A recent Tennessee Supreme Court decision (Jean Dedmon v. Debbie Steelman, et al.) made clear that a plaintiff’s lawyer can introduce hospital, doctor, and other medical bills based on the initial amount the medical care provider charged, and not the discounted amount an insurance company paid. The difference is critical because many juries, judges, and arbitrators base the amount of pain and suffering victims have on the dollar amount of their medical bills. Additionally, the lower amount also means insurance companies pay less than what is really owed – thus hurting the medical provider.
Confusion about which bills (the original bills or the discounted bills) could be introduced in personal injury cases began with another Tennessee case, West v. Shelby County Healthcare Corporation. In that case, the hospital sought to obtain a lien against a patient who had not paid the hospital for medical services. A lien is essentially a security interest in a person’s property to ensure that a debt is paid.
Medical providers normally contract with insurance companies to pay a discounted price. They do this because they know the insurance companies have the money. Collecting from patients directly requires a lot of legal work. Getting the insurance company to pay saves the hospital expensive collection costs.
The West decision held that the hospital could only obtain a lien for the discounted amount – the amount hospitals routinely accept from insurance companies. The Supreme Court based their decision on their interpretation of Tennessee’s lien laws.
Insurance companies then tried to use the West decision to limit the amount of medical claims submitted in personal injury cases to the discounted amount.
- A lower trial court agreed with the insurance company that only the discounted amount could be introduced.
- The Tennessee Court of Appeals reversed the lower court and held that only the higher original medical bill could be introduced (whether the injured plaintiff had insurance or not). It did, however, say that the defense could introduce the discounted bills to show the original higher bills were not reasonable.
- The Tennessee Supreme Court agreed with the Tennessee Court of Appeals by ruling that the higher rate should be introduced AND that the insurance company could NOT introduce the discounted rate – even to show the insurance bill was unreasonable.
The Supreme Court also denied an effort by insurance companies to argue that medical services should be reviewed based on the fair market value of the services – a backdoor way of arguing that just the discounted rates should be introduced. The Supreme Court rejected the fair market value approach. It held that if the defendant did not pay the plaintiff’s medical bills, the discounted amount cannot be used. Additionally, the Supreme Court ruled, the defendant cannot mention that a plaintiff has insurance because it might prejudice the jury into thinking the plaintiff was already compensated for their injuries.
At the Rocky McElhaney Law Firm, our personal injuries contest every attempt by insurance companies to deny your claim or to reduce the amount of damages that you are due. Our Gladiators in Suits fight to get accident victims and the families of deceased victims every dollar they deserve. To talk with a truck accident lawyer in Nashville, Hendersonville, or Knoxville, please call us at 615-425-2500 or complete our contact form to make an appointment. We represent plaintiffs on a contingency fee basis.