Opinion ID: 852350
Heading Depth: 1
Heading Rank: 2

Heading: Unfair and Undesirable Judicial Policy

Text: I also oppose the new rule because it is incomplete, misleading, and unfair, and will add layers of complexity, time, and expense to personal injury litigation, impairing the efficient administration of justice. The majority acknowledges that the proper measure of medical expense damages for a personal injury plaintiff is the reasonable value of such expenses but concludes that the complexity currently surrounding the state of health care pricing systems [3] favors giving defendants new tools, namely the evidence of discounted payments for such services, to challenge the plaintiff's evidence of presumptively reasonable medical expenses under Indiana Evidence Rule 413. The new rule fails to take into account, however, that these contractual discounts confer significant benefits upon medical service providers in addition to just the cash received in discounted payments. In exchange for medical services, providers receive not only the insurer's payments, but also the pecuniary value of numerous additional benefits, among which are prompt payment, assured collectability, avoidance of collection costs, increased administrative efficiency, and significant marketing advantages. It is widely recognized that, by agreeing to reduced rates, providers gain significant administrative and marketing advantages, including a large volume of business, rapid payment, ease of collection, and occasionally advance deposits. Lawrence F. Wolper, Health Care Administration: Planning, Implementing, and Managing Organized Delivery Systems 553 (4th ed.2004); see also, e.g., Arnold Birenbaum, Managed Care: Made in America 22 (1997) ([Discounting] guarantees the hospital that a certain number of beds will be occupied.); William O. Cleverley & Andrew E. Cameron, Essentials of Health Care Finance 301 (6th ed.2006) (discounting attracts new blocks of patients); Steven R. Eastaugh, Health Care Finance: Economic Incentives and Productivity Enhancement 97 (2006) (PPOs [preferred provider organizations] have an intuitive appeal as a mechanism for attracting fixed blocks of business.... Taking on PPO patients is analogous to taking credit card business in that you absorb the 3, 6, or 9 percent discounts in hopes of increasing the volume of new users to the hospital.... Generating new sources of revenues and new users of the hospital ... is the desideratum.); Shahram Heshmat, Framework for Market-Based Hospital Pricing Decisions 10 (1993) (In return for obtaining preferred status (which is designed to increase the volume of business), providers make their services more attractive to payers through means such as discounting....); Peter R. Kongstvedt, The Managed Health Care Handbook 32 (4th ed. 2001) ([A] PPO may commit to pay all clean claims submitted by its providers within 15 days of submittal in return for a larger discount from charges.); Rockwell Schulz & Alton C. Johnson, Management of Hospitals and Health Services: Strategic Issues and Performance 40 (2003) (The advantage to the [provider] in joining a PPO is access to more patients while retaining [a fee-for-service payment mechanism].); Paul B. Ginsburg, The Dynamics of Market-Level Change, 22 J. Health Pol. Pol'y & L. 363, 371 (1997) (Managed care plans have pursued a number of strategies, including to take advantage of scale economies in marketing and administration, and to increase market power in relation to both purchasers and providers.); Robert J. Kulak, Preferred Provider Organizations: On the Cutting Edge of Medical Delivery System Change, 2 Benefits Q. 4, 4-5 (1986) (in return for agreeing to provide services at previously negotiated rates, providers can expect an increase in their market share, prompt payment and a reduction of administrative detail). Even the Amicus Defense Trial Counsel of Indiana, which supports the defendant in this case, acknowledges that: Discounted fee arrangements between healthcare providers and insurers are for their mutual benefit. Providers discount from their customary rate for managed care patients for a reasonto be included on a list of preferred network providers from which the managed care plan members are permitted to obtain healthcare without prior approval from the insurance company. Thus, providers bargain for a large panel of patients who are, to some extent, directed to them by the insurance company in exchange for discounting or writing-off their customary rates. The insurance company essentially obtains a bulk discount on medical services for the plan members. The insurers pass their savings onto the plan members in the form of lower premiums, which helps them attract more customers, representing even more potential business for providers. Br. of Amicus Curiae Defense Trial Counsel of Indiana in Supp. of Appellant's Pet. for Transfer at 9-10 (internal citation omitted). As recognized by the Virginia Supreme Court, amounts written off are as much of a benefit for which [the plaintiff] paid consideration as are the actual cash payments made by his health insurance carrier to the health care providers. Acuar v. Letourneau, 260 Va. 180, 531 S.E.2d 316, 322 (2000). The majority acknowledges that other jurisdictions have considered this issue with varying results. Supra at 855. Other observers, however, have more precisely recognized the clear majority view as that which permits injured plaintiffs to claim and recover the full amount of [their] reasonable medical expenses for which [they were] charged, without any reduction for the amounts apparently written off by [their] healthcare providers pursuant to contractually agreed-upon rates with [their] medical insurance carriers. Lopez v. Safeway Stores, Inc., 212 Ariz. 198, 129 P.3d 487, 496 (2006) (emphasis added). Similarly, Professor Dobbs explains, In line with the basic measure of damagesthe reasonable value of the medical services renderedmost courts passing on the issue in recent years have made rulings that permit the plaintiff to prove all of the reasonable medical charges, even though some of those charges were waived by the provider.  [4] 2 Dan B. Dobbs, The Law of Torts § 380, at 132-33 (2001 & supp.2005) (emphasis added). This dominant view comports with the fundamental purpose of the common law collateral source rule: to prevent a tortfeasor from deriving any benefit from compensation or indemnity that an injured party has received from a collateral source. Acuar, 531 S.E.2d at 322. [T]he focal point of the collateral source rule is not whether an injured party has `incurred' certain medical expenses. Rather, it is whether a tort victim has received benefits from a collateral source that cannot be used to reduce the amount of damage owed by a tortfeasor. Id. Thus, if we authorize consideration of the amount of discounted payments as evidence of the reasonable value of a plaintiff's medical services, juries will receive a distorted, misleading, and incomplete picture unless they are also able to consider the pecuniary value of all the benefits conferred upon health care providers in their symbiotic exchange with medical insurers. While today's new rule does not foreclose the admission of such essential evidence, its gathering and presentation will significantly burden both injured plaintiffs and efficient judicial administration. A new level of discovery will be needed to determine and quantify the value to providers. Plaintiffs will be required to expend considerable resources to marshal and present such evidence, thereby prolonging trials. New appellate issues will result. Not the least of these will be the challenge of devising a methodology to implement the majority's caveat that discounted amounts may be introduced only if done without referencing insurance. Supra at 853, 858. Regardless of the technique used, it seems virtually impossible to deceive the common-sense inference of juries that insurance is the source of any discounted amounts paid to satisfy medical care accounts. This all seems very unnecessary. Under today's new rule, the existence and extent of any improvement to the accuracy of verdicts seems overwhelmed by the significant probability of incompleteness, confusion, and resulting unfairness, all further compounded by detrimental effects on the fair and efficient administration of justice. These negative aspects can easily be avoided, without sacrificing fairness and justice, by recognizing that when medical providers agree to accept discounted amounts, the extent of the discount presumably reflects the value of the tangible and intangible benefits the providers receive in return. For these reasons, I favor adherence to the common law collateral source rule, as narrowly modified by Indiana's collateral source statute, both of which were properly applied by the trial court in this case.