Time to Examine Tennessee’s Collateral Source Rule by William Walton


Originally published in the Tennessee Bar Association - December 1, 2012.

Taking Another Look at Fye v. Kennedy -

Damages in tort law are designed to compensate for injury and, in the words of one court, “only for that.”[1] On the other hand, few bastions of the Tennessee personal injury bar are more vigorously defended (and heartily embraced) than the “Collateral Source Rule.” No one marches under the rule’s banner more proudly than a personal injury lawyer who has successfully excluded evidence concerning the amount of actual “paid” medical expenses when compared to the amount of the “billed” medical expenses in a personal injury case. Conversely, no one squeals louder than a defense practitioner buffaloed into paying a substantial personal injury settlement based upon phantom “billed” medical expenses that all parties acknowledge will never be paid.

The expansion of government-mandated health care (and the attendant growing dictation of what medical expenses can, and cannot, be recovered by a health care provider), as well as the heavy influence of government reimbursement rates on private health care insurers,[2] suggest that it is time for Tennessee courts and the Tennessee General Assembly to revisit the operation of the Collateral Source Rule in Tennessee. Specifically, the Collateral Source Rule should be re-examined to the extent that it allows submission to (and recovery of) phantom medical expenses from a jury, but prevents the same jury from considering the amount of medical expenses actually “paid.” In today’s rapidly changing and complex health care environment, both figures are relevant to a jury in determining whether medical expenses are “reasonable” and “necessary.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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