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Indiana Supreme Court: Collateral Source Statute Does Not Bar Evidence of Discounted Medical Expenses
Posted in Litigation

In Stanley v. Walker, the Indiana Supreme Court held that Indiana’s collateral source statute, Indiana Code section 34-44-1-2, does not prohibit the introduction of evidence regarding the discounted amounts actually paid to medical providers for medical services rendered without reference to insurance. 

Justice Sullivan, writing for a 3-2 majority, observed that when determining a plaintiff’s recovery for medical expenses, the “focus is on the reasonable value, not the actual charge.”  The “actual amount charged to the plaintiff or the amount actually paid by him may tend to prove the reasonable and fair value of the services rendered to him but are not conclusive on the issue.”  The Court also commented that, “based on the realities of health care finance, we are unconvinced that the reasonable value of medical services is necessarily represented by either the amount actually paid or the amount stated in the original medical bill.”

The Court held that the “collateral sources statute does not bar evidence of discounted amounts in order to determine the reasonable value of medical services,” and instructing a jury that statements of charges for such expenses constitutes "prima [facie] evidence that the charges are reasonable and fair" is error.  To the extent a jury is instructed that amounts initially billed by medical providers for medical expenses is evidence of reasonable and fair value, the instruction also should reference the discounted amount actually paid.

Justice Boehm wrote a concurrence, in which Chief Justice Shepard joined, clarifying that while the majority opinion holds that the discounted price actually paid for medical services is admissible as to the reasonable value of those services, it is not conclusive.  “But if we were to choose between the sticker price that most people do not pay and the discounted price that most people do pay, we should hold that the sticker price is to be excluded from evidence as the less realistic evidence of the reasonable value of these services . . . .”

Justice Dickson, joined by Justice Rucker, dissented.  The dissent concluded that “if we authorize consideration of the amount of discounted payments as evidence of the reasonable value of a plaintiff’s medical services, 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.”

Bingham McHale’s Kelly Eskew served as co-counsel for amicus Defense Trial Counsel of Indiana in this case.



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