Summary
The Alaska Supreme Court held that a personal-injury plaintiff may introduce full, undiscounted medical bills as evidence of the reasonable value of medical services, even when Medicare paid less than the amounts billed. The court ruled that the negotiated rate differential is a collateral-source benefit, so evidence of the amounts actually paid is generally excluded from the jury and may instead be addressed through post-verdict proceedings under AS 09.17.070. The court reversed and remanded the superior court’s order excluding the undiscounted bills.
Topics
Practice areas
Questions Presented
- Whether undiscounted medical bills remain relevant and admissible evidence of the reasonable value of medical services when providers accept a lesser amount from Medicare as payment in full.
- Whether the difference between the amounts billed and the amounts paid constitutes a collateral-source benefit subject to Alaska's collateral-source rule and post-verdict reduction procedure.
- Whether a defendant may introduce evidence of amounts actually paid to rebut the reasonableness of undiscounted medical bills.
Holdings
- Undiscounted medical bills are generally admissible as relevant evidence of the reasonable value of medical services, even when providers accept a lesser payment from Medicare as payment in full.
- The difference between the amounts billed by medical providers and the amounts accepted as payment in full is a benefit to the injured party from a collateral source and is subject to the collateral-source rule.
- A defendant may not introduce evidence of amounts actually paid when offered to rebut the reasonableness of undiscounted medical bills because doing so would undermine the collateral-source rule, but may present other competent, non-collateral-source evidence.
- To the extent the negotiated rate differential is a collateral benefit for which the collateral source has no right of subrogation by law or contract, it is subject to the post-verdict procedure in AS 09.17.070.
Key quotations
“We conclude that the amounts billed by the providers are relevant evidence of the medical services' reasonable value. We further conclude that the difference between the amounts billed and the amounts paid is a benefit to the injured party that is subject to the collateral source rule; as such, evidence of the amounts paid is excluded from the jury's consideration but is subject to post-trial proceedings under AS 09.17.070 for possible reduction of the damages award.” (1019-20)
“We also follow the majority of courts by adopting the "reasonable value" approach, in which an injured party is allowed to introduce the full, undiscounted medical bills into evidence at trial.” (1027)
“We agree that this "hybrid approach" is highly likely to undermine the collateral source rule; therefore, evidence of what was actually paid should not be admitted if offered to rebut the reasonableness of the undiscounted bills.” (1027-28)
Factual background
Lorena Weston fractured her right wrist and right leg after slipping on ice in a hotel parking lot owned by AKHappytime, LLC. She underwent complicated surgery at Alaska Native Medical Center; the hospital billed more than $135,000, while Medicare paid $24,247.45 in full settlement of the providers' bills. In her negligence action, AKHappytime sought to exclude the undiscounted bills, arguing that only the amounts actually paid reflected the reasonable value of the medical services.
Procedural history
Weston was injured in a slip-and-fall at a hotel parking lot and sued AKHappytime for negligence. The superior court ruled that she could introduce only the adjusted medical rates accepted by her providers as payment in full. The Supreme Court of Alaska granted Weston's petition for review, reversed, and remanded.
Remand instructions
The superior court must conduct further proceedings consistent with the opinion, including allowing evidence of Weston's undiscounted medical bills subject to the collateral-source limitations described by the Supreme Court.