HB 1255, concerning evidence of collateral source payments, passed the House on a vote of 57 – 40. This would seem to be a reaction to the Indiana Supreme Court’s decision in Stanley v. Walker this past May.
The issue, generally speaking, is how to compensate personal injury victims for their medical bills. The Indiana Trial Rules say, basically, the plaintiff can introduce their bills and that’s prima facie evidence of the reasonable value of the medical procedure. But this ignored the fact that the medical providers often took discounts, sometimes rather steep discounts, as payment in full of the debt. Collateral source payments are payments toward the victim’s injury from sources other than the defendant(s). Some collateral source payments are excluded — the biggest one of these is insurance. You don’t want the defendant to get off the hook simply because the plaintiff was prudent enough to buy insurance. And, in any case, the insurance company has a lien on any settlement the plaintiff gets; so they get paid back if the defendant ends up paying.
The sticker price on a medical bill is often as reliable an indicator of its actual price as the sticker price on a car. The Supreme Court said that defendants could counter by showing that the provider wrote off some of the medical bill. This is different from an insurance payment where money actually changed hands. Without allowing evidence of a discount, you’re just putting extra money in a plaintiff’s pocket for bills they didn’t have to pay. (And, since negotiations about general (pain and suffering) as opposed to special (medical bills) damages frequently revolve around multiples of the special damages, the windfall to the Plaintiff can be compounded.
HB 1255 would undo the Supreme Court’s decision by prohibiting evidence of “a writeoff, discount, or other deduction associated with a collateral source payment.” Actually, the statute itself is kind of self-referential. It says, “the court shall allow the admission into evidence of . . . proof of collateral source payments other than . . . a writeoff, discount, or other deduction associated with a collateral source payment.” So, you can provide evidence of a collateral source payment but not a discount associated with that payment. Strictly read, that’s ridiculous.
As I mentioned, there are certain collateral source payments, primarily insurance, that are excluded as evidence. What I think they mean is that discounts associated with excluded collateral source payments.
This runs counter to the policy expressed by IC 34-44-1-1: “The purpose of this chapter is to enable the trier of fact in a personal injury or wrongful death action to determine the actual amount of the prevailing party’s pecuniary loss; and to provide that a prevailing party not recover more than once from all applicable sources for each item of loss sustained.”
Hiding the amount of medical discounts from the jury prevents it from accurately determining the actual amount of the plaintiff’s pecuniary loss and enables the plaintiff to recover amounts never paid by the plaintiff or on the plaintiff’s behalf.
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