The collateral source rule still applies in Claims Commission cases to bar evidence that a plaintiff actually paid a discounted amount on his or her medical expenses.
In both Estate of Tolbert v. State of Tennessee, No. M2017-00862-COA-R3-CV (Tenn. Ct. App. Feb. 28, 2018) and Stevens v. State of Tennessee, No. M2017-01114-COA-R3-CV (Tenn. Ct. App. Feb. 28, 2018), plaintiffs were awarded damages by the Claims Commission due to car accidents caused by state employees. The Claims Commission awarded plaintiffs the full amount of their undiscounted medical bills, plus other damages, and the State appealed, arguing that the damages awarded should have reflected the discounted amounts actually paid by plaintiffs. The Court of Appeals affirmed the damage award of the full, undiscounted amount.
The Court noted that while these appeals were pending, the Tennessee Supreme Court decided Dedmon v. Steelman, 535 S.W.3d 431 (Tenn. 2017), in which it held that “defendants are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut plaintiffs’ proof that the full, undiscounted charges are reasonable.” The issue in both of these cases, then, was whether Dedmon applied to cases under the Claims Commission Act. In answering this question, the Court in Stevens quoted extensively from and adopted the reasoning of the opinion released for Estate of Tolbert.
The State argued that subsection (d) of the Claims Commission Act (§ 9-8-307(d)) abrogated the collateral source rule in this context. This subsection states:
The state will be liable for actual damages only. No award shall be made unless the facts found by the commission would entitle the claimant to a judgment in an action at law if the state had been a private individual. …
The state asserted that the reference here to “actual damages” meant that plaintiffs should be limited to what was actually paid on their behalf. The Court, though, quickly rejected this argument, pointing out that “Tennessee courts have generally equated ‘actual damages’ with ‘compensatory damages,” and that “[w]hen a statute contains a term with a well-recognized common law meaning, we will apply the common law meaning unless a different meaning is apparent from the context or general purpose of the statute.”
Ultimately, the Court held that “[n]othing in the Claims Commission Act indicates that the General Assembly intended to deviate from the well-recognized common law meaning of ‘actual damages.’” Accordingly, it concluded that “the collateral source rule precluded consideration of the amounts deducted as adjustments to the claimant’s medical bills based on their insurance,” and that discounted medical bills could not be used by defendants in Claims Commission cases.
These two cases were short and well-written, correctly applying both the Dedmon decision and existing common law to claims arising under the Claims Commission Act.