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A few days ago, the Tennessee Court of Appeals filed its opinion in the case of Jean Dedmon vs. Debbie Steelman, et al., No. W2015-01462-COA-R9-CV, and took what appears to be the next step in changing the way Tennessee courts will determine the amount of medical expenses a plaintiff can recover in personal injury cases.

Historically, in Tennessee, an injured plaintiff has been able to seek recovery of the full, non-discounted amount of their medical bills regardless of what is actually paid to or written off by the medical provider if there was expert testimony that the bills were "reasonable."

For example, assume a plaintiff is injured in a motor vehicle accident with defendant driver. The plaintiff incurs $50,000 in bills for medical treatment, and the plaintiff's doctor testified these bills were "reasonable." Also assume that because of the contracts between the medical providers and insurance carriers in which the insurance carrier had negotiated substantial discounts, the hospital agreed only to be paid a fraction of the total bill, say $12,000, and write off the rest. Under the traditional rule, the plaintiff could seek to recover the full $50,000 in medical bills and could potentially receive a $38,000 windfall.

This type of result occurred due to the operation of the Collateral Source Rule, which prohibits a defendant from providing evidence of payments or benefits a plaintiff receives from a collateral or outside source to reduce their own liability. The judge or jury deciding the case never hears information about how much of the bill was paid, or by whom - the plaintiff of the plaintiff's medical insurer.

Using the example above, the jury would only hear that the plaintiff incurred $50,000 in medical bills. The jury would not hear that the bills were paid by the plaintiff's medical insurer, or that the insurer only paid $12,000 and that the remaining $38,000 in charges were written off.

In recent years, lawyers and the courts have been looking at this issue from another angle and began questioning how to determine the "reasonable" amount of medical expenses, which is what is recoverable. The first case to potentially alter the traditional rule was West vs. Shelby County Healthcare Corporation, 459 S.W.3d 33 (Tenn. 2014). In West, the Tennessee Supreme Court addressed the reasonableness of medical expenses in cases involving the Tennessee hospital lien statutes. The Court held that the full, non-discounted amount of medical bills ($50,000 in the example discussed above) are never actually paid and that the "reasonable" amount of medical bills is the reduced amount that a medical provider accepts ($12,000 in our example). Since the court in West was addressing a hospital lien case, there has been some question as to whether the reasoning in West would apply in a personal injury cases.

In Dedmon vs. Debbie Steelman, et al., No. W2015-01462-COA-R9-CV, the Tennessee Court of Appeals declined to extend the holding in the West opinion to personal injury cases and held that according to existing Tennessee Supreme Court precedent, the medical expenses that may be recovered in a personal injury case are the full amount of the medical bills and are not reduced by the discounts accepted by the medical provider.

In Dedmon, the defendant, relying on the West opinion, filed a motion to exclude evidence of unreasonable medical charges and argued that the amounts the medical providers accepted in satisfaction of the bills should be deemed the "reasonable" amount of medical expenses. The plaintiff argued that the testimony reflected that the full amount of the medical expenses were reasonable, that the West opinion did not apply to personal injury cases, and that to hold otherwise would violate established law and the collateral source rule. The trial court granted the defendant's motion and excluded the plaintiff's physician's testimony as to the reasonableness of the full amount of the medical bills. The trial court indicated that based on its review of the West opinion, it believed the Tennessee Supreme Court would follow West in a personal injury case.

The Court of Appeals sided with the plaintiff and reversed and remanded the trial court's ruling. The Court of Appeals determined that the West opinion was limited to hospital lien cases and it rejected "any assertion that the Supreme Court meant for its holding in West, standing alone, to control all determinations of reasonableness with regard to medical expenses under Tennessee law." The Court of Appeals also stated that while the Tennessee Supreme Court may extend West to personal injury cases, the Court of Appeals could not do so and had to follow the law as it presently exists, which is that "a plaintiff may present the testimony of a physician who testifies that the amount of medical expenses billed or charged to a plaintiff was reasonable." The Court of Appeals urged the Tennessee Supreme Court to review the case and settle this question.

Judge Joe Riley filed a concurring opinion in Dedmon in which he stated that if the Tennessee Court of Appeals were not bound by existing case law, he would apply the rationale in West to personal injury cases. Judge Riley wrote, "non-discounted charges have become more fictional than actual" and "non-discounted charges are no longer the reasonable medical expenses." Judge Riley also stated that the rationale in West does not violate the collateral source rule. According to Judge Riley, since the full amount of the medical bills is never actually paid and neither the insurer nor the injured party is ever liable for the full amount, the plaintiff is not actually receiving a benefit from a collateral source in the full amount of the charges. Therefore, evidence of the reduced amount should not be barred.

Ultimately, it is likely that the Tennessee Supreme Court will address this issue. Potential outcomes include: (1) keeping the traditional rule - the defendant may not introduce evidence of insurance payments, so evidence of the discounted amount of medical expenses is barred; (2) a defendant may introduce evidence of the discounted amount, but cannot show that they were paid by a collateral source, such as insurance, and the judge or jury decides what amount is reasonable under all the circumstances; or (3) the plaintiff cannot introduce anything more than the discounted amount plus any payments actually made by the plaintiff or any amounts for which the plaintiff is actually responsible.

However, for now, a plaintiff may still seek to recover the full, non-discounted amount of their medical bills in personal injury cases.

The full opinion in Jean Dedmon vs. Debbie Steelman, et al. and Judge Riley's concurring opinion may be found at:

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