In a recent decision, the Indiana Supreme Court held that a defendant in a personal-injury suit may introduce evidence of discounted reimbursements paid by government payers. Patchett v. Lee, 29S04-1610-CT-549 (Ind. Oct. 21, 2016). In Patchett v. Lee, the defendant admitted that she negligently drove her care into oncoming traffic, causing a collision with and injuries to the plaintiff that required medical treatment. The plaintiff brought a personal-injury claim seeking damages that would “fully and fairly compensate her.” Id. at 3. Though the defendant admitted she was liable for the injuries, a dispute arose regarding the amount of damages.
Indiana tort law seeks to make injured parties whole. Compensatory tort damages are designed to place the plaintiff in a position substantially equivalent to that which she would have been in had no tort been committed. Nichols v. Minnick, 885 N.E.2d 1, 4 (Ind. 2008). When determining the amount of compensatory damages a plaintiff is entitled to recover, courts look to the “reasonable value” of necessary medical services. Stanley v. Walker, 906 N.E.2d 852, 858 (Ind. 2009). A determination of the reasonable value of necessary medical services involves more than simply showing what the plaintiff was required to pay out of pocket for such services. Even if the plaintiff receives complimentary health care, she is nonetheless entitled to the fair value of the medical services provided. City of Indianapolis v. Gaston, 58 Ind. 224, 227 (1877).
One way to establish the reasonable value of medical services is to admit hospital billing statements into evidence. However, the parties can disagree regarding whether the medical charges are reasonable. Another metric of the reasonable value of medical services is the reduced amount paid to a medical provider that represents payment in full. In Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), the Indiana Supreme Court discussed whether the collateral-source rule, which bars evidence of compensation plaintiffs received from non-party sources, acted to prevent evidence of reduced amounts for medical services. The Court decided in Stanley that the collateral source statute does not bar evidence of discounted amounts in order to determine the reasonable value of medical services, so long as insurance is not referenced. Stanley, 906 N.E.2d 858.
In Patchett v. Lee, the Court extended the Stanley decision to apply to payments made through the Healthy Indiana Plan (HIP). The Court held that the rationale behind its decision in Stanley, to allow the jury to make a determination of the reasonable value of medical services, applied equally to reduced HIP reimbursements as it does to payments made through private insurance companies. The Court reasoned that the factfinder should hear evidence of the amount a medical service provider accepts as payment in full, even when the payer is a governmental healthcare program. Evidence of the amount the healthcare provider charges coupled with the discounted amount it accepts as payment in full is useful in determining the reasonable value of the services provided. By admitting both the billed and accepted amounts into evidence, Indiana courts allow juries to determine what damages are warranted in a particular case to make the plaintiff whole.
Corey Meridew of Camden & Meridew, P.C. practices in the areas of civil litigation, civil torts, utility law, and business litigation. For more information, or to speak with Corey call 317-770-0000 or complete our online contact form today.
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