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A very important
Tennessee Court of Appeals opinion was issued on June 2, 2016. In this case, Jean Dedmon v. Debbie Steelman, No. W2015-01462-COA-R9-CV (Tenn. Ct. App.
June 2, 2016), the Court discussed whether the amount an insurance
company actually pays for medical services in a personal injury action, is, as
a matter of law, the “reasonable” amount of medical expenses. In order to recover medical expenses under
Tennessee law, in a personal injury action, the plaintiff must prove the
medical expenses were reasonable and necessary.
The reason the Dedmon decision is so important is because of the West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014) decision. In the West
case, the Tennessee Supreme Court, when interpreting the Tennessee Hospital
Lien Act, essentially found that a hospital’s non-discounted charges reflected
in their lien, were not reasonable because they do not reflect what is actually
being paid in the marketplace. The Court
found that, under the Tennessee Hospital Lien Act, the amount actually paid for
the hospital charges were the reasonable charges for the services provided, not
the amounts billed which were, as a matter of law, unreasonable.
Since the time of the West decision, several trial courts and some Federal
district courts have decided that the West case reasoning also applies to personal injury
actions. They have found that essentially,
in a personal injury action in the State of Tennessee, evidence of the actual
amount actually paid for medical bills is the only amount that can be
introduced into evidence, not the amount billed or charged by the
provider. The reason is, due to
insurance industry dynamics, there is almost always a significant difference in
the amount billed or charged by the provider and the amount actually paid by
insurance, Medicare or otherwise. For
instance, in the Dedmon case, the total amount of “incurred” medical expenses
were $52,482.87 (the amount charged by the providers). However, the plaintiff’s health insurance
carrier only paid $18,255.42. As a
result, there is a significant disparity between the amount billed and the
amount actually paid.
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