House Vote Expected Today! Legislation to Prevent Plaintiffs from Black-Boarding Hospital Charges vs. What was Paid by a Third Party

Dec 13, 2016

Saurbier

In July, 2016, the Michigan Supreme Court denied to grant an Application for Leave on a Court of Appeals ruling that held that negotiated insurance discounts that reduced the amount of medical expenses Plaintiffs would otherwise be responsible for paying in verdicts or settlements are “‘benefits received or receivable’ from an insurance policy, and therefore, a collateral source within the meaning of MCL 600.6303(4).” In denying leave to appeal, Justice Zahra authored a concurrence, joined by Justice Markman and Chief Justice Young, arguing that in reaching this conclusion, the: “… result is at odds with my understanding of the purpose of the collateral-source statute. As is evident from the Court of Appeals’ opinion, the Legislature did not expressly limit its exclusion from the collateral-source rule to the amount actually paid for medical services by the lienholder.”

This holding would essentially allow Plaintiffs to “blackboard” economic damages during trial that are nonexistent. Practically, the Court of Appeals ruling would authorize recovery for medical expenses that were never incurred by allegedly-injured Plaintiffs. Justice Zahra implored the Legislature to take a closer look at this ruling and the actual language of the underlying statue to consider revising it to fix this likely unintended purpose.  This week marks the last week of this legislative session. As such, lawmakers in Lansing are working through a large agenda of many items. On the agenda in the Michigan House of Representatives today is SB 1104.

SB 1104, authored by Senator Mike Shirkey, seeks to remedy this problem by limiting damages for past medical expenses or rehabilitation services to actual damages for medical care that arose out of the alleged malpractice. Section 1482 of the bill would provide that damages recoverable for past medical expenses or rehabilitation service expenses could not exceed the actual damages for care. Additionally, the bill would prohibit Plaintiffs from introducing evidence of past medical expenses, except for evidence of the actual damages for medical care.

The bill defines “actual damages” as: “The dollar amount actually paid for past medical expenses or rehabilitation service expenses by or on behalf of the individual whose medical care is at issue, including payments made by insurers, but excluding any contractual discounts, price reductions, or write-offs by any person,” and the “remaining dollar amount that the plaintiff is liable to pay for the medical care.”

The legislation would solve the problem crated by the Court of Appeals ruling while preserving the core of the Collateral Source Rule. It passed the Senate by a vote of 26-10 on October 20, 2016. It was placed on “second reading” in the House on December 8, 2016; setting the stage for moving to “third reading” and then final passage. We are being told that the Plaintiffs’ Bar and associated interest groups and organizations are lobbying hard against final passage. The Michigan Health and Hospital Association is supportive of its passage, and offered testimony in the Senate Competitiveness Committee. That testimony can be found here: http://www.mha.org/Portals/0/medical_liability_2016.pdf

Information on the legislation, including a non-partisan analysis from the House Fiscal Agency can be found here: http://www.legislature.mi.gov/documents/2015-2016/billanalysis/House/pdf/2015-HLA-1104-19288E96.pdf

This legislation is on the agenda today and lawmakers could move for final passage. If you wish to call your State Representative and urge them to vote “Yes,” follow this link to find them and obtain their contact information: http://www.house.mi.gov/mhrpublic/