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Justices split on discounted medical expenses

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In a ruling about whether insurance discounts can be used to determine reasonable medical expenses, two Indiana Supreme Court justices say their colleagues have created a new rule that is "incomplete, misleading, and unfair" and will add "layers of complexity, time, and expense to personal injury litigation, impairing the efficient administration of justice."

In its 3-2 decision Wednesday afternoon in Brandon Stanley v. Danny Walker, No. 41S01-0810-CV-539, the majority held that those discounted benefits can be used to determine what's reasonable and actually paid by plaintiffs seeking damages for their injuries. That issue gives the court a chance to catch up with the modern managed health-care world.

Justice Frank Sullivan authored the opinion in the Johnson County case regarding a 2004 vehicle accident in which Danny Walker sustained injuries and ultimately received treatment from 11 different medical providers. He filed a negligence complaint against Brandon Stanley to recover incurred medical expenses, lost wages, and pain and suffering; Stanley admitted negligence before trial and the case proceeded on the damages issue.

The injured plaintiff, Walker, introduced medical bills totaling the original billed amount of $11,570; however he didn't show the $4,750 that was ultimately discounted by an agreement between the medical service providers and Walker's health insurer bringing the medical costs for which he and the insurance company were responsible to $6,820.

Disputing the originally billed amount because of the discounts, Stanley asked the trial court to admit the discounted medical bills totaling $6,820 into evidence, but Walker argued that violated Indiana's collateral source statute, Indiana Code § 34-44-1-2, which prohibits the introduction of "insurance benefits" evidence in personal injury cases. The court agreed and didn't allow the evidence, and the Court of Appeals affirmed in a decision last year that followed a $70,000 general verdict in Walker's favor.

In its ruling, the Indiana Supreme Court majority affirmed the judgment but remanded for the trial court to reduce the damage award by $4,750. The court noted that if Walker will not accept the reduction, he is free to retry the issue of damages before another jury.

Justice Sullivan adopted the approach in the Ohio Supreme Court decision of Robinson v. Bates, 857 N.E.2d 1195, 1200 (Ohio 2006), which held that a jury may determine the reasonable value of medical services is the amount originally billed, the amount accepted as payment, or some amount in between. That state's common law "collateral source rule" wasn't applicable to discounted bills because they weren't payments from a third party to the plaintiff, the court decided.

"We find this to be the fairest approach; to do otherwise would create separate categories of plaintiffs based on the method used to finance medical expenses," Justice Sullivan wrote, noting that parties can also introduce evidence and witnesses to show billed and paid amounts don't represent the reasonable value.

But Justices Brent Dickson and Robert Rucker dissented, saying the majority's holding contravenes the express requirements of Indiana's collateral source statute and is an "unfair and undesirable judicial policy."

With this rule, juries will receive a "distorted, misleading, and incomplete picture unless they are also able to consider the pecuniary value of all the benefits conferred upon health care providers in their symbiotic exchange with medical insurers," Justice Dickson wrote in his 9-page dissent. "... A new level of discovery will be needed to determine and quantify the value to providers. Plaintiffs will be required to expend considerable resources to marshal and present such evidence, thereby prolonging trials. New appellate issues will result.  ...

"This all seems very unnecessary," he wrote.

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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