NASHVILLE, Tenn. (Legal Newsline) – The Tennessee Supreme Court ruled Nov. 17 that in personal injury cases, “reasonable charges” for medical treatment are what the medical providers charge, not what the insurance company ends up paying.

That differs from a 2014 Tennessee Supreme Court decision in West v. Shelby County Healthcare Corp. that said hospital charges billed to the patient were not “reasonable.”

In its conclusion, the Supreme Court notes: “In sum, we hold that the definition of 'reasonable charges' under the Hospital Lien Act set forth in West v. Shelby County Healthcare Corp... does not apply directly to determinations of 'reasonable medical expenses' in personal injury cases; the West definition of 'reasonable charges' is limited in application to interpretation of the Hospital Lien Act. 

"We also decline to alter existing law in Tennessee regarding the collateral source rule. Consequently, the plaintiffs may submit evidence of Mrs. (Jean) Dedmon’s full, undiscounted medical bills as proof of her 'reasonable medical expenses,' and the defendants are precluded from submitting evidence of discounted rates for medical services accepted by medical providers as a result of Mrs. Dedmon’s insurance.”

These decisions arise from the appeal of a personal injury case. According to the opinion, in 2010, Jean Dedmon was involved in a car accident with an automobile driven by John Cook. Dedmon sustained severe back and neck injuries, incurring hospital and medical charges totaling $52,482.87, the opinion states.

Cook died after the suit was filed, and his representatives Debbie Steelman and Danny T. Cates (collectively, defendants), were substituted.

In 2014, the Tennessee Supreme Court rendered a precedent-setting decision. 

“On Dec. 19, 2014, this court issued its decision in West v. Shelby County Healthcare Corp. ... suffice it to say at this juncture that West held that a hospital’s 'reasonable charges' under Section 29-22-101(a) are the amount the hospital accepts from the patient’s private insurer, not the amount in the medical bills sent to the patient,” the opinion states.

Based on that, the defendants filed a motion in limine to exclude evidence of unreasonable medical charges. They argued that $18,255.42 should be the amount in dispute. They calculated that as the amount paid by the insurance company. 

“They argued that, in comparing the two bills, the full, undiscounted medical bills are unreasonable ‘under the West standard,'" the opinion states.

In March 2015 the trial court agreed with the defendants and excluded evidence of the reduced amount paid by the insurance company. Plaintiff appealed. 

The Tennessee Supreme court also ruled that the “collateral source” rule would remain the law in Tennessee. That rule, as the court’s opinion states, “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.” 

In other words, the reduced amount insurance companies pay to settle hospital bills, for example, should not be considered when considering liability. 

The opinion concluded, “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.” 

The opinion was written by Justice Holly Kirby. Jeffrey S. Bivins, Cornelia A. Clark, Sharon G. Lee and Roger A. Page joined.

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