Dedmon Decided: The Destiny Of 'Reasonable' Medical Expenses In Tennessee Revealed

In a stunning reversal of what appeared to be the trend towards discounted medical damages in personal-injury cases, the Tennessee Supreme Court ruled on Friday, November 17, 2017, that the Collateral Source Rule reigns supreme. Under it, the high court held, "plaintiffs may submit evidence of the injured party's full, undiscounted medical bills as proof of reasonable medical expenses." "[D]efendants," on the other hand, "are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut the plaintiffs' proof." West v. Shelby County Healthcare Corp., where the court held in 2014 that "the amount of the full, undiscounted charges billed to the patient is 'unreasonable,'" "was not intended to apply in personal injury cases." Instead, "West was intended only to construe the phrase 'reasonable charges' in the context of determining the maximum amount of a . . . [Hospital Lien Act] lien."

So compelling was the language of West that fully six Tennessee federal district courts1 had held since 2014 that the discounted amounts accepted by a medical provider—and not the undiscounted amounts billed to patients—"were, as a matter of law, the reasonable medical expenses." Several, recognizing the unduly persuasive force of collateral sources, acknowledged the importance of the Collateral Source Rule but concluded that it "does not expand the scope of economic damages to include expenses the plaintiff never incurred." These courts, like the Dedmon trial court, saw wisdom in West's exposure of "the subterfuge that the medical community uses with regard to insurance and expenses." And like the trial court, they "could not imagine that [the Tennessee Supreme Court] would use any other logic than [it] had used in [West]."

But the Collateral Source Rule was not implicated in West. Tennessee has abrogated the rule by statute in workers' compensation and health care liability cases.2 Not so in the personal-injury context. There, "the [C]ollateral [S]ource [R]ule has been firmly entrenched . . . for over a century." And it avoids the injustice that would allow a defendant who injures an insured plaintiff to pay less in medical expenses than a defendant who similarly injures an uninsured one.

More importantly, "[f]rom its inception, . . . the most basic application of the [C]ollateral [S]ource [R]ule has been to prevent the plaintiff's recovery from being reduced by benefits that are collateral to the defendant...