Changes to Law Governing the Value of Plaintiffs’ Medical Bills and the Collateral Source Rule

Since 2005, Missouri attorneys have struggled with the interpretation and application of Missouri’s collateral source rule as it related to evidence of a plaintiff’s medical treatment bills. Generally speaking, the collateral source rule bars a defendant from introducing evidence that part of a plaintiff’s damages were paid for by a party other than the defendant; i.e., the plaintiff’s insurance company or some other form of public benefit. In Missouri, however, that rule had been applied to allow plaintiffs to present evidence of the total amount billed by a health care provider for medical services irrespective of contractual adjustments with insurers, writeoffs, or other reductions. The philosophy behind this approach was that defendants should not benefit from those adjustments and reductions when they otherwise allegedly had caused the expenses to be incurred in the first place; opponents to reform on the issue further argued that it was designed to increase profit margins for insurers and penalized those with better health insurance. The problem with that methodology, of course, was that conversely plaintiffs were arguably being rewarded with a recovery windfall beyond what it actually took to pay their bills—essentially a double-dip.

This application stemmed from the October 2010 opinion in Deck v. Teasley,[1] in which the Missouri Supreme Court spoke to the issue interpreting the version of Mo. Rev. Stat. 490.715.5[2] then in place, as amended in 2005. In Deck, the Court laid out a framework wherein after Defendants presented evidence of the dollar amount necessary to satisfy the financial obligation to the health care provider, the Plaintiff could try to rebut that presumption with evidence of the full amount that had been billed through bills, affidavits, and/or testimony by various health care providers or other witnesses from their offices to discuss the actual “value” of the services--regardless of the negotiated rates that had been reached with patients’ insurers or other cuts or writeoffs to the bills. In practice, this “reasonableness” and “value”-based approach undercut the attempt of Mo. Rev. Stat. 490.715 to address the reality of reduced and cut-rate billing.

On July 5, 2017, however, some relief to this confusion arrived. Governor Greitens signed Missouri Senate Bill 31, bringing changes and sought-after clarity to Missouri’s collateral source rule and the tortured interplay between the statute and Deck. Missouri Senate Bill 31 amends Mo. Rev. Stat. 490.715[3] to redefine the value or “actual cost” of medical expenses as:

“…a sum of money not to exceed the dollar amounts paid by or on behalf of a plaintiff or a patient whose care is at issue plus any remaining dollar amount necessary to satisfy the financial obligation for medical care or treatment by a health care provider after adjustment for any contractual discounts, price reduction, or write-off by any person or entity.”

Translation: Parties must now introduce evidence of the plaintiff’s “actual cost” for medical care or treatment, which is now clearly defined as the amounts required to satisfy plaintiff’s medical bills plus any outstanding balances -- doing away with the confusing “rebuttable presumption” standard previously imposed by Deck and the 2005 version of the statute. Damages claimed by a plaintiff at trial that have been satisfied by a payment from a defendant, the defendant’s insurer, or a defendant’s authorized representative prior to trial are not recoverable and defendant is entitled to deduct those payments toward any judgment rendered against them. Id. At 490.715.2 & 3 (2017).

A result of this legislative change that would not be wholly unexpected could be that plaintiffs decline to offer their medical bills as evidence of special damages in their cases. This approach was sometimes already being used prior to Senate Bill 31 in the Deck era, particularly in cases where large amounts were cut from plaintiffs’ bills--making the disparity between the “billed” and “paid” amounts of the bills enough that plaintiffs worried they risked appearing to a jury as overreaching. Jurors also would frequently realize that plaintiffs had health insurance or other payment sources when they saw the two disparate numbers. To attempt to remedy this, prior to trial, plaintiffs’ attorneys would amend (or advise that they planned on doing so) their pleadings to remove claims for special damages attributable to the medical bills, arguing that doing so made evidence of those bills beyond the scope of the pleadings even if defendants attempted to introduce them as evidence of the nature (or lack thereof) of pain, suffering, and injury in the case.

However, this strategy may backfire on the plaintiffs—if they choose this approach too early, and refuse to engage in medical billing discovery, they offer defendants little to no basis on which to evaluate their claims—potentially hindering resolution negotiations. Moreover, juries are smart and know that for the most part, no one rides for free—medical treatment costs something, and without seeing any bills or discussion of what plaintiffs’ treatment cost, they may be left wondering if there is truly any cost that was incurred by the plaintiffs that should be compensated. There is nothing in the revised legislation that keeps defendants from themselves introducing the billing evidence—as noted above, S.B. 31 speaks in terms of “parties,” not “plaintiff” or “defendant”—but the obvious downside to such an approach from the defense side is that it potentially gives juries a number touchstone, whereas without the bills in front of them, there is nothing to which they can necessarily tether a damages finding.

Time will tell as to the strategic effect of Senate Bill 31, but for now, defendants can take some relief in knowing that clarity has at least arrived in the definition of what a plaintiff’s medical/special damages will look like at trial.

Senate Bill 31 can be viewed in its final “Truly Agreed To and Finally Passed” format at http://www.senate.mo.gov/17info/pdf-bill/tat/SB31.pdf.

[1] Deck v. Teasley, 322 S.W.3d 536 (Mo.banc 2010).

[2] Mo. Rev. Stat. §490.715.5(2) (2005) provided: “…(2) In determining the value of the medical treatment rendered, there shall be a rebuttable presumption that the dollar amount necessary to satisfy the financial obligation to the health care provider represents the value of the medical treatment rendered. Upon motion of any party, the court may determine, outside the hearing of the jury, the value of the medical treatment rendered based upon additional evidence, including but not limited to: (a) The medical bills incurred by a party; (b) The amount actually paid for medical treatment rendered to a party; (c) The amount or estimate of the amount of medical bills not paid which such party is obligated to pay to any entity in the event of a recovery. Notwithstanding the foregoing, no evidence of collateral sources shall be made known to the jury in presenting the evidence of the value of the medical treatment rendered.”

[3] Mo. Rev. Stat. §490.715 (2017)

  • Amanda M. Mueller

    Amanda M. Mueller focuses her practice on cases involving complex litigation matters, including:

    • Premises liability matters
    • Personal injury matters
    • Religious/school institution cases involving allegations of ...

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