Plaintiff’s personal injury attorneys won a pretty big decision from the Court of Appeals in Stanley v. Walker. The Court of Appeals upheld a trial court’s decision to exclude the defendant’s efforts to present evidence that medical providers had written down their medical bills.
If a defendant causes an injury, he is responsible for paying the plaintiff’s reasonable medical expenses. Indiana’s rules of evidence say that a party can make a prima facie showing of the reasonable cost of their medical expenses by simply presenting their medical bills. However, Indiana, like most states, have a “collateral source” rule that specifies that defendants can’t introduce evidence of insurance benefits by way of trying to escape their own liability. That’s reasonable as far as it goes. It shouldn’t make any difference to a defendant’s liability whether I wrote a check to the hospital or my insurance company wrote the check. In the latter case, you can be sure the insurance company is going to come after me for reimbursement if I get money from a defendant.
However, this decision also says that a defendant can’t present evidence that the hospital simply reduced the price of their service due to a negotiation with an insurance company. The court decided this was an “insurance benefit” and, therefore, had to be excluded from evidence.
The core question here is how a defendant can go about proving what constitutes a reasonable price for a medical expense. The plaintiff gets to set the bar by simply presenting a medical bill. More and more, however, it seems that the sticker price for medical bills are a lot like the sticker price for used cars — a starting point in negotiations. In some ways, I think the hospitals have to jack up the price in order to get a reasonable level of reimbursement from the government and the big insurers. Unlike with car sales, however, there doesn’t seem to be an equivalent of a Kelley’s Blue Book with which to provide the going rate for medical services.
In my view, the defense should be able to provide evidence that the medical provider took $x as payment in full and suggest to the jury that $x is, therefore, the market price for the services. The parties could then make any follow up arguments they thought necessary and the jury could consider the evidence and decide whether the sticker price, $x, or somewhere in between constituted the “reasonable expense.” This is not to say that the Court of Appeals necessarily decided this incorrectly. It was interpreting a statute. It may very well be time for the General Assembly to consider amending the statute to allow the defense an method that’s not overly burdensome by which to argue that the amount paid and not the amount billed constitutes the reasonable value of the services.
As it is, I don’t think it’s possible or at least feasible for a defendant to, for example, go to each provider and demand information on the amount paid by all patients for a particular service and then use the average to argue that the average is a more reasonable price. In any event, I expect that this issue will keep coming up the more the sticker price for medical services becomes divorced from the amount usually paid for those services.
I guess this really puts personal injury cases in limbo, with the Butler case from 2007, which came to the opposite conclusion, up on transfer.
I suppose it’s the defense attorney in me, but I have a hard time with the notion that the amount *actually paid* is inadmissible to establish the reasonable cost of medical treatment. I’m grappling with the notion of write-offs as an “insurance benefit.” I suppose, to the extent that Anthem is able to provide a competitive premium, its ability to obtain significant write-downs does work to the benefit of the insured. As you note, it’s a statute, but the definition of benefit is a bit hazy.
I do really disagree with the court’s reasoning as to windfall. The judges seem to presume that whatever the outcome, someone is getting a windfall. I don’t see it that way. If only $7,000 was paid on Plaintiff’s behalf, but he is paid $11,000 because that’s what was billed, it seems to me that it is Plaintiff and his attorney who are getting the windfall in the form of compensation for damages that were not actually incurred. On the other hand, if the defendant is allowed to establish that the true cost of the medical treatment was only $7,000, then the Plaintiff is compensated for what was actually paid on his behalf. I don’t see that as a windfall for the Defendant. The Plaintiff is made whole, at least as to special damages, by payment of what the services actually cost.
I was really troubled by this citation that the court relied upon from a California case:
That’s true enough as far as the collateral source doctrine goes generally, but it doesn’t strike me as applicable to the case at hand. Obviously, given a bill for $11,000, it is none of the jury’s business whether the plaintiff or his insurer paid the $11,000. But that’s not the issue in this case. The issue is that the bill for $11,000 is little more than a sham, or sticker price, as you more diplomatically said it. Unlike in the example from the California case or in the typical collateral source scenario, in the case at hand the primary benefit of having insurance is that the money is coming out of Anthem’s pocket, not the Plaintiffs.
I suppose it’s a colorable interpretation of the statute. But the purpose of tort law is to make Plaintiffs whole, not to compensate them for insurance premiums that they would have paid regardless of the injury. I hope the General Assembly steps in here.
I agree with you that the court is misguided about insured plaintiffs being in a worse position than uninsured plaintiffs. Currently, it seems that with the insured and uninsured alike, Defendants are entitled to prove the reasonable value of medical services through some unspecified method. If they do that with an uninsured who is stuck with the sticker price, all it means is that the tortfeasor pays the reasonable value while the injured party gets stuck with the excess.
Not all that different, I suppose, from the situation where someone agrees to pay too much for a car and the car gets totaled. The victim may owe $10,000 for a car that’s only worth $5,000. The tortfeasor pays $5,000 and the victim is stuck with a $5,000 debt and no car.