HIP payments not negotiated; Stanley not applicable

Medical payments made by the Healthy Indiana Plan for a woman involved in a car accident to reimburse her medical providers in full satisfaction of hospital bills were properly excluded at trial, the Court of Appeals held Thursday. The trial court correctly ruled that those payments are barred by the collateral source statute and that Stanley v. Walker does not apply.

Mary Patchett caused a car accident in which Ashley Lee suffered severe injuries. Lee was a member of HIP, a health insurance program from the state that pays for medical expenses, and members contribute monthly contributions to their coverage. Lee’s total medical bills were more than $80,000; HIP paid out a little more than $12,000 to the medical providers, and that was considered paid in full.

Lee sued Patchett, and Lee filed a motion to prevent Patchett from referencing the HIP payments. The trial court granted her request, finding Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009), doesn’t apply because the price HIP paid wasn’t negotiated but is a set amount based on Medicaid and Medicare rates. The matter came before the Indiana Court of Appeals on interlocutory appeal.

Indiana Trial Lawyers Association filed an amicus brief, arguing in part, that “[a]llowing the admission of government reimbursement rates will change our tort system into one that necessarily values the suffering and injuries to those served by Medicaid and Medicare – our needy, disabled, and elderly – less than those who can afford private insurance.”

After examining Stanley, the collateral source statute and collateral source rule, the COA affirmed the lower court. Stanley allows for the admission of “discounted amounts” that are based on negotiation.

“Here, because the HIP payments were not calculated based upon market negotiation but instead were set by government regulation, such amounts are not probative of the reasonable value of the medical expenses. Thus, we conclude that the trial court properly excluded the evidence of the HIP payment amounts,” Judge Elaine Brown wrote in Mary K. Patchett v. Ashley N. Lee, 29A04-1501-CT-1.