To date, Nevada follows a strict collateral source rule, which generally renders evidence of a collateral source of payment for an injury inadmissible — that is, a tortfeasor (and his or her liability insurance carrier) is not entitled to introduce evidence that a portion of the injured person’s medical bills was paid for by health insurance (or any other source unrelated to the tortfeasor). Proctor v. Castelletti, 112 Nev 88, 911 P.2d 853, 854 (1996).
We now adopt a per se rule barring the admission of a collateral source of payment for an injury into evidence for any purpose. Collateral source evidence inevitably prejudices the jury because it greatly increases the likelihood that a jury will reduce a plaintiff’s award of damages because it knows the plaintiff is already receiving compensation.
The Nevada Supreme Court appears inclined to extend (or strengthen) this rule to also preclude evidence of health insurance “write-downs” (when the actual cost of a claimant’s medical treatment is less than what is shown on the bills, owing to the fact that his or her health insurance negotiated favorable prices). For example, a claimant’s health insurance may only have to pay $200 for a an MRI which bills out at $1,500. Insurance defense attorneys contend that in such a scenario, they should be able to argue to the jury that the cost of the MRI (i.e., the Plaintiff’s “damage”) is only $200.
In Tri County Equip & Leasing, LLC v. Klinke, 2011 WL 1620634 (Nev. April 27, 2011), an unpublished Order by the Nevada Supreme Court, Justice Cherry and Justice Gibbons ruled that the district court properly excluded evidence of the medical cost write-downs. In so holding, they reasoned that, in general, write-downs are negotiated between the medical provider and the third party paying the medical costs on behalf of the tort victim. Therefore, evidence of the write-downs would lead a jury to infer the existence of a collateral source. The decision, however, is an “unpublished order,” and, therefore, should not be regarded as precedent and may not be cited as legal authority. SCR 123
An unpublished opinion or order of the Nevada Supreme Court shall not be regarded as precedent and shall not be cited as legal authority except when the opinion or order is (1) relevant under the doctrines of law of the case, res judicata or collateral estoppel; (2) relevant to a criminal or disciplinary proceeding because it affects the same defendant or respondent in another such proceeding; or (3) relevant to an analysis of whether recommended discipline is consistent with previous discipline orders appearing in the state bar publication.
A year and a half later, in that same case, the Nevada Supreme Court issued a published order: Tri-County Equipment & Leasing V. Klinke, _ Nev. _, _, 286 P.3d 593 (2012). That case deals with the admissibility of workers compensation benefits, which, per statute, are admissible. The Court refused to rule on the admissibility of health insurance write-downs, but did acknowledge the issue at footnote 6:
it is apparent that there are numerous reasons for medical provider discounts, including discounts that result when an injured party’s insurance company has secured medical provider discounts as part of the health insurance plan. At least in those circumstances, such benefits may reside within the scope of the collateral source rule, although that is a legal issue we leave for a case that requires its determination. Whether the collateral source rule applies to other types of medical expense discounts would require evidence of the reason for the discount and its relationship to the third-party payment.
In his concurrence, Justice Gibbons, with whom Justice Cherry agreed, reiterated his belief that there was a per se bar of evidence of medical insurance write-downs:
Evidence of payments showing write-downs is irrelevant to a jury’s determination of the reasonable value of the medical services and will likely lead to jury confusion … My conclusion that the collateral source rule bars the introduction of evidence showing medical provider discounts or write-downs is consistent with a majority of jurisdictions that have addressed this issue … Further, when medical write-downs occur, one party is likely to receive a windfall. If the write-downs cause one party to receive a windfall, it should be the insured plaintiff, not the tortfeasor. See Lopez, 129 P.3d at 496 (“Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer.” (quoting Acuar, 531 S.E.2d at 323)); see also Restatement (Second) of Torts § 920A cmt. b (1979) (“[I]t is the position of the law that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor.”); 22 Am.Jur.2d Damages § 392 (2012) (“If there is a windfall, it is considered more just that the injured person profit rather than grant the wrongdoer relief from full responsibility for the wrongdoing.”). Thus, Nevada’s collateral source rule bars the introduction of evidence of medical provider discounts or write-downs.
To be sure, precluding evidence of collateral source or insurance write-downs may enable an injured person to obtain a double recovery; but from a public policy standpoint Justice Gibbons is extremely persuasive in his position that justice is better served by giving the windfall to an injured person (who has been paying health insurance premiums to obtain such a benefit) as opposed to a negligent tortfeasor.
While this insurance situation sounds academic, it comes into play in almost every car accident when an injured person has health insurance. If you were in a car accident, you need an attorney who has experience navigating through the insurance pitfalls. Call Yan Kenyon today for your free consultation at 702.888.0000.
Jay Kenyon is a principal of the law firm of Yan Kenyon. His practice is 100% devoted to personal injury law. Call for your free consultation. 702.888.0000
