New Illinois Supreme Court decision on the Collateral Source Rule

On June 19, 2008, in Wills v. Foster, the Illinois Supreme Court issued an important decision on the Collateral Source Rule.

Collateral Source Rule: Benefits received by the plaintiff from a collateral source (i.e., health-care insurance provider, Medicare/Medicaid, etc.) will not diminish/reduce damages otherwise recoverable from the defendant.
* Please note that the Collateral Source Rule has been modified in some situations by statute; but the Illinois Supreme Court did not address this issue.

Issue ruled on by the Illinois Supreme Court: How does the Collateral Source Rule apply in cases in which the plaintiff's medical bills are paid by Medicaid and/or Medicare at a discounted rate? In other words, can a plaintiff recover as damages the entire amount billed by health-care providers for medical services, or is a plaintiff limited to recovering the discounted amount actually paid for the medical services?

Holding: The plaintiff may recover the amount the health-care providers initially billed for services rendered, regardless of what was actually paid.

Bottom Line:

Illinois now follows the "reasonable-value approach" with respect to what a plaintiff is entitled to recovery as damages for medical bills incurred. The reasonable-value approach allows the plaintiff to recover the "reasonable" value of medical services regardless of whether the patient has private insurance, is covered by a government program (Medicare or Medicaid) or received gratuitous services.

Are paid bills admissible by the defense to show that the billed amount was not reasonable? No. The Collateral Source Rule bars the jury from learning anything about collateral income. Defendants are free to cross examine witnesses that a plaintiff might call to establish reasonableness, and the defense is also free to call its own witnesses to testify that the billed amounts do not reflect the reasonable value of the services. However, defendants may not introduce evidence that the plaintiff's bills were settled for a lesser amount.

This decision is certainly favorable to plaintiffs.