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 ]
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