What Makes a Plaintiff Whole ? Patchett v . Lee ’ s Impact on Medical Special Valuation
By : Katie R . Osborne , Attorney
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One of the purposes of tort law is to “ make injured parties whole .” This is typically accomplished when a person whose negligent conduct caused injury to another party compensates the injured party for his injury . Understanding the Indiana Courts ’ treatment of the method by which parties may introduce evidence of damages is necessary to adequately assess the value of a personal injury claim . The process by which defendants may introduce evidence for purposes of calculating the reasonable value of a plaintiff ’ s medical treatment was recently clarified by the Indiana Supreme Court in Patchett v . Lee , 60 N . E . 3d 1025 ( Ind . 2016 ).
The factual circumstances in Patchett are relatively common : a motor vehicle collision gave rise to a personal injury claim wherein the parties agreed that the defendant ’ s negligent operation of a motor vehicle caused plaintiff to suffer injuries , but the parties disagreed as to the reasonable value of those injuries . The parties were unable to resolve the dispute informally and proceeded with litigation so that a neutral third party – a jury – could examine the evidence and determine the value of plaintiff ’ s claim .
Prior to trial , the parties agreed that plaintiff was permitted , pursuant to Indiana Rule of Evidence 413 , to introduce her related medical bills as prima facie evidence of the reasonable value of her medical expenses . Accordingly , the plaintiff introduced her medical bills , totaling $ 87,706.36 , as evidence of the value of her treatment . However , an issue arose when the defendant sought to introduce evidence demonstrating that plaintiff ’ s medical providers accepted $ 12,051.48 as payment in full . Whether the accepted amount could be introduced as evidence was imperative for the defendant given the potential impact the $ 75,654.88 discount could have on the jury ’ s damages assessment .
Understanding the bases of the parties ’ arguments requires an understanding of Indiana ’ s collateral-source statute , Ind . Code § 34-44-1-et seq . ( 2010 ), and the Indiana Supreme Court ’ s opinion in Stanley v . Walker , 906 N . E . 2d 852 ( Ind . 2009 ). Indiana ’ s collateral-source statute bars , subject to specific exceptions , the introduction of evidence showing that a plaintiff received compensation from non-party “ collateral ” sources . In Stanley , the Indiana Supreme Court held that the collateral-source statute did not bar the introduction of reduced amounts paid by a private insurer as evidence
of the value of plaintiff ’ s medical treatment , so long as the introducing party did not reference the source of the payment .
The Patchett plaintiff claimed that the reasoning of Stanley did not apply because the prices paid by government programs were not bargained for in arms-length transactions , unlike the prices for private insurers . Thus , plaintiff claimed the collateral-source statute barred introduction of the reduced payments as evidence of the reasonable value of plaintiff ’ s medical treatment . The trial court agreed with plaintiff , prohibiting the introduction of the reduced payments into evidence . In November 2015 , the Court of Appeals affirmed the trial court ’ s decision , inciting questions as to the broader implications of this decision and the disparate treatment of claims brought by privately-insured versus governmentprogram plaintiffs .
In October of this year , the Indiana Supreme Court reversed the Court of Appeals and held that Stanley applies uniformly to reduced payments made by private insurance companies and government payers . The Court explained that the proper focus of the inquiry was the medical provider ’ s acceptance of the reduced amount for payment rather than the source of the payment . The Court believes this was the “ fairest approach ” and touted its trust in the jury ’ s ability to fully consider all aspects of a claim before assigning it a reasonable value .
The Patchett decision created a clear , uniform approach to the damages evidentiary process , but the concurring opinion left the door open for future challenges . Of the five Indiana Supreme Court Justices , two concurred with the majority ’ s conclusion that the Stanley reasoning allowed introduction of payments made by government payers as well as private insurers , but also noted their belief that the Stanley decision was wrongfully decided . The concurring justices expressed willingness , if asked directly , to reconsider and overturn Stanley , after which the collateral source doctrine would bar the introduction of any evidence whatsoever of payments by any nonparty , including both private insurers and government health programs . While a two-justice concurrence is not a majority , it will be important to stay tuned for future legislative and judicial developments , as plaintiffs may see this as an invitation to challenge the existing analysis .
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