Recent Kentucky Court of Appeals Decision Upholds Reduction in Medical Expense Award by Amount Written Off by Healthcare Provider; Also Upholds Zero Pain and Suffering Award

by David Kramer
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In a recent decision that was designated for publication, the Kentucky Court of Appeals held that, while a plaintiff is permitted to introduce into evidence the full amount of medical bills incurred for treatment of injuries or conditions for which damages are claimed, the trial court should reduce the amount awarded for medical expenses where the expenses were written off by medical providers. In Dennis v. Fulkerson, 2009-CA-1367 (6/24/11), the plaintiff's medical expenses had been written off by the hospital at which he was negligently treated by an independent physician. The trial court did not permit the jury to be advised that the medical bills had been written off, and the jury awarded $4,000 for medical expenses. The defendant filed a post-trial motion to vacate the award of medical expenses, arguing that the plaintiff should not be permitted to recover for medical expenses that were written off. The trial court denied the motion. The Court of Appeals cited Beckner v. Palmore, 719 S.W.2d 288 (Ky. App. 1986), for the principle that the plaintiff is permitted to introduce to the jury all medical bills incurred for treatment of his or her injuries for which recovery is sought because the amount of medical expenses may help the jury in determining the amount of pain and suffering the plaintiff experienced. Arguably, in addition to pain and suffering, the amount of medical expenses incurred would be relevant to the severity of the plaintiff's injuries. Also, lawyers sometimes use the amount of medical expenses incurred as a metric for the amount of damages that the plaintiff should recover (i.e., asking for an award that is a certain multiple of the medical expenses).

The Court in Dennis could have cited Thomas v. Greenview Hospital, Inc., 127 S.W.3d 663 (Ky. App. 2004), overruled on other grounds, Lanham v. Com., 171 S.W.3d 14 (Ky. 2005). In Thomas, the defendant hospital asserted that the plaintiff should be limited to introducting evidence of only those medical expenses that were actually payable to the plaintiff's health-care providers after reductions were made to the bills based on contracts between the providers and the Medicare program. The Court of Appeals followed the holding in Beckner and upheld the submission to the jury of the full amount of bills incurred because such evidence was felt to be relevant to pain and suffering. However, the Court of Appeals held that the trial court acted properly in reducing the amount of the jury's verdict for medical expenses to the amount actually payable to the health-care providers. The Court held that the collateral source rule did not apply because the reduction involved an amount that was written off and "never subject to indemnification or paid by a third-party source."

This line of cases (particularly Thomas) appears partially at odds with the Kentucky Supreme Court's opinion in Baptist Healthcare Systems, Inc. v. Miller, 177 S.W.3d 676 (Ky. 2005), in which the Court held that the plaintiff was entitled to recover, not merely introduce, the full amount billed to Medicare for medical expenses even though almost 90% of the expenses billed were classified as a "Medicare adjustment or Medicare write off." The Court held that the collateral source rule applied in this situation and that the plaintiff could recover the "reasonable value" of the medical services provided in treating a compensable injury or condition "without consideration of insurance payments made to the injured party." Justice Cooper's dissent in Baptist Healthcare v. Miller recounted the history of the collateral source rule, and suggested the majority opinion was not consistent with the weight of authority on the issue. He asserted the rule would preclude introduction of evidence of payment of medical bills "actually incurred and either paid or owing" from a collateral source for which the plaintiff had either purchased or earned coverage, but should not permit recovery of a "phantom expense" that was never incurred. Nonetheless, an opinion of the Supreme Court takes precedence over a decision of the Court of Appeals.

The Baptist Healthcare v. Miller holding is particularly unfair when a write-off is made by a health-care provider that is itself a defendant in a medical negligence case. In that situation, not only would the defendant have its services written off, but wold also be subject to damages to the plaintiff.

Dennis is not consistent with Miller to the extent that a medical bill that is completely written off should not be part of the amount awarded to the plaintiff in the judgment, though the amount incurred for treatment may still be submitted to help prove pain and suffering.

Dennis was issued on June 24, 2011, and was designated for publication. The case should not be cited as authority until finality and publication are verified.

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David Kramer
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