Sen. Steele’s SB 87 would prohibit a court from admitting evidence, in a personal injury action, of a writeoff, discount, or other deduction associated with a “collateral source payment.” In simple terms, this means that the court could not allow evidence that a medical provider accepted payment from an insurance provider of something less than 100% of the sticker price as satisfaction in full of the medical debt.
This matters quite a bit because a jury is directed to award an injured person, among other things, the “reasonable value” of the medical services required because of the injury. Under Ind. R. Evid. 413, a statement from the medical provider constitutes prima facie evidence that a charge for the service is reasonable. That means the plaintiff can carry his or her burden of showing what the service cost and that it is reasonable simply by showing the bill. The defendant, then, is allowed to counter the plaintiff by introducing other evidence showing that a different number is, in fact, the reasonable cost of the service.
The 800 lb. gorilla in this particular room is that the market for medical services is dysfunctional, and the sticker price on medical bills are often fantastic, based on a marked up chargemaster price, used primarily for the purpose of starting a negotiating point for insurers and Medicare.
Personal injury plaintiff’s lawyers love this phenomenon since it increases the take for their clients (and, incidentally, improves the contingency fee) – the insurer pays a reduced negotiated fee to the hospital, the jury only gets shown the sticker price and awards that, the plaintiff pays the insurer back the reduced amount, and the plaintiff keeps the spread. Everyone wins but the defendant. The argument goes that the defendant should not be rewarded for the prudence of the plaintiff in getting insurance. That’s true, as far as it goes, but the defendant should also not be penalized because the sticker price of a medical bill is inflated above market rates. (There is also a concern, based probably on now outdated notions about insurance, that the jury will be less likely to award damages on insured losses because it’s already been taken care of.) Indiana courts have started allowing evidence of insurance write downs, notably in the case of Stanley v. Walker. This is a reaction to that.
The fundamental question is how do we get juries to arrive at a “reasonable value” for medical services. Unfortunately, that’s a challenge nobody, let alone juries, has been able to solve with any notable success.
Doug, don’t forget that the plaintiff has paid for his or her health insurance for some period of time before the incident, usually a considerable period of time. In reality, the difference only means that the plaintiff is usually only being reimbursed a portion of what they actually paid for their own coverage. The Stanley v. Walker decision also created the unfair advantage to liability insurers that the plaintiff’s insurance is now accounted for in front of a jury, either in effect or in total, but not the defendant’s liability coverage.
I’m not sure what the correct remedy should be – I would suggest that the insurance rate bears a stronger relationship than the invoice rate to the actual market value of the medical services.
Yes, the insured has paid in premiums for quite some time; but I think what they are getting in return is primarily risk management and not, to any great extent, medical services discounted below their “reasonable value.”
If we want to keep insurance information from prejudicing a jury against a party and the parties cannot stipulate to a reasonable value for medical bills, perhaps a special proceeding in front of a judge to establish that number. Though I don’t expect too many people, judges least of all, to be excited about that kind of proceeding.
This whole thing seem beyond confusing and not totally clear on who is actually making a gain from it (but would tend to believe it would be the attorney who gets a percent.) I suspect about everyone reading this has observed the situation where the bill from the doctor and hospital, etc. may end up being settled with the insurance for hundreds and even thousands less than the original bill. Recently saw on where the billing was for over $1500 (emergency room treatment of a minor head injury) and the insurance company paid less than $200 and there was no billing to the patient for anything.