Montgomery Ward & Company, Inc. v. Anderson

Supreme Court of Arkansas · 1998 · Torts

976 S.W.2d 382 (Ark. 1998)

Updated July 23, 2026

TortsCollateral-source ruleDamagesMedical expensesmedical-expense damagesdiscounted medical billsgratuitous medical servicesexceptions to collateral-source rule

Facts

Shirley Anderson was injured in a fall while shopping in Montgomery Ward's store and was sent by store personnel to UAMS for treatment. UAMS billed her $24,512.45 for surgery and other medical services. Through her attorney, Anderson negotiated an agreement under which UAMS would discount the bill by 50%. Montgomery Ward sought to limit proof of medical expenses to the discounted amount and to introduce evidence of the discount, but the trial court treated the discount as a collateral source and admitted the full billed amount.

Issue

Whether the collateral-source rule bars a tort defendant from introducing evidence that a medical provider forgave or discounted part of the plaintiff's medical bill, so that the plaintiff may prove the full amount billed as medical damages.

Rule

Gratuitous or discounted medical services are a collateral source and are not to be considered in assessing the damages due a personal-injury plaintiff. Evidence of collateral-source benefits is excluded unless it is relevant for a purpose other than mitigation of damages, including the recognized exceptions identified in Evans v. Wilson.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

After a delivery truck struck Nora Patel in Tulsa, she received treatment at Red River Medical Center, which billed $42,000. Nora's attorney later negotiated a 40% reduction of the bill, leaving Nora personally responsible for only $25,200.

In Nora's negligence suit against the trucking company, the defendant moves to limit proof of medical expenses to $25,200 and to tell the jury about the negotiated reduction. How should the court rule?

Explanation. The majority adopted the rule that gratuitous or discounted medical services are a collateral source not considered in assessing a personal-injury plaintiff's damages. Where the defendant had nothing to do with procuring the discount, evidence of the reduction is excluded if offered only to mitigate damages, and the plaintiff may present the full billed amount.