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Montgomery Ward & Co. v. Anderson

Supreme Court of Arkansas
976 S.W.2d 382 (1998)
ELI5:

Rule of Law:

Under the collateral source rule, a defendant tortfeasor may not introduce evidence that a plaintiff's medical expenses were discounted or provided gratuitously by a third party. The plaintiff is entitled to recover the reasonable value of the medical services, not just the amount they ultimately paid.


Facts:

  • On November 14, 1994, Shirley Anderson was badly injured in a fall while shopping in a Montgomery Ward store.
  • Montgomery Ward personnel sent Anderson to the University of Arkansas for Medical Sciences (UAMS) for treatment.
  • Anderson incurred medical bills from UAMS totaling $24,512.45.
  • Through her attorney, Anderson negotiated an agreement with UAMS to discount her medical bill by fifty percent.
  • Montgomery Ward had no involvement in procuring the discount for Anderson's medical bill.

Procedural Posture:

  • In the trial court, Montgomery Ward filed a motion in limine to prevent Shirley Anderson from presenting evidence of her total medical bill, seeking to limit her evidence to the discounted amount she was obligated to pay.
  • The trial court denied Montgomery Ward's motion, ruling the negotiated discount was a collateral source.
  • Following the trial, Montgomery Ward moved for a new trial pursuant to Ark. R. Civ. P. 59(a)(8), arguing the court's ruling on the collateral source issue was an error of law.
  • The trial court denied the motion for a new trial.
  • Montgomery Ward, as appellant, appealed the denial of its motion for a new trial to the Arkansas Supreme Court, with Shirley Anderson as the appellee.

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Issue:

Does the collateral source rule prohibit a defendant in a personal injury case from introducing evidence that the plaintiff's medical bill was discounted by the medical provider?


Opinions:

Majority - David Newbern, Justice

Yes. The collateral source rule prohibits a defendant from introducing evidence that the plaintiff's medical bill was discounted. The court holds that gratuitous or discounted medical services are a collateral source not to be considered in assessing the damages due a personal-injury plaintiff. The court's reasoning is grounded in the policy that the injured party, rather than the tortfeasor, should receive the benefit of any recovery from a collateral source. To allow the tortfeasor to benefit from the discount would be a windfall. Citing the Restatement (Second) of Torts § 920A, the court emphasizes that a tortfeasor's responsibility is to compensate for all harm caused, not merely the net loss to the injured party. The court explicitly adopts the rule that discounts and gratuities are collateral sources, aligning with its 'oft-stated policy of allowing the innocent plaintiff, instead of the tortfeasor defendant, to receive any windfall.'



Analysis:

This decision formally expands the scope of the collateral source rule in Arkansas to include negotiated discounts and gratuitous services, not just traditional sources like insurance. It solidifies the legal policy that a tortfeasor is liable for the full, reasonable value of the harm caused, irrespective of the plaintiff's good fortune or diligence in mitigating their final out-of-pocket expenses. This precedent strengthens plaintiffs' positions in personal injury cases by allowing them to present the full billed amount of medical expenses as evidence of damages. For defendants, it eliminates the strategy of reducing their liability by pointing to post-treatment bill reductions they played no part in obtaining.

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