BROWN, Judge.
In this interlocutory appeal, Mary K. Patchett: appeals the trial court's order granting a motion in limine filed by Ashley N. Lee, and ordering that evidence of payments made by the Healthy Indiana Plan ("HIP") to reimburse Lee's medical providers in full satisfaction of Lee's hospital bills, was barred by the collateral source statute, Ind.Code § 34-44-1-2, and is not admissible under Indiana caselaw. Patched raises one issue, which we revise and restate as whether the court abused its discretion in ruling that such evidence was inadmissible. We affirm.
On July 5, 2012, Lee was operating her motor vehicle in Noblesville, Indiana, when Patched negligently operated her vehicle into the opposing lane and crashed into Lee. Lee sustained "disfiguring and permanent injuries, including, but not limited to, multiple orthopedic injuries, fractures, including a fracture of the right calcaneus, and contusions." Appellant's Appendix at 18. Lee was billed a total of $87,706.36 for the treatment of her injuries by medical providers. At the time of the accident, Lee was a member of HIP, which was a "program sponsored by the state of Indiana that provided a more affordable healthcare choice to thousands of otherwise uninsured individuals throughout Indiana" in which "[p]articipants are required to make monthly contributions toward coverage." Id. at 55. HIP paid Lee's medical providers a total of $12,051.48 in full satisfaction of her medical bills.
On May 2, 2013, Lee filed a complaint for damages against Patchett, Patchett admitted negligence and conceded that most of the medical services provided to Lee were necessary, and the court scheduled the matter for a jury trial on damages. On September 11, 2014, Lee filed a motion in limine regarding the HIP payments, seeking to prevent Patchett from "eliciting testimony concerning or introducing evidence regarding" those payments. Id. at 40. Patchett filed her objection to the motion on September 22, 2014, and the court held a pretrial conference on September 24, 2014, and addressed Lee's motion.
On October 16, 2014, the court issued the order from which this appeal arises and which made findings consistent with the foregoing, stating in relevant part:
Id. at 10, 13-14.
On November 14, 2014, Patchett filed a Motion for Reconsideration or Alternative Request for Certification of Order in Limine for Interlocutory Appeal, and on December 5, 2014, the court issued an order certifying its October 15 Order for interlocutory appeal. On January 30, 2015, this court granted Patchett's request to accept jurisdiction under Ind. Appellate Rule 14(B)(1).
The issue is whether the trial court abused its discretion in ruling that evidence of the amount HIP paid to reimburse Lee's medical providers was inadmissible under the collateral source statute and caselaw. Evidentiary rulings such as in this case lie within the discretion of the trial court, and we may reverse such decisions only if a trial court abuses its discretion. State Auto. Ins. Co. v. DMY Realty Co., LLP, 977 N.E.2d 411, 422 (Ind.Ct. App.2012). "A trial court abuses its discretion if its decision clearly contravenes the logic and effect of the facts and circumstances or if the trial court has misinterpreted the law." Wagler v. West Boggs Sewer Dist., Inc., 980 N.E.2d 363, 383 (Ind.Ct.App.2012), reh'g denied, trans. denied, cert. denied, ___ U.S. ___, 134 S.Ct. 952, 187 L.Ed.2d 786 (2014).
The parties agree that both the collateral source statute and the Indiana Supreme Court's 2009 decision in Stanley v.
The collateral source statute, codified at Ind.Code § 34-44-1-2, provides:
In Stanley, Danny Walker sustained injuries in an automobile accident when he collided with a vehicle operated by Brandon Stanley, in which Stanley was at fault for the accident. 906 N.E.2d at 853-854. Walker's medical providers billed him a total of $11,570, but his health insurer negotiated a discount with his providers totaling $4,750, and the medical providers accepted payment from the insurer of $6,820 in satisfaction of Walker's medical bills. Id. at 854. Walker filed a complaint against Stanley for his injuries, Stanley admitted negligence for the accident, and the case proceeded on the issue of damages. Id. at 853-854. At trial, Walker introduced his bills showing the amounts medical service providers originally billed him totaling $11,570, and, at the close of Walker's testimony, Stanley sought to admit Walker's discounted medical bills and made an offer of proof. Id. at 854. Walker objected on grounds that evidence of the discounted bills violated the collateral source statute, and the trial court sustained the objection, ruling that the discounts constituted insurance benefits paid for by Walker and "insurance and `anything flowing from the insurance benefit purchased by the plaintiff. . . .' would thus be prohibited under the collateral source statute." Id. (footnote omitted). The jury returned a $70,000 general verdict in favor of Walker. Id.
The Court first considered the collateral source statute "and its common law predecessor, the `collateral source' rule." Id. It observed that:
Id. (quoting Shirley v. Russell, 663 N.E.2d 532, 534 (Ind.1996) (quoting Shirley v. Russell, 69 F.3d 839, 842 (7th Cir.1995))). It noted that "[t]he Legislature abrogated the common law collateral source rule by enacting the collateral source statute," which allows for "evidence of collateral source payments . . . except for specified exceptions." Id. at 855. The Court stated that
Id.
With this in mind, the Court turned to the issue presented, observing that an injured plaintiff "is entitled to recover damages for medical expenses that were both necessary and reasonable" and that the question presented was "how to determine the reasonable value of medical services when an injured plaintiff's medical treatment is paid from a collateral source at a discounted rate." Id. (citing Cook v. Whitsell-Sherman, 796 N.E.2d 271, 277 (Ind.2003)). It identified three different approaches other jurisdictions have used to analyze whether to allow such evidence. Some states "apply the collateral source rule to negotiated discounts on the plaintiff's medical care for which the plaintiff paid consideration." Id. Two states have held that such medical discounts were a collateral source "but that they were compelled to set off the collateral source amount against an award of compensatory damages under their respective state statutes." Id. Finally, "[i]n another approach, the Ohio Supreme Court has allowed both the amount paid and the amount billed into evidence to prove the reasonable value of medical services." Id. at 855-856 (citing Robinson v. Bates, 112 Ohio St.3d 17, 857 N.E.2d 1195, 1200 (2006) (holding that the jury may determine that the reasonable value of medical services is the amount originally billed, the amount accepted as payment, or some amount in between)).
The Court next turned to Ind. Evidence Rule 413, which provides one method for proving the reasonable value of medical expenses and states: "[s]tatements of charges for medical, hospital or other health care expenses for diagnosis or treatment occasioned by an injury are admissible into evidence. Such statements shall constitute prima facie evidence that the charges are reasonable." Id. at 856 (quoting Evid.R 413). The Court then discussed its previous statements in Cook and observed that although "medical bills can be introduced to prove the amount of medical expenses when there is no substantial issue that the medical expenses are reasonable. . . . in cases where the reasonable value of medical services is disputed, the method outlined in Rule 413 is not the end of the story." Id. (citing Cook, 796 N.E.2d at 277-278). After examining statements from prior cases, the Court declared:
Id. at 856-857 (internal citations omitted).
The Court also discussed the policy issues involved, in which "[t]he complexities of health care pricing structures make it difficult to determine whether the amount paid, the amount billed, or an amount in between represents the reasonable value of medical services." Id. at 857. Citing to a law review article, the Court observed that although "hospitals historically billed insured and uninsured patients similarly," after "the advent of managed care, some insurers began demanding deep discounts, and hospitals shifted costs to less influential patients." Id. (citing Mark A. Hall & Carl E. Schneider, Patients As Consumers: Courts, Contracts, and the New Medical Marketplace, 106 MICH. L.Rev. 643, 663 (2008)). The Court further observed that "insurers generally pay about forty cents per dollar of billed charges and that hospitals accept such amounts in full satisfaction of the billed charges." Id. (citing Hall & Schneider, supra, at 663). Citing to another authority, the Court also noted that "the relationship between charges and costs is `tenuous at best,'" and accordingly, "based on the realities of health care finance, we are unconvinced that the reasonable value of medical services is necessarily represented by either the amount actually paid or the amount stated in the original medical bill." Id.
Following its policy discussion, the Court returned to the question of how to determine the reasonable value of medical services at a damages hearing in a personal injury lawsuit, and it adopted the Ohio "hybrid" approach, specifically the declaration from the Ohio Supreme Court that, "[t]he jury may decide that the reasonable value of medical care is the amount originally billed, the amount the medical provider accepted as payment, or some amount in between. . . ." Id. (quoting Robinson, 857 N.E.2d at 1200-1201). According to the Ohio court, "[b]ecause no one pays the negotiated reduction, admitting evidence of [discounts] does not violate the purpose behind the collateral-source rule," and accordingly "both values were relevant evidence that should be submitted to a jury to determine the reasonable value of medical services." Id. (quoting Robinson 857 N.E.2d at 1200). The Court, while recognizing "that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number of factors—not just the reasonable value of the medical services," held that nevertheless "this evidence is of value in the fact-finding process leading to the determination of the reasonable value of medical services," that "[t]he collateral source statute does not bar evidence of discounted amounts in order to determine the reasonable value of medical services," and that "[t]o the extent the adjustments or accepted charges for medical services may be introduced into evidence without referencing insurance, they are allowed." Id. at 858.
Justice Dickson authored a dissent in Stanley which began by stating that "this new rule contravenes the express requirements of the collateral source statute. . . and is also unfair and undesirable judicial policy." Id. at 860.
Turning to the parties' arguments, Patchett's position is that "although Stanley involved contractual discounts imposed by a private insurer, its reasoning and its language apply with equal force to all types of discounted payments which fully satisfy a medical provider's charges, including discounted payments from a state or other governmental authority," and "[i]t is not the source of the discount which determines the admissibility or relevancy of this evidence, but the fact that the medical provider was willing to accept the discounted payment in full satisfaction of its charges." Appellant's Brief at 8. Patchett points out that Stanley specifically stated "that the discount of a particular provider generally arises out of a contractual relationship with health insurers
Lee begins her argument by noting that "it is undisputed that for well over a century . . . the measure of damages for medical services in a common law tort action is the `reasonable value' of those services." Appellee's Brief at 8. She argues that "[t]he instant case is distinguished from Stanley in that HIP is not a private, individual, or group health insurance plan, and [] there is no evidence that Lee's medical providers accepted payments that were `discounted' or that resulted from negotiation as contemplated by Stanley." Id. at 9. She states that HIP "was a publicly-funded plan that paid providers based on Medicare and Medicaid rates" as established by an act of the General Assembly. Id. (citing Ind.Code § 12-15-44.2-14(a)). She points out that payments under HIP are not negotiated and rather are "dictated by the State of Indiana, based on federal Medicare reimbursement guidelines," which are "established under Congressional authority." Id. at 10.
Lee also argues that Patchett's reliance on Butler is misplaced because that case concerned a wrongful death action and thus "was decided not in a common law dispute, such as the instant case, but instead in the framework of two statutory schemes—the Indiana Medical Malpractice Act and the Indiana Adult Wrongful Death Act," for which damage calculation is different and is concerned with the "estate's `reasonable expenses.'" Id. at 12-14. She argues that the trial court correctly ruled that "Stanley stands for the proposition that evidence of negotiated discounts between providers and insurers may be helpful in determining the `reasonable value' of medical services." Id. at 15. Her position is that the court also acted within its discretion when it ruled, independently, that evidence of the HIP payments be excluded under Ind. Evidence Rule 403 because such evidence would confuse the jury as to how the amounts should be considered.
The Indiana Trial Lawyers Association ("ITLA") filed an amicus brief arguing that Medicaid reimbursement rates used by HIP are not relevant to the issue of "reasonable value" because they are not negotiated "and medical providers are
We first turn to the text of the collateral source statute. As noted, the trial court found that the HIP payments are inadmissible under Ind.Code § 34-44-1-2(1)(C), which precludes the admission into evidence of "payments made by: . . . (ii) any agency, instrumentality, or subdivision of the state or the United States; that have been made before trial to a plaintiff as compensation for the loss or injury for which the action is brought." The trial court observed that neither the pleadings nor the arguments contended that this exception does not apply, and moreover, Patchett does not directly challenge its application on appeal. Indeed, the lone reference Patchett makes to this subparagraph is in her reply brief where she states that "[a]s Stanley permits the defendant to challenge the reasonableness of the plaintiff's medical charges by showing that those bills were fully satisfied by a discounted payment, it necessarily resolves Lee's related arguments that the trial court had discretion to exclude this evidence" under Ind.Code § 34-44-1-2(1)(C)(ii). Appellant's Reply Brief at 10-11. Thus, Patchett does not challenge the applicability of Ind.Code § 34-44-1-2(1)(C)(ii) but instead suggests that Stanley is equally applicable to that subparagraph.
Also, the parties do not dispute that Lee was a member of HIP, which functioned as her health insurer, and that she made monthly contributions towards coverage. See also Ind.Code § 12-15-44.2-11 (Supp.2011) (governing an enrollee's payment amounts, which started at $160 per year). Ind.Code § 34-44-1-2(1)(B) provides that evidence of "insurance benefits that the plaintiff or members of the plaintiff's family have paid for directly" are inadmissible under the collateral source statute.
Regardless of whether Subparagraph (B) or (C) is the relevant provision of the collateral source statute applicable here matters not, however, because we find that the rule in Stanley does not apply to these facts. Again, Stanley essentially ruled that "[g]iven the current state of the health care pricing system" in which "a medical provider's billed charges do not equate to cost," evidence of "discounted amounts" may be introduced in order to assist in determining the reasonable value of medical services so long as no reference to insurance is made in admitting those discounted amounts, and that such evidence does not violate the collateral source statute. 906 N.E.2d at 858. Accordingly, to the extent that Ind.Code § 34-44-1-2(1)(B) provides that evidence of "insurance benefits that the plaintiff or members of the plaintiff's family have paid for directly" are inadmissible, merely admitting the discounted amount does not violate the statute. Id.
The policy underlying the rule in Stanley breaks down, though, when the amounts actually paid are not the result of arms-length negotiation. The trial court made this observation in its order, noting that here, the reimbursement rate provides no guidance to the jury in determining "the `reasonable value' of the medical service provided." Appellant's Appendix at 13. Counsel for ITTA at oral argument articulated the assumption in Stanley that the "discounted amounts" are a result of negotiation as follows:
Oral Arg. at 32:45-33:38, available at https://mycourts.in.gov/arguments/default.aspx?&id=1852&view=detail&yr=&when=&page=1&court=app&search =&direction=ÄSC&future=False&sort=&judge=&county=&admin=False&page Size=20.
After considering the relevant language in Stanley, we arrive at the same conclusion as the trial court. The Stanley Court began its discussion of whether to admit collateral source evidence by identifying different approaches jurisdictions have used, and at the outset observed that some states "apply the collateral source rule to negotiated discounts on the plaintiff's medical care for which the plaintiff paid consideration" and that "[t]wo state courts have held that the medical discounts were a collateral source, but that they were compelled to set off the collateral source amount . . . under their respective state statutes." 906 N.E.2d at 855 (emphases added). The emphasized language demonstrates that, indeed, the rule in Stanley is premised on the principle that the discounted amounts must be the product of negotiation. Further, the Court later quoted from Robinson, which discussed the "hybrid" approach adopted by the Court and similarly contemplated negotiated discounts where it stated that "[b]ecause no one pays the negotiated reduction, admitting evidence of [discounts] does not violate the purpose behind the collateral-source rule." Id. at 857 (quoting Robinson 857 N.E.2d at 1200) (emphasis added). The Court stated that, based thereon, "both values were relevant evidence that should be submitted to a jury to determine the reasonable value of medical services." Id.
There are other statements in Stanley that support this conclusion. The policy discussion focused on private insurers that "began demanding deep discounts," noting that "insurers generally pay about forty cents per dollar of billed charges and that hospitals accept such amounts in full satisfaction of the billed charges." Id. The HIP payments, by contrast, constituted 13.7 percent of the original amount billed to Lee for her medical treatment. Justice Boehm in his concurrence wrote that he believed the discounted amounts are relevant "because they reflect the amounts that the providers are willing to accept for their services." Id. at 859 (emphasis added). We further find that even the description of the lower amount as "discounted amounts" contemplates arms-length negotiations. We therefore determine that the rule of Stanley applies only to lower paid amounts when those amounts are the result of negotiated discounts and therefore are probative of a medical service's reasonable value.
Lee and ITTA both cite to authority in their briefs for the proposition that the HIP payments are premised on political decisions and are not the product of
The Court in Stanley reaffirmed that a successful plaintiff in a personal injury suit is entitled to the reasonable value of that person's medical expenses, and it held that evidence of "discounted amounts" arrived at as the result of negotiation between the provider and an insurer are probative in determining reasonable value and should be admitted. Here, because the HIP payments were not calculated based upon market negotiation but instead were set by government regulation, such amounts are not probative of the reasonable value of the medical expenses. Thus, we conclude that the trial court properly excluded the evidence of the HIP payment amounts.
To the extent that Patchett argues that Butler v. Ind. Dep't of Ins. demonstrated the Indiana Supreme Court's intent to make all discounted payments admissible regardless of source, we note that the Court in that case held that "under the statute governing actions for the wrongful death of unmarried persons with no dependents. . . the amount recoverable for reasonable medical and hospital expenses necessitated by the alleged wrongful conduct
The estate in Butler emphasized "the statutory language referring to `reasonable' expenses and the open-ended phrase `but are not limited to,'" and the Court observed caselaw holding "that in common law tort actions Indiana has long recognized that a plaintiff may recover the reasonable value of medical services, regardless of whether the plaintiff is personally liable for them or whether they were rendered gratuitously" and that "the extent of recovery by an injured plaintiff for medical expenses depends not upon what the plaintiff paid for such services but rather their reasonable value." Id. at 201-202. The Court proceeded to note that the facts in that case do "not present a common law claim but rather arise [] as a statutory cause of action that the common law did not recognize" and that it must construe such statutory provisions narrowly, holding that under Indiana's Adult Wrongful Death Act,
Id. at 202-203.
We find the facts and reasoning in Butler to be distinguishable, and we do not believe that the Court's mere reference to the collateral source statute in a footnote and the pending Stanley decision has an impact on the outcome of this case.
Finally, even if evidence of the HIP payment amounts are admissible under the collateral source statute and Stanley, such would not preclude the court, in its discretion, from excluding said amounts under Ind. Evidence Rule 403, which states that "[t]he court may exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, or needlessly presenting cumulative evidence." "A trial court decision regarding whether any particular evidence
For the foregoing reasons, we affirm the trial court's order granting Lee's motion in limine.
Affirmed.
RILEY, J., and ALTICE, J., concur.