In Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), the SCOTSI held that the discounted prices negotiated by insurers were relevant evidence (in a personal injury trial) of the reasonable value of the medical services provided to the plaintiff, provided that there was no mention of insurance. Stanley recognized the troubling disparity in medical service pricing between insured and uninsured patients. I hoped after reading Stanley that the SCOTSI was only one decision away from recognizing a right of the uninsured patient to challenge the reasonableness of medical service charges in the defense of a collection suit. I couldn’t have been more wrong.
That next decision came in Allen v. Clarian Health Partners, 980 N.E.2d 852 (Ind. 2012). There the unanimous SCOTSI held that the suit of uninsured patients challenging the reasonableness of undiscounted medical services should be dismissed for failure to state a claim. I regard that result as palpably erroneous. Hospitals were given carte blanche to continue gouging the uninsured, that portion of the population least capable of paying the inflated, undiscounted prices typically billed by hospitals.¹
Then came Parkview Hospital v. Frost, ____ N.E.3d _____ (Ind.Ct.App. 2016) (TR denied), a very technical extension of Stanley. In the case of an injured motorcyclist who received a hospital lien for undiscounted hospital bills, a divided COA held that evidence of discounts provided to the insured (privately insured or within government programs) is relevant and admissible in determining the reasonable charges for purposes of the Hospital Lien Act.
Finally we have the Transfer decision of October 19, 2016 in Patchett v. Lee, ____ N.E.3d ____ (Ind. 2016). Patchett also involved a motor vehicle accident and a personal injury suit. The plaintiff had insurance through the Healthy Indiana Plan (“HIP”). Remarkably, her hospital charges were bargained down to a mere 14% of the gross billing. Her accident-related medical bills (exceeding $87,700.00) were admissible under Evidence Rule 413 as evidence that the charges were reasonable. The dispute was whether the defendant could introduce evidence of the reduced payments (about $12,050.00) as contrary evidence of the reasonable value of the medical services.
The trial court held that evidence of the reduced payments would not be admitted at trial. In Patchett v. Lee, 46 N.E.3d 478 (Ind.Ct.App. 2015) (vacated) the 2/1 COA majority affirmed the trial court.
On Transfer the SCOTSI has reversed. The holding is that the defendant may introduce evidence of the huge discounts accepted by the providers. This is Stanley on steroids.
The unacceptable paradox of these cases will now be described. Let’s say there are two identical personal injury plaintiffs except that one has medical insurance while the other has none. Against the insured plaintiff defense counsel can introduce evidence of discounted payments to providers as proof of a lower reasonable value of the services. In contrast, the uninsured personal injury plaintiff (when sued by his hospital) is not allowed to challenge the reasonableness of the undiscounted charges on his bill by offering proof of what his hospital routinely accepts from private insurers and government programs. The SCOTSI has painted itself into a corner. It needs to rescue itself with a comprehensive review of issues from the cited cases. The easiest solution (though not all that easy) would be to overrule the erroneous 5/0 holding in Allen v. Clarian Health Partners.
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¹I note how the failing, doomed Affordable Care Act (“Obamacare”) tried to fix the problem with universal insurance. This misses the real target, which is the unreasonably high cost of medical services. Old-fashioned rules of the marketplace are ineffective in controlling medical costs, such that price controls must be part of any national health insurance plan.
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