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In Stanley, the Indiana Supreme Court interprets Indiana's collateral-source statute to permit a defendant in a personal-injury suit to introduce discounted reimbursements negotiated between the plaintiff's medical providers and his private health insurer, so long as insurance is not referenced. The rationale applies equally to reimbursements by government payers.
Mary Patchett admits she drove her car negligently into oncoming traffic in 2012, striking Ashley Lee's vehicle and causing Lee injuries that required medical treatment. Lee sued and sought damages that would "fully and fairly compensate her". Patchett admitted she was liable for the accident and generally agreed Lee received necessary medical treatment for her resulting injuries. But Patchett contested the reasonable value of Lee's medical care, so the parties prepared for a trial on damages. The parties agreed that Indiana Evidence Rule 413 allowed Lee to introduce her accident-related medical bills totaling $87,706.36 as evidence those charges were reasonable. The parties disagreed, however, whether Patchett could introduce evidence that Lee's providers accepted a reduced amount as payment in full. Specifically, because Lee was enrolled in the Healthy Indiana Plan (HIP), a government-sponsored healthcare program, her providers, as HIP participants, accepted HIP's prevailing reimbursement rates of $12,051.48 in full satisfaction of those charges—an 86-percent discount from the amounts billed. Lee moved before trial to prevent the jury from hearing the reduced HIP rates. Patchett objected, but the trial court granted Lee's motion. In addition to finding that the HIP payments are subject to the collateral-source statute and not permitted by Stanley, the court excluded the HIP amounts under Evidence Rule 403, because it found HIP's reduced rates would only confuse the jury. The court certified its order for interlocutory appeal, observing that "whether [Patchett] may prove the reasonable value of [Lee's] medical expenses by introducing evidence of the discounted payments made to her medical providers through RIP is of critical importance to the jury's determination of damages." The Court of Appeals accepted jurisdiction and affirmed. The court concluded Stanley was limited to "evidence of 'discounted amounts' arrived at as the result of negotiation between the provider and an insurer". Because the reduced HIP amounts "were not calculated based upon market negotiation", the court held they are "not probative of reasonable value" and were properly excluded. Patchett then sought transfer, arguing the courts below erred in finding Stanley v. Walker inapplicable to HIP discounts.
Did the rationale of Stanley v. Walker apply equally to reimbursements by government payers?
In excluding evidence of the reduced HIP rates, the trial court misinterpreted the holding in Stanley by holding the collateral-source statute, Ind. Code § 34-44-1-2(1) (2014), required the exclusion of accepted reimbursements from government payers; evidence of a medical provider's willing acceptance of reduced amounts was of value in the fact-finding process leading to a determination of the reasonable value of medical services. The trial court abused its discretion in excluding evidence of HIP discounts under Ind. R. Evid. 403 on the ground that admission of the HIP rates would only cause confusion to the jury on how such amounts should be used or considered.