This opinion is subject to revision before final
publication in the Pacific Reporter
2025 UT 47
IN THE
SUPREME COURT OF THE STATE OF UTAH
TROY GARDNER,
Appellee,
v.
TYLER NORMAN,
Appellant.
No. 20240344
Heard April 9, 2025
Filed October 30, 2025
On Direct Appeal
Third District Court, Salt Lake County
The Honorable Keith A. Kelly
No. 220906066
Attorneys:
Karra J. Porter, Michael N. Driggs, Salt Lake City, for appellee
Samantha J. Slark, Salt Lake City, for appellant
__________________________________________________________
Additional attorneys for amici curiae, in support of appellant:
Freyja Johnson, Rachel Phillips Ainscough, Bountiful, for
International Municipal Lawyers Association; Darcy M. Goddard,
Salt Lake City, for Utah Counties Indemnity Pool; Troy L. Booher,
Salt Lake City, for State Farm Mutual Automobile Insurance
Company; S. Spencer Brown, Scarlet R. Smith, Salt Lake City, for
Prime Insurance Company; Heidi G. Goebel, Salt Lake City, Cary
Silverman, Mark A. Behrens, Wash., D.C., for National Federation
of Independent Business Small Business Legal Center, Inc.,
National Association of Manufacturers, American Tort Reform
Association, Coalition for Litigation Justice, Inc., American
Property Casualty Insurance Association, National Association of
Mutual Insurance Companies, American Trucking Associations,
(continued . . .)
GARDNER v. NORMAN
Opinion of the Court
JUSTICE HAGEN authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE PEARCE,
JUSTICE PETERSEN, and JUSTICE POHLMAN joined.
JUSTICE HAGEN, opinion of the Court:
INTRODUCTION
¶1 This opinion resolves a recurring issue in personal injury
cases in which a plaintiff seeks to recover past medical expenses. If
the plaintiff carried health insurance, those medical expenses may
have already been paid, at least in part, by the insurance company.
But evidence that the expenses were covered by insurance is
generally inadmissible because a defendant’s liability for damages
cannot be reduced based on compensation the plaintiff received
from a third party. This is known as the collateral source rule.
¶2 The amount that must be paid to satisfy an insured
patient’s medical bill varies based on the contractual arrangement
between the health insurance company and the healthcare
provider. The amount that providers agree to accept as full
payment for services rendered to insured patients is often
significantly less than the gross charge. We are asked to decide
whether the collateral source rule requires exclusion of that
negotiated charge.
¶3 This case arises from an automobile collision between Troy
Gardner and Tyler Norman. Gardner brought a negligence claim
against Norman in which he sought special damages for his past
medical expenses. Both parties filed motions in limine to determine
the admissibility of the negotiated charge Gardner’s insurance paid
the hospital to satisfy his medical bills. The district court decided
that, under the collateral source rule, the negotiated charge paid by
Gardner’s insurance must be excluded. The district court
ultimately awarded Gardner special damages for his past medical
care based on the hospital’s gross charges. Norman appealed, and
__________________________________________________________
Inc., and Utah Trucking Association; Nathanael J. Mitchell, Salt
Lake City, for Utah Defense Lawyers Association; Peggy E. Stone,
Joshua D. Davidson, J. Clifford Petersen, Asst. Solics. Gen., Salt
Lake City, for Utah Division of Risk Management.
Additional attorneys for amicus curiae, in support of appellee:
Peter W. Summerill, South Jordan, for Utah Association for Justice.
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Opinion of the Court
we elected to retain this case because it presents an issue of first
impression before this court.
¶4 We hold that the collateral source rule does not require
exclusion of the negotiated charges for Gardner’s medical care. The
gross charge does not reflect Gardner’s past medical expenses
because neither he nor his insurance were ever obligated to pay that
amount. Because the difference between the gross charge and the
negotiated charge was not a benefit to Gardner from a collateral
source, the rule does not apply. Accordingly, we vacate the special
damages award and remand for a new bench trial on that issue.
BACKGROUND
¶5 Norman was driving a marked Salt Lake City police
vehicle when he rear-ended Gardner’s car, which was stopped in
traffic on a freeway off-ramp. As a result of the collision, Gardner
went to the emergency room and saw an eye doctor. The hospital
billed Gardner $7,175.77 for the emergency room visit. But as
required by an existing contract between Gardner’s health
insurance and the hospital, the amount his insurance paid to fully
satisfy the bill was $4,395.75—just under a forty percent reduction
of the initial charge. For Gardner’s eye exam, the amount billed by
the hospital and paid by his insurance was $92.
¶6 Gardner later brought a negligence claim against Norman,
seeking special damages for his past medical expenses and general
damages for pain and suffering.1 Gardner sought $7,267.77 in
special damages, representing the gross charges listed on the initial
bill he received from the hospital.
Pretrial Rulings
¶7 Both parties filed motions in limine to determine what
evidence the fact finder could consider in determining Gardner’s
medical expenses. In his motion, Norman moved to exclude all
evidence of the gross charge, which he refers to as the
“chargemaster rate.”
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1 Gardner also named Norman’s employer, Salt Lake City, as a
defendant. Prior to trial, the court granted the City’s motion for
summary judgment. Because Norman was not acting within the
scope of his employment, the court determined that the City could
not be held liable for the accident. We therefore refer to Norman as
the only defendant even though the City participated in the
litigation prior to its dismissal.
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Opinion of the Court
¶8 Federal law requires hospitals to publish “a list of the
hospital’s standard charges for items and services provided by the
hospital.” 45 C.F.R. § 180.10. “Standard charge means the regular
rate established by the hospital for an item or service provided to a
specific group of paying patients,” including (1) the “[g]ross
charge,” (2) the “[d]iscounted cash price” for individuals who selfpay, (3) the “[p]ayer-specific negotiated charge,” which is the
amount a hospital has negotiated with a third party, and (4) the
“[d]e-identified maximum” and “[d]e-identified minimum”
representing the highest and lowest charge a hospital has
negotiated with all third-party payers.
Id. §§ 180.20, 180.50(b). The
gross charge “means the charge for an individual item or service
that is reflected on a hospital’s chargemaster, absent any
discounts.” Id. § 180.20. “Payer-specific negotiated charge[s]”
include those that insurance companies have negotiated to pay. Id.
§ 180.50(b). Insurance companies regularly contract with
healthcare providers in advance to set the negotiated charge for all
available services. See Tschaggeny v. Milbank Ins.,
2007 UT 37, ¶ 10,
163 P.3d 615 (explaining that it is “typical in the industry,” as part
of an existing contractual arrangement, for a “health insurer [to
have] negotiated a lower rate for health care services for its policy
holders”).
¶9 Norman argued in his motion that the district court should
exclude evidence of the gross charge for Gardner’s medical care or,
in the alternative, allow evidence of both the gross charge and the
negotiated charge Gardner’s insurance actually paid to satisfy the
bill. In response, Gardner argued that exclusion of the gross charge
listed on his initial bill “based on indemnification from [his] private
health insurance” would “directly violate[] Utah’s adoption of the
collateral source rule.” He contended that limiting his ability to
present “evidence of the amount charged” as a direct result of the
car crash would hinder his ability “to show that the value of
medical services received was reasonable and necessary.”
¶10 The district court denied Norman’s motion, ruling that
“the insurance company payment and discount that were received
as a benefit to the plaintiff fit under the collateral source doctrine.”
The court reasoned that alleged tortfeasors are not entitled to the
benefit of discounts negotiated by a plaintiff’s insurance because a
tortfeasor who denies liability (1) “has not accepted responsibility
for payment,” (2) “has not negotiated for discounts,” (3) “has not
voluntarily accepted payment responsibility at the time of the
service,” and (4) “delays payment until after a lawsuit is filed.”
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Opinion of the Court
Such tortfeasors, the court continued, “should not be entitled to the
same discounts available to patients or their insurers who
voluntarily agree to pay at the time medical services are rendered.”
¶11 Following the court’s ruling, the parties proceeded with
disclosure of trial exhibits. Upon receipt of the exhibits, Gardner
moved to exclude any evidence or mention of the negotiated
charges he or his insurance actually paid for medical services as
opposed to the gross charges originally billed. Gardner argued that
the negotiated charges were inadmissible under the collateral
source rule. Norman countered that evidence of the negotiated
amount “doesn’t violate the collateral source rule because it’s not
seeking to reduce [damages] by the fact the third party had paid
[them], just trying to introduce [the negotiated rate] as relevant
evidence of the amount that is reasonable for the services.” The
district court granted Gardner’s motion ruling that evidence of
“insurance discounts” would be excluded from the trial.
Bench Trial
¶12 During a bench trial, Norman’s counsel attempted to
question Gardner about the billing for his emergency room visit.
The evidence showed that the hospital billed Gardner’s emergency
room visit at two different levels of service—level four and level
five. The evidence also showed that Gardner’s insurance denied
coverage of the level five bill for $1,208—an amount included in the
total $7,267.77 Gardner sought.2
¶13 Norman’s counsel asked Gardner on cross-examination if
he ever questioned the hospital about why it billed the emergency
room visit at two different levels. Gardner said he did not.
Norman’s counsel then asked whether the hospital ever withdrew
the bill. Gardner’s counsel objected that the question called for
speculation, which the district court overruled. Gardner responded
that he knew “they made adjustments later.” Norman’s counsel
asked whether Gardner knew what those adjustments were.
Gardner’s counsel moved to strike, citing the collateral source rule.
The court sustained the objection.
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2 Norman contends that this denial included a comment:
“[M]edical records do not support level 5. Please re-bill.” The
record citation Norman provides for this comment only shows a
denial with no comment. But Gardner has not disputed the factual
accuracy of Norman’s representation.
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GARDNER v. NORMAN
Opinion of the Court
¶14 At the conclusion of the bench trial, the court determined
that Norman breached his duty of care and proximately caused
Gardner’s injuries. In addition to general damages, the court
awarded Gardner special damages for past medical expenses in the
amount of $7,267.77—the gross charge initially billed by the
hospital. Because Norman had already reimbursed Gardner’s
personal injury protection car insurance for $3,000, the court
deducted that amount from the special damages award, bringing
the total to $4,267.77.
¶15 Norman appealed.
ISSUE AND STANDARD OF REVIEW
¶16 Norman argues that the district court erred when it relied
on the collateral source rule to allow Gardner to introduce the gross
charge for his medical care, to prevent Norman from introducing
the negotiated charge, and to prevent Norman from questioning
Gardner about whether a bill was withdrawn or reduced due to a
billing error. While we review a district court’s decision to admit
evidence for abuse of discretion, we review for correctness the
“legal questions underlying the admissibility of evidence”—in this
case the applicability of the collateral source rule. State v. Griffin,
2016 UT 33, ¶ 14,
384 P.3d 186 (cleaned up); see also Mahana v. Onyx
Acceptance Corp.,
2004 UT 59, ¶ 35,
96 P.3d 893 (“Whether the
district court was correct in its application of the collateral source
rule is a question of law that we review for correctness, without
deference to the district court’s conclusions.”).
ANALYSIS
¶17 The question presented is whether the collateral source
rule requires courts to exclude evidence of the negotiated charge
for an insured plaintiff’s past medical care. This is a matter of first
impression in Utah. See Tschaggeny v. Milbank Ins., 2007 UT 37, ¶ 24,
163 P.3d 615 (noting “that the application of the collateral source
rule to medical bill write-offs is a matter of first impression in Utah”
but declining to reach the unpreserved issue). To answer this
question, we begin with basic principles governing special
damages as well as an overview of the collateral source rule. We
next examine how other courts have analyzed the collateral source
rule in this context. We then conclude that the collateral source rule
does not operate to exclude evidence of the negotiated rates paid
for an insured plaintiff’s medical care.
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Opinion of the Court
1. Special Damages
¶18 When a plaintiff suffers harm from a defendant’s tortious
actions, “compensatory damages seek to place the plaintiff in the
same position [the plaintiff] would have occupied had the tort not
been committed.” Wilson v. IHC Hosps., Inc., 2012 UT 43, ¶ 37 n.10,
289 P.3d 369 (cleaned up). Special damages, a form of
compensatory damages also known as specific or economic
damages, account for “harm that is considered more finite” and
“measureable.” Sheppard v. Geneva Rock,
2021 UT 31, ¶ 17 n.5,
493
P.3d 632 (cleaned up). Such damages are limited to “hard amounts”
incurred by the plaintiff “that are subject to careful calculation such
as the cost of medical and other necessary care.”
Id. (cleaned up);
see also Hansen v. Mountain Fuel Supply Co.,
858 P.2d 970, 976 (Utah
1993) (explaining that plaintiffs may recover medical expenses
“incur[red] as a result of a demonstrated injury” (cleaned up)).
¶19 To recover “compensation for medical expenses in a tort
action,” a plaintiff must prove that the amount incurred was
“reasonable and necessary.” Hansen, 858 P.2d at 981; see also Wilson,
2012 UT 43, ¶ 37 (“Upon proof of liability, a plaintiff may recover
medical expenses that are reasonable and necessary.”); Simmons v.
Wilkin,
15 P.2d 321, 323 (Utah 1932) (explaining that special
damages must “be reasonable and necessary as a result of the
accident”). Specifically, “evidence is required to show that the
medical expenses accurately reflect the necessary treatment that
resulted from the injur[y] and that the charges are reasonable.”
Gorostieta v. Parkinson,
2000 UT 99, ¶ 35,
17 P.3d 1110. The
reasonableness requirement means that, even if the treatment was
necessary, recovery is limited to “the reasonable value of the
services rather than the amount paid or charged.” RESTATEMENT
(SECOND) OF TORTS § 911 cmt. h (A.L.I. 1979).
¶20 But if “the injured person paid less than the exchange rate,
he can recover no more than the amount paid.” Id. (emphasis
added). Because special damages compensate the plaintiff for the
concrete economic harm suffered as a result of the tortfeasor’s
actions, Sheppard, 2021 UT 31, ¶ 17 n.5, it is not enough to prove that
certain expenses would have been reasonable had they been incurred.
In other words, only “reasonable and necessary expenses for
medical care and other related expenses incurred” are compensable
as special damages. Cf. MODEL UTAH JURY INSTRUCTIONS 2d CV2003
& CV2005, https://legacy.utcourts.gov/muji/?cat=1&subcat=20
(last visited Oct. 24, 2025) (defining economic damages).
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GARDNER v. NORMAN
Opinion of the Court
2. The Collateral Source Rule
¶21 When a third party covers all or part of a plaintiff’s medical
expenses, the collateral source rule is implicated.3 Under this rule,
wrongdoers are “not entitled to have damages, for which [they are]
liable, reduced by proof that the plaintiff has received or will
receive compensation or indemnity for the loss from an
independent collateral source.” Gibbs M. Smith, Inc. v. U.S. Fid. &
Guar. Co., 949 P.2d 337, 345 (Utah 1997) (cleaned up). In its
application, the collateral source rule has both an evidentiary and
a damages aspect.
¶22 The evidentiary aspect “precludes both explicit reference
and methodical allusion to collateral source benefits.” Wilson,
2012
UT 43, ¶ 2. “It has long been recognized that evidence of collateral
source benefits involves a substantial likelihood of prejudicial
impact.” Id. ¶ 47 (cleaned up). That prejudice may occur in two
ways. First, evidence of payment from a collateral source suggests
that a plaintiff is already receiving any necessary care, which may
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3 The collateral source rule is a common law concept that can be
altered by statute. In some states, the legislature has modified or
abolished the collateral source rule. See, e.g., Gulfstream Park Racing
Ass’n v. Volin,
326 So. 3d 1124, 1126 (Fla. Dist. Ct. App. 2021)
(Florida statute “requires a court to setoff certain payments from
collateral sources in personal injury cases”); Swanson v. Brewster,
784 N.W.2d 264, 269 (Minn. 2010) (Minnesota “statute changed the
rule on collateral sources and damage awards, essentially
providing that a plaintiff cannot recover money damages from the
defendant if the plaintiff has already received compensation from
certain third parties or entities”); Furlong v. Merriman, No.
HHBCV044000416S,
2006 WL 1461112, at *7 (Conn. Super. Ct. May
4, 2006) (Connecticut statute requires the court to “reduce the
amount of an economic damages award by an amount equal to the
total” paid by a collateral source (cleaned up)).
The Utah Legislature has altered this common law rule only for
medical malpractice claims. See generally UTAH CODE § 78B-3-405.
When a plaintiff receives damages in a malpractice action, “the
court shall reduce the amount of the award by the total of all
amounts paid to the plaintiff from all collateral sources.” Id. § 78B-
3-405(1). But where a collateral source has a subrogation right or
the collateral payment was not included in the damages award, the
court does not reduce the damages. Id.
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Opinion of the Court
lead the jury to “believe[] that the outcome of the trial is immaterial
to the party benefitting from the collateral source.” Id. (cleaned up).
Second, because many jurors “do not understand the concept of
subrogation rights, they will erroneously conclude that the plaintiff
is seeking a windfall.”
Id. This misunderstanding is “highly
prejudicial because the jury will believe that the plaintiff has
already been fully compensated and is trying to obtain a double
recovery,” thereby tainting the jury’s decision-making process.
Id.
(cleaned up).
¶23 The damages aspect prevents a plaintiff’s recovery from
being offset by any payments provided by an independent
collateral source. See Gibbs M. Smith, Inc., 949 P.2d at 345; Mahana v.
Onyx Acceptance Corp.,
2004 UT 59, ¶ 37,
96 P.3d 893. Put simply,
“[p]ayments made to or benefits conferred on the injured party
from other sources are not credited against the tortfeasor’s liability,
although they cover all or a part of the harm for which the
tortfeasor is liable.” RESTATEMENT (SECOND) OF TORTS § 920A(2)
(A.L.I. 1979). This means that the plaintiff may recover medical
expenses already paid by the plaintiff’s insurance even when “it
results in a windfall to the plaintiff based on the premise that the
plaintiff victim, rather than the defendant tortfeasor, should be the
beneficiary of any windfall.” Mahana,
2004 UT 59, ¶ 37. The rule is
also intended to “encourage[] the maintenance of insurance by
assuring that a plaintiff’s payments from a collateral source will not
be reduced by a subsequent judgment.” Wilson,
2012 UT 43, ¶ 31
(cleaned up).
3. Application to the Negotiated Charges Context
¶24 In this appeal, Norman argues that the collateral source
rule “does not apply to preclude evidence of the amount” of the
negotiated charge “or to entitle a plaintiff to recover more than the
damage actually caused by the defendant.” He contends that the
collateral source rule instead is “limited to preventing evidence of
the source of the payment, not the amount paid.” In Norman’s view,
“admitting evidence of rates not charged to or paid by [a plaintiff]
or his insurer and excluding the amounts actually charged and paid
is contrary to bedrock principles of compensatory damages and
tort recovery, which aim to compensate only for the harm caused.”
¶25 In contrast, Gardner argues that “[c]onsistent with the
collateral source rule,” only the gross charge initially billed to a
plaintiff is “admissible to prove the reasonable and necessary
amount of medical expenses.” He contends that this is consistent
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GARDNER v. NORMAN
Opinion of the Court
with the purpose of the collateral source rule: “to prevent a
windfall to the tortfeasor, ensuring that the plaintiff—not the
wrongdoer—benefits from” a plaintiff’s “efforts to secure
discounted medical bills while avoiding full responsibility for
payment of the claim.” Gardner asserts that “evidence of the
amount paid or accepted by insurance” is evidence of a benefit
from a collateral source and “does not reflect the true costs and
efforts associated with obtaining and maintaining coverage,
including paying premiums and dealing with coverage disputes.”
¶26 The debate between these two parties is one that has
played out in other cases across the country with states reaching
various conclusions. Among the states that have allowed
consideration of the negotiated charge, several approaches have
emerged. For a number of states, the outcome has been dictated by
state statutes modifying the collateral source rule.4 Other states
allow the admission of both the gross rate and the negotiated rate
as evidence of the reasonable value of medical care.5 Yet a third
approach precludes recovery based on the gross charge by either
excluding evidence of the gross charge or reducing the damages
award post-verdict.6
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4 See, e.g., Weston v. AKHappytime, LLC, 445 P.3d 1015, 1019
(Alaska 2019); Meek v. Mont. Eighth Jud. Dist. Ct.,
349 P.3d 493, 496
(Mont. 2015); Haygood v. De Escabedo,
356 S.W.3d 390, 395–99 (Tex.
2011); Swanson, 784 N.W.2d at 269–70, 282; Deck v. Teasley,
322
S.W.3d 536, 538–42 (Mo. 2010) (en banc); Crocker v. Grammer,
87 So.
3d 1190, 1193 (Ala. Civ. App. 2011); Furlong,
2006 WL 1461112, at
*7–8, *11.
5 See, e.g., Martinez v. Milburn Enters., Inc.,
233 P.3d 205, 222–23
(Kan. 2010); Law v. Griffith,
930 N.E.2d 126, 135–36 (Mass. 2010);
Stanley v. Walker,
906 N.E.2d 852, 858 (Ind. 2009); Robinson v. Bates,
857 N.E.2d 1195, 1200–01 (Ohio 2006); Barday v. Donnelly, No. CV-
04-508,
2006 WL 381876, at *2–3 (Me. Super. Ct. Jan. 27, 2006).
6 See, e.g., Weston,
445 P.3d at 1019; Haygood, 356 S.W.3d at 395–
99; Howell v. Hamilton Meats & Provisions, Inc.,
257 P.3d 1130, 1139–
40 (Cal. 2011); Swanson, 784 N.W.2d at 269–70, 282; Sliker v. Nat’l
Feeding Sys., Inc., No. 282 CD 2010,
2015 WL 13779690, at *8 (Pa. Ct.
Com. Pl. Oct. 19, 2015); Furlong,
2006 WL 1461112, at *7–8, *11;
Wildner v. Wendorff, No. 05-1998,
2006 WL 2265453, at *4 (Iowa Ct.
App. Aug. 9, 2006).
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Opinion of the Court
¶27 The third approach is best exemplified by Howell v.
Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Cal. 2011). In that
case, the California Supreme Court considered “whether restricting
recovery to amounts actually paid by a plaintiff or on his or her
behalf contravenes the collateral source rule.” Id. at 1137. As in our
case, the defendant moved “to exclude evidence of medical bills
that neither [the] plaintiff nor her health insurer . . . had paid.” Id.
at 1133. The defendant asserted that the record showed that
“significant amounts” of the plaintiff’s past medical bills “had been
adjusted downward before payment pursuant to [prior]
agreements between” the healthcare providers and her insurance.
Id. at 1133–34.
¶28 The court held “that a plaintiff may recover as economic
damages no more than the reasonable value of the medical services
received and is not entitled to recover the reasonable value if his or
her actual loss was less.” Id. at 1137. The court explained that “[t]o
be recoverable, a medical expense must be both incurred and
reasonable.” Id. In the court’s view, the burden to prove that the
plaintiff’s special damages reflect the “reasonable value” of the
services incurred limits “recovery to reasonable expenditures” but
does “not expand[] recovery beyond the plaintiff’s actual loss or
liability.” Id. In other words, the reasonable value of medical care
in this context “is a term of limitation, not of aggrandizement.” Id.
at 1136 (cleaned up).
¶29 Turning to the case before it, the court concluded that the
“plaintiff did not incur liability for her providers’ full bills, because
at the time the charges were incurred the providers had already
agreed on a different price schedule for” patients covered by the
plaintiff’s insurance. Id. at 1143. And because the plaintiff “never
incurred the full bill,” the court went on, the plaintiff “could not
recover [that amount] in damages for economic loss,” making the
collateral source rule “inapplicable.” Id.
¶30 The court clarified that the rule still “applie[d] with full
force” to prevent the deduction of payment made by an
independent source “from the damages which the plaintiff would
otherwise collect from the tortfeasor.” Id. at 1143–44 (cleaned up). But
“the negotiated rate differential [was] not a collateral payment or
benefit subject to the collateral source rule.” Id. at 1144. “Certainly,
the collateral source rule should not extend so far as to permit
recovery for sums neither the plaintiff nor any collateral source will
ever be obligated to pay.” Id. at 1143 (cleaned up).
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Opinion of the Court
¶31 We find the reasoning of the California Supreme Court
persuasive. Special damages must reflect the actual loss resulting
from the tortfeasor’s conduct. Under the collateral source rule, the
fact that a third party bore that loss is inadmissible and cannot be
used to reduce a plaintiff’s recovery. But that rule does not alter the
fundamental principle that special damages are limited to the
actual loss resulting from the injury.
¶32 Here, Gardner never incurred the gross charges listed on
the initial hospital bill. Before he was injured, Gardner’s insurance
had entered into a contract with the hospital that set out the
authorized amounts that could be charged to insured patients.
Because the contracted prices were in place when Gardner sought
treatment, his “prospective liability” was limited to those
authorized amounts. See id. at 1139. As a result, Gardner “cannot
meaningfully be said” to have ever “incurred the full charges.” Id.
Even if the gross charges reflect a reasonable cost of necessary
treatment resulting from the injury, they do not represent the cost
of the medical services that Gardner received, which was limited to
the preexisting negotiated charges.
¶33 Gardner argues that such a determination violates the
public policy underlying the collateral source rule by awarding a
windfall to tortfeasors. See Wilson, 2012 UT 43, ¶ 31 (“[P]ublic
policy favors giving the plaintiff a double recovery rather than
allowing a wrongdoer to enjoy reduced liability simply because the
plaintiff received compensation from an independent source.”
(cleaned up)). Norman, on the other hand, argues that to rule
otherwise violates “the fundamental tort law purpose of placing”
plaintiffs in the same position they would have occupied but for
the tort. See Mahana,
2004 UT 59, ¶ 26 (“To the extent possible, the
fundamental purpose of compensatory damages is to place the
plaintiff in the same position he would have occupied had the tort
not been committed.”). We agree with Norman.
¶34 Limiting an insured plaintiff’s recovery to the negotiated
charge does not create a windfall for tortfeasors. The collateral
source rule prevents a plaintiff’s recovery from being “reduced by
proof that the plaintiff has received or will receive compensation or
indemnity for the loss from an independent collateral source.”
Gibbs M. Smith, Inc., 949 P.2d at 345 (cleaned up). It prevents a
tortfeasor from obtaining a windfall where collateral source
benefits have mitigated the plaintiff’s out-of-pocket losses. See
generally Wilson,
2012 UT 43. But the difference between the gross
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charge and the negotiated charge is “not a ‘benefit’ under the
collateral-source rule because it is not a payment.” Robinson v. Bates,
857 N.E.2d 1195, 1200–01 (Ohio 2006). Only “the amount a
plaintiff’s health insurer actually pays to the health care provider is
a benefit from a collateral source.” Martinez v. Milburn Enters., Inc.,
233 P.3d 205, 213 (Kan. 2010).
¶35 Given that no one pays the difference between the gross
charge and the negotiated charge, admitting evidence of the
predetermined reduction “does not violate the purpose behind the
collateral-source rule.” Robinson, 857 N.E.2d at 1200. The tortfeasor
does “not obtain a credit because of payments made by a third
party on behalf of the plaintiff,” which is what the collateral source
rule prevents.
Id. The tortfeasor still faces the burden of paying for
the economic loss proximately caused by the tortfeasor’s
negligence. But the difference between the gross charge and the
negotiated charge results from the preexisting contractual
arrangement between the insurer and the healthcare provider. It is
not a loss caused by the tortfeasor’s conduct.
¶36 If special damages were based on the gross charge, it
would place the plaintiff “in a better financial position than before
the tort was committed.” Howell, 257 P.3d at 1136. In limited
situations, such a windfall to the plaintiff is permitted by the
collateral source rule. If the collateral source lacked subrogation
rights, for instance, the rule contemplates that “the plaintiff victim,
rather than the defendant tortfeasor, should be the beneficiary of
any windfall.” Mahana, 2004 UT 59, ¶ 37. But that does not allow
the plaintiff to recover more than the actual loss caused by the
tortfeasor’s conduct as special damages.
¶37 Gardner also argues that it would be unfair to allow a
tortfeasor to benefit from the plaintiff’s efforts to maintain health
insurance when the tortfeasor’s liability to an otherwise identical
plaintiff might have been greater based merely on insurance status.
We recognize that medical billing “depends, to a significant extent,
on the identity of the payer.” Howell, 257 P.3d at 1142. But “one who
injures another takes him as he is.” Harris v. ShopKo Stores, Inc., 2013
UT 34, ¶ 23,
308 P.3d 449 (cleaned up). This will often mean that the
same tortious conduct might result in vastly different damage
awards based on the identity and personal characteristics of the
plaintiff. It is simply the luck of the draw that a defendant who
injured an insured plaintiff might be required to pay a lower
damages award for past medical expenses because of the
13
GARDNER v. NORMAN
Opinion of the Court
preexisting contract between the plaintiff’s insurer and the medical
providers.7
¶38 In holding that the negotiated charge for past medical
expenses is the proper measure of special damages, we emphasize
that our holding does not modify the collateral source rule. Under
that rule, evidence that an insurer paid any portion of the medical
costs a plaintiff incurred is inadmissible. See Wilson, 2012 UT 43,
¶ 2. Similarly, a plaintiff’s recovery cannot be reduced by the
amounts paid or reimbursed through health insurance, except in
medical malpractice cases as provided by statute. See supra ¶ 21 n.3.
To borrow the California Supreme Court’s language in Howell, “we
merely conclude [that] the negotiated rate differential—the
discount medical providers offer the insurer—is not a benefit
provided to the plaintiff in compensation for his or her injuries and
therefore does not come within the rule.” 257 P.3d at 1145. Both the
evidentiary and damages aspects of the collateral source rule
remain in full effect, except where abrogated by statute. But that
rule does not allow a plaintiff to recover more than the amount
actually incurred for past medical treatment.
¶39 Although special damages must be based on the costs the
plaintiff actually incurred, we do not go so far as to hold that
evidence of gross charges is never admissible. Where the
reasonableness of the negotiated charge is in dispute, for instance,
the gross charge might be relevant to a fact at issue, see UTAH R.
EVID. 401, although the risk of prejudice might substantially
outweigh the probative value of that evidence, id. R. 403, especially
if its admission risks violating the collateral source rule by
__________________________________________________________
7 We also recognize that the disparity between an insured and
uninsured plaintiff may not be as great as Gardner suggests. As
with insured individuals, predetermined discounted rates exist for
those who are uninsured. By way of example, the hospital where
Gardner received care has posted rates showing that an uninsured
individual receiving the same treatment as Gardner would receive
about a twenty-five percent discount. See Price Transparency,
INTERMOUNTAIN HEALTH, https://intermountainhealthcare.org/
locations/intermountain-medical-center/about/pricetransparency (last visited Oct. 24, 2025). The adjusted charge for an
uninsured patient would be greater than the negotiated charge
Gardner incurred, but in both cases, the gross charge would not
reflect the medical expenses they each incurred, regardless of their
insurance status.
14
Cite as: 2025 UT 47
Opinion of the Court
revealing that the cost was covered, in whole or in part, by
insurance. And we express no opinion on the “relevance or
admissibility” of this evidence “on other issues, such as
noneconomic damages or future medical expenses.” Howell, 257
P.3d at 1146.
¶40 Here, the district court excluded evidence of the
negotiated charge and used the gross charges to calculate the
special damages award, based on its understanding that the
collateral source rule required that result. But while the collateral
source rule prohibits evidence that Gardner’s medical costs were
paid by his insurance, it does not allow Gardner to recover special
damages for costs he has not and never will incur. We therefore
vacate the district court’s award of special damages and remand for
a new trial on that issue.
CONCLUSION
¶41 Under the collateral source rule, the fact that the
negotiated charge was paid by a third party is inadmissible and
cannot reduce the plaintiff’s recovery. But the amount of the
negotiated charge reflects the actual loss incurred, which is the
measure of special damages. Because the court based the special
damages award on the gross charges for which neither Gardner nor
his insurance were responsible, we vacate the award and remand.
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