Summary
In Strahley v. Mercy Health Center of Manhattan, 2000 WL 1745291 (D. Kan. 2000) (unpublished opinion), Judge Vratil adopted the Medicaid-based rationale in Bates and, like Fischer, extended it to private insurance write-offs by health care providers.
Summary of this case from Martinez v. Milbum Enterprises, Inc.Opinion
Civil Action No. 99-2439-KHV.
November, 2000.
MEMORANDUM AND ORDER
Plaintiffs allege that defendants acted negligently during the birth of Andrew Strahley. This matter comes before the Court on Defendant Mercy Health Center Of Manhattan, Inc.'s Motion In Limine To Exclude Evidence Of Medical Expenses Written Off By Health Care Providers (Doc. # 81) filed September 12, 2000. For reasons set forth below, the Court finds that the motion should be sustained.
Mercy Health Center seeks to exclude evidence of amounts which represent contractual adjustments or "write-offs" of plaintiffs' medical expenses. It thus seeks to limit plaintiffs' evidence of medical expense to amounts actually paid by plaintiffs, their insurance carrier or Medicaid — as opposed to amounts billed by their health care providers. Plaintiffs argue that to the extent their medical bills were reduced under Medicaid or private insurance contracts, such evidence is inadmissible under the Kansas collateral source rule.
The admissibility of evidence in diversity cases in federal court is generally governed by federal law. See Romine v. Parman, 831 F.2d 944, 945 (10th Cir. 1987). If an evidentiary question is intertwined with a state substantive policy, however, state law applies. See Moe v. Avions Marcel Dassault-Breguet Aviation, 727 F.2d 917, 930-33 (10th Cir. 1984) (in diversity case Kansas law controls admissibility of evidence of subsequent remedial measures). Application of the collateral source doctrine, while an evidentiary rule, is closely tied to state substantive policy, and thus is governed by Kansas law. See Hottle v. Beech Aircraft Corp., 47 F.3d 106, 109-110 (4th Cir. 1995) (state evidentiary rule excluding private internal company documents applies in diversity case, even though documents otherwise admissible under the Federal Rules of Evidence).
Under Kansas law,
The collateral source rule permits an injured party to recover full compensatory damages from a tortfeasor irrespective of the payment of any element of those damages by a source independent of the tortfeasor. The rule also precludes admission of evidence of benefits paid by a collateral source, except where such evidence clearly carries probative value on an issue not inherently related to measurement of damages.
Bates v. Hogg, 22 Kan. App.2d 702, 705, 921 P.2d 249, 253 (1996), statutory overruling on other grounds noted in Frans v. Gausman, 6 P.3d 432 (Kan.Ct.App. May 12, 2000). Under the collateral source rule, the fact that Medicaid and private health insurance paid plaintiffs' medical expenses is not admissible. The question in this case, however, is whether plaintiffs may introduce evidence of amounts which represent write-offs of medical expenses. See Mitchell v. Hayes, 72 F. Supp.2d 635, 637 (W.D.Va. 1999) (under Virginia collateral source rule, plaintiffs may not introduce evidence of amount of medical expenses written-off).
Mercy Health Center argues that the write-offs are not part of plaintiffs' damages, relying primarily on Bates. In that case, plaintiff asserted that the trial court erred in prohibiting her from presenting evidence of the full market value of the medical treatment which she had received, instead of the amounts which Medicaid actually paid on her behalf after a statutory write-off or charge-down. Plaintiff contended that in doing so, the court violated the Kansas collateral source rule. The Kansas Court of Appeals rejected plaintiff's argument, noting that the purpose in awarding damages is to make plaintiff whole by restoring her to the position she occupied before her injury. 22 Kan. App.2d at 703, 921 P.2d at 252. The court reasoned that plaintiff would be restored to her prior position if she received the amount which Medicaid had paid to health care providers on her behalf. Thus, the court concluded that the collateral source rule did not apply.
The court also found that the amount paid to health care providers under Medicaid becomes the customary and thus reasonable value of the services.
Although Bates addressed only a Medicaid write-off, the same reasoning applies to amounts written off in conjunction with private health care insurance. No one, including plaintiffs, is liable for the amount of the write-offs. Therefore, they do not represent actual losses. See McAmis v. Wallace, 980 F. Supp. 181, 184 (W.D.Va. 1997) (plaintiff in Virginia personal injury action could not recover amount of Medicaid write-off). As the court stated in Mitchell v. Hayes,
Discounting is a reality of modern medical economics and it does no violence to the collateral source doctrine to bring to the tort compensation system the same intended savings. By allowing the plaintiff to show the discounted medical expenses as evidence of his damages, even though he paid no part of them, but refusing any evidence of the write-offs that no one incurred, there is a proper balance of the competing interests at issue.72 F. Supp.2d 635, 637; see Feraca v. Klinker, 2000 WL 1210862 (Va. Cir. Ct. May 2, 2000) (no one liable for written-off portions of medical bills, so collateral source rule does not require that plaintiff be permitted to recover written-off portion); see also Jackson v. City of Kansas City, 263 Kan. 143 (1997) (suggesting in dicta that plaintiff may not recover expenses written off by medical providers).
IT IS THEREFORE ORDERED that Defendant Mercy Health Center Of Manhattan, Inc.'s Motion In Limine To Exclude Evidence Of Medical Expenses Written Off By Health Care Providers (Doc. # 81) filed September 12, 2000 be and hereby is SUSTAINED. Plaintiffs are precluded from referring to or introducing at trial any amount of medical bills that represent adjustments or write-offs.