write-off
A write-off is an accounting action that removes an asset from the books, typically as a loss or expense, when it is deemed uncollectible or obsolete. This action reduces the value of the asset while simultaneously debiting a liabilities account. In contrast, to “deduct” an item means to subtract it from gross income or adjusted gross income when calculating taxable income.
Personal Injury
In personal injury cases, an injured party is entitled to recover necessary and reasonable expenses arising from the injury, including the reasonable value of the medical care required to treat the injury. For purposes of assessing damages in a personal injury case, a “write-off” refers to the difference between the original amount of a medical bill and the amount accepted by the medical provider as the bill’s full payment. Write-offs raise the question of how to determine the reasonable value of medical care.
Collateral Source Rule
The collateral source rule prevents the jury from learning about a plaintiff’s income from a source other than the tortfeasor; this is to ensure that the tortfeasor does not benefit from third-party payments to the plaintiff. This ensures that the damages awarded to a plaintiff are not reduced by amounts already recovered from third parties, such as insurers. However, in the case of Robinson v. Bates, 112 Ohio St.3d 17, 2006-Ohio-6362, the Court concluded that the common law collateral-source rule does not exclude evidence of write-offs because a write-off is not a payment; and therefore, does not constitute the payment of a benefit. Consequently, the Court allowed evidence of write-offs to be admitted to help evaluate the reasonable value of medical expenses, clarifying that the tortfeasor does not obtain credit from such write-offs.
See: Ohio Revised Code - Title 23 Courts-Common Pleas - Chapter 2317 - Evidence Section 2317.421 | Prima-facie evidence of the reasonableness of medical bills, and 28 CFR § 94.25 - Collateral Sources.
[Last reviewed in November of 2024 by the Wex Definitions Team]
Wex