First Quarter 2020
By: Clayton Fielder
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?
In Kansas, the Collateral Source Rule was established through common law and states that payments made to the injured party from other sources are not credited against the tortfeasor’s liability. The Rule was first applied in Kansas in the 1918 case of Berry v. Dewey, 102 Kan. 593, 172 P. 27 (1918). In the Berry case, the Kansas Supreme Court held that the benefits received by a mother following the death of her son could not be deducted from the damages awarded to her in the wrongful death action.
Kansas attempted to modify the Collateral Source Rule legislatively on several different occasions. The legislature passed three separate statutes modifying the Rule in 1976, 1985, and 1988. Each of these statutes were struck down by the Court on constitutional grounds. A fourth attempt at modification was passed by the Senate in 2006 but rejected by the House of Representatives.
In 1996, the Kansas Court of Appeals reviewed the Collateral Source Rule as it applies to medical billing write-offs for the first time in Bates v. Hogg, 22 Kan. App2d 702, 921 P.2d 249 (Kan. Ct. App. 1996). In Bates, the issue was whether the Plaintiff could submit evidence of the total cost of treatment billed to Medicaid, excluding hospital write-offs. The Court held that the Collateral Source Rule did not apply, and that the Plaintiff could not collect more than Medicaid could collect for the medical services rendered. The Court held that the amount charged to Medicaid was the “customary charge” and reasoned that it “would be unconscionable to permit the taxpayers to bear the expense of providing free medical care to a person and then allow that person to recover damages for medical services from a tortfeasor and pocket the windfall.” Id. At 706.
The most recent change to the Collateral Source Rule came in 2010 with the Kansas Supreme Court’s decision in Martinez v. Milburn Enterprises, Inc., 290 Kan. 572, 233 P.3d 205 (2010). In Martinez, the trial court excluded all evidence of the amount the medical providers charged and only allowed evidence of the amount paid by the insurance company to satisfy the medical providers’ bills. This decision was appealed by the Plaintiff. On review, the Kansas Supreme Court held that (1) the Collateral Source Rule does not bar evidence of the amount originally billed by the medical provider or the reduced amount accepted by the provider as long as the collateral source of the payment is not identified; (2) the reasonable value of medical services is a question of fact for the jury to determine; and (3) evidence of both the amount billed and the amount accepted in full satisfaction are relevant to prove the reasonable value of the medical services.