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Reasonable Medical Expenses in Tennessee: Supreme Court Ruling

Reasonable Medical Expenses in Tennessee: Supreme Court Ruling

November 21, 2017

By: Mike Vetter

Recently, the Tennessee Supreme Court filed the opinion in Dedmon v. Steelman, et al., W2015-01462-SC-R11-CV, which put to rest many questions and arguments related to what reasonable medical expenses mean in a Tennessee personal injury case.

In the case of West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), an argument related to the recovery of medical expenses pursuant to a hospital lien was heard. In that case, the hospital was seeking to recover medical charges pursuant to a hospital lien. The hospital claimed it was entitled to recover the face amount of the medical bills that had been incurred. The defendant argued that the hospital was not entitled to recover the face amount of the bills because that was not a reasonable charge and that hospitals and medical providers regularly accept a lesser sum in full payment of their bills.

The problem created by this, however, was that traditionally plaintiffs in personal injury cases put into evidence as reasonable charges the face amount of the medical bills and hospital bills that are incurred. This has been traditional Tennessee practice and plaintiffs have been allowed to potentially recover the face amount of the bills without regard to the amounts actually paid/accepted by the medical providers and hospitals as payment in full for these charges. The argument was and is that any collateral source (generally an insurance payment) that pays or reduces a plaintiff’s medical bill should not aid or reduce the damages to potentially be recovered from the party causing injuries and that the full amount of the damages caused by a tortfeasor should be recoverable by the plaintiff.

The two cases created an obvious problem because a hospital seeking to recover its lien for medical bills was not allowed to recover the face amount of the hospital bills as a “reasonable charge.” However, in personal injury cases, the face amount of the charges was and continues to be put into evidence as the “reasonable charge” for the cost of the medical treatment. How could the same face amount of medical bills be treated differently under Tennessee law depending upon who the party seeking recovery was?

The case of Dedmon v. Steelman, et al., W2015-01462-SC-R11-CV, brought this issue squarely before the Tennessee Supreme Court and caused significant angst because there is a vast difference between the face amount of most medical and hospital bills and the amount that is actually paid by an insurance carrier and/or a government program such as Medicare, Medicaid, or TennCare.

In Dedmon v. Steelman, et al., W2015-01462-SC-R11-CV, the Tennessee Supreme Court ruled that the finding in West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), was limited to cases involving efforts to recover on hospital liens and ruled that the holding does not apply to personal injury cases. In part, the Tennessee Supreme Court stated the following, “We hold that the collateral source rule applies in this personal injury case, in which the collateral benefit at issue is private insurance. Consequently, the plaintiffs may submit evidence of the injured party’s full, undiscounted medical bills as proof of reasonable medical expenses. Furthermore, the defendants are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut the plaintiffs’ proof that the full, undiscounted charges are reasonable. The defendants remain free to submit any other competent evidence to rebut the plaintiffs’ proof on the reasonableness of the medical expenses, so long as that evidence does not contravene the collateral source rule.”

The bottom line is that plaintiffs in a personal injury case will continue to be allowed to present the jury with the face amount of the medical and hospital bills that are incurred and the amount actually paid related to the bills by a collateral source will not be admissible.


Mike Vetter is the Chair of the firm’s Products Liability group. His practice is also concentrated in property and casualty litigation, construction, insurance coverage, bad faith, auto and uninsured motorist litigation and premises liability. He is a Rule 31 Civil Mediator. Mike is licensed to practice in Tennessee, Kentucky, California, and Missouri.

This blog contains general information about legal matters. The information is not advice, and should not be treated as such. Communication of information by, in, to or through this blog and your receipt or use of it: (1) is not provided in the course of and does not create or constitute an attorney-client relationship; (2) is not intended to convey or constitute legal advice; and (3) is not a substitute for obtaining legal advice from a qualified attorney.

 


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