Opinion ID: 1591333
Heading Depth: 1
Heading Rank: 2

Heading: Recovery of Medical Expenses.

Text: The district court made a pretrial ruling that Pexa's recovery for his past medical expenses would be limited to the amount paid to his health care providers. The court stated, however, that the plaintiff could still introduce evidence of the billed amount because this figure was probative of the extent of his injuries. (Auto Owners had agreed the jury would not be told that Pexa's health insurer and Medicare had paid for his medical care.) In line with the court's pretrial ruling, the jury was instructed that in determining the amount of Pexa's damages, it should consider, among other items, [t]he reasonable value of necessary hospital charges, doctor charges and prescriptions from the date of injury to the present time. It is stipulated that the total amount of these bills is $41,544.34 and that, due to adjustments, the amount the plaintiff may recover for this item is $15,950.39. In addition, the court entered the figure of $15,950.39 on the special verdict form in the blank provided for past medical expense. The plaintiff claims the court erred in limiting his recovery to the amount paid for medical services rendered to him and in instructing the jury accordingly. Whether a plaintiff may recover more than the amount actually paid for medical care is a legal question. Therefore, we review the court's ruling for correction of errors of law. See In re Marriage of Wagner, 604 N.W.2d 605, 608 (Iowa 2000) (reviewing ruling based on legal question for correction of errors of law). We first address the plaintiff's contention that the court's instruction violated Iowa's collateral source rule. The collateral source rule is a common law rule of evidence that bars evidence of compensation received by an injured party from a collateral source. Schonberger v. Roberts, 456 N.W.2d 201, 202 (Iowa 1990). The rule prevents the jury from reducing the tortfeasor's obligation to make full restitution for the injuries caused by the tortfeasor's negligence. Id. Although this rule has been modified by statute, see Iowa Code § 668.14 (1999), it continues to preclude evidence of payments made pursuant to any federal program for an injured person's actual economic losses, see id. § 668.14(1). We do not think this rule is implicated in the present case because the court did not reduce the plaintiff's recovery by the amounts paid by a collateral source; rather, the court limited the plaintiff's recovery to those amounts. A proper calculation of the plaintiff's medical expenses must precede a determination of their recoverability; only the latter issue implicates the collateral source rule. Thus, the pertinent question here is not whether there has been an inappropriate offset to the plaintiff's economic loss, but instead whether the court's rulings and instructions improperly limited the evidence and incorrectly calculated that loss. To answer this question, we must consider the rules governing the measurement and proof of an injured person's medical expenses. [1] An injured plaintiff may recover only the reasonable and necessary costs of medical care. See Stanley v. State, 197 N.W.2d 599, 606 (Iowa 1972). Therefore, the plaintiff has the burden to prove the reasonable value of the services rendered. See id.; Ege v. Born, 212 Iowa 1138, 1153, 236 N.W. 75, 82 (1931). The reasonable value of medical services can be shown by evidence of the amount paid for such services or through the testimony of a qualified expert witness. Stanley, 197 N.W.2d at 606; Arnold v. Ft. Dodge, Des Moines & S. R.R., 186 Iowa 538, 547, 173 N.W. 252, 255 (1919). The amount charged, standing alone, is not evidence of the reasonable and fair value of the services rendered. Stanley, 197 N.W.2d at 606-07; Arnold, 186 Iowa at 547, 173 N.W. at 255. The billed amount is relevant only if that figure was paid or an expert witness has testified to the reasonableness of the charges. Arnold, 186 Iowa at 547, 173 N.W. at 255. We have consistently held that evidence of the amount charged will not, in the absence of proof of the reasonableness of the billed sum, support recovery of medical expenses. Stanley, 197 N.W.2d at 606-07; Ege, 212 Iowa at 1151-52, 236 N.W. at 82; Arnold, 186 Iowa at 547, 173 N.W. at 255. This court has also stated that the jury is not bound by the testimony of an expert with respect to the reasonable value of medical services, but may use and be guided by their own judgment in such matters. Ege, 212 Iowa at 1153, 236 N.W. at 82. With these principles in mind, we conclude the trial court erred in limiting the plaintiff's proof of the reasonable value of his medical expenses to the amount paid to and accepted by the medical providers. Counsel for Auto Owners candidly acknowledged at oral argument that he had agreed to stipulate that a particular witness, if called at trial, would testify that the charges of the hospital and other providers were fair and reasonable. Had such testimony been permitted, the plaintiff would have provided an adequate evidentiary basis for the jury to award the billed charges to compensate Pexa for past medical expenses. We reject the insurer's contention that an injured party's recovery for past medical services should be limited to the amount actually paid for medical services. This position is contrary to the long-standing principle that such damages are measured by the reasonable value of medical services, and the amount paid is but one form of probative evidence on this issue. In addition, this argument fails to account for the possibility that medical charges may be compromised for reasons other than the unreasonableness of the billed amount. Although we conclude the trial court erred, reversal is not required unless the plaintiff was prejudiced by this error. State v. Hartsfield, 681 N.W.2d 626, 633 (Iowa 2004). At first blush, prejudice appears inevitable. Pexa was deprived of the opportunity to have his damages for medical care set at $41,544.34, rather than $15,950.39. Yet had he been awarded this additional sum, the total amount of his compensatory damages would still have been less than $100,000, the amount he had recovered from the tortfeasor. Thus, even under these circumstances, Pexa would not have been entitled to any UIM benefits. Therefore, he was not prejudiced by losing the opportunity to have a greater sum awarded for his medical expenses. The plaintiff asserts another basis for prejudice, however. He claims the trial court, by limiting the amount he could recover for medical expenses, effectively limited the potential for a much greater verdict on other items of damage. His theory is that a plaintiff's medical bills reflect the severity of the plaintiff's injuries. One flaw in this argument is that the relevant fact in the assessment of damages is the reasonable and necessary cost of medical care, which may or may not be the same as the medical bills. See Stanley, 197 N.W.2d at 606. As we discussed above, only when the charged amounts have been paid or an expert testifies they are fair and reasonable do the medical bills take on any probative value. Due to the parties' anticipated stipulation, we can safely assume in this case that had the court not restricted the plaintiff's recovery for past medical care, there would have been expert testimony that the plaintiff's medical bills were fair and reasonable so as to support admission of the bills into evidence. Nonetheless, the jury may not have accepted the charged amounts as the reasonable value of the medical services in view of the fact the medical providers accepted a much smaller sum in satisfaction of those bills. Therefore, had the court properly submitted this issue, the plaintiff would not necessarily have been better off. In fact, we think the instruction given to the jury was actually more supportive of the plaintiff's contention that his medical expenses reflected the severe nature of his injuries than a proper submission of this issue would have been. The jury was instructed the total amount of [the plaintiff's medical] bills is $41,544.34 and that, due to adjustments, the amount the plaintiff may recover for this item is $15,950.39. Thus, the jury was told unequivocally that the plaintiff had medical expenses of $41,544.34. So, the plaintiff could easily have argued that his high medical expenses demonstrated how extensive his injuries were, the precise argument he claims he was deprived of making. Furthermore, the jury was not told the reduced sum the plaintiff was permitted to recover was the amount actually accepted by the health care providers in satisfaction of their charges. Consequently, the plaintiff was not faced with an argument that the amount charged was not the fair and reasonable cost of Pexa's medical care. In other words, Pexa had the advantage of being able to use the bills to support his other claims of damage unchallenged, an advantage he would not have had if the court had properly allowed the jury to determine whether the amount charged was the fair and reasonable value of these services or the smaller sum actually paid. Under these circumstances, Pexa was not prejudiced. Therefore, the trial court's error in limiting the plaintiff's recovery for past medical care does not warrant reversal.