“Reasonable” Medical Expenses in Tennessee (Amount Billed or Amount Paid?) – The Law After West and Dedmon for Personal Injury Litigation

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.

Expert Testimony Not Required in Standard Tennessee Premises Liability Cases

The recent Tennessee Court of Appeals decision of Gary Lee Steele v. Primehealth Medical Center, P.C., No. W2015-00056-COA-R3-CV, 2015 WL 9311846 (Tenn. Ct. App. 2015) is an interesting premises liability case that discusses the potential requirement of expert proof for this type of case.  This case involved a slip/trip and fall on the premises of the defendant due to an allegedly defective sidewalk.  The trial court excluded the plaintiff’s expert proof because the plaintiff failed to comply with the trial court’s scheduling order and expert proof was not disclosed during discovery. As a result, the trial court granted summary judgment to the defendant because the plaintiff failed to provide expert proof on whether the sidewalk was unreasonably dangerous. 

This case was appealed to the Tennessee Court of Appeals and that Court took issue with the trial court’s determination that this expert testimony was mandatory.  The Tennessee Court of Appeals discussed the fact that in more and more cases expert testimony is needed due to the complexity of our civilization and the specialization that is present in our society.  However, the Court noted specifically that:

[We] are not aware of any general requirement, established by a court or by the legislature, that expert testimony must be presented in order to prove the existence of a dangerous condition in a premises liability case. As a general rule, no expert testimony is required when a case involves ordinary negligence.

Steele at 6.  There simply is no prior definitive case law on this issue that forces this requirement in this type of case.  The Court went on to note several situations in Tennessee where the Tennessee Supreme Court has found that expert proof is not required including the following:

- Whether a party has sustained a serious mental injury in cases of intentional infliction of emotional distress.

- Whether a construction contractor and the public utility company that hired the contractor were negligent in leaving a ditch open over a weekend of heavy rain.

Tennessee Supreme Court Modifies Spoliation of Evidence Doctrine By Removing Intentional Misconduct Requirement

Tennessee has long had a doctrine of spoliation of evidence which allows the trial court to draw negative inferences or even provide dismissal against a party who destroys evidence.  Historically, Tennessee courts have required the presence of actual intentional misconduct to invoke the doctrine of spoliation of evidence particularly when providing the remedy of a negative inference or dismissal.  The Tennessee Supreme Court in Lea Ann Tatham v. Bridgestone Americas Holding, Inc., No. W2013-02604-SC-R11-CV, 2015 WL 6688035 (Tenn. 2015) dealt with an apparent conflict between the case law and Rule 34A.02 of the Tennessee Rules of Civil Procedure that was adopted on July 1, 2006.  The full text of Rule 34A.02 provides as follows:

Rule 37 sanctions may be imposed upon a party or an agent of a party who discards, destroys, mutilates, alters, or conceals evidence.

The question before the Tennessee Supreme Court in Lea Ann Tatham was whether Tennessee Courts should continue to require an intentional misconduct prerequisite for a trial court to impose sanctions for spoliation of evidence.  The Tennessee Supreme Court decided this issue and expressed the desire to provide a uniform standard on this issue.  The Court found that “intentional misconduct is not a prerequisite for a trial court to impose sanctions for the spoliation of evidence, including that of a negative inference.”  Id. at 8.  The Court adopted a specific analysis required by Tennessee trial courts to determine whether sanctions are appropriate in a spoliation of evidence situation.  The new test is a “totality of the circumstances” test, however, intentional misconduct is clearly no longer an absolute perquisite.  Intentional misconduct is simply one of the factors to be considered by the trial court. 

The Tennessee Supreme Court detailed certain factors that are relevant to a trial court’s consideration of whether sanctions are appropriate in the context of spoliation for evidence.  These include the following factors:

(1) the culpability of the spoliating party in causing...

Tennessee Collateral Source Rule – Status of the pending proposed 2013 Tennessee legislation to abolish the collateral source rule in Tennessee.

The Tennessee legislature is considering many interesting pieces of legislation in the 2013 legislative session.  One bill that is of great interest to Tennessee attorneys as well as anyone handling Tennessee personal injury claims is SB 1184/HB 0978.  The bill is aptly named the “Phantom Damages Elimination Act”.  This bill would effectively abolish the collateral source rule in Tennessee. 

The collateral source rule prevents a defendant from introducing evidence that the injured plaintiff received payments from any other source to try to reduce or mitigate the damages sustained by the plaintiff.  The Tennessee Court of Appeals in Fye v. Kennedy, 991 S.W. 2d 754, 763 (Tenn. Ct. App. 1998) stated that:

An injured party's right to recover his or her “reasonable and necessary expenses” must be viewed in connection with the collateral source rule:

Normally, of course, in an action for damages in tort, the fact that the plaintiff has received payments from a collateral source, other than the defendant, is not admissible in evidence and does not reduce or mitigate the defendant's liability.

See also John Day’s detailed discussion of the collateral source rule on his blog for a more detailed discussion of the collateral source rule. 

Proposed SB 1184/HB 0978 would effectively eliminate the collateral source rule in Tennessee.  In fact, the language in the bill would only allow a plaintiff in a personal injury or wrongful death case to recover economic damages for medical and other costs of medical care for:

Evidence - In Tennessee when does the "cancellation rule" apply to exclude testimony of a witness who provided inconsistent testimony?

Brief Summary:  The “cancellation rule” is a narrow rule and only applies to bar inconsistent testimony of a witness in limited circumstances.  The rule can exclude the testimony of a witness when the testimony is clearly contradictory (is not open to different interpretations or explanation) and there is no corroborating evidence for either version of the testimony.

Analysis:  The recent Tennessee Court of Appeals decision of Norman Hill v. Danny Tapia, Jr., No. M2012-00221-COA-R3-CV, 2012 WL 6697308 (Tenn. Ct. App. December 21, 2012) discussed when the "cancellation rule" applies to bar testimony from a physician who provided inconsistent testimony.  This issue came up because one party contended that the entirety of a physician's testimony should be "stricken from consideration because it is vague, contradictory, and unclear."  Hill at 5.  The court noted that "Dr. Hampf's testimony first tends to establish causation, then tends to weaken that conclusion."  Hill at 4. 

The court noted that Tennessee has adopted the "cancellation rule".  The Tennessee Court of Appeals stated "Tennessee follows the rule that contradictory statements by the same witness regarding a single fact cancel each other out.   If determined by the trial court to be contradictory, the statements by the witness are considered to be ‘no evidence’ of the fact sought to be proved.”  Hill at 5.  The court went on to state:

The question here is not one of the credibility of a witness or of the weight of evidence; but it is whether there is any evidence at all to prove the fact. If two witnesses contradict each other there is proof on both sides, and it is for the jury to say where the truth lies; but if the proof of a fact lies wholly with one witness, and he both affirms and denies it, and there is no explanation, it cannot stand otherwise than unproven. For his testimony to prove it is no stronger than his testimony to disprove it, and it would be mere caprice in a jury upon such evidence to decide it either way.

...

Medical Testimony - Is a doctor's speculation about future surgeries and costs of those surgeries admissible at trial?

Brief Summary:  The short answer is that a doctor can not speculate about the need for future surgeries or the costs associated with such surgeries.  Testimony from a doctor that amounts to speculation will be excluded by the trial court.

Analysis:  In the recent Tennessee Court of Appeals decision of Sapinder Singh v. Larry Fowler Trucking, Inc., No. W2011-01986-COA-R3-CV, 2012 WL 3731562 (Tenn. Ct. App. 2012) the Court addressed whether the trial court’s exclusion of a doctor's speculative testimony about a future potential surgery and the cost for such surgery was proper. Singh at 1.  Dr. Michael Jaffin was asked in his deposition whether the plaintiff would need additional surgery in the future. Singh at 2.  The Appellate Court discussed the speculative nature of the testimony as follows:

In those portions of his testimony that were excluded from evidence, Dr. Jaffin testified that he would not “pretend to tell you what kind of surgery” Mr. Singh would require in the future, and that he could not “tell for sure” what these surgeries would cost. In fact, Dr. Jaffin testified that Mr. Singh would need further surgical evaluation, which he “would leave [ ] to a spine surgeon.” By his own admission, Dr. Jaffin is not at all certain as to what, if any, future surgeries will be medically necessary. Consequently, he is not qualified to testify as to what, if any, spinal surgeries Mr. Singh will need. As he testifies: “I can't tell you because I'm not a spine surgeon.” As such, Dr. Jaffin's testimony does not demonstrate a reasonable medical certainty concerning the need for future surgeries.

Concerning the costs of future surgeries, Dr. Jaffin testified that the costs would “be at least $300,000.” Later in his testimony, he opines that the costs would be “well over $200,000.” This testimony is also speculative. As noted above, Dr. Jaffin, by his own testimony, is not qualified to opine as to the specific surgeries that may be necessary and, because he is not qualified concerning the surgeries, he is likewise not qualified to testify as to the costs of the surgeries.

Singh at 7.  In order to assess whether this testimony is admissible one must look at Tennessee Rules of Evidence 702 and 703 which requires a trial court to determine: "(1) whether expert testimony will substantially assist the trier of...

Contract Interpretation - Can the terms of a written contract be modified by the subsequent course of conduct of the parties?

Brief Summary:  The terms of a contract can be modified by the subsequent actions of the parties to that contract.  Further, evidence about these actions is not barred by the parol evidence rule.

Analysis:  In the recent decision of The University Corporation v. Bruce Wring, No. W2011-01126-COA-R3-CV, 2012 WL 4078517 (Tenn. Ct. App. September 18, 2012) the Tennessee Court of Appeals discussed whether a written contract could be modified by the actions of the parties.  This case involved a dispute over a contract pertaining to the repair, renovation and sale of foreclosed properties. The University Corporation at 1.  A dispute arose between the parties as to appropriate compensation.  The University Corporation at 1.

One of the parties argued that the course of conduct between the two parties modified the terms of the written contract.  Specifically, the parties never required the production of documentation showing expenses despite the fact it was explicitly required in the contract. The University Corporation at 1.  In response, the other party contended the merger clause in the contract and the parol evidence rule prevented any modification of the written agreement and therefore the requirement for documentation on expenses was required.  Under Tennessee law "parol evidence is inadmissible to contradict or vary the terms of a written agreement."  The University Corporation at 6.  However, the Tennessee Court of Appeals found this fact does not necessarily end the inquiry.  The court stated as follows:

But it is well settled that this rule does not prohibit the establishment by parol evidence of an agreement made subsequent to the execution of the writing, although such subsequent agreement may have the effect of adding to, changing, modifying or even altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence does not in any way deny that the original agreement of the parties was that which the writing purports to express, but merely goes to show that the parties have exercised their right to change or abrogate the same, or to make a new and independent contract.

Evidence of Truthfulness - Can MRI testing of the brain be admitted into evidence to show an individual is telling the truth about issues in the case?

Brief Summary:  According to the United States Court of Appeals for the Sixth Circuit MRI testing of the brain to show an individual’s truthfulness is not admissible in court.  The scientific evidence has not effectively established that this information is reliable enough to be admitted as evidence under the Federal Rules of Evidence.

Analysis:  The United States Court of Appeals for the Sixth Circuit decided a very interesting case concerning whether results from a functional magnetic resonance imaging (MRI) test can be admitted to prove the truthfulness of testimony.  The decision of United States of America v. Lorne Allan Semrau, 693 F.3d 510 (6^th Cir. 2012) considered the appeal of Dr. Lorne Semrau who was convicted of three criminal counts of healthcare fraud.  At trial, Dr. Semrau’s counsel attempted to introduce evidence showing that results from MRI testing performed on Dr. Semrau indicated he was telling the truth about pertinent issues in the case.  The trial court excluded this evidence.  On appeal he asserted this testing should have been admitted into evidence by the trial court.  Semrau at 516.  The Sixth Circuit noted this was a matter of first impression in any jurisdiction.  Semrau at 516. 

Dr. Steven J. Laken, Ph.D., is the President and CEO of Cephos Corporation and he performed the MRI testing of Dr. Semrau.  Semrau at 516 - 518.  Dr. Laken testified that studies show accuracy rates of "between eighty-six percent and ninety-seven percent” for this type of testing.  Semrau at 517.  However, during cross-examination Dr. Laken “conceded that his 2009 ‘Mock Sabotage Crime’ study produced an ‘unexpected’ accuracy decrease to a rate of seventy-one percent.”  Semrau at 517.  Dr. Laken also testified that this MRI lie detection method has “a huge false positive problem in which people who are telling the truth are deemed to be lying around sixty to seventy percent of the time.” Semrau at 517, 518.

In 2009, Dr. Semrau's attorney contacted Dr. Laken to perform testing on Dr. Semrau about his alleged healthcare fraud.  Semrau at 518....