Stanley v. Walker
2009 Ind. LEXIS 471, 906 N.E.2d 852, 2009 WL 1477496 (2009)
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Rule of Law:
In a personal injury action, evidence of the discounted amount a medical provider accepts as full payment for services is admissible to determine the reasonable value of those medical services, provided the evidence is introduced without referencing insurance.
Facts:
- In 2004, Brandon Stanley and Danny Walker were involved in an automobile accident.
- Due to Stanley's negligence, Walker sustained injuries requiring treatment from eleven different medical providers.
- The medical providers issued initial bills to Walker totaling $11,570.
- Through arrangements between Walker's health insurance company and the medical providers, the total billed amount was discounted by $4,750.
- Walker's medical providers accepted $6,820 from his insurance company as full and final payment for their services.
- Neither Walker nor his insurance company was liable for the $4,750 discounted amount.
Procedural Posture:
- Danny Walker sued Brandon Stanley in an Indiana trial court to recover damages from an auto accident.
- Before trial, Stanley admitted negligence, and the trial proceeded on the issue of damages only.
- At trial, Walker introduced medical bills totaling $11,570; Stanley sought to introduce evidence that only $6,820 was accepted as full payment.
- The trial court sustained Walker's objection, excluding Stanley's evidence of the discounted amount under the collateral source statute.
- The jury returned a general verdict for Walker in the amount of $70,000.
- Stanley, as appellant, appealed to the Indiana Court of Appeals, which affirmed the trial court's judgment.
- Stanley, as appellant, sought transfer to the Supreme Court of Indiana, which the court granted.
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Issue:
Does Indiana's collateral source statute, which prohibits the introduction of evidence of 'insurance benefits,' bar a defendant from introducing evidence of the discounted amounts accepted by medical providers in full satisfaction of their bills to determine the reasonable value of medical services?
Opinions:
Majority - Sullivan, J.
No. Indiana's collateral source statute does not bar evidence of discounted amounts accepted by medical providers, as this evidence is relevant to determining the reasonable value of medical services. The proper measure of damages is the 'reasonable value' of the services, not necessarily the amount billed or the amount paid. Given the complexities of modern healthcare pricing, where billed amounts often do not reflect actual costs, a jury should be able to consider both the original bill and the amount accepted as payment to determine what is reasonable. As long as the defendant introduces the evidence of the discounted amount without mentioning that it resulted from insurance, the collateral source statute is not violated. Therefore, the defendant should have been allowed to present evidence that the providers accepted $6,820 to rebut the plaintiff's prima facie evidence that the reasonable value was the billed amount of $11,570.
Dissenting - Dickson, J.
Yes. The collateral source statute expressly prohibits the admission of evidence of 'insurance benefits for which the plaintiff...paid for directly,' and the negotiated discount is precisely such a benefit. The majority's new rule contravenes the statute's plain language. Furthermore, allowing this evidence is unfair because it presents a misleading and incomplete picture to the jury; it ignores the significant non-cash value providers receive from insurers in exchange for discounts, such as prompt payment and a large volume of business. This decision will unfairly penalize plaintiffs who are prudent enough to carry insurance and will add layers of complexity and expense to personal injury litigation.
Concurring - Boehm, J.
No. The discounted price paid for medical services is highly relevant to determining their reasonable value. In today's market, the 'sticker price' on a medical bill is often meaningless, as the majority of transactions occur at heavily discounted rates negotiated by insurers. These discounted prices, representing what providers are willing to accept from the bulk of their customers, are the most realistic evidence of reasonable value. Excluding this evidence would mean relying on an inflated, unrealistic figure, while admitting it allows the jury to better assess the true market value of the services provided.
Analysis:
This decision significantly alters the landscape of personal injury damages in Indiana by clarifying the application of the collateral source rule in the context of modern health insurance discounts. It rejects the 'billed amount' as the sole measure of damages and instead establishes the 'reasonable value' as a question of fact for the jury. By allowing defendants to introduce evidence of the amount actually paid, the court aims to prevent plaintiffs from recovering 'phantom damages'—the difference between the inflated billed amount and the discounted paid amount. This holding creates a new evidentiary battleground, compelling defendants to seek discovery on discounted payments and plaintiffs to justify why the billed amount represents the reasonable value, potentially leading to more complex trials and lower medical expense awards.
