On November 17, 2017, the Tennessee Supreme Court delivered its long awaited opinion in Dedmon v. Steelman, holding that personal injury plaintiffs may submit evidence of the injured party’s full, undiscounted medical bills as proof of reasonable medical expenses and that defendants are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut the plaintiffs’ proof that the undiscounted charges are reasonable. In addition to rejecting the argument that a plaintiff's recovery should be limited to the discounted amounts accepted by medical providers, the Court rejected the argument that introducing evidence of the actual amount paid does not violate the collateral source rule:
[T]he Defendants argue that the actual amount paid approach is not contrary to the collateral source rule because it does not involve evidence of payments from a collateral source. They note that, under this approach, plaintiffs are still permitted to introduce evidence of all medical expenses actually incurred by them or paid on their behalf, without indicating who made the payments. The negotiated rate differential is not a collateral-source benefit to the plaintiff, they insist, because it benefits only the plaintiff’s insurance company. We disagree.
The Court's summary of its holding follows:
We granted this appeal to address whether our holding in West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), applies in personal injury cases. We hold that it does not. West held that “reasonable charges” for medical services under Tennessee’s Hospital Lien Act, Tennessee Code Annotated sections 29-22-101 to –107 (2012), are the discounted amounts a hospital accepts as full payment from patients’ private insurers, not the full, undiscounted amounts billed to patients. West, 459 S.W.3d at 46. West defined “reasonable charges” in the context of interpreting the Hospital Lien Act, and its holding is limited to that Act. As an alternative argument, we are asked in this appeal to consider applying the principles in West to the determination of reasonable medical expenses in personal injury cases. Doing so involves the collateral source rule, which excludes evidence of benefits to the plaintiff from sources collateral to the tortfeasor and precludes the reduction of the plaintiff’s damage award by such collateral payments. The rule is based on the principles that tortfeasors should be responsible for all of the harm they cause and that payments from collateral sources intended to benefit an injured party should not be used to reduce the liability of the party who inflicted the injury. After a thorough review of court decisions in Tennessee and across the country on the collateral source rule, we decline to alter existing law in Tennessee. 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 decision of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded to the trial court for further proceedings.
The full opinion is available at this link: Dedmon v. Steelman
Dan Berexa
Nashville, Tennessee
