Opinion ID: 2584655
Heading Depth: 1
Heading Rank: 22

Heading: Kansas Court of Appeals' Decisions

Text: The first Kansas appellate court to consider the question of actual cash payments and medical write-offs was Bates in which a divided Court of Appeals panel considered whether an injured plaintiff could include in his economic damage claim amounts written off by a health care provider under the federal Medicaid program. The two-judge majority concluded that the collateral source rule was inapplicable under the circumstances and agreed further to limit plaintiff's claim to the actual amounts paid. 22 Kan.App.2d at 705, 921 P.2d 249 ([T]he amount allowed by Medicaid becomes the amount due and is the `customary charge' under the circumstances.). The Bates majority also expressed its agreement with the public policy reflected in a federal court decision in a similar North Carolina case, stating 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 tort-feasor and pocket the windfall.' 22 Kan. App.2d at 706, 921 P.2d 249 (quoting Gordon v. Forsyth County Hospital Authority, Inc., 409 F.Supp. 708, 719 (M.D.N.C.1976)). But the Bates majority did nothing to reconcile its result with this court's historical basis for strictly enforcing the collateral source rule. This court criticized that failing in Rose I. 276 Kan. at 545, 78 P.3d 798. Judge Rulon vigorously dissented from the Bates majority view, taking the general position that our state's case law required that a plaintiff recover the reasonable value of medical services regardless of the amount actually paid or written off because of the collateral source rule. Harkening back to our early collateral source jurisprudence, Judge Rulon noted: While the plaintiff can only recover the reasonable value of the medical services provided, there is no requirement in Kansas that it be shown that any amount was actually paid. Were it otherwise, there is no way an injured party could recover damages for services provided gratuitously by family members or charity. Bates, 22 Kan.App.2d at 710, 921 P.2d 249 (citing Lewark v. Parkinson, 73 Kan. 553, 85 P. 601 (1906)). Judge Rulon then observed the concepts of deterrence and accountability inherent in our rule, by stating: The purpose of the collateral source rule is to prevent a wrongdoer from escaping from full liability for the consequences of his or her negligence. 22 Kan. App.2d at 709, 921 P.2d 249 (citing 2 Minzer, Nates, Kimball, Axelrod, and Goldstein, Damages in Tort Actions § 9.60, p. 9-88 [1991]). He then quoted from 22 Am. Jur. 2d, Damages § 566, p. 638 the following passage: Thus, if the basic goal of tort law is only that of compensating plaintiff for his [or her] losses, evidence of these benefits should be admitted to reduce the total damages assessed against the defendant. At the same time, reducing recovery by the amount of the benefits received by the plaintiff would be, according to most courts, granting a `windfall' to the defendant by allowing him [or her] a credit for the reasonable value of those benefits. Such a credit would result in the benefits being effectively directed to the tortfeasor and from the intended partythe injured plaintiff. If there must be a windfall, it is usually considered more just that the injured person should profit, rather than let the wrongdoer be relieved of full responsibility for his [or her] wrongdoing.  (Emphasis added.) Later, the Rose I majority limited the Bates majority holding to cases in which a Medicaid contract mandated the nonrecourse discount. Rose I, 276 Kan. at 545, 78 P.3d 798. But the fact that all members of this court today refuse to adopt either the result or underlying public policy reflected by the Bates majority speaks more pointedly to its failings and the lack of precedential value both it and its progeny should be given in the present discourse. The next Court of Appeals panel to address the issue did so during the period of time between Rose I and the rehearing in Rose II. That panel declared it was not constrained to follow Rose I because the pending rehearing suspended the binding effect of the original decision, and it extended Bates to apply to a private insurance carrier being sued by its own insured under an uninsured motorist clause. Fischer v. Farmers Insurance Company, Inc., No. 90,246, 2005 WL 400404, unpublished opinion filed February 18, 2005. The panel determined it was proceeding with the case based upon the currently effective precedent of Bates and upon our firm belief that the collateral source rule has no place in the determination of the proper measure of damages to be applied to all plaintiffs' economic damages. Op. at . In Fischer, the tortfeasor was not a party to the dispute. The trial court limited Fischer to presenting to the jury only the cash amounts actually paid personally and by her medical insurer. The write-off amounts were excluded from plaintiff's claim. Relying on Bates, the Court of Appeals panel, which included then-Judge, now Justice, Johnson, affirmed. The panel based its decision on its belief that Bates was not principally driven by the fact that a Medicaid contract mandated the write-off at issue. Op. at . The same Court of Appeals judges who comprised the Fischer panel again sat as a panel to decide the next case in our series, Liberty v. Westwood United Super, Inc., No. 89,143, 2005 WL 1006363, unpublished opinion filed April 29, 2005, rev. denied 280 Kan. 983 (2005). Not surprisingly, that panel extended Bates to Medicare write-offs and repeated its declaration of freedom from the Rose I opinion because it was still pending on rehearing. The panel again held that the amount permitted to be charged to Medicare patients was the customary charge for their medical treatment, so a Medicare patient's damages were limited to that amount. More recently, a Court of Appeals panel in Adamson decided that write-offs under a private insurance contract providing personal injury protection to the plaintiff and a self-pay write-off for expenses charged directly to the plaintiff by a health care provider were admissible and should not have been excluded by the trial court under the Bates rationale. Adamson v. Bicknell, 41 Kan. App.2d 958, 207 P.3d 265 (2009), rev. granted March 31, 2010. In Adamson, plaintiff did not challenge the trial court's exclusion of Medicaid write-offs because of Bates but did dispute the issue as to the other write-offs, claiming they had nothing to do with Medicaid. The Adamson panel limited the holding in Bates to Medicaid, agreed with plaintiff, and unanimously reversed the trial court's exclusion of this evidence on the basis of the collateral source rule. Adamson, 41 Kan. App.2d at 971-72, 207 P.3d 265. The Adamson court did not address its sister panel's extension of Bates in Fischer. In summary, the common threads running through three Court of Appeals' decisions ( Bates, Fischer, and Liberty ) are these: (1) plaintiffs are limited to claiming only the cash amounts actually paid personally, their insurance carriers, or federal assistance programs; and (2) a belief that the question in these cases is not the collateral source rule, but the reasonable value of medical care and expenses for the treatment of plaintiff's injuries. As to the first point, this court has rejected it. As to the second, it begs the issue because we are concerned here with what evidence may be elicited at trial on this issue. The collateral source rule has always been a limitation on evidence about the reasonable value of medical service, which limitation is founded on principles of fairness, equity, relevance, deterrence, and accountability for defendants. In effect, these Court of Appeals panels simply answer the question by restating it. This ignores the underlying principles this court has stated for having a collateral source rule. Finally, the more recent Adamson decision conflicts with the other panels' rationale as it concerns write-offs provided directly to a plaintiff or to plaintiff's private medical insurance carrier. In summary, we find little adherence to this court's historical reading of the collateral source rule in the various approaches and rationales taken by the Court of Appeals.