The Reasonable Value of Medical Expenses
April 24, 2009 /24-7PressRelease/ -- When you are injured because of someone else's negligence, you generally have the right to recover reasonable compensation for those injuries from the responsible party. This includes compensation for any medical expenses. According to Indiana law, personal injury plaintiffs may recover the "reasonable value" of the medical services they received. This amount has traditionally been determined by what the healthcare provider charges for its services, not by what you actually pay. Thus, if you received free medical care, you have still been entitled to recover the reasonable value of that care. Injured people in Indiana may soon find out whether this will continue to be how medical bills are looked at by Indiana juries.

Who Pays the Bills?

This is the question many injured plaintiffs ask very soon after an accident -- and this question needs to be answered as soon as possible. The problem is that the answer is not always what you might think. And how it is answered may very well determine what a jury determines what your "medical expenses" are when it is time to calculate your damages.
If someone is injured in an accident that was caused by another, who pays for the injured person's medical expenses? Many people erroneously believe the other party's insurance -- whether homeowner, auto or other -- will pay for their medical bills as they are received. While this seems fair, this is often not true, as the defendant's insurance company will want a written release at the time they pay a settlement. They usually do not accept a "pay as you go" arrangement, so in order to keep doctors happy and collection agencies from calling, an injured party should submit the bills to their own health insurance company. Then, that health insurance company will likely have a right to be paid back out of the final settlement. (There may also be what is known as medical payments coverage as part of the plaintiff's own car insurance policy -- this is often in a small amount and will also need to be paid back at the time of final settlement with the defendant's insurance company.) Billing your health insurance (as well as Medicare and Medicaid) is essential to avoid payment delays and calls from bill collectors, but it also may end up reducing what a jury awards for medical expenses if your case goes to trial.

Ultimately, the burden to pay for medical expenses falls on the injured person. Through legal action, they may be able to recover some of those expenses, but how much may be recovered is currently an issue before the Indiana Supreme Court.

Collateral Source Payments

In order to understand the issue and how the Court will be looking at it, it is necessary to consider what is known as Indiana's "collateral source rule". In determining the reasonable value of medical expenses at trial, certain evidence can be introduced that shows what amount of these expenses may not have come from the plaintiff's pocket. Under Indiana's collateral source statute, defendants in personal injury and wrongful death lawsuits can submit evidence of some collateral source payments -- payments from sources other than the defendant -- to the jury. The jury then can credit these amounts against the plaintiff's medical expenses, reducing the total amount of damages ultimately awarded to the plaintiff.
The purpose of the collateral source rule is to prevent injured people from recovering double compensation or "windfalls" for their injuries. As currently written, the rule permits the following evidence:

- Proof of collateral source payments (not paid for by the plaintiff)
- Proof of any amount of money that the plaintiff may be required to repay as a result of receiving collateral payments (like worker's compensation benefits)
- Proof of the cost to the plaintiff or the plaintiff's family of collateral benefits received by the plaintiff or the plaintiff's family
However, not all types of collateral payments may be presented to the jury. Under IC 34-44-1-2, collateral source payments that are paid for by the plaintiff or the plaintiff's family -- either out of pocket or through taxes -- are inadmissible. These include:
- Life insurance or other death benefit payments
- Insurance benefits paid for by the plaintiff or the plaintiff's family
- Payments made by a state or federal government agency (like Social Security)

Stanley v Walker
The case that may reverse the intended effects of this rule and discourage full compensation for medical bills is Stanley v Walker, which was argued before the Indiana Supreme Court in November of 2008. In this case, Daniel Walker and Brandon Stanley were involved in a car accident. Walker was injured in the accident, requiring over $11,000 worth of medical treatments from various providers. Walker's insurance company negotiated write-offs of some of these charges, lowering the overall amounts that were paid to medical providers by over $4700. (The providers accepted these amounts because of contracts negotiated with Walker's health insurance carrier.)

Under the collateral source rule, the defendant generally is not allowed to bring evidence of any payments made by the plaintiff's insurance company for medical expenses, so long as the plaintiff paid the premiums for the insurance out-of-pocket. In Stanley, the defendant argued that the write-offs were an amount that neither Walker nor his insurance company were required to pay and should be considered in determining the reasonable costs of the plaintiff's medical bills.

Stanley, on the other hand, argued that the write-offs were a benefit of having insurance and should not result in a windfall to the defendant. Both the lower court and the Court of Appeals agreed with Stanley that evidence of the write-offs were a benefit from paying insurance premiums and were inadmissible under Indiana's collateral source statute.
The case has been appealed to the Indiana Supreme Court, but the court has not yet issued an opinion. If the Indiana Supreme Court upholds the Stanley decision, it will be an important victory for plaintiffs in personal injury and wrongful death actions. It will help prevent those responsible for injuring or killing others from profiting from an accident victim's decision to purchase health insurance and help ensure plaintiffs receive the true reasonable value of their medical expenses -- what their doctors charge for them.

About Mitchell Hurst Jacobs & Dick -
Founded in 1981, Mitchell Hurst Jacobs & Dick has a successful record of representing people who have been seriously injured in accidents. We also represent the family members of people who have died in accidents.

If you were the victim of medical malpractice, a trucking accident, construction accident, or any other type of personal injury accident, please contact our Indiana personal injury attorneys today for a free consultation and case evaluation.
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