Dedmon v. Steelman

• Decision Date: 17 November 2017
• Docket Number: No. W2015-01462-SC-R11-CV,W2015-01462-SC-R11-CV
• Citation: 535 S.W.3d 431
• Parties: Jean DEDMON v. Debbie STEELMAN et al.
• Court: Tennessee Supreme Court

535 S.W.3d 431

Jean DEDMON

v.Debbie STEELMAN et al.

No. W2015-01462-SC-R11-CV

Supreme Court of Tennessee, AT JACKSON.

April 5, 2017 Session

FILED November 17, 2017

Melanie M. Stewart, Memphis, Tennessee, for the appellants, Debbie Steelman, and Danny T. Cates, Sr., as co-personal representatives of the Estate of John T. Cook, deceased.

Glenn K. Vines, Mark N. Geller, Kevin N. Graham, and Jason J. Yasinsky, Memphis, Tennessee, for the appellee, Jean Dedmon.

Bradford D. Box and Adam P. Nelson, Jackson, Tennessee, for the Amicus Curiae, the Tennessee Defense Lawyers Association.

W. Bryan Smith, Memphis, Tennessee; John Vail, Washington, D.C.; and Brian G. Brooks, Greenbrier, Arkansas, for the Amicus Curiae, Tennessee Trial Lawyers Association.

Holly Kirby, J., delivered the opinion of the Court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G. Lee, and Roger A. Page, JJ., joined.

Holly Kirby, J.

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.

FACTUAL AND PROCEDURAL BACKGROUND

The relevant facts in this appeal are undisputed. In February 2010, Plaintiff/Appellee Jean Dedmon was involved in an automobile accident with John T. Cook. Mrs. Dedmon was seriously injured in the accident. Mrs. Dedmon and her husband, Fred Dedmon (collectively, "Plaintiffs"), filed this lawsuit against Mr. Cook, alleging that his negligence caused Mrs. Dedmon to suffer severe and permanent injuries and to incur past and future medical expenses. The complaint itemized Mrs. Dedmon's medical bills from sixteen different medical providers, which totaled $52,482.87. The bills were attached to the complaint.

After the complaint was filed, Mr. Cook died. In September 2013, the Plaintiffs filed an amended complaint substituting Mr. Cook's personal representatives, Debbie Steelman and Danny T. Cates (collectively, "Defendants"), for Mr. Cook.¹

Meanwhile, in March 2013, the Plaintiffs deposed one of Mrs. Dedmon's treating physicians, neurosurgeon Vaughn Allen, M.D. Dr. Allen treated Mrs. Dedmon between April 2010 and September 2012, and in September 2010, he performed neck surgery on her.² In his deposition, Dr. Allen testified that all of Mrs. Dedmon's medical bills, including those from his own clinic and those from Mrs. Dedmon's other medical providers (hospitals, physical therapists, radiologists, etc.), were reasonable and necessary to a reasonable degree of medical certainty. Dr. Allen's deposition was filed in the trial court, and the medical bills were attached as exhibits.³

On December 19, 2014, this Court issued its decision in West v. Shelby County Healthcare Corp. , 459 S.W.3d 33 (Tenn. 2014). West interpreted Tennessee's Hospital Lien Act (HLA), Tennessee Code Annotated sections 29-22-101 to -107 (2012). We will discuss West in more detail below, but 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. West , 459 S.W.3d at 46. In the course of its analysis, the West Court commented that the amount of the full, undiscounted charges billed to the patient is "unreasonable" as compared to the amount of the discounted bills paid by the insurer. Id. at 44. The undiscounted bills sent to the patient, the West opinion stated, do "not 'reflect what is [actually] being paid in the market place.' Because 'virtually no public or private insurer actually pays the full charges[,] ... [a] more realistic standard is what insurers actually pay and what hospitals [are] willing to accept.' " Id. at 45 (quoting What's the Cost?: Proposals to Provide Consumers with Better Information about Healthcare Service Costs: Hearing Before the Subcomm. on Health of the House Comm. on Energy and Commerce , 109th Cong. 99 (2006) (statement of Dr. Gerard Anderson, Professor, Bloomberg School of Public Health & School of Medicine at Johns Hopkins University; Director, Johns Hopkins Center for Hospital Finance and Management)).

Prompted by the holding in West , the Defendants in the instant case filed a "Motion in Limine to Exclude Evidence of Unreasonable Medical Charges."⁴ Citing West , they argued that evidence of Mrs. Dedmon's full, undiscounted medical bills must be excluded because the amounts of those bills are, as a matter of law, unreasonable. The Defendants asserted that West 's pronouncements on hospital bills "set[ ] forth a new standard in Tennessee, as a matter of law." According to the Defendants' calculations, Mrs. Dedmon's health insurer paid only $18,255.42 to satisfy Mrs. Dedmon's medical bills. As a result, they argued, the full charges reflected in Mrs. Dedmon's medical bills are irrelevant and should be excluded on that basis.

The Defendants also took the position in their motion that "[t]he collateral source rule does not apply to [the] issue" of whether the discounted amounts paid by Mrs. Dedmon's insurance company are admissible. They insisted that "evidence of payment of the medical expenses by medical insurance will not be used to show that the medical expenses have been paid in an attempt to mitigate the damages. Rather, the evidence would be used to show whether the charges are reasonable, as defined by the Supreme Court." We interpret the Defendants' position in the motion in limine as arguing that the amount paid by Mrs. Dedmon's insurance company should be submitted into evidence instead of the undiscounted medical bills sent to the patient. Under the Defendants' reasoning, there is purportedly no need to mention the fact that the discounted amounts resulted from Mrs. Dedmon's insurance contract, so the collateral source rule would not be violated.

In addition to the motion in limine , the Defendants filed a "Notice of Intent to Rebut Presumption Pursuant to T.C.A. § 24-5-113." See Tenn. Code Ann. § 24-5-113(b)(2). The notice, like the motion in limine , was based solely on the Defendants' interpretation of West . The Defendants argued that, if the full, undiscounted medical bills are admitted into evidence, then the discounted amounts accepted by the medical provider should be admissible to rebut the Plaintiffs' expert testimony that the undiscounted charges are reasonable. They argued that, in comparing the two bills, the full, undiscounted medical bills are unreasonable "under the West standard."

In March 2015, the trial court conducted a hearing on the Defendants' motion in limine . The trial court agreed with the Defendants that, based on West , Mrs. Dedmon's full, undiscounted medical bills are irrelevant to the question of her reasonable medical expenses and that the discounted amounts paid by Mrs. Dedmon's insurer constituted her reasonable medical expenses as a matter of law. Accordingly, it granted the motion in limine and excluded evidence of Mrs. Dedmon's full, undiscounted medical bills. The trial court commented that it interpreted West as having advanced a policy of not allowing "the subterfuge that the medical community uses with regard to insurance and expenses to sully the court system." The trial court added that it could not "imagine that [this Court] would use any other logic in this situation than they used in [the hospital lien statute] situation."

Mrs. Dedmon sought permission for an interlocutory appeal from the trial court's order. Permission was granted by both the trial court and the Court of Appeals. See Tenn. R. App. P. 9.

The Court of Appeals reversed. See Dedmon v. Steelman , No. W2015-01462-COA-R9-CV, 2016 WL 3219070, at *11 (Tenn. Ct. App. June 2, 2016), perm. app. granted (Tenn. Oct. 21, 2016). Citing limiting language in West , the appellate court concluded...