Medical Expenses Billed vs Amount Paid: What is the appropriate amount of recovery? It’s up to the jury! Circuit Split?
Higgs v. Costa Crociere S.P.A. Co., 2020 U.S. App. LEXIS 25793 *; 2020 WL 4723739 (11th Cir., Aug. 14, 2020).
State courts, state legislatures, and federal courts adjudicating maritime claims have within the past 10 or more years confronted the issue of whether a claimant can recover the full amount of medical costs actually charged as opposed to the reduced amount. This reduced amount would be what the medical insurer actually paid to the medical provider pursuant to a contract with the medical provider and usually at large discounts. The conflict arises in the application of the collateral source rule, which prohibits the tortfeasor from damages by the amount the claimant may have recovered from insurance and to which the tortfeasor has not contributed. The rule arises out of English common law.
Hospitalization and medical insurance, as do federal benefits such as Medicare and Medicaid, make the issue more bewildering because insurers negotiate with physicians, hospitals, and other health care providers to provide reduced fees for services. A physician my charge $5000.00 for surgery but is paid only $300.00 with the balance being written off, for which the patient is not responsible.
The U.S. Fifth Circuit Court of Appeals last addressed this issue in Deperrodil v. Bozovic Marine, Inc.[1] and held that in a maritime personal injury action, the proper recovery is the amount paid by the compensation carrier and not the full amount billed.[2]
The Eleventh Circuit took a different approach in Higgs. The claimant was a passenger on a vessel owned by the defendant and sued to recover damages after tripping over a bucket in the dining area.[3] The jury awarded $1 million dollars in damages and about $61,000.00 in medical expenses, which was approximately the amount billed. The trial judge reduced the medical award to the amount paid by the insurer.[4] Claimant’s counsel cross-appealed, arguing that the trial judge committed error in reducing the award pursuant to the collateral source rule.[5]
The Eleventh Circuit panel did not refer to any decisions of the Fifth Circuit and determined that the claimant is entitled to recover the reasonable value of the treatment “regardless of whether their medical expenses have been paid and by whom.”[6] The amount paid by health care insurers does not represent the reasonable value of the services actually provided.[7] Thus, the proper measure of the value of the past medical costs is to be determined by the jury considering the amount actually billed, the amount paid, and “any expert testimony and other relevant evidence the parties may offer.”[8]
In summary, it appears that the rule now in the Eleventh Circuit regarding this legal issue is that there is no rule. This would also appear to conflict with the Fifth Circuit decision, though that case involved an employee of a third party covered by the Longshore Act. Is that a sufficient distinction?
[1] 842 F.3d 352 (5th Cir. 2016) The jurisprudence in the Fifth Circuit can be traced back to Phillips v. Western Co., 953 F.2d 923, 932 (5th Cir. 1992); Davis v. Odeco, Inc., 18 F.3d 1237, 1243 (5th Cir. 1994); Johnson v. Cenac Towing, Inc., 544 F.3d 296 (5th Cir. 2000); Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373 (5th Cir. 2012).
[2] Id. at 361.
[3] 2020 U.S. App. LEXIS 25793 at *1.
[4] Id. at *2.
[5] The claimant was covered under a Medicare Advantage plan and paid $305 in premiums. Total costs for the medical services was $60,944.11. The insurer paid $12,313.67; the remaining sum is uncollectable. See 2020 U.S. App. LEXIS 25793, at * 26-27.
[6] Id. at * 32.
[7] Id.
[8] Id. at *45-46.
