(And What Is Rule 414?)

by: Robert Slaughter

At Slaughter & Lupton Law, we’re personal injury lawyers handling cases in Virginia and North Carolina. With our “cross-border” practice, we have attorneys licensed, with many years of experience, in both states.

Virginia and North Carolina Medical Expenses

One huge difference in the personal injury law in the two states is in the area of medical expenses. In lawsuits in both states, the money a person injured by the wrongful conduct of another can recover includes medical expenses reasonably incurred to treat this accident victim’s injuries.

For many decades, the law of medical expenses was basically the same in both states. In 2011, though, North Carolina’s medical expense law changed dramatically. That change had a huge impact on North Carolina personal injury cases.

North Carolina’s Rule 414

What was the change? If you’ve been around North Carolina courts when personal injury cases are tried or around North Carolina lawyers, paralegals, or insurance adjusters discussing personal injury cases, you may have heard references to the “414 number” or the “414 medicals” or the “414 amount.” Unless you’ve had experience with North Carolina personal cases, you probably wondered what in the world they’re talking about.

They’re talking about North Carolina Rule of Evidence 414, enacted in 2011. The Rules of Evidence govern what evidence is admissible in a trial. In other words, they govern what testimony or documents a judge or jury considers in trying a case. Here’s Rule 414:

Rule 414. Evidence of Medical Expenses

Evidence offered to prove past medical expenses shall be limited to

evidence of the amounts actually paid to satisfy the bills that have been

satisfied, regardless of the source of payment, and evidence of the

amounts actually necessary to satisfy the bills that have been incurred

but not yet satisfied. This rule does not impose upon any party an

affirmative duty to seek a reduction in billed charges to which the

party is not contractually entitled.

What Does This Mean For Me?

What’s so dramatic about that short rule? It has virtually turned North Carolina personal injury practice upside down. Why is that? Because it has resulted in an enormous reduction in the monetary recovery, whether by settlement or trial, of the injured accident victim in many cases. And it’s inherently unfair. Let me explain.

Virginia’s Medical Expenses

In Virginia (and in North Carolina before 2011), the injured victim’s entire medical bill amounts are admissible in evidence, even if the victim wasn’t or isn’t required to pay the entire amount because of health insurance payments or medical provider write-offs. For example, if a hospital bill is $10,000, and Medicaid paid $1,000 in full payment of the bill, the entire $10,000 bill amount is admissible in evidence.

North Carolina Medical Expenses

That result is very different in North Carolina. If Medicaid paid $1,000 in full payment of the $10,000 bill, only the $1,000 amount paid is admissible in evidence. That’s because Rule 414 limits the admissible bill amount to the amounts actually paid to satisfy the bill ($1,000) and the amount necessary to satisfy the bill ($0—it has been satisfied). That means the jury verdict can include only $1,000 for that medical bill, while in Virginia, the verdict could include $10,000 for the same bill. This isn’t an extreme example; these type differences are usual.

In both states, from the recovery, the victim would normally have to reimburse Medicaid $1,000 for its $1,000 payment. That’s not so harsh in Virginia, where the victim could recover the full $10,000 of the bill. But in North Carolina, the victim could only recover $1,000 for the bill and have to reimburse Medicaid $1,000 for its payment absent compromise with Medicaid or court intervention.

What if I don’t have Medicare/Medicaid?

Here’s an example that shows unfairness in a different way. What if the victim has no Medicaid, Medicare, or other health insurance and has $20,000 in bills that no one has paid? Under Rule 414, that person can recover the entire $20,000, which is the amount necessary to satisfy the bill. But a victim who has paid for health insurance to protect her family would in many cases not be able to recover the entire $20,000. That’s because when health insurance pays the victim’s bills, the medical providers are typically required, by contract with the health insurer, to write off a portion of the bills. And some health insurance plans require the victim to reimburse the insurer, from the recovery, the amount the insurer paid on the bills.

414 Chart Example

We do “414 Charts” for our North Carolina cases. This is one of those charts (with our client’s and providers’ names not given). If this was a Virginia case, the total admissible medical expenses would simply be the sum in the total charges column, $37, 165.35. In North Carolina, however, the total admissible amount is only the sum in the total payments and balances block, $9,874.11.

Rule 414 Chart – [client’s name]

The difference in admissible medical expenses not only affects the award for medical expenses, but also the monetary value of the entire case, particularly for settlement purposes.

An accident victim can recover more than medical expenses. The recovery can also include amounts for past and future physical pain and mental suffering, past and future loss of income, permanent disability, scarring, and deformity. But the typical starting point in settlement negotiations is the amount of the admissible medical expenses. Sometimes that amount is multiplied to get a ballpark settlement amount.

In past years, routine cases would settle for about three times the amount of admissible medical expense. Then the insurance adjusters started trying to settle routine cases for two or even one and a half times the amount of the admissible medical expenses.

The Slaugther & Lupton Law Difference

At Slaughter & Lupton, we don’t see any client’s case as “routine”—every case is different and special. And we don’t judge cases by a multiplier of the admissible medical expense amount. Yet that amount surely affects the money we can obtain in a settlement. So the difference in the admissible medical expense amount that can result from North Carolina’s Rule 414 can make a great difference in the amount of the settlement.

We’re stuck with Rule 414 in North Carolina cases. But Slaughter & Lupton lawyers know how to get the most from every case, whether it’s a North Carolina case or a Virginia case.

Call us at (757) 999-1111 or fill out the contact form below for your free case evaluation.

Robert Slaughter is a personal injury attorney and partner at Slaughter & Lupton Law, PLLC. Slaughter has over four decades of courtroom experience as a trial lawyer. He has built a successful private practice in North Carolina, handled 100+ trials, and has made countless other court appearances across Virginia and North Carolina. Learn more about Robert Slaughter on his Attorney Page.