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Dedmon: The Destiny of “Reasonable” Medical Expenses in Tennessee.

Currently pending before the Tennessee Supreme Court is a case that could change the face of personal-injury litigation in the state. Accepted for review on October 24, 2016, Dedmon v. Steelman asks whether the amount billed by a medical provider, the amount ultimately paid (by a patient or a patient’s insurance company), or some combination of the two constitutes the “reasonable” medical expenses that the patient may recover in a lawsuit against someone who injured her. The answer has tremendous implications for the valuation of personal-injury cases, the prospect of pre-trial settlement, and the kinds of proof that may be introduced at trial.

A little over two years ago, the Tennessee Supreme Court held in West v. Shelby County Healthcare Corp. that undiscounted medical bills were “unreasonable” when a hospital had accepted discounted payments from insurance companies in full satisfaction of the bills. The hospital had sought to recoup the full, undiscounted bills from insureds’ tort recoveries under the Tennessee Hospital Lien Act. Seven months ago, the Tennessee Court of Appeals, relying on West, held in Dedmon that personal-injury plaintiffs may prove the full amount of their medical expenses, before any insurance discounts, but that defendants may “offer proof contradicting the reasonableness of [those] expenses.

The issue had reached the Court of Appeals via interlocutory review of an evidentiary motion. The plaintiffs in Dedmon, who were injured in a car accident, submitted expert testimony from a treating physician to the effect that their medical expenses were “appropriate, reasonable, and necessary.” The defendants responded by filing a motion to exclude that evidence, stating the following:

The Supreme Court in West . . . clearly stated that the reasonable medical expenses are defined as that which the medical provider accepts from medical insurance, as a matter of law. Therefore, the Plaintiff should not be allowed to introduce proof of any medical expense in excess of the amount accepted by her medical providers as payment in full.

The trial court sided with the defendants and granted their motion, but the Court of Appeals reversed that decision.  The Court of Appeals agreed that, under West, medical expenses in excess of the amount accepted by a plaintiff’s medical providers were “unreasonable.” But, noting considerable discord among trial courts about West’s reach, the Court of Appeals observed that the West court expressly addressed “which version of the [hospital’s] costs is the reasonable cost for the purposes of [the Hospital Lien Act]” (alteration and emphasis in original). Thus, the Court of Appeals held, West only defined reasonable medical charges for the purposes of the Hospital Lien Act.” Special Judge Joe Riley wrote separately to make plain that, “[w]ere it not for existing case law which [the Court of Appeals was] bound to follow as an intermediate appellate court, [he] would apply the West rationale to personal injury litigation.

This past October, the Tennessee Supreme Court took up the charge. The court has not yet scheduled oral argument in Dedmon, and briefing is not yet complete. Consequently, several months may elapse before the court rules. Meanwhile, however, parties on both sides of the issue will be watching closely. What is the destiny of “reasonable” medical expenses in Tennessee? Dedmon will tell the tale.

 

— This blog is co-authored by Gadson William (Will) Perry and Michael C. McLaren

Will Perry

Michael McLaren