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Jean Dedmon v. Debbie Steelman
Citation: 535 S.W.3d 431Docket: W2015-01462-SC-R11-CV
Court: Tennessee Supreme Court; November 16, 2017; Tennessee; State Supreme Court
Original Court Document: View Document
The Supreme Court of Tennessee reviewed the case of Jean Dedmon v. Debbie Steelman et al., regarding whether the principles established in West v. Shelby County Healthcare Corp. apply to personal injury cases. The court concluded that the holding in West, which defined 'reasonable charges' for medical services under the Hospital Lien Act as the discounted amounts accepted by hospitals, does not extend to personal injury claims. In this context, the court reaffirmed the collateral source rule, which prevents the introduction of evidence regarding benefits received from sources unrelated to the tortfeasor, such as private insurance. This means that the plaintiffs can present their full, undiscounted medical bills as evidence of reasonable medical expenses, while defendants cannot use evidence of the discounted rates accepted by insurers to contest the reasonableness of those expenses. However, defendants are allowed to introduce other competent evidence to challenge the plaintiffs' claims, provided it does not conflict with the collateral source rule. The court affirmed in part and reversed in part the decision of the Court of Appeals, remanding the case to the trial court for further proceedings. The opinion was delivered by Justice Holly Kirby, with participation from Chief Justice Jeffrey S. Bivins and Justices Cornelia A. Clark, Sharon G. Lee, and Roger A. Page. The case background notes that the plaintiffs, Jean and Fred Dedmon, filed the lawsuit following a serious automobile accident caused by John T. Cook in February 2010, leading to significant injuries and medical expenses for Mrs. Dedmon. Mrs. Dedmon's medical bills, totaling $52,482.87 and sourced from sixteen providers, were attached to the original complaint. Following the death of Mr. Cook, the Plaintiffs amended the complaint to substitute his personal representatives, Debbie Steelman and Danny T. Cates, as Defendants. In March 2013, Dr. Vaughn Allen, a neurosurgeon who treated Mrs. Dedmon from April 2010 to September 2012 and performed neck surgery in September 2010, was deposed. He testified that all medical bills incurred by Mrs. Dedmon were reasonable and necessary. On December 19, 2014, the court's decision in West v. Shelby County Healthcare Corp. clarified that under Tennessee's Hospital Lien Act, a hospital's 'reasonable charges' are defined as the amounts accepted from insurers rather than the total billed amounts. The court indicated that undiscounted bills do not reflect actual market payments and are therefore deemed 'unreasonable.' Following this ruling, the Defendants filed a Motion in Limine to exclude evidence of Mrs. Dedmon's undiscounted medical bills, arguing they are as a matter of law unreasonable based on the West decision. They noted that Mrs. Dedmon’s insurance paid only $18,255.42, asserting that this amount should be considered instead of the full billed charges. The Defendants contended that the collateral source rule does not apply in this context and that the insurance payment should be admissible to establish the reasonableness of the charges, without referencing the insurance contract's influence on the discounted amounts. Defendants submitted a 'Notice of Intent to Rebut Presumption' under T.C.A. 24-5-113 alongside a motion in limine, both hinging on their interpretation of West. They argued that if the full, undiscounted medical bills are admitted, the discounted amounts accepted by the medical provider should also be allowed to challenge the Plaintiffs' expert testimony regarding the reasonableness of the undiscounted charges. The trial court held a hearing in March 2015, ruling that, based on West, Mrs. Dedmon's full medical bills were irrelevant to determining reasonable expenses and granted the motion in limine, thereby excluding those bills. The court noted that West aimed to prevent the manipulation of medical expenses related to insurance from influencing judicial outcomes. Mrs. Dedmon was granted permission for an interlocutory appeal, which the Court of Appeals later reversed. The appellate court determined that West did not apply to personal injury cases, referencing specific language from the West decision that limited its scope to private insurance cases. Consequently, it rejected the Defendants' argument for excluding the full medical bills and remanded the case. On remand, the appellate court allowed the introduction of evidence regarding discounted amounts accepted by the medical providers to challenge the Plaintiffs' claims about the reasonableness of the undiscounted bills. It acknowledged the collateral source rule but clarified that defendants can present evidence disputing the reasonableness of medical expenses, provided that insurance is not mentioned. Judge Joe G. Riley concurred with the majority's endorsement of a 'hybrid' method for admitting evidence in Tennessee, which permits the introduction of both full, undiscounted medical bills and the discounted amounts accepted by medical providers. The Court of Appeals overturned the trial court's decision that favored the Defendants, ruling that Mrs. Dedmon's full, undiscounted medical bills were admissible to establish her reasonable medical expenses resulting from the accident. Additionally, it determined that discounted amounts could be presented to counter the Plaintiffs' claims about the reasonableness of the undiscounted bills, provided that insurance references were excluded. The Court of Appeals invited further review of these matters, which the higher court granted. In the appeal, the Defendants reiterated arguments made previously, asserting that the precedent set in West should bar Mrs. Dedmon's full medical bills from evidence. They contended that, even if West does not apply directly, its principles should limit recoverable 'reasonable medical expenses' to the discounted rates accepted by providers. The court noted that these issues involve questions of law, reviewed de novo without deference to lower court rulings. The analysis begins with a review of Tennessee law regarding damages in personal injury cases and the collateral source rule. It examines the West decision and whether its definition of 'reasonable charges' should influence the determination of 'reasonable medical expenses' in personal injury claims. If West is found inapplicable, the court will evaluate the implications of allowing evidence of the discounted rates to counter claims regarding the reasonableness of undiscounted medical expenses. Existing Tennessee law permits a person injured by another's negligence to recover damages for all forms of harm, with the burden of proof resting on the plaintiff. Damages can be classified as economic (including past and future medical expenses, lost wages, and lost earning potential) and non-economic. Economic damages encompass all losses that naturally arise from the defendant's wrongful actions, with past medical expenses often categorized as 'out-of-pocket' expenses. The term 'out-of-pocket' medical expenses refers solely to past medical expenses, distinguishing them from future expenses. Non-economic damages encompass pain and suffering, permanent impairment or disfigurement, and loss of enjoyment of life, which are inherently subjective and lack specific dollar value. Plaintiffs do not need to quantify these damages but must provide some evidence to support the awarded amount, allowing the trier of fact significant discretion in determining the monetary value. A common method for estimating non-economic damages is to use a multiple of the plaintiff's economic damages, specifically past medical expenses, which must be proven as 'necessary and reasonable.' To recover medical expenses, a plaintiff must establish that the medical bills incurred due to the defendant's negligence were necessary and reasonable, supported by competent expert testimony. Experts must demonstrate knowledge of the plaintiff's condition, treatment received, customary treatment options, and customary charges for similar treatments. In Tennessee, even if medical services are deemed necessary, the plaintiff must prove that the charges are reasonable. Defendants can challenge the plaintiff's claims regarding necessity and reasonableness. Tennessee Code Annotated section 24-5-113(a) grants a rebuttable presumption that itemized medical bills of $4,000 or less, attached to the complaint, are necessary and reasonable. This provision aims to assist claimants for whom expert deposition costs may outweigh the value of the medical services sought. However, this presumption can be rebutted by evidence contradicting the necessity or reasonableness of the expenses. Subsection (b) of the same statute outlines an alternative method for establishing a rebuttable presumption of the reasonableness of the plaintiff's medical bills, without addressing necessity. In civil actions for personal injury, if an injured party serves itemized medical, hospital, or doctor bills to the other parties at least 90 days before trial, there is a rebuttable presumption that these expenses are reasonable. Any party intending to contest this presumption must notify others 45 days prior to trial, specifying which bills are deemed unreasonable. The presumption of reasonableness applies to medical claims of any size and is distinct from the presumption of necessity established in a different subsection. Plaintiffs must demonstrate causation, proving that the defendant's conduct caused the injuries necessitating medical treatment. Additionally, the collateral source rule, originating from English common law and established in U.S. law by the Supreme Court in 1854, dictates that a defendant cannot reduce their liability by the amount the injured party receives from their insurance. The principle was affirmed in the case of The Propeller Monticello v. Mollison, where the court held that insurance proceeds are separate from the defendant's liability, ensuring that compensation from the wrongdoer is distinct from insurance payments. The term "collateral source" comes from a Vermont case, which echoed the Supreme Court's reasoning, emphasizing that insurance proceeds are supplementary to recovery from the wrongdoer. Insurance policies obtained by a plaintiff are considered collateral to the remedy against a defendant, as the plaintiff procured the insurance independently and at their own expense, without any contribution from the defendant. The relationship between the plaintiff and the insurer is akin to a wager, with the defendant having no involvement or interest in this agreement. The plaintiff's insurance policy is not taken out for the defendant's benefit, and there is no legal principle mandating that the insurance proceeds be allocated to the defendant. The concept known as the 'collateral source rule,' established in the case of Harding and supported by the U.S. Supreme Court in Mollison, stipulates that a defendant cannot argue against double recovery for plaintiffs, as insurers typically hold subrogation rights. Any recovery from the tortfeasor for amounts covered by insurance creates an equitable adjustment between the plaintiff and the insurer, with no implications for the defendant. Consequently, all states except possibly Alabama have adopted some form of this rule. In Tennessee, the collateral source rule was articulated in Anderson v. Miller in 1896, which stated that the plaintiff's insurance contract does not affect the defendant's obligations. The defendant's rights are not influenced by the existence of such contracts. The Tennessee Supreme Court later reinforced this principle in Porter, ruling that evidence of salary payments received by an injured plaintiff should not be admissible to reduce the defendant's liability, as it is established that payments from accident insurance do not diminish recovery against a wrongdoer. Thus, plaintiffs in Tennessee can recover all medical expenses, regardless of insurance payments, and evidence of such payments is typically inadmissible in tort cases. This principle is encapsulated in Section 920A of the Restatement (Second) of Torts. A payment made by a tortfeasor or an acting agent to an injured party is deducted from the tortfeasor's liability. However, payments or benefits received by the injured party from independent sources do not reduce the tortfeasor's liability, even if they cover part of the harm. The collateral source rule dictates that such benefits are not admissible in evidence and do not mitigate the defendant's liability, as established in Fye, 991 S.W.2d at 763-64, and further applied in Holliday v. State. This rule serves both substantive and evidentiary purposes: it prohibits reducing a plaintiff's recovery based on benefits from unrelated sources, ensuring that benefits intended for the injured party do not inadvertently advantage the tortfeasor. The law upholds that the tortfeasor is responsible for the full extent of the harm caused, irrespective of the injured party's net loss. Benefits received, whether from insurance or gifts, are retained by the plaintiff without affecting the tortfeasor's obligation. Overall, the tortfeasor must compensate for all harm caused, maintaining a clear distinction from any collateral benefits received by the injured party. The collateral source rule aims to prevent a tortfeasor from avoiding liability due to compensation received by the injured party from external sources. This principle asserts that a victim's foresight or luck in obtaining benefits from collateral sources should not diminish the tortfeasor's responsibility. The rule also serves the purpose of tort deterrence, a fundamental aspect of the rule since its establishment over a century ago. In terms of evidentiary implications, if a plaintiff’s recovery cannot be reduced by these collateral benefits, any evidence regarding such benefits must be excluded from trial proceedings. Specifically, this includes benefits from insurance policies (regardless of whether they are held by the plaintiff or a third party), employment benefits (both gratuitous and contractual), gratuities, and social legislation benefits like social security and pensions. Courts generally agree that presenting evidence of insurance coverage to a jury can lead to misinterpretation and unjust reductions in damages, as juries may subconsciously adjust awards based on perceived collateral compensation. Comment c of Section 920A elaborates on the types of benefits excluded from consideration, reaffirming that the rule's intent is to ensure that the tortfeasor remains liable regardless of the injured party's collateral benefits, thereby promoting fairness and accountability in tort law. Social security benefits, welfare payments, and pensions are governed by the collateral-source rule, which prevents jury bias against plaintiffs regarding liability and damages. Courts have consistently barred the admission of evidence related to collateral sources to avoid reducing plaintiffs' damage awards based on payments received from such sources. Historically, this rule has been applied both substantively and procedurally in Tennessee law, ensuring that collateral source recoveries do not lessen a defendant's liability in tort cases. Although the collateral-source rule is well-established in American law, many states have modified it to various extents; 42 jurisdictions have enacted statutes that limit the rule, and 44 states have made legislative changes to lessen its impact. Only twelve states, including Tennessee, maintain the rule in its original form, though Tennessee has partially abrogated it in specific healthcare liability cases since the 1975 legislation. The legislation referenced, Tenn. Code Ann. § 29-26-119, was enacted to control costs associated with medical malpractice litigation and healthcare. This statute has established a statutory exception to the collateral source rule specifically for medical malpractice cases, which allows for the exclusion of certain damages from being compensated if they are covered by other sources, such as insurance or government benefits. The Tennessee courts have upheld the constitutionality of this statute and clarified that the collateral source rule does not apply to workers' compensation benefits, necessitating legislative action for any changes. However, the rule remains applicable in other personal injury cases. In the case of West v. Shelby County Healthcare Corporation, the defendants assert that the ruling regarding "reasonable" medical charges should also apply to personal injury litigation. The West court indicated that damages for medical expenses in personal injury cases are limited to those that are "reasonable and necessary," and observed that actual billing practices often reflect a discrepancy between the billed amounts and what is paid by insurers. The defendant hospital in West operated on a model where they billed the full amount for services but accepted discounted payments from insurance companies, leading to what is referred to as the "negotiated rate differential" or "write-off." This distinction is critical for assessing what constitutes reasonable medical charges in related litigation. Refusing to classify the "negotiated rate differential" as a "write-off," it is emphasized that these amounts are not gratuitous. The case of Kenney, 760 S.E.2d at 438, refers to such differences as “discounts or write-offs.” It is noted that generalizations about the healthcare system must include disclaimers due to numerous exceptions, such as certain medical providers only accepting specific insurance carriers or opting not to accept insurance at all. In the West case, 459 S.W.3d at 38-39, a hospital accepted insurance from both plaintiff patients and received payments at negotiated, discounted rates. The West Court clarified that its ruling does not apply to hospital liens against patients enrolled in TennCare. The case arose under the Tennessee Hospital Lien Act (HLA), which enables hospitals to claim liens on patients' tort claims for all reasonable hospital charges when treatment follows injuries caused by another's negligence (Tenn. Code Ann. § 29-22-101). In practice, the hospital in West sought to recover the full, undiscounted bill from a third-party tortfeasor, even after insurance payments were made at discounted rates. The hospital retained its lien and continued to pursue the full amount, agreeing to reimburse the insurer only after recovering the full bill from the tortfeasor. The plaintiffs, injured by negligence, challenged the hospital's lien, alleging that its practices were unlawful under the HLA. Relevant provisions of the HLA establish the right to a lien for necessary hospital charges but limit the lien to one-third of any excess amounts. Damages recovered by a party through judgment or settlement are subject to interpretation under Tennessee's Hospital Lien Act (HLA), specifically referencing Tenn. Code Ann. 29-22-101(a). The court analyzed the implications of hospital liens, emphasizing that a lien exists only as long as a patient owes a debt to the hospital. It characterized the dispute around whether "reasonable charges" under the HLA refer to the hospital's full, undiscounted bills or the discounted amounts accepted from private insurers. Ultimately, the court ruled that "reasonable charges" are the discounted amounts, aligning with market practices where insurers typically pay less than full charges. The concept of "balance billing," where providers bill patients for amounts exceeding what insurers pay, was also addressed, noting legal limitations on such practices, particularly concerning TennCare. The court underlined that the hospital's full charges are considered unreasonable as they do not reflect actual market transactions. Dr. Gerard Anderson's statement during a congressional hearing highlights the legal interpretation of healthcare liens under the Hospital Lien Act (HLA). The court determined that reasonable charges, as defined under the HLA, are the discounted amounts that hospitals agree to accept from private insurers, rather than the full, undiscounted bills sent to patients. The ruling established that a hospital's lien can only exist as long as the patient owes a debt to the hospital; therefore, once the insurer pays the negotiated amount, the hospital loses the authority to maintain its lien. This ruling was specifically limited to HLA applications and did not extend to hospital liens against TennCare enrollees. The court noted the absence of discussion regarding the collateral source rule in the West case, which led to confusion among lower courts regarding the definition of reasonable medical expenses in personal injury cases. Some courts incorrectly interpreted the West ruling to exclude evidence of full medical bills, instead accepting only the discounted amounts paid by insurers as reasonable expenses. They referenced the California Supreme Court's decision in Howell v. Hamilton Meats, which clarified that the collateral source rule does not allow for the inclusion of expenses that the plaintiff never incurred. Other courts reaffirmed that the collateral source rule applies to personal injury cases, thereby prohibiting the admission of insurance benefits as evidence. This distinction was upheld by several Tennessee federal district courts and the trial court in the current case. In Smith v. Lopez-Miranda, Hall v. USF Holland, and Keltner v. United States, various courts addressed the application of the collateral source rule, affirming that evidence of written-off medical charges is barred by this rule. These cases did not, however, account for the presumption of reasonableness found in related statutory frameworks. The ruling in West clarified that its interpretation concerning "reasonable charges" applies specifically to hospital lien actions and should not extend to personal injury cases, which involve different public policies and legal standards. The West decision emphasized a distinction between the full medical bills and the discounted amounts accepted by hospitals, establishing that the latter represents the maximum "reasonable charges" under the relevant statute. The court underscored that expanding the West holding to personal injury cases would improperly shift factual determinations of damages to legal conclusions, altering the intended application of the statute. Ultimately, the court's role is to determine the reasonable cost of medical services as guided by Tennessee law. In personal injury cases, the determination of a plaintiff’s “reasonable medical expenses” is a factual issue resolved by the jury, based on evidence from both parties. The assessment of damages is not governed by fixed legal rules but is largely at the discretion of the trier of fact. The Tennessee Supreme Court's decision in West does not change Tennessee's established collateral source rule, which allows plaintiffs to recover the full amount of medical expenses without deduction for insurance payments. The rule, long upheld in Tennessee, ensures that a tortfeasor compensates for all harm caused, preventing any benefits received by the plaintiff from becoming a windfall for the tortfeasor. The Defendants argue that the court should adapt to current healthcare realities by limiting recovery to the discounted amounts paid by insurers, asserting that the collateral source rule should not apply in this context. While acknowledging the significant changes in the healthcare system since the rule's inception, the court remains open to considering the Defendants' arguments within established legal principles, recognizing the need for the law to evolve to meet societal needs. Plaintiffs in personal injury cases may receive various collateral benefits, including those from unions, Social Security, TennCare, Medicaid, Medicare, veterans’ facilities, and charity-affiliated providers, all of which are potentially subject to the collateral source rule. The healthcare pricing, payment, and reimbursement landscape has significantly evolved, particularly with the rise of managed care organizations (MCOs), which have distorted service pricing due to their demand for deep discounts. Social legislation benefits have shifted away from traditional fee-for-service models toward capitation payments for treatment. Hospitals are often required to treat uninsured patients or those insured by non-contractual insurers, driven by federal statutes against patient dumping. Providers face conflicting pressures to manage budgets, remain competitive, comply with regulations, and serve community needs, leading to varied charges based on patient categories. The gap between standard rates for uninsured patients and amounts accepted from insurers or social programs has widened, complicating the determination of reasonable medical charges and expenses. This complexity has resulted in increased litigation surrounding medical expenses in personal injury claims, exacerbated by government payor involvement and financial pressures on healthcare systems. Courts nationwide face challenges in understanding healthcare systems and ensuring equitable personal injury damage awards for plaintiffs and defendants. The complexity in determining the reasonable value of medical services is highlighted, referencing Stanley v. Walker, which illustrates the difficulties posed by the healthcare landscape. Although the collateral source rule has been a longstanding principle in American damages law, evolving healthcare conditions have led many jurisdictions to reevaluate its application. Approaches vary widely, with some states modifying the rule through statutes or common law, while others display inconsistency based on specific case facts or court decisions. A significant concern is the reliance on non-neutral commentary to inform judicial perspectives, complicating the courts' ability to find unbiased information. Legislative impact is also crucial, as state statutes on the collateral source rule lack uniformity. Some states have partially abrogated the rule, often as part of tort reform, creating statutes that maintain the rule for certain purposes while allowing for jury verdict reductions based on collateral payments. Additionally, some courts have deemed statutes that restrict damage evidence to discounted amounts unconstitutional, asserting such regulations infringe upon judicial authority and violate separation of powers principles. Examples include cases from Arkansas, Kentucky, and Georgia, which underscore constitutional challenges to collateral source statutes. Texas has implemented a collateral-source statute limiting recovery to discounted insurance payments, reflecting a broader trend in tort reform. The common-law collateral source rule restricts the recovery of medical expenses to those amounts that a health care provider is entitled to charge. Statutes from Missouri and Oklahoma reinforce this by allowing only evidence of the "actual cost" or the amount paid for medical services. North Dakota has modified the collateral source rule, applying a "private insurance" exception to encourage individuals to obtain personal insurance. Other states, including Oregon and Tennessee, have also made adjustments to the rule, with Oregon allowing post-trial reductions of damages and Tennessee considering changes based on various court precedents. Several states have enacted health care liability legislation that limits the collateral source rule, including Arizona, Maine, Maryland, Wisconsin, West Virginia, and Utah. Colorado and Idaho allow trial courts to reduce a plaintiff's verdict, sometimes permitting evidence of both undiscounted bills and discounted amounts to assess the reasonableness of medical expenses, a method referred to as "hybrid." In reviewing the collateral source rule's application in personal injury lawsuits, courts have categorized approaches into three types: 1) actual amount paid, 2) benefit of the bargain, and 3) reasonable value. The "actual amount paid" approach, favored by some courts, restricts recovery to the amounts actually paid to medical providers to prevent plaintiffs from receiving a "windfall" from tortfeasors. This approach is supported by statutes in multiple states, including Alaska, Connecticut, Florida, and New York. Indiana statutes also support the "hybrid" method, reflecting a broader trend toward modifying the application of the collateral source rule. In Stanley v. Walker, the Indiana Supreme Court interpreted Ind. Code 34-44-1-2, while Crocker v. Grammer addressed Ala. Code 1975. 12-21-45, and Jaques v. Manton focused on Ohio Rev. Code Ann. 2315.20. Iowa law permits a plaintiff to recover full, undiscounted medical bills supported by expert testimony, but allows the introduction of discounted amounts to challenge the reasonableness of those bills, as established in Pexa v. Auto Owners Ins. Co. Tennessee has limited the abrogation of the collateral source rule to health care liability and workers’ compensation cases, as noted in Tenn. Code Ann. 29-26-119. The collateral source rule is not relevant when insurance payments cover medical providers, allowing recovery only of actual amounts paid by insurers. The leading case, Howell v. Hamilton Meats, asserts that the discounted rates negotiated by insurers do not represent expenses incurred by the plaintiff, as neither the plaintiff nor their insurer is liable for these amounts. Thus, since the plaintiff did not incur the full medical bills, the collateral source rule does not apply. The rule's purpose is to ensure that compensation from independent sources is not deducted from damages owed by the tortfeasor, but it does not pertain to liabilities the plaintiff did not incur. The benefits from negotiated rates primarily accrue to insurers, not the plaintiffs. Howell noted that different considerations may apply for donated medical services or charitable aid, but did not clarify the treatment of social legislation benefits. Medical debt write-offs for uninsured plaintiffs can lead to disparities in compensation for tort injuries, as highlighted by the Howell Court's ruling. This decision suggests that a tortfeasor may pay less for medical expenses if the injured party is part of a managed care organization compared to an uninsured individual, a situation the court dismissed as a fact of life. Few courts have adopted this approach, and when they do, it is often influenced by specific statutes. For example, in Dyet v. McKinley, Medicare write-offs were ruled not recoverable as collateral sources. Similar rulings in Haygood v. DeEscabedo and Moorhead v. Crozer Chester Medical Center reinforce that the collateral source rule does not apply to amounts not chargeable by healthcare providers. Criticism of Howell's reasoning centers on its inconsistency regarding the collateral source rule's applicability to third-party payments versus forgiveness of debts, with some describing the decision as “schizophrenic.” The Howell court acknowledged that a tortfeasor's liability decreases if the victim has insurance, while it increases for the uninsured, conflicting with the fundamental intent of the collateral source rule, which aims to prevent tortfeasors from benefiting from a victim's compensation from other sources. The "benefit-of-the-bargain" approach allows plaintiffs with insurance to recover full medical bills, including negotiated discounts, as long as they have paid for those benefits. However, if plaintiffs did not pay for discounted rates, they cannot claim the full amounts. This approach aims to reward insured individuals and encourage purchasing insurance. The “benefit of the bargain” approach to personal injury claims has faced criticism for favoring wealthier plaintiffs who can afford insurance, creating a disparity in recovery outcomes among beneficiaries from different insurance programs. This approach has been said to undermine the collateral source rule, which aims to ensure uniform liability among defendants regardless of how plaintiffs finance their medical expenses. Alternatively, the “reasonable value” approach allows plaintiffs to recover the reasonable value of medical expenses without regard to insurance status. Courts define “reasonable value” variably, with some recognizing the actual amount paid, while others accept the full, undiscounted medical bills. A hybrid method allows consideration of both values in determining reasonable compensation. Section 920A of the Restatement (Second) of Torts emphasizes that there should be no differentiation between collateral source payments, which contrasts with the reasoning applied under Section 911, meant for property and service exchanges rather than personal injury. Most courts adopting the reasonable value approach permit recovery of the full billed amounts, including any discounts applied through contractual agreements with providers. Most state courts recognize the negotiated rate differential as a collateral source benefit, allowing injured plaintiffs to recover the full amount of reasonable medical expenses billed. This approach aligns with the traditional collateral source rule in tort law, which asserts that tortfeasors should be liable for all damages caused, and that plaintiffs should benefit from negotiated discounts. Critics argue that the "reasonable value/full-bill" method can result in a "windfall" for plaintiffs, as they may recover amounts not actually paid. Some courts utilize a "hybrid" method, allowing plaintiffs to present full medical bills while defendants can introduce evidence of negotiated rates, provided insurance details are not disclosed. This method is criticized by some courts, which maintain the collateral source rule as a substantive law. Tennessee courts generally follow the "reasonable value/full bill" approach, as evidenced in Fye v. Kennedy, where a decedent's hospital bill was significantly reduced through Medicaid acceptance. In Fye, the defendants argued that the trial court incorrectly allowed plaintiffs to recover the fair value of services rather than the actual amount paid by Medicaid, claiming that the plaintiffs should not recover amounts not paid due to the hospital's forgiveness of the debt. The hospital bill of $748,384.08 was deemed reasonable, and the Court of Appeals ruled that evidence of a $75,164 payment was inadmissible under the collateral source rule, emphasizing that the jury should not be informed about the bill's partial forgiveness. In Tennessee, recovery focuses on the reasonable value of necessary services, requiring proof that the services were both necessary and reasonably charged. The collateral source rule prevents defendants from showing that a reasonable charge has been paid by a third party or forgiven, though they may present evidence regarding necessity and reasonableness of the services rendered. The court highlighted that the rationale behind the collateral source rule is to ensure that a tortfeasor bears full responsibility for the harm caused, without benefiting from collateral payments. The current defendants advocate for a shift toward an "actual amount paid" approach, suggesting it should limit recovery to amounts accepted by medical providers, asserting this does not conflict with the collateral source rule. They argue that negotiated rates benefit only the insurer. However, the court disagrees with this position, maintaining the integrity of the collateral source rule. The collateral source rule prevents a plaintiff’s recovery from being diminished by benefits received from sources unrelated to the defendant, like insurance payouts. The negotiated rate differential, achieved by insurers, is considered a benefit for which the plaintiff has paid, similar to direct cash payments made by insurance. Courts affirm that a plaintiff incurs the full amount of medical charges upon treatment, remaining liable for these charges until they are settled or forgiven. The rule asserts that write-downs negotiated between insurers and providers do not equate to debt forgiveness, as these write-downs depend on the insurer’s payment acceptance after treatment is rendered. Patients typically sign agreements acknowledging their obligation to pay full charges if insurance coverage is denied. Medical bills are legitimate obligations that patients would face without insurance, highlighting the potential for personal bankruptcy due to medical debt. Thus, arguments for adopting an “actual amounts paid” approach, which would allow evidence of adjusted insurance payments, are rejected as inconsistent with the collateral source rule, which protects the full, undiscounted medical bills from being disclosed. Adopting the “actual amount paid” approach would necessitate rejecting the collateral source rule, which has been deemed essential. The Howell case is criticized for its flawed justification for not contravening this rule and for equating the amount paid by medical insurance with the reasonable value of medical expenses, suggesting that “reasonable value” aligns with “market value.” Howell concluded that plaintiffs can recover no more than what medical providers accepted as full payment. The Defendants further argue that the term “reasonable medical expense” is similar to “fair market value,” likening it to the sale of a vehicle or home. They assert that the best method to determine reasonable medical expenses is to reference the amount accepted by providers as payment in full. However, the court emphasizes that medical expenses cannot be valued like tangible assets due to the complexities of healthcare pricing, which is influenced by regulation and various market factors. Discounted medical rates typically reflect negotiated amounts rather than true service value, thus rendering the Defendants' simplistic approach misleading. Furthermore, the Defendants' arguments focus solely on personal injury plaintiffs with private insurance, overlooking broader implications. The discussion highlights the complexities and potential legal issues surrounding the application of the "actual amount paid" approach to medical expenses in personal injury cases. It notes that varying scenarios, such as plaintiffs with TennCare, Medicare, veterans’ facility care, charitable sliding-scale payments, or family gifts, could lead to significant discrepancies in awards for reasonable medical expenses, despite identical medical services. Implementing this approach inconsistently among different types of collateral benefits may create categories of plaintiffs based on their insurance status, potentially violating equal protection clauses in state and federal constitutions, as seen in relevant case law. Concerns are also raised regarding Tennessee's collateral source rule, which presumes the reasonableness of full, undiscounted medical bills under certain conditions. The Howell decision's distinction between "donated services" and insurance benefits is criticized, arguing that the collateral source rule should apply uniformly to both. Historical application of Tennessee Code Annotated section 24-5-113 affirms this presumption for full medical bills, as established in previous court rulings. The excerpt emphasizes the implications of the collateral source rule on the admissibility of evidence regarding medical expenses in court cases. It notes that prior discussions failed to address whether the amounts “paid or incurred” reflect discounted amounts accepted by medical providers, largely due to this rule preventing the introduction of a plaintiff’s insurance benefits. The long-standing judicial interpretation aligns with the Legislature’s presumed agreement, with no contrary authority present. The court rejects the Defendants' argument that Section 24-5-113 supports their appeal, asserting that deeming full medical bills inadmissible as unreasonable would contradict the statutory process for establishing a legal presumption of reasonableness. The court also dismisses the Defendants’ push for the “actual amount paid” approach, instead acknowledging the Court of Appeals’ endorsement of a “hybrid” method, which allows plaintiffs to present full, undiscounted bills while permitting defendants to present evidence of discounted amounts, provided that insurance is not mentioned. Despite the potential equity of the hybrid method, it faces significant criticism due to practical issues and its potential to undermine the collateral source rule. Concurring/dissenting Justices in the cited case highlighted that numerous courts had rejected the hybrid method, warning it could lead to jury confusion and the inference of insurance, which the collateral source rule prohibits. The Amicus Tennessee Defense Lawyers’ Association further contends that the Affordable Care Act’s mandatory provisions challenge the necessity of the collateral source rule. The decision avoids reliance on the Affordable Care Act due to its uncertain status and acknowledges that some plaintiffs may remain uninsured. The text critiques the introduction of evidence regarding lesser amounts paid, arguing it risks jury prejudice and fails to adequately reflect the reasonable costs of care. It references the Kansas Supreme Court's application of the Collateral Source Rule, noting that hybrid approaches in legal proceedings, such as that adopted by the Ohio Supreme Court in Robinson, have caused confusion and complexity for litigants dealing with collateral benefits from third parties. The Ohio appellate court criticized this hybrid method for leading to jury confusion and an unclear verdict. Other jurisdictions, including Wisconsin and Illinois, have rejected the use of discounted payments as evidence against the reasonableness of full medical bills, asserting that this practice undermines the collateral source rule. Such evidence could mislead juries and indirectly reveal the existence of insurance, which the rule aims to prevent. Defendants are allowed to challenge the reasonableness of bills through witness testimony but cannot present evidence of reduced payments, as this would contravene the collateral source rule. Evidence of discounted medical bills, even when used solely to challenge the reasonableness of undiscounted bills, is perceived as an attempt to circumvent the collateral source rule. The prevailing legal authority criticizes this hybrid approach, asserting it undermines the collateral source rule and creates confusion by introducing discounted payments without context, potentially misleading juries to assume insurance exists. The application of this hybrid method in cases involving other collateral sources, such as charitable care or benefits like TennCare, raises additional uncertainties regarding jury instructions and evaluations. The collateral source rule is upheld by most courts as it supports public policy by allowing plaintiffs to benefit from insurance they have purchased, preventing tortfeasors from receiving an unjust advantage from these benefits. This principle extends to other collateral benefits, emphasizing that they are meant for the injured party, not the responsible tortfeasor. While the Defendants and the Tennessee Defense Lawyers Association acknowledge flaws in the collateral source rule within the current healthcare context, they have not proposed a superior alternative. Any deviation from established precedent must be justified by a strong belief in the necessity of change, which is not supported by existing common-law alternatives. Furthermore, relying on discounted medical service amounts does not accurately represent their true value, as these discounts often reflect the negotiating power of third-party payors and the advantages of prompt payment to providers. The excerpt addresses the implications of the collateral source rule in personal injury cases, particularly the challenges related to the presentation of medical expenses. It highlights that the amounts accepted by medical providers are negotiated and do not represent the prevailing costs for other patients. Doubts are raised regarding whether the reasonable value of medical services correlates with the amounts paid or billed. The Defendants, supported by the Amicus Tennessee Defense Lawyers Association, criticize the collateral source rule for allowing juries to award full, undiscounted medical bills without considering discounted amounts, risking overcompensation for plaintiffs who did not incur those full costs. This overcompensation concern has long been acknowledged as a drawback of the rule. However, the law does not prohibit overcompensation outright, suggesting that holding tortfeasors accountable may take precedence over preventing it. Under current Tennessee law, plaintiffs can present full medical bills to demonstrate the reasonable value of their medical expenses, while defendants may introduce competent counter-evidence regarding the necessity and reasonableness of those services, allowing the jury to assess the value based on all evidence. The court finds the Defendants’ arguments insufficient to warrant a departure from Tennessee's established collateral source rule, emphasizing a reluctance to overturn previous decisions without compelling reasons. The court affirms the Court of Appeals' decision to reverse the trial court's approval of the Defendants' motion in limine, maintaining the status quo of the collateral source rule in Tennessee. The Court reversed the Court of Appeals' holding that allowed Defendants to introduce evidence of lesser amounts accepted by Mrs. Dedmon's medical providers to challenge the Plaintiffs' claims of reasonable medical expenses. The Court clarified that the definition of “reasonable charges” from West v. Shelby County Healthcare Corp. applies solely to the Hospital Lien Act and does not influence the determination of “reasonable medical expenses” in personal injury cases. Plaintiffs are permitted to present evidence of Mrs. Dedmon's full, undiscounted medical bills, while Defendants cannot introduce evidence of discounted rates due to insurance. However, Defendants can present other competent evidence to contest the reasonableness of the medical expenses, provided it adheres to the collateral source rule. The Court affirmed part of the Court of Appeals' decision, reversed it regarding the introduction of discounted evidence, and remanded the case to trial court for further proceedings. Costs of the appeal are assigned to the Appellants/Defendants.