Fort Wayne Indiana Personal Injury Lawyer and Attorney Blog

Collateral Sources of Payment for Injuries are Not Admissible at Trial

August 30, 2016

Indiana Decision Rules That Collateral Sources of Payment for Injuries are Not Admissible at Trial

For many years, Indiana case law has stipulated that defense counsel can introduce collateral sources of governmental payments on the behalf of injured parties can be introduced to the jury. Essentially, this means that a defendant in an injury case can tell the jury how much any governmental insurer (Medicaid, Medicare, TriCare, etc.) has reimbursed a healthcare provider for its services. Therefore, if a person is in an accident, caused by defendant, and is charged $40,000 by a hospital for care but the person is covered under Medicaid and Medicaid negotiates a payment to the hospital for only $20,000 of the original $40,000, the defendant used to be able to submit evidence of this negotiation and payments made on behalf of the injured person. This was true even if the “reasonable value” of the medical services provided were $40,000. As of November 19, 2015, this rule has changed.

In Patchett v. Lee in the Indiana Court of Appeals, the Court heard arguments on this issue. In the case, Ms. Lee was injured in a wreck that was not her fault. She racked up a high number of medical bills as a result. 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.” HIP paid the balance of Lee’s medical bills but negotiated the bills down to around 25% of the total she was billed for. Lee petitioned the court to preclude the defendant from introducing evidence of the payments made by HIP.  Lee’s motion was granted and the evidence was precluded. The defendant appealed to the Court of Appeals.

The Court argued that the evidence of the negotiated rate is not admissible because the amounts actually paid are not the result of “arms-length negotiation” and that the rate paid by a governmental entity provides no guidance as to the “reasonable value” of the medical services provided. For example, “when a provider treats a Medicaid patient, that provider must accept as payment in full the reimbursement amount set by regulation.” Therefore, there is no negotiation between a private citizen or on the part of a insurance company with the medical provider.