result the Court reaffirmed two earlier decisions. In Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362, it held that the collateral-source rule does not bar evidence of the amount a provider accepted as full payment, and that both the original bill and the amount accepted are admissible, with the jury free to find the reasonable value is the billed amount, the paid amount, or something in between. In Jaques v. Manton in 2010, which we discussed in an earlier post on billed versus paid medical bills, it held that the 2005 collateral-benefits statute did not change that analysis. Moretz completes the set: not only is write-off evidence admissible, it comes in without an expert.

Why this matters to injured people

We represent injured people, so let us be direct about the effect. Medical expenses are the foundation of most injury claims. They are the hardest number to dispute, and they anchor how adjusters and juries think about the rest of the case. When a jury sees that a $48,000 bill was "really" settled for $14,500, two things happen: the medical-expense award tends to shrink toward the lower figure, and the perceived seriousness of the injury shrinks with it, which drags down the award for pain and suffering.

Moretz removes the one practical obstacle that kept some defendants from doing this. Before, a defendant who wanted to argue "the paid amount is the reasonable value" might have needed a billing expert, and many did not bother. Now the defense simply introduces the statements showing the adjustments. Expect every insurer in Ohio to do so.

What remains in the injured person's favor

The law after Moretz is not one-sided. Robinson still holds that the original bill is admissible and is itself prima facie evidence of reasonableness. The jury may still find that the full billed amount is the reasonable value. And nothing in these cases touches the other, often larger, categories of economic loss. In practice, a well-prepared claim now emphasizes:

• The full billed amount, properly presented. Itemized statements delivered to the defense on time so the statutory presumption applies in your favor.
• Why the billed amount is reasonable. Where the stakes justify it, testimony from providers or billing witnesses explaining that the charges are the provider's usual and customary rates. The defense no longer needs an expert; the plaintiff may still choose to use one.
• Future medical care. Write-offs apply to bills already paid. The cost of future surgery, therapy, medication, and equipment is proven through treating physicians and, in serious cases, life-care planners, and is not reduced by past insurance discounts.
• Lost income and lost earning capacity. For a permanently injured worker these losses often exceed the medical bills many times over. We described how to document them in our post on lost wages and earning capacity.
• The human loss. Pain, limitation, and the change in daily life are proven through the injured person, family, and treating providers, not through a billing ledger.

There is also a point about fairness that juries understand when it is explained. The injured person paid premiums for years to obtain the negotiated rates. The defendant did not. The jury is entitled to hear that, decide what the care was actually worth, and award it.

A note on pre-existing conditions and bills

Defense lawyers pair the write-off argument with another favorite: that part of the treatment was for a condition the injured person already had. We addressed the governing rule, that a defendant takes the plaintiff as found, in our post on pre-existing conditions and the eggshell-plaintiff rule. The combination of the two arguments is where a poorly documented claim loses most of its value, and where an organized one holds up.

What this means for you

If you have an injury claim in Ohio, the insurance company will now use your health insurer's discounts to argue your case is worth less. That is the law as of this fall, and the way to answer it is preparation: complete, itemized bills; proof of future care; full documentation of lost earnings; and a clear presentation of what the injury has done to your life. Those things take time to build, which is one more reason to involve a lawyer early rather than after the adjuster's first offer. Our personal injury practice handles this work on every serious case.