First Quarter 2020


By: Jeanne Hamilton


A Hennessy & Roach, P.C., seven state Liability Group analysis on the question of Collateral Source Issues related to Medical Bills, specifically, what is admissible before the jury?



Defense attorneys were thrilled in 2009 when the Indiana Supreme Court decided the Stanley v. Walker case, 906 N.E.2d 852 (Ind. 2009).  There, the Court first addressed the collateral source rule in personal injury actions, and allowed the defendant to introduce outside evidence of the “reasonable value of the medical services provided”.  This includes allowing the jury to know not only the amount of the billed services but also net amounts accepted by medical providers to determine the “reasonable value”.  However, the exact scope of the Stanley case remained unclear over the course of the following seven (7) years.

In a highly anticipated decision in 2016, the Indiana Supreme Court decided the Patchett v. Lee case, 60 N.E.3d 1025 (Ind. 2016), and extended the Collateral Source Rule to clearly include governmental reductions.  In Patchett, the Court held that evidence of reduced amounts accepted based on governmental programs is admissible as well, including government payments such as the Healthy Indiana Plan (HIP).  Again, this is to show the reasonable value of a plaintiff’s medical expenses. In reversing the Court of Appeals, the Indiana Supreme Court stated, “(w)e think the approach more faithful to Stanley’s holding and rationale is that which allows the factfinder to hear evidence of the reduced amounts a provider accepts as payment in full, even when the payer is a government healthcare program.”  Id. At 1030.  As a result, the Indiana Supreme Court made it clear that a plaintiff in a personal injury lawsuit can introduce evidence of his or her medical bills to recover damages for medical treatment and, in turn, the defendant is then permitted to introduce evidence of the amounts accepted by medical providers after all write-offs, adjustments, insurance payments, and all other information that is relevant to assessing the reasonable value of the services provided, including rates set by governmental programs, so long as it can “be done without referencing the source of the reductions.”  Stanley, supra at 858.   The Patchett Court held, “In Stanley, we held “[t]he collateral source statute does not bar evidence of discounted amounts in order to determine the reasonable value of medical services”, so long as insurance is not referenced. Patchett, at 1029.

Based on these Indiana Supreme Court cases, the jury will be positioned to evaluate all evidence and reach a determination regarding the proper amount of damages to award the plaintiff for his or her alleged medical expenses.  While not specifically addressing Medicare or Medicaid payments, the Patchett decision is typically used as a basis by the trial courts to also allow admission of reduced amounts as “accepted reimbursements from government payers.” Patchett, supra, at 1033.