On July 27, 1999, in Ellsworth v. Schelbrock, the Wisconsin Court of Appeals held the plaintiff could recover the reasonable value of medical expenses rendered, rather than the lesser amount actually paid under a medical assistance program. The decision is a blow to recent efforts by defendants to prevent plaintiffs from recovering as damages medical bills which were written-off and never paid by plaintiffs or any other party.
In Ellsworth, the plaintiff Hope Ellsworth was rear-ended by a vehicle driven by a drunk driver early one morning as she was driving home from work. As a result of the impact, Ellsworth's vehicle ignited into flames and she received substantial burns. Dunn County, the subrogated plaintiff, paid the plaintiff's medical expenses under a medical assistance program. The expenses paid by Dunn County amounted to approximately $325,000. Uncontroverted medical testimony established the reasonable and customary value of Ellsworth's medical services was just under $600,000, and the trial court filled in that number on the verdict.
On appeal, defendants, Schelbrock and MSI contended, among other things, that Ellsworth's recovery of past medical expenses should be limited to $325,000, the amount actually paid through medical assistance. The appeals court determined the availability of public assistance should not operate to reduce a tort-feasor's legal liability, because to do so would "transfer responsibility for malfeasance from the tort-feasor to the victim and the state." The court held the application of the collateral source rule to medical assistance payments was proper, despite the existence of a third party's subrogation claim for the amount paid. Under this holding, even though personal injury claims are partially subrogated, the remainder is subject to the collateral source rule regardless of the fact that the expenses have not been "incurred" by the plaintiff and have, in fact, been extinguished by operation of law.
The decision pertains specifically to medical assistance benefits as collateral sources. The court declined to address the situation where a medical bill is discounted in return for other considerations, such as a contract for exclusive treatment or under an HMO arrangement. The decision may also be appealed to the Wisconsin Supreme Court.