Court Opinion

ID: 9786695
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:00:43.453054+00
Date Added: 2024-06-11T07:36:47.574983
License: Public Domain

Johnson, J.,
concurring: On the issue of medical care provider discounts, I remain convinced that Bates v. Hogg, 22 Kan. App. 2d 702, 921 P.2d 249, rev. denied 260 Kan. 991 (1996); Fischer v. Farmers Ins. Co., No. 90,246, unpublished opinion filed February 18,2005; and Liberty v. Westwood United Super, Inc., No. 89,143, unpublished opinion filed April 29,2005, rev. denied 280 Kan. 983 (2005), reached the correct result on the questions that are pre*613sented in this case, i.e., whether contractual discounts or write-offs are a collateral source benefit subject to the collateral source rule and how to appropriately measure the reasonable value of medical services. However, if I remain true to my convictions, the trial bench and litigation bar in this state will be placed in the untenable position of not knowing what evidence is legally admissible on the question of economic damages.
The existing precedent, i.e., Bates, Fischer, and Liberty, to which I adhere, would instruct the trial court to admit only the evidence of the amount which the medical care provider had contractually agreed to accept in full satisfaction of the bill for medical services (amount paid). Three of my colleagues would tell the district court that evidence of the amount the provider initially billed (predis-count amount) is admissible and the trial court risks reversal based upon a violation of the collateral source rule if any evidence is admitted on the amount actually paid or the amount of the discounts. The remaining three justices would affirm a trial court’s admission of any relevant evidence of the reasonable value of the medical services, which they believe could include both the pre-discount amount and the amount paid. In effect, the trial court would be told that one justice says only the amount paid, three justices say only the prediscount amount, and three justices say both the prediscount amount and the amount paid. What evidence could a trial judge admit without risking reversal?
I do not discern in my colleagues’ opinions any practical solution to the dilemma this appellate court deadlock would present to the district court upon remand. Therefore, to avoid a calamity of epic proportions, I will fall on the sword of pragmatism. I cast my vote with my colleagues who believe that both the prediscount amount and the amount actually paid are relevant, admissible evidence of damages. However, in a fit of self-pitying martyrdom, I feel entitled to indulge myself by setting forth some selected thoughts on the matter.
I begin by taking issue with Justice Nuss’ characterization of the first opinion in Rose v. Via Christi Health System, Inc., 276 Kan. 539, 78 P.3d 798 (2003). Although I believe the labeling of that opinion as “Rose I” unduly elevates its status, I will follow that *614nomenclature for the sake of simplicity, as well as referring to Justice Nuss’ opinion as the majority and the joint opinion of Chief Justice Davis, Justice Rosen, and Justice Biles as the concurrence.
I am concerned about two possible misconceptions about Rose I. First, the majority’s repeated reference to the Court of Appeals’ decision in Liberty as being “contrary to [the Supreme Court’s] holding in Rose Í” seems to intimate a failure by the Court of Appeals to follow Kansas Supreme Court precedent. See Buchanan v. Overley, 39 Kan. App. 2d 171, 175-76, 178 P.3d 53 (2008) (“[The Court of Appeals] is duty bound to follow Kansas Supreme Court precedent, absent some indication the court is departing from its previous position.”). Second, in its synthesized chronology of recent Kansas law, the majority declares that after Bates, but before Fischer, “Medicare write-offs are covered by the collateral source rule per Rose I.”
With regard to the first concern, the majority fails to mention that both Fischer and Liberty acknowledged the existence of Rose I, but opined that, pursuant to the Supreme Court’s own rules, that decision was not binding precedent on the Court of Appeals at tire time Fischer and Liberty were decided and filed. I believe a review of the chronology of Rose I and Liberty in conjunction with the Supreme Court Rules will confirm that legal conclusion.
Rose I was filed October 31, 2003. Before the mandate was issued on that opinion, the defendant hospital, Via Christi, filed a timely motion for rehearing or modification on November 20, 2003. See Kansas Supreme Court Rule 7.06(a) (2009 Kan. Ct. R. Annot. 60) (motion for rehearing or modification to be filed within 20 days of decision date). The filing of the motion for rehearing or modification stayed the issuance of a mandate in the case, pending the determination of the issues raised in the motion. Rule 7.06(a). The decision was not an effective final order, because the mandate had not issued. Cf. K.S.A. 60-2106(c) (Supreme Court may by rule provide for postdecision motions for rehearing; when under such rule a decision of an appellate court becomes final, such court shall promptly cause transmission of its mandate). The Supreme Court granted the motion for rehearing on January 7, 2004. “If a rehearing is granted, such order suspends the effect of the original de-*615cisión until the matter is decided on rehearing.” Rule 7.06(a) (2009 Kan. Ct. R. Annot. 60). The case was not decided on rehearing until the decision in Rose II was filed on June 3, 2005. Rose v. Via Christi Health System, Inc., 279 Kan. 523, 113 P.3d 241 (2005). To summarize, a mandate was not issued on Rose I; the issuance of such a mandate was stayed, by rule, on November 20, 2003; the legal effect of Rose I was suspended, by rule, on January 7, 2004; and the suspension of Rose Ts legal effect continued for approximately 1 1/2 years, until June 3, 2005.
The Liberty case was set for hearing in the Court of Appeals on February 13, 2004, after the effect of Rose I had been legally suspended. Some 14 months later, when Liberty was filed, the Court of Appeals panel noted that it was “not currently bound by [Rose Z], albeit we have afforded our high court the deference of delaying our decision in the hope that a rehearing decision would be forthcoming. However, we now choose to proceed, based upon Rates.” Liberty, slip op. at 12.
To reiterate, because the legal effect of Rose I remained suspended, that original decision was not binding precedent upon the Court of Appeals (or anyone else for that matter) when Liberty was filed. Indeed, if the Court of Appeals panel had been inclined to follow the rationale of Rose I, it could not have cited to that unmandated opinion for supporting legal authority. Perhaps the publication of the Rose I opinion in our official reports convinces the majority that it had precedential value. Nevertheless, at the time, there was no mandatory holding from the Supreme Court in tire Rose case to which Liberty could be “contrary”; rather, the only legally effective precedent was Rates. Moreover, even if Rose I could have been considered some sort of persuasive authority, the Supreme Court’s uncommon act of granting a rehearing in the case certainly provided “some indication the court is departing from its previous position.” Overley, 39 Kan. App. 2d at 175-76. As time would tell, the Supreme Court did depart from its original decision.
My second concern is with treating Rose I as part of the case law in this state on the issue of medical bill discounts. In my view, Rose I never became the law in Kansas. As the majority notes, when *616the matter was decided on rehearing, the Supreme Court issued the opinion referred to as Rose II. When the sole and only mandate in this case was issued on September 22,2005, it was accompanied by Rose II, not Rose I. As the majority notes, Rose II specifically declined to decide whether medical bill discounts or write-offs are a benefit from a collateral source. 279 Kan. at 534. In other words, to this day, the Supreme Court has not issued a mandate accompanied by an opinion that includes a holding on the medical bill discount issue presented in this case. In my view, Rose I possesses no more legal effect or precedential value than a draft opinion; it is not now nor has it ever been a final order of the Kansas Supreme Court.
To the contrary, Bates, Fischer, and Liberty, represent the case law from Kansas state courts on this issue. Ironically, the Supreme Court declined an opportunity to answer the question it left unanswered in Rose II or to reject the holding in Liberty on this issue when it denied the petition for review in Liberty on the same date that it issued the mandate in Rose II. Although one cannot read anything into a denial of a petition for review, one might ponder why the Supreme Court would let Liberty stand unabated if Rose I was Kansas law and Liberty was “contrary to [the] holding in Rose ir
Turning now to the concurrence, I note that my concurring colleagues are enamored with the fact that the collateral source rule has a “100-year-old history” in this state. With tongue in cheek, I would point out that the rule against perpetuities also has a long history in this state, but such longevity alone does not make the rule against perpetuities applicable to the question presented in this case. Likewise, the contractual write-offs must fit within the definition of a collateral source benefit, regardless of how long the collateral source rule has been applied in this state to insurance benefits that are actually paid, to the medical care provider. I wholeheartedly agree with preserving the century-old collateral source rule in this case by excluding evidence that the health insurer paid $4,689 of the $5,310 bill which was actually paid. I would not, today and for the first time in this state, extend the rule to the phantom portion of the bill designated as discounts or write-offs.
*617Looking at the concurrence’s recitation of the collateral source rule from Wentling v. Medical Anesthesia Services, 237 Kan. 503, 515, 701 P.2d 939 (1985), I note that it states that “ ‘[t]he collateral source rule permits an injured party to recover full compensatory damages.’ ” (Emphasis added.) (Quoting 3 Minzer, Nates, Kimball, Axelrod and Goldstein, Damages in Tort Actions § 17.00, p. 17-5 [1984]). A victim is fully compensated when returned to his or her preinjury status. With respect to medical services, that preinjury status is that the victim owes no medical bill. If judgment is awarded to the plaintiff in an amount that will fully pay the medical bill, i.e., in an amount that the medical care provider has contractually agreed to accept in full settlement of the services provided, the plaintiff is returned to the preinjury status of owing for no medical services and he or she has been fully compensated. Allowing the victim to recover the amount of the contractual write-offs, which were never intended to be paid by anyone, places the plaintiff in a better position after the injury with a pocketful of fictional discount damages. The rationale often given is that it is better to give the plaintiff a windfall than to let a tortfeasor escape full responsibility for his or her wrongful act. That rationale suggests that the unpaid discount damages are actually punitive damages to teach the tortfeasor a lesson, rather than compensatory damages to make the plaintiff whole.
Looking further at the Wentling definition of the collateral source rule, recited by the concurrence, it states that “ ‘[t]he rule also precludes admission of evidence of benefits paid by a collateral source.’ ” (Emphasis added.) Wentling, 237 Kan. at 515 (quoting Damages in Tort Actions § 17.00, p. 17-5). Of course, as noted, the write-offs were not “paid” by Coventry Health Systems (health insurer), the “collateral source” in this instance, or by anyone else. In advance of Martinez’ entering Wesley Medical Center (hospital), Coventry had negotiated the discounts for its own benefit and Wesley had agreed to accept the discounted payments, presumably to qualify as an authorized provider for those persons insured with Coventry. The discounts resulted from a business deal between Coventry and Wesley. There certainly was no gratuity involved.
*618Moreover, the bargained-for benefit concept is illusory. One would presume that Martinez purchased health insurance to assure that she could receive reimbursement of or payment for needed medical services which might be required for any reason, including illnesses, as well as accidents. Health insurance is first-party coverage. It stretches one’s credulity to believe a person purchases health insurance with a view to the size of the discounts that might be collected from a tortfeasor in the event medical services are occasioned by someone else’s negligence. To the contrary, a health insurance purchaser is fiscally motivated by the amounts that will need to be personally paid to the company in premiums; by the amounts that will need to be personally paid to the health care providers in deductibles and copayments; and by the scope of the services covered by the policy, e.g., maternity benefits.
Of course, some of what I set forth here is drawn from Bates, Fischer, and Liberty. The concurrence perceives that the common threads in those three Court of Appeals opinions are: “(1) plaintiffs are limited to claiming only the cash amounts actually paid personally, [by] their insurance carriers, or [by] 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 plaintiffs’ injuries.” Interestingly, the concurrence challenges the efficacy of the first common thread, which is at the heart of the three opinions, with the one-sentence declaration: “As to the first point, this court has rejected it.” Apparently, the concurrence ascribes to the theory that a majority of votes trumps cogent thinking.
With respect to the second “common thread,” the concurrence believes the Court of Appeals decisions begged the question and answered the question by restating it. Apparently, the concurrence does not discern that there are two sides to this coin. On one side, the plaintiff is objecting to admitting evidence of the discounts because the plaintiff characterizes them as collateral source benefits. On the other side, the defendant is objecting to admitting evidence of the prediscount billing amount because it bears no rational relationship to the reasonable value of the provided medical services. The relevance or materiality of the allegedly inflated *619initial billing is a question that exists regardless of the applicability of the collateral source rule.
Perhaps an analogy might be helpful. The assumptions are as follows: (1) a defendant has a liability insurance policy which includes coverage for the cost of defense; (2) the liability insurer has an agreement with a law firm to represent its insureds at the rate of $200 per billable hour, which will be paid by the insurer without any additional billing to the insured; (3) the trial court has determined that the plaintiff is hable to the defendant for certain attorney fees, e.g., as a discovery sanction, and the court directs the defendant to submit evidence of the amount of those fees; and (4) the law firm has prepared a billing statement for the insurer that is calculated on the basis of $1,000 per billable hour, but which then reflects a contractual discount or write-off of $800 per hour, to get to the agreed upon hourly rate of $200. The questions presented are: (1) Whether the defendant will be allowed to submit only the $1,000 per hour billing, excluding any evidence of either the $200-per-hour actual payment or the $800-per-hour discount on the theory that the discount or write-off is a collateral source benefit from the purchase of liability insurance; and (2) whether the plaintiff can successfully object to the introduction of the $l,000-per-hour billing because it is not the appropriate measure of the reasonable value of legal services.
The hypothetical reinforces my contention that the bargained-for benefit approach is unrealistic. The defendant contracted with the liability insurer to have competent legal representation to defend the insured against any lawsuit. In selecting an insurer, the insured might well have considered the amount of premium it would have to pay for the liability coverage and the reputation of the insurer. However, the insured is unconcerned about how much it will cost the insurer to fulfill its policy obligation to provide legal counsel; the insured just wants competent counsel defending the insured. Moreover, it defies imagination to believe that a liability insurance purchaser would contemplate the situation in which a wrongdoer would be reimbursing the cost of defense, and, accordingly, the purchaser would consider the insurer s contract with the law firm and the law firm’s billing policy.
*620Further, tire hypothetical highlights the fallacy of ascribing any significance to a fictional prediscount charge. The law firm knew that it was only going to collect $200 per hour and, therefore, it could have arbitrarily selected any inflated amount it wanted as a prediscount charge, even if it had never collected that rate from any client. If another law firm had chosen to reflect an initial billing closer to reality, say $300 per hour, the insured’s windfall would be significantly reduced based solely on the candor of the “collateral source.” Moreover, the plaintiff could attack the admission of the $l,000-per-hour billing as being unreasonable, even if evidence of the $200-per-hour contract is excluded.
My last comment on the hypothetical is that it supports the notion that people and entities should be free to make their own deals through valid and enforceable contracts, and that when they do so, the contract establishes the value of the goods and services involved. If the law firm feels that the reasonable value of its services is worth more than $200 per hour, it is free to decline to represent the insurance company. If the law firm believes that it must accept the $200 hourly rate in order to attract insurance company clients because other firms are willing to accept that amount, then that simply means that the reasonable value of legal services in that context is $200 per hour. To use another example, if I fist my house for $250,000, but actually get a purchase contract for $200,000, the value of my house is the sale price, not my estimate of what I think the house should be worth.
My final comments address the concurrence’s argument that even introducing evidence of the amount actually paid discriminates against those plaintiffs who are insured and the majority’s response that an uninsured plaintiff might also have a negotiated reduction of the amount billed. I find the concurrence’s argument to be inscrutable and the majority’s response to be incomplete.
The concurrence’s example assumes two plaintiffs have similarly broken legs and are billed $10,000 for the same medical services; one plaintiff is uninsured; and one plaintiff is insured by an insurer which has negotiated a $9,000 write-off, leaving $1,000 to actually be paid. The issue before us is the evidence which can be admitted to establish a specific category of damages, i.e., compensation for *621the plaintiffs economic damages. Yet, the concurrence, utilizing its collective “common sense,” finds disparate treatment for the insured plaintiff based in part on its belief of how a jury would analyze the separate category of noneconomic damages. The concurrence speculates that a jury which does not hear that economic damages were satisfied by $1,000 will award more money to the uninsured plaintiff for pain and suffering. That is akin to saying that a criminal defendant charged with one count of theft is less likely to be convicted of that charge than a defendant who is charged with nine other eximes in addition to the theft charge. While common sense would suggest that it might be true that more charges increase the likelihood of conviction of one of those crimes, legally each count must stand on its own proof. The same should be true of damages in a civil action. Pain and suffering damages should be driven by proof of the extent to which the injuries have caused the plaintiff pain and suffering, separate and apart from the amount of money it took to fix the injuries. Indeed, the broken leg used in the concurrence’s example might well cause considerably more pain and suffering for an extended period of time than some other surgical procedure generating a much higher medical bill. In essence, the concurrence believes that a jury is likely to abdicate its responsibility to determine the amount of each category of damages based solely on the proof applicable to that category. It would have us guard against jury nullification on noneconomic damages by manipulating the admissible evidence of economic damages. As in the criminal analog, that position is legally unsupportable.
Ironically, the concurrence’s example will serve nicely to point out that, within the category of economic damages, it is the uninsured plaintiff who gets the short straw regardless of what evidence we deem to be admissible. As the majority notes, under Kansas Administrative Regulations, an insurer is precluded from issuing a policy in this State that allows it to be reimbursed for the portion of die medical bill that the insurer pays. Therefore, if the insured plaintiff obtains judgment for $10,000 in medical services, he or she pockets all but the amount of deductible and copayment the insured personally paid. That would result in a windfall of over $9,000. Even if the insured plaintiff obtains judgment for only the *622$1,000 that was actually paid for medical services, he or she still pockets the portion of the $1,000 paid by the health insurer.
In contrast, I know of nothing that prohibits the hospital from collecting its bill out of an uninsured plaintiff s judgment. Therefore, even though the uninsured plaintiff might recover the entire initial hospital billing of $10,000 from the tortfeasor, that plaintiff still owes the $10,000 hospital bill and will pocket nothing.
Additionally, a rather significant factor absent from the concurrence’s hypothetical is any provision for the payment of the plaintiff s attorney fees. Presuming a 40% contingent fee arrangement, the uninsured plaintiff would actually net $6,000, less expenses. However, the uninsured plaintiff still owes a $10,000 hospital bill, of which $4,000 must be paid with personal funds unless he or she can personally negotiate a discount with the hospital. In contrast, so long as the insurer’s portion of the $1,000 actually paid for the insured plaintiff exceeds 40%, that insured still pockets money after paying his or her contingent attorney fees.
In other words, an insured plaintiff will always be in a better cash position than an uninsured plaintiff with respect to the economic damages. I can accept that circumstance with respect to the amounts that the insurer actually paid for medical services under the oft-stated theory that a person should reap the rewards of his or her prudence and foresight in purchasing insurance. However, in reality, the ability to be insured is seldom a function of prudence and foresight, but rather it depends too often on fortuitous circumstances, such as favorable employment or affluence acquired via family-provided opportunities. In that regard, I would note that the concurrence’s hypothetical omits a significant segment of our citizemy. Some persons, e.g., farmers or small businesspersons, are unable to afford to purchase health insurance from a blue-ribbon company that has the clout to extract huge discounts. The tradeoff for affordable premiums is that the health insurance policy has higher deductibles and copayments and the amount of services for which the insurance will pay is reduced. Therefore, the windfall for those who are underinsured will be less than the windfall for those fortunate enough to be fully insured. I can find no justification for exacerbating the difference in pocket money between *623the most fortunate and the least fortunate among us by allowing the recovery of unpaid discounts.
Nevertheless, as a practical matter, I feel compelled to hold my nose and join with the result reached in Justice Nuss’ opinion.
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