Patchett v. Lee – Collateral Source Rule Weighed

Florida’s collateral source rule, as established in F.S. 768.76, prevents defendants in personal injury lawsuits from presenting evidence that would show a plaintiff received coverage for the injury at issue from a collateral source – such as a health insurance company or workers’ compensation insurance. The thinking goes that defendants shouldn’t catch a break on their liability just because a plaintiff was insured. highway

However, there is one big exception to the collateral source rule in Florida, and that is with regard to payments made by governmental agencies, such as Medicare or Medicaid. The general thinking is that while health or private insurance benefits are earned by a plaintiff with money from their own pockets – and shouldn’t be penalized for taking such initiative – those who obtain federal benefits as a matter of entitlement without actually earning it may not be entitled to the same protection.

In the recent case of Patchett v. Lee, the Indiana Supreme Court reached a similar conclusion. According to court records, the appeals court in this matter previously ruled that government reimbursement rates aren’t accurate reflections of the actual value of a health care service. However, the state supreme court reversed. 

Plaintiff was injured in a crash for which the other driver admitted her negligent driving was the cause. However, the two parties disagreed on damages or, specifically, what was the reasonable value of plaintiff’s medical care.

Both parties agreed that Indiana laws permitted plaintiff to enter into evidence accident-related bills that totaled $88,000, and that was evidence those amounts were reasonable. However, they could not come to an agreement regarding whether defendant could introduce the reduced amount that was actually paid by the government-sponsored health care program – which amounted to a total of $12,000, which fully satisfied the outstanding balance at an 86 percent discount.

Plaintiff moved to prevent jurors from hearing this evidence, arguing that payments made by government insurers weren’t permitted under the state’s collateral sources rule. The court agreed, and also concluded that evidence of this would only serve to confuse the jurors. Although the court granted plaintiff’s motion, it certified an interlocutory appeal for review to the appellate court. The trial court stated that resolution of this issue was critical to the importance in this case – and others – concerning a jury’s determination of damages.

The appellate court affirmed the trial court’s grant of plaintiff’s motion, saying the reimbursed amount was indicative only of market negotiation, but wasn’t probative or reflective of the actual value of services.

Defendant appealed to the state supreme court, which reversed.

The court noted firstly that what is a “reasonable” amount for a health care service for personal injuries can be proved in a number of ways. One of those ways is to present medical bills that reflect charges for certain services. However, if one of the parties contests the reasonable amount of those charges, then there is going to be more to the story.

Common injury law precedent in Indiana held that the collateral source statute wouldn’t prohibit evidence of discounted amounts to determine what is a reasonable amount, so long as insurance isn’t mentioned. Where the trial court went wrong in this case was to assume this only meant that those amounts negotiated between a health insurance company and medical provider applied. For the first time, the court held, amounts paid by government-backed insurance may also be presented to the jury.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Patchett v. Lee, Oct. 21, 2016, Indiana Supreme Court

More Blog Entries:

Schaefer v. Universal Scaffolding – Spoliation of Evidence in Construction Accident Lawsuit, Oct. 24, 2016, Car Accident Miami Lawyer

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