SB 68’s revision of the collateral source rule may be the single most financially consequential change in the law for Georgia car accident victims. For accidents occurring on or after April 21, 2025, the rule that prevented defendants from showing juries what insurance actually paid for medical treatment is gone. What replaces it changes how medical damages are valued, how cases are settled, and who benefits from having health insurance versus who is penalized by it.
What “phantom damages” Were and Why They Were Controversial
Before SB 68, Georgia’s collateral source rule generally prevented defendants from introducing evidence of insurance payments for a plaintiff’s medical treatment. If a hospital billed $80,000 for a spinal surgery and the plaintiff’s health insurance paid $18,000 under its negotiated rate (with the remaining $62,000 written off as a contractual adjustment), the jury evaluated medical damages based on the $80,000 billed amount. The $62,000 difference, money that was billed but never paid by anyone and never owed by anyone, is what critics called “phantom damages.”
The plaintiff’s argument for the old rule: the billed amount represents the value of the medical services provided. The plaintiff purchased health insurance through premium payments, and the benefit of those premiums should not be transferred to the defendant who caused the injury. The discount exists because the plaintiff invested in insurance, not because the medical services were worth less.
The defense argument against the old rule: awarding $80,000 for treatment that cost $18,000 produces a windfall that bears no relationship to the plaintiff’s actual economic loss. The jury is evaluating damages based on a fictional number that no one ever paid or will pay.
SB 68 resolved this debate in favor of the defense position, at least for accidents occurring after April 21, 2025.
The New Rule: Juries See Both Numbers
Under O.C.G.A. § 51-12-1.1 (enacted by SB 68), for causes of action arising on or after April 21, 2025, the following framework applies:
The plaintiff can still introduce evidence of the billed amount, which is the chargemaster rate set by the medical provider.
The defendant can now introduce evidence of the amount “actually necessary to satisfy” the medical charges, including amounts paid by or on behalf of the plaintiff through health insurance, workers’ compensation, or other coverage.
The jury uses both figures to determine what the statute calls the “reasonable value” of the medical treatment. Neither number automatically controls. The jury is not required to award the billed amount. The jury is not required to limit the award to the paid amount. They determine reasonable value with both data points available.
In practice, the effect is directional. When a jury sees that a $75,000 hospital bill was satisfied by a $16,000 insurance payment, the reasonable value determination tends to move toward the lower figure, not the higher one. The billed amount loses its anchor power when the paid amount is visible beside it.
The Dollar Impact: A Worked Example
A car accident victim undergoes knee surgery. The hospital bills $75,000 at chargemaster rates. The plaintiff’s health insurance has a negotiated rate with the hospital. The insurer pays $16,000 in full satisfaction of the bill. The hospital writes off $59,000 as a contractual adjustment.
Under the old rule, the jury evaluates medical damages starting from $75,000. The defense cannot mention the $16,000 payment. The plaintiff’s medical damages component is anchored at or near $75,000.
Under the new rule, the jury sees $75,000 billed and $16,000 paid. The jury determines “reasonable value.” If the jury settles on $25,000 as the reasonable value, the plaintiff has lost $50,000 in medical damages compared to the old rule.
The secondary effect is even larger. Pain and suffering calculations commonly use medical damages as a multiplier base. With a 3x multiplier: $75,000 in medical damages produces $225,000 in pain and suffering under the old rule. $25,000 in medical damages produces $75,000 in pain and suffering under the new rule. The total case value difference from the “phantom damages” change alone can exceed $200,000 in serious injury cases.
The Insured vs. Uninsured Paradox
SB 68 created an unintended structural asymmetry between insured and uninsured accident victims that operates in the opposite direction from what most people would expect.
Insured patients have health insurance that negotiated lower rates with medical providers. The defendant can now show the jury these lower paid amounts. The jury sees a $75,000 bill alongside a $16,000 payment and may value the treatment closer to $16,000. The plaintiff’s health insurance, purchased through premium payments, now serves as evidence that reduces the plaintiff’s own recovery.
Uninsured patients have no insurance discount to show. Their medical bills may be at or near chargemaster rates, and those bills are either paid at the full rate, remain unpaid, or are subject to payment plans at the billed amount. The defendant has no lower “paid amount” to introduce. The jury may evaluate medical damages closer to the full billed amount because no alternative reference point exists.
The result: a person who paid insurance premiums for years and obtained health coverage may recover less in medical damages than an identical patient with identical treatment who had no insurance. The insured plaintiff’s premiums, which were supposed to protect them, now provide the defense with a tool to reduce their civil recovery.
This paradox was not the legislature’s stated intent. SB 68 was designed to prevent inflated damages awards, not to penalize insurance coverage. But the mechanical operation of the rule produces this effect.
Letters of Protection Under SB 68
A Letter of Protection (LOP) is an agreement where a medical provider treats an accident victim on credit, agreeing to be paid from any future settlement or judgment. LOPs allow victims without health insurance to access medical treatment they could not otherwise afford during the pendency of a claim.
Under SB 68, LOP arrangements are now discoverable and admissible. The defendant can see the LOP agreement itself, the itemized medical charges with specific billing codes, the name and dollar amount of any portion of the account receivable that was sold to a third party (a practice used by some medical funding companies), and the identity of anyone who referred the plaintiff to the provider for treatment.
The practical impact is significant. LOP billing, which sometimes uses chargemaster or near-chargemaster rates specifically because the charges are expected to be paid from litigation proceeds, is now transparent and challengeable. Defense attorneys can present LOP billing patterns to argue that the charges are inflated and do not represent the “reasonable value” of the treatment provided.
For the full analysis of how Letters of Protection work and their strategic implications under the new law, see Letters of Protection in Georgia Personal Injury Cases.
What This Means for Documenting Medical Expenses
If your accident occurred on or after April 21, 2025, how you document your medical treatment and expenses has changed in important ways.
Explanation of Benefits (EOB) documents are now relevant evidence. The EOB from your health insurance shows the billed amount, the allowed amount, the insurance payment, and your patient responsibility (copay, coinsurance, deductible). Under SB 68, both the billed and paid amounts are potentially visible to the jury, making these documents an important part of the claims file.
The billed-paid gap is now a two-edged factor. Billing records and EOBs together tell the financial story of treatment. If an insurer paid $3,000 on a $15,000 bill, that $12,000 gap is potential evidence for the defense. Understanding the gap for each provider helps evaluate the realistic medical damages component of a case before entering settlement negotiations.
Health insurance use affects the reasonable value calculation. Under the old rule, there was sometimes a strategic argument for bypassing health insurance and paying medical providers directly or through LOPs, because the full billed amount would be presented to the jury. Under the new rule, that strategy backfires: the jury sees the paid amount regardless, and LOP charges face additional scrutiny. Using health insurance produces a documented, contractually negotiated payment amount that establishes a floor for the reasonable value of treatment.
Accidents Before April 21, 2025
If your accident occurred before April 21, 2025, the “phantom damages” provision of SB 68 does not apply to your case. The old collateral source rule governs, and the jury generally evaluates medical damages based on the billed amount without seeing insurance payment information.
This is true even if your lawsuit was filed after April 21, 2025. The trigger is the accident date (when the cause of action arose), not the filing date. Other SB 68 provisions (anchoring restrictions, bifurcation, discovery stays, voluntary dismissal restrictions) apply retroactively to all pending cases regardless of accident date, but the “phantom damages” provision is prospective only.
For the full SB 68 hub covering all provisions and their effective dates, see Georgia SB 68 Tort Reform and Car Accident Claims.
This guide covers SB 68’s impact on medical damage calculations in Georgia as of March 2026. O.C.G.A. § 51-12-1.1 governs the “reasonable value” standard for medical damages in cases arising on or after April 21, 2025. Constitutional challenges may be pending. Laws change. This information is educational and does not constitute legal advice. If you need advice about your specific situation, consult a licensed Georgia attorney.
Last updated: March 2026
