## Facts

- Samuel C. Liston was injured when John N. Kenney rear-ended the vehicle in which Liston was a passenger while it was stopped at a traffic light.
- The collision force broke the seat in which Liston was sitting, and Liston suffered serious, permanent spinal injuries requiring extensive treatment.
- About one hour after the crash, Kenney’s blood alcohol content measured .328; he later pleaded no contest to first-offense DUI.
- Liston incurred medical bills exceeding $70,000, but his health insurer’s provider contracts resulted in discounted charges and write-offs.
- Kenney admitted sole liability, and the trial proceeded as a bifurcated damages trial: compensatory damages first, then punitive damages.
- Before trial, Kenney sought to limit medical-expense damages to amounts actually paid by Liston or collateral payors and to admit evidence of the discounts/write-offs; the circuit court excluded that evidence under the collateral source rule.
- The jury awarded more than $3 million in compensatory damages (including $74,061 for past medical expenses) and $300,000 in punitive damages; the circuit court entered judgment on the verdict.

## Issues

1. Whether the collateral source rule permits a tortfeasor to reduce past medical-expense damages by insurer-negotiated discounts, reductions, or write-offs by medical providers.
2. Whether the circuit court committed reversible error in evidentiary rulings and in a limiting instruction concerning Kenney’s assets during the punitive-damages phase.

## Decision

- The Supreme Court of Appeals of West Virginia affirmed the judgment.
- The court held that provider discounts and write-offs arising from insurer contracts are collateral source benefits that do not reduce the tortfeasor’s liability.
- The court held the plaintiff may recover the reasonable value of necessary medical services, not merely the amounts actually paid.
- The court found no reversible error in the challenged evidentiary rulings or the limiting instruction during the punitive-damages phase and upheld the $300,000 punitive award.

## Legal Principles

- The collateral source rule bars a defendant from reducing damages based on payments or benefits conferred on the plaintiff from sources other than the defendant.
- The rule applies to insurance benefits and to gratuitous or discounted services, including medical charges later reduced or written off, so long as the benefit does not originate from the defendant or someone acting for the defendant.
- In personal-injury cases, recoverable medical expenses are measured by the reasonable value of medical and nursing services necessarily required by the injury, not by the plaintiff’s out-of-pocket expenditures.
- Where a health-care provider reduces, discounts, or writes off part of a medical bill pursuant to insurer arrangements, the plaintiff may still recover the reasonable value of the services, and the tortfeasor is not entitled to a reduction based on the discount or write-off.
- Trial courts retain discretion over evidentiary rulings and punitive-damages instructions; absent an abuse of discretion causing prejudice, a verdict will be affirmed.

## Conclusion

The court affirmed compensatory and punitive damages arising from a drunk-driving rear-end collision, holding that insurer-negotiated medical billing discounts and provider write-offs are collateral source benefits that cannot be used to reduce a tortfeasor’s liability for the reasonable value of necessary medical services.


Kenney v. Liston, 760 S.E.2d 434 (W. Va. 2014)