Dedmon: The Destiny ...

Dedmon: The Destiny Of “Reasonable” Medical Expenses In Tennessee Part II

May 22, 2017 | by Gadson William Perry

In Tennessee, personal-injury plaintiffs may recover as damages the reasonable and necessary costs of the medical treatment that they received for their proven injuries.  Until recently, a plaintiff’s ability to prove a reasonable medical expense turned entirely on whether the amount of a given bill was consistent with the amount customarily charged in the relevant medical community.  Thus, the discounted amount often paid by a plaintiff’s insurer to satisfy that bill was inadmissible at trial.  See, e.g., Frye v. Kennedy, 991 S.W.2d 754, 764 (Tenn. Ct. App. 1998) (denying defendant’s request to limit plaintiff’s alleged medical damages to amount actually paid by Medicaid).

As we explained in January (see here), however, this traditional approach has been redefined over the past two years, largely due to efforts to limit the measure of a plaintiff’s recovery to the amount actually paid by an insurer.  Last summer, the Tennessee Court of Appeals addressed the issue in Dedmon v. Steelman, a personal-injury, car accident case. Squarely presented in Dedmon was 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 a patient may recover in a lawsuit against someone who injured her.  The Court of Appeals rejected the Dedmon defendants’ attempt to preclude the plaintiffs from offering at trial their undiscounted medical bills as damages, holding that plaintiffs may prove the full amount of their medical expenses, before any insurance discounts, through expert testimony. The court also held, however, that defendants may “offer proof contradicting the reasonableness of the medical expenses” so long as such proof does “not run afoul of the collateral source rule.”

In reaching this result, the court note that “[d]amages in personal injury cases are not measured by ‘fixed rules of law’ but rest[] largely in the discretion of the trier of fact.” Under the court’s “hybrid approach,” juries will consider evidence of both the amount charged by a plaintiff’s medical provider and the amount paid by her insurer in assessing the reasonableness of a claimed medical expense.

The issue is now before the Tennessee Supreme Court, which accepted Dedmon for review last October.  Although the case currently remains pending, briefing is complete, and oral arguments were heard last month.

Meanwhile, several federal district courts have weighed in, reaching varying results and furthering the split among Tennessee trial courts. In Boettcher v. Shelter Mutual Insurance Company (see here[1])—decided before the Tennessee Supreme Court accepted review of Dedmon—the United States District Court for the Western District of Tennessee concluded that, under Dedmon, Tennessee law did not preclude a plaintiff from presenting undiscounted medical bills to the jury in a personal injury case.  In Johnson v. Trans-Carriers, Incorporated (see here[2])––decided after the Tennessee Supreme Court took up Dedmon—another judge on the same court reached a different result.  There, the court held that “necessary and reasonable” medical expenses were the amounts actually paid by the plaintiff’s insurance company and concluded that the Tennessee Supreme Court was likely to reach the same conclusion.

A third federal district court in Cone v. Hankook Tire Company (see here[3])— – decided on January 25, 2017—echoed Johnson, again holding that a plaintiff’s reasonable and necessary medical expenses are the “amounts actually paid by the insurer  . . . , not the non-discounted amounts billed.”  And, like the Johnson court, the Cone court opined that, “upon review of the Dedmon decision, the Tennessee Supreme Court is likely to hold that an injured plaintiff’s non-discounted medical bills do not represent necessary and reasonable medical expenses in personal injury actions.”

As these decisions reflect, the destiny of reasonable medical expenses in Tennessee remains uncertain as the state high court deliberates.  Because the amount of money that is actually paid to satisfy a medical bill is often significantly less than the amount billed, the court’s ruling significantly could impact the scope of recoverable damages in personal injury cases.  Lawyers and litigants alike await the outcome.