When you are injured in a car accident, the medical bills can pile up fast. But if you have health insurance, your insurance company often pays a lower, negotiated rate rather than the full gross amount originally billed by the hospital.

So, if you sue the at-fault driver, which amount are you entitled to claim as your damages? The full “sticker price” bill or the discounted rate your insurance actually paid?

The Utah Supreme Court recently addressed this exact question in the case of Gardner v. Norman.

The Facts of Gardner v. Norman

In this case, Troy Gardner was stopped in traffic on a freeway off-ramp when he was rear-ended by Tyler Norman. Norman was driving a marked Salt Lake City police vehicle. Following the collision, Gardner sought treatment at the emergency room and an eye doctor.

• The hospital initially billed Gardner a gross charge of $7,175.77 for his emergency room visit.
• However, because of a pre-existing contract between the hospital and Gardner’s health insurance, the insurance company only had to pay $4,395.75 to fully satisfy the bill.
• For his eye exam, the amount billed and paid was $92.
• Gardner sued for negligence and asked for special damages based on the full $7,267.77 initially billed by the hospital.

The lower district court sided with Gardner, deciding that under a legal doctrine known as the “collateral source rule,” the defendant wasn’t allowed to benefit from the discounts negotiated by the plaintiff’s insurance. The court awarded Gardner special damages based on the higher gross charges for his medical bills.

The Utah Supreme Court’s Ruling

The Utah Supreme Court took up the case to resolve how the collateral source rule applies to negotiated medical charges. This was an issue of first impression in the state. Here is what the Court decided:

• Actual Loss Matters: The Court noted that special damages are meant to compensate a plaintiff for their actual, concrete economic harm. Only reasonable and necessary expenses that are actually incurred are compensable.
• The Gross Charge is a Phantom Number: Because Gardner’s insurance had a contract with the hospital before he was injured, Gardner’s liability was always limited to the negotiated rate. Neither Gardner nor his insurance company was ever obligated to pay the gross charge.
• The Collateral Source Rule Still Applies, But Differently: The collateral source rule generally prevents a wrongdoer from reducing their liability just because the victim received compensation from an independent source, like insurance. The Court affirmed that evidence showing an insurer paid the bills is still strictly inadmissible. However, the difference between the gross charge and the negotiated charge isn’t a “payment” or a “benefit” from the insurance company. It is simply a contractual discount.
• The Result: The Court vacated the lower court’s damages award, ruling that the negotiated charge, not the gross charge, reflects the actual loss incurred and is the proper measure of special damages.

What This Means for Your Personal Injury Case

If you are injured in Utah, Gardner v. Norman clarifies that the special damages you claim for past medical expenses will be limited to the amounts actually incurred, rather than the gross amount of the medical bills. While the jury will still not be told that your insurance footed the bill, your financial recovery for medical expenses will be strictly tied to what was actually owed or paid.

Navigating the intersection of personal injury law, health insurance, and the courts can be incredibly complex. You need an advocate who understands the latest developments in Utah law.

Need a Personal Injury Advocate? Contact Attorney David Head

Are you dealing with the physical and financial aftermath of a car crash or personal injury? Don’t leave your recovery to chance.

Attorney David Head has the legal experience and relentless dedication needed to fight for the compensation you deserve. From accurately calculating your medical damages under the latest Utah Supreme Court rulings to negotiating with stubborn insurance companies. David Head is committed to protecting your rights every step of the way.

Contact the Law Office of David Head today for a consultation and put a proven legal advocate in your corner.