We have now received the long-awaited decision from the Tennessee Supreme Court in Dedmon v. Steelman. The Court declined to extend the holding in West v. Shelby County Health Care Corp. to personal injury cases. West held that “reasonable charges” for medical services under Tennessee’s Hospital Lien Act are the discounted amounts a hospital acccepts as full payment from patients’ private insurers, not the full, undiscounted amounts billed to patients. The Dedmon Court found the West decision was limited to Tennessee’s Hospital Lien Act and did not apply in personal injury cases. The Court also declined to alter existing law in Tennessee regarding the collateral source rule. Consequently, plaintiffs in Tennessee can continue to submit undiscounted medical bills as proof of “reasonable medical charges” and defendants are precluded from submitting evidence of discounted rates for medical services accepted by medical providers. Defendants can continue to submit other “competent evidence” to rebut Plaintiff’s proof on the reasonableness of medical expenses so long as defendants’ proof does not contravene the collateral source rule.
In this 45-page opinion, Justice Kirby provides a comprehensive review of the collateral source rule and the evidentiary rules that apply to medical damages in the context of a personal injury case. The historical rationale for the collateral source rule is that the insurance proceeds emanate from an agreement between the plaintiff and the insurer, wholly “collateral” to the defendant, so the defendant should not benefit from the plaintiff’s receipt of proceeds “with which he has no concern.” The evidentiary component of the collateral source rule, according to the Court, flows from this rationale. If plaintiff’s recovery may not be reduced by collateral benefits, then evidence that a plaintiff received benefits or payments from a collateral source independent of the tortfeasor’s procuration or contribution must be excluded. As a result, the collateral source rule excludes evidence that some or all of plaintiff’s medical bills were paid by (1) an insurance policy, whether maintained by the plaintiff or third party, (2) employment benefits, either gratuitous or arising out of contract, (3) gratuities and/or (4) social legislation benefits, such as social security benefits, welfare and pensions.
If you have any questions or concerns regarding the impact of this weighty decision on current or future cases, please do not hesitate to contact our firm at 615-256-8787.