Last month the Tennessee Supreme Court, in Dedmon v. Steelman, affirmed the long-standing collateral source rule in personal injury cases. As long as an injured plaintiff can establish that the medical expenses they incurred were reasonable and necessary for their treatment, the full amount of the charges from the medical providers can be accepted into evidence. Defendants cannot challenge the reasonableness of these medical expenses with evidence of the actual (discounted) amounts paid to medical providers by the plaintiff’s insurance provider.

Defendants sought to extend the Court’s decision in West v. Shelby County Healthcare Corp. to personal injury cases. West interpreted Tennessee’s Hospital Lien Act (HLA) to preclude a hospital from seeking the balance of medical expenses charged to a patient after the hospital had accepted discounted payment from the insurance company in satisfaction of the debt. Since a lien only exists for the amount a patient owes, “reasonable charges” could not exceed what the patient was required to actually pay the hospital.

The Court in Dedmon rejected the defendants efforts to limit recovery of injured plaintiffs to the discounted amounts that medical providers accepted from insurance companies in payment of medical expenses. The Court considered and rejected the “actual amount paid,” “benefit of the bargain,” and “reasonable value/actual amount paid” approach adopted in other jurisdictions. Finding that these alternatives created as many problems as they solved, the Court retained Tennessee’s “reasonable value/full bill” approach.

To rebut an injured plaintiff’s claim that the charges are reasonable and necessary, defendants are limited to competent evidence that does not run afoul of the collateral source rule.

Practical effect: No change in Tennessee to proving or disputing an injured plaintiff’s medical expenses.