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Clearing the Smokescreen: Evidence of Medical Bills Where the Underlying Accident was Covered by Workers' Compensation Insurance

October 18, 2016 BY Whitney Lay Greene

In Georgia, a personal injury plaintiff is entitled to recover all “reasonable and necessary” medical expenses arising from his or her injury. MCG Health, Inc. v. Knight, 325 Ga. App. 349 (2013).  However, questions often arise when a Plaintiff seeks to use the “retail cost” for services rendered by a physician as evidence of medical expenses, when the amount actually paid for the services is far less than the “retail cost.” It is well settled that a defendant in a personal injury claim cannot introduce evidence that an entity other than plaintiff (usually insurance) paid for the plaintiff’s medical treatment. See Kelly v. Purcell, 301 Ga. App. 88 (2009). This rule, known as the “collateral source rule,” is intended to prevent a defendant from mitigating its liability or benefitting from the fact that a plaintiff happened to have health insurance. Id. For the same reason, a defendant is also generally barred from introducing evidence that the actual cost of the treatment received by plaintiff was less than the “retail cost” based on a contractual agreement (between the insurance company and the plaintiff’s provider) that the provider would accept a lower rate.

However, an issue arises when the plaintiff’s underlying accident was work-related and his medical expenses were paid by the workers’ compensation carrier. Unlike a case involving a contractual agreement between a provider and an insurance company, the costs for medical treatment in a workers’ compensation claim are set by law, pursuant to a fee schedule issued by the State Board of Workers’ Compensation. As such, it is illegal for providers to charge more than the fee schedule allows. Order on Motions In Limine, Vontressa Dennis v. D&F Equipment Sales, Inc., No. 7:14-CV-132 (HL), ECF No. 56 p. 6 (S.D. Ga. July 11, 2016) (hereinafter “Order”).   

In a current case pending before the Valdosta Division of the United States District Court for the Middle District of Georgia, the defendant filed a Motion in Limine arguing that the plaintiff should only be permitted to present evidence of the amount of medical expenses actually paid by the employer’s workers’ compensation carrier, instead of the medical treatment provider’s “retail rates”. Defendant’s Motion in Limine, Vontressa Dennis v. D&F Equipment Sales, Inc., No. 7:14-CV-132 (HL), ECF No. 52 p. 6 (S.D. Ga. July 11, 2016 – Judge Hugh Lawson) (hereinafter “Motion”).    

First, the defendant argued that a plaintiff was only entitled to the reasonable and necessary expenses arising from the injury, and that the “retail rates” for services did not accurately reflect the plaintiff’s reasonable and necessary expenses. Id.  For example, if a provider publishes a $1,000,000.00  rate, but the provider is bound by law to provide the service for $75.00, then the $1,000,000.00 rate could not be necessary because the plaintiff received medical services for an amount lower that the published rate. Id. Likewise, the “retail rate” could not be reasonable if the provider is prohibited by law from charging that rate. Id.  

Second, the defendant argued that the plaintiff was only entitled to recovery for injuries actually sustained, in order to put her in the position she would have been in without the injury. Id.; See, Home Insurance Co. v. North River Insurance Co., 192 Ga. App. 551 (1989); MCI Communications Services, Inc. v. CMES, Inc. 291 Ga. 461 (2012). As such, the appropriate measure of the plaintiff’s medical expenses (and the amount required to make her “whole”) were the actual expenses paid by the workers’ compensation carrier, not the inflated “retail rates.” Id.

In response, the plaintiff argued that evidence of the Board’s fee schedule would violate the collateral source rule, and that the fee schedule was inapplicable because the on-going suit was against a third-party, not the plaintiff’s employer. Order at 6.  The judge concluded that the plaintiff was only entitled to recover her “reasonable and necessary” medical expenses, which were the expenses actually paid by her employer for medical treatment, not the “retail rates.” Id. at 6-7. The judge did not address the defendant’s alternative arguments. However, the judge noted that the defendant was prohibited from mentioning that the expenses were paid by the employer pursuant to the “collateral source rule,” and was prohibited from stating that the bills had been reduced from the “retail rates.” Id. Accordingly, the judge held that it was up to the parties to determine how to present evidence of the amount of plaintiff’s medical expenses without revealing that they were paid by another party. Id. at 7.

This ruling presents a prime opportunity for defendants in certain personal injury cases to attempt to reduce the amount of medical expenses presented to the jury at trial. It also serves as (at least limited) validation for the lament of multitudes of defense attorneys across the country that the “retail rates” for medical services do not accurately reflect the “reasonable and necessary costs” of medical treatment because virtually no person or entity actually pays the “retail rate.” Allowing a plaintiff to recover for medical expenses which were not actually sustained amounts to a windfall for the plaintiff which goes above and beyond the proscribed goal of damages—to make the plaintiff whole.

Obviously, the above case represents only a single ruling by one trial court judge, and it is not binding precedent.  However, the Order is well-reasoned and may provide persuasive support in other cases.  

Also, questions remain regarding whether, and how far, this ruling can be extended in the context of presenting “reasonable and necessary” medical expenses at trial. For example, one possible extension is in the context of cases where Medicare pays for the plaintiff’s medical treatment. Only time will tell whether this ruling represents a temporary aberration, or marks a new trend regarding what evidence of medical expenses can be presented at trial.  Regardless, Judge Lawson’s Order provides valuable support for this type of argument in future cases.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley