Day on Torts
According to the Tennessee Supreme Court, where an HCLA defendant did not assert in his answer that a non-party physician was the cause-in-fact of plaintiff’s injuries, the trial court did not err by excluding evidence supporting that allegation at trial, even when the defendant did not seek to prove that the other physician was negligent. Further, where plaintiff’s medical bills were discounted due to an insurance policy plaintiff purchased and paid for privately, the collateral source rule was not abrogated under Tenn. Code Ann. § 29-26-119, and plaintiff could use the “full, undiscounted medical bills to satisfy the burden of proving the reasonable value of medical expenses.”
In Crotty v. Flora, 676 S.W.3d 589 (Tenn. 2023), plaintiff filed an HCLA claim against defendant doctor, alleging that her ureter was perforated during a surgery performed by defendant. Five days after the surgery performed by defendant, plaintiff had to have a second surgery, which was performed by Dr. Wiatrak. Plaintiff’s ureter perforation was found during this second surgery.
Plaintiff did not name Dr. Wiatrak as a defendant in her HCLA case. When defendant filed his answer, he reserved the right to amend his answer to assert comparative fault allegations, but he never did so.
Multiple pre-trial motions were filed, but two were at issue in this appeal to the Supreme Court. First, the trial court granted plaintiff’s motion in limine excluding “any comment, argument, or evidence asserting or suggesting fault by Dr. Wiatrak.” Second, the trial court ruled that the collateral source rule was not abrogated under the facts of this case, and that plaintiff could use the full, undiscounted amounts of her medical expenses when proving damages. In this interlocutory appeal, the Tennessee Supreme Court affirmed both of these rulings.
The Supreme Court first considered whether the trial court erred by excluding any evidence that Dr. Wiatrak was the cause-in-fact of the injury. It was undisputed that defendant did not amend his answer to assert comparative fault against Dr. Wiatrak, but defendant argued that Rule 8.03 did not bar the proffered evidence here because he was not asserting that Dr. Wiatrak was negligent, but instead “only negat[ing] the causation element of [plainitff’s] case.” The Court rejected this distinction.
The Court looked to the history of comparative fault in Tennessee, and especially relied on its previous decision in George v. Alexander, 931 S.W.2d 517 (Tenn. 1996), which included a similar argument by physician defendants. In George, two defendant physicians sought to show that the alleged injury was actually caused by the body positioning used by a non-party physician. The plaintiff in that case argued that Rule 8.03 required the defendants to “affirmatively plead the surgeon’s comparative fault as a defense,” but the defendant physicians argued that they were not required to plead comparative fault because they were only seeking to show that the surgeon’s actions were the cause-in-fact of the injury, not that the surgeon was negligent. The Supreme Court sided with plaintiff in that case. The Court explained:
Thus, George emphasized that Rule 8.03 requires defendants to be transparent, to give plaintiffs notice and a fair opportunity to bring into the litigation a nonparty who allegedly contributed to the plaintiff’s injury. It held that, if a defendant in a negligence case asserts that a nonparty was a cause-in-fact of the plaintiff’s injury, this amounts to “blame-shifting” that triggers a defendant’s duty under Rule 8.03 to affirmatively plead that allegation, even if the defendant does not accuse the nonparty of negligence.
(internal citation omitted). Applying that reasoning here, the Court stated that the argument made by defendant in this case was the same argument rejected in George.
Defendant here made the additional argument that he could not comply with both Rule 8.03 and the HCLA at the same time, as the HCLA “requires defendants who alleged fault against a nonparty to file a certificate of good faith showing there is a good faith basis to allege such fault against another.” Because he was not arguing that Dr. Wiatrak was negligent, he argued that he could not comply with both the Rule and the statute. The Court rejected this argument:
It would be passing strange for us to hold that, by enacting statutes that compel transparency and facilitate fairness, efficiency, and a just apportionment of fault, the legislature intended to abrogate nearly two decades of comparative fault jurisprudence advancing those same goals. …Rule 8.03 does not require defendants to allege the fault of the nonparty explicitly or use the words ‘comparative fault.’ It does not require precise language. …Here, [defendant] put nothing in his answer to afford [plaintiff] that same opportunity [to bring the nonparty into the litigation]. We are not persuaded that section 29-26-122(b) left [defendant] no choice but to omit from his answer anything that would have told [plaintiff] he intended to effectively shift the blame to Dr. Wiatrak.
(internal citations and quotations omitted). The trial court’s ruling was accordingly affirmed.
The Supreme Court next considered whether Tenn. Code Ann. § 29-26-119 abrogated the collateral source rule in this case. While plaintiff argued that the full, undiscounted amount of medical expenses could be used when showing damages, defendant argued that he should be allowed to introduce evidence of insurance-related discounts on the charges. The Supreme Court ultimately ruled for plaintiff and affirmed the trial court’s holding on this issue.
The trial court had found that plaintiff’s medical expenses were paid “in whole or in part by insurance that was purchased in whole or in part privately and individually,” and the Supreme Court accepted this finding in its analysis. The Court noted that § 29-26-119 “is not a model of clarity,” and it looked to both the language of the statute and previous caselaw in evaluating this issue.
The statute allows for “actual economic losses,” and the Court stated that “[t]he full, undiscounted fees are not legally imputed costs; they exist.” (internal citation omitted). The Court noted that patients agree to be liable for all fees on the front end, and if insurance denies a claim, the patient will not get any benefit in the form of discounts. The Court also noted that the statute lists the “cost of reasonable and necessary medical care” as an example of an actual economic loss, and that cost is defined as “the amount paid or charged for something.” (internal citation omitted). Considering the text of the statute, the Court found that “the best reading of the phrase ‘cost of reasonable and necessary medical care’ in section 29-26-119 is the full, undiscounted medical fees.”
Next, the Court looked at the portion of the statute that “sets out the circumstances in which the collateral source rule is abrogated.” While the statute lists several circumstances in which the collateral source rule does not apply, the statute ends by providing an exception when the costs are paid by privately purchased insurance. The Court explained that the term “paid or payable” applies to the private insurance exception, but went on to state that “because the insured typically agrees on the front end he is liable for the full, undiscounted fees, the entire amount charged is ‘payable’ from his perspective.” The Court wrote that “the fact that the insurer ultimately pays out-of-pocket a lesser, negotiated amount does not mean that the charged amount is not ‘payable.”
The Court concluded:
Thus, under the statutory private insurance exception, the common law collateral source rule is not abrogated where the medical costs are “paid or payable” by “assets of the claimant or of the members of the claimant’s immediate family and insurance purchased in whole or in part, privately and individually.” Tenn. Code Ann. § 29-26-119. In other words, if the statutory exception applies, the statute does not preclude application of the common law collateral source rule. In health care liability cases where the common law collateral source rule remains in effect, plaintiffs “may use their full, undiscounted medical bills to satisfy the burden of proving the reasonable value of medical expenses.” Assuming for purposes of this appeal that [plaintiff’s] medical expenses were paid “in whole or in part by insurance” that was “purchased in whole or in part privately and individually,” the trial court did not err in holding that “the collateral source rule is in full force and effect” as the premise for its ruling on the parties’ cross-motions in limine.
(internal citations omitted). The Supreme Court accordingly affirmed both trial court rulings.
Justice Page wrote a separate opinion dissenting from the majority on the collateral source rule issue. He wrote that he believed “when section 29-26-119 governs damages in a health care liability action, the statute’s clear language contemplates only ‘actual economic losses suffered…paid or payable,” thereby abrogating the collateral source rule.
This opinion was released eleven months after oral arguments in this case.
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