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Plaintiff Limited on Admissibility of Medical Bills to Amounts Paid by Medicare

By on October 7, 2016 in Collateral Source Rule with 0 Comments

Plaintiffs always want to present to a jury the full amount of medical bills incurred in an accident with the hope that it will increase the amount of their pain and suffering award. Based upon the collateral source rule, N.J.S.A. 2A:15-97, medical bills paid by insurance may be introduced into evidence but then must be deducted from the verdict post-trial by the judge molding the verdict. But, what about bills paid by Medicare? Can the plaintiff introduce the entire amount of the bills or just the fraction paid by Medicare? This question was addressed in the recent unpublished Law Division decision, Charles v. Thomas, 2016 N.J. Super. Unpub. LEXIS 2199 (Law Div. Oct. 3, 2016).

In Charles, the infant plaintiff, while undergoing a routine ear, nose and throat exam suffered cardiopulmonary arrest following his procedure. As a result, it is alleged that he developed hypoxic ischemic encephalopathy, cortical blindness, developmental delays, and seizure disorders. Medicare paid $239,695 for his bills, which was significantly less than the amounts originally billed by the providers. Regardless, it was undisputed that the plaintiff did not owe more than that amount.

Defendants argued that the plaintiff should be limited to introducing into evidence the amount of the medical bills actually paid by Medicare, not the amounts that the health providers billed, because that would most accurately reflect plaintiff’s loss. Defendants filed a motion to limit the admissibility of the plaintiff’s medical bills to the amount of the medical bills paid by Medicare. Plaintiff argued that the original billed amount reflected the amount of medical expenses incurred and, as such, should be admissible “so as to more fully inform the jury as to the extent of Plaintiff’s injuries resulting from his heartbreaking ordeal.”

The judge pointed out that the purpose of tort law is to make plaintiffs whole by compensating them for their actual losses and expenses. If plaintiff prevailed in this case, Medicaid would be entitled to recover its $239,695 paid. Thus, plaintiff’s actual loss, to make him whole, was that amount because Medicare was entitled to be reimbursed out of any award.

The collateral source rule does not apply to Medicaid benefits because the plaintiff must reimburse Medicaid. Hence, these benefits are not a collateral source and not subject to deduction from the award. Thus, the bills are admissible and would not be deducted from the award by the judge post-trial. Yet, the issue remains as to what amount the plaintiff may present to the jury – the original amount or the significantly reduced amount actually paid by Medicaid.

The judge had to decide what is an “incurred” bill – the full amount of the bill or the amount actually paid by Medicaid. The judge considered the definition of the word “incur,” which means “to become liable or subject to.” Here, Plaintiff was only liable to Medicaid to the extent of the $239,695 it paid. Thus, Plaintiff only “incurred” the amount he is liable to pay Medicaid: the $239,695.

The judge also reviewed an unpublished Appellate Division decision (Ribeiro v. Sintra), which he found instructive. In Ribeiro, the plaintiff was billed $178,914 in medical expenses but the providers accepted $25,420 as full payment. The Appellate Division found that medical expenses “incurred” were equivalent to the amount accepted by the medical providers in full payment, rather than the actual amount billed.

Utilizing Ribeiro’s reasoning, the trial judge limited the plaintiff to introducing into evidence the loss he actually incurred, which was the amount paid by Medicaid and accepted by the providers as full payment, not the original amount of the bills.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

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