In a case being closely watched throughout the state, the Indiana Supreme Court issued its opinion in Patchett v. Lee, holding for the first time that the admission of evidence to the jury of reduced healthcare payments in personal injury suits must now also include reimbursements that healthcare providers receive from government payers such as Medicare and Medicaid. This case garnered much attention in the legal and business communities throughout Indiana because the outcome directly impacts the calculation of jury awards in personal injury suits.

Prior to the Supreme Court's ruling in Patchett, the collateral source statute, Ind. Code § 34-44-1-2(c), as interpreted by Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), permitted the admission of evidence of the total amount of healthcare costs billed by the healthcare provider, as well as the reduced reimbursement accepted by the healthcare provider in full satisfaction of the charges. The jury could examine both values to determine the reasonable value of medical services for purposes of calculating its award to the injured plaintiff. However, the Stanley case dealt with discounted payments that health care providers accepted in full payment for services rendered under private insurance plans.

In Patchett, the trial court and Indiana Court of Appeals sought to distinguish Stanley, holding that evidence as to reimbursements accepted by healthcare providers for government insureds warranted different treatment from that of reimbursements for private pay patients. The trial court ruled (and the Indiana Court of Appeals affirmed) that Medicare and Medicaid payments made to healthcare providers on behalf of government-insureds, in full satisfaction of the services rendered, should be barred from entry into evidence because they were not the result of an arms-length negotiation and, thus, did not constitute a probative, relevant measure of the reasonable value of medical services provided to the injured plaintiff. This resulted in a separate class of plaintiffs being treated differently in terms of what they may recover for medical special damages because of how they are insured. Click here to learn more.

However, the Supreme Court reversed and remanded, directing the trial court to allow into evidence the amount of the payments made in full satisfaction of claims on behalf of the government-insured in this personal injury suit. The court answered: “Today, we hold the rationale of Stanley v. Walker applies equally to reimbursements by government payers. The animating principle in both cases is that the medical provider has agreed to accept the reduced reimbursement as full payment for services rendered. The reduced amount is thus a probative, relevant measure of the reasonable value of the plaintiff’s medical care that the factfinder should consider.”

The result of this case significantly impacts the calculation of jury awards in personal injury suits and ensures that defendants will not face greatly expanded financial liability in cases involving government-insureds. The opinion adopts the result advocated and follows the reasoning espoused in the amicus curiae brief filed on behalf of the Indiana Health Care Association by Quarles & Brady attorneys.