The Collateral Attack on the Collateral Source

and How to Fight It

06/18/2020 By Justin Kallal

If the facts are against you, then argue the law. If the law is against you, then argue the facts. If both the law and the facts are against you, then attack the plaintiff’s doctors and how they make a living.

An increasing number of insurance companies and some defense counsel are taking the questionable strategy of attacking the reasonableness of an injured individual’s medical bills to try to minimize the claim for damages or simply to create pointless additional work for plaintiff’s attorneys. Sadly, it is not uncommon for these defense counsel to simply refuse to stipulate to the plaintiff’s medical bills, but then provide no evidence or testimony that the bills are unreasonable.

This tactic used to be rare in Wyoming, but it is becoming more common as insurance companies push harder to devalue the claims of injured individuals. If you do plaintiffs injury work, then you need to be ahead of the curve and fend off these attacks before they occur. The law and the facts are on your side; it is your job to make sure your client’s claims are not blindsided by a baseless attack of the “reasonableness” of the charges for their medical care. This article provides you with the legal framework of the issue and the basic tools and strategies to keep these tactics at bay to protect your client’s claims.

The collateral source rule is alive and well in Wyoming. Individuals are allowed to receive compensation from a tortfeasor for the reasonable value of their medical care, even if the care is provided at a discounted rate or for free. This has been the law of the land since Banks v. Crowner, 694 P.2d 101 (Wyo. 1985). “It is generally held that one who is injured by the tortious conduct of another is entitled to recover the reasonable value of the medical services necessary to treat the injury.

This is true even if the medical services are rendered gratuitously.” This rule has survived countless and ongoing attacks and is still well observed by both the federal and the state judiciary in Wyoming. The collateral source rule recently survived an attempted legislative attack in 2019 and was soundly defeated with help from a coordinated response by the Wyoming Trial Lawyers Association (WTLA).

In Wyoming, the collateral source rule allows the plaintiff to present their medical bills “as billed” as evidence to show the reasonable value of their medical care. The rule also prevents the defendant from introducing evidence of what was actually paid to satisfy the bills to establish reasonable value. This defense argument has been rejected by all Wyoming Courts and the Tenth Circuit:

Any discounts or write-offs reflected in Mr. Prager’s medical bills were a benefit that came as a direct result of negotiations with those providers by Workers’ Compensation— a source independent of the Hospital Defendants. This places the payments squarely within the collateral-source rule. ” The law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him.”

Restatement (Second) of Torts § 920A cmt. b. We hold that the Hospital Defendants, as tortfeasors, may not receive any consideration or benefit stemming from the discounts or write-offs. There was no abuse of discretion by the district court in excluding the evidence of Wyoming Workers’ Compensation payments. Prager v. Campbell County Memorial Hosp., 731 F.3d 1046, (10th Cir. 2013).

The Wyoming courts have been so strong in supporting the collateral source rule that some plaintiff’s lawyers have become complacent in being prepared to defend the reasonableness of their client’s medical bills. For years it was as easy as sending a letter or email citing Banks v. Crowner and telling the adjuster or defense counsel to just give it up on the “as paid” argument, but this is not the case anymore.

The defendant is prevented from attacking the reasonableness of plaintiff’s bills by showing discounts accepted by providers, but that does not prevent the defense from attacking the bills with other evidence. A quick Google search yields hundreds and hundreds of experts willing to testify about the reasonableness of medical bills. You can bet your last dollar that the vast majority of these experts are hired guns willing to say anything to devalue the medical care provided by your client’s doctors and nurses and physical therapists. However, the typical tactic of defense counsel is not even to hire an expert, but to simply refuse to stipulate to the reasonableness of the medical bills.

This can put you in a nasty bind if you just assumed defense counsel would stipulate to the medical bills and you did not prepare to make your case. As a plaintiff’s lawyer you must be aware of the issue and defense tactics in order to be prepared to shift the burden to the defendant. To get ahead of the issue and to establish and defend the reasonableness of your client’s medical bills.

If you are in litigation, address the issue early and directly with defense counsel. The majority of defense counsel from Wyoming are still willing to stipulate to the medical bills as billed. They see the tactic of refusing to stipulate or attacking provider bills for what it is: a needless and stupid burden on the plaintiff and a waste of the court’s time. Does anyone really believe it serves any legitimate interest to force five or ten health care providers to testify or provide affidavits that the money they charge for their work is reasonable?

Once you get an agreement from opposing counsel in writing, then you can go on with your case and not worry about this tactic. If you are pre-litigation and negotiating with an insurance adjustor who insists on valuing the claim based upon what has been paid by Medicare or Medicaid, then you are probably best served by saving your breath and filing suit. If you are in litigation and defense counsel indicates they will not stipulate, then you need to be proactive and put the ball in their court. If this fails and they actually hire an expert to dispute the bills, then you need to be prepared to prove up the reasonableness of your client’s medical bills.

Kristeen Hand, partner at The Spence Law Firm, recommends shifting the burden onto the defense early. Before the plaintiff goes to time-consuming length and expense to prove reasonableness with testimony from providers (all of which are obviously going to defend their bills), they really should be able to subvert this distracting defense by getting ahead of it in the beginning. In your complaint, plead that the plaintiff’s treatment and medical bills are reasonable.

Then if the defendant denies this in their answer, press them for the factual basis for their denial in your first round of discovery. Use interrogatories. Ask them to identify unreasonable bills and to give their factual basis for their position. More often than not you will find these interrogatories go unanswered during discovery because this defense is just red herring, and the defendant should consequently be precluded from making these arguments at trial.

Also, do not be afraid to get the issue in front of the judge early at the initial pre-trial conference. Point out that the defense apparently intends to contest the reasonableness of your client’s medical bills and that you may need an additional full day or two of trial to present as many as ten additional witnesses to address this issue. Most judges do not see this issue as a good use of the court’s or anyone else’s time.

Many defense attorneys will lose their resolve when faced with the prospect of trying to explain to a judge why they should be allowed to waste a day of everyone’s time when they have no evidence to support their refusal to stipulate. Remember, if you hire a physiatrist or other expert to testify comprehensively about your client’s medical care have them review the treatment and billing records of your client and be prepared to testify that both were reasonable and necessary.

Todd Ingram, partner at the Metier Law Firm, LLC recommends the following four strategies:

1) Identify past medical providers in Rule 26 disclosures along with the assertion that a representative of the providers’ billing department would be expected to testify about the reasonableness of medical billings; make this an automatic first step.

2) Obtain an affidavit from the medical provider’s billing department asserting the billing reflects reasonable and customary charges for services provided in your area. Redact collateral source information from the affidavits.

3) Serve Request for Admissions that the billing was reasonable and customary if you have obtained affidavits from your providers to the reasonableness of the billing. If the defense denies and proof is required at trial, then expenses and fees associated therewith would then be recoverable.

4) Always, always, always designate someone, even if it is the provider them self (or their billing department representative), in your expert disclosures as expected to testify that the medical bills were reasonable. In larger cases, have your life care planner (LCP) prepared to testify about the billing. This allows the provider to testify that the past treatment was reasonable and necessary, and the LCP can testify that all the bills for that treatment were reasonable.

The law and the facts and common sense are on the plaintiff’s side in defeating the attack on the reasonableness of plaintiff’s medical bills. However, if you are not aware of the issue then you and your client can be blindsided when the defense attacks your clients’ bills or refuses to stipulate to them. Be proactive and get the stipulation right away from opposing counsel. Use your complaint and interrogatories to shift the burden to the defense.

Force defense counsel to try and justify their unreasonable refusal to stipulate to medical expenses to the judge. If necessary, get affidavits and serve request for admissions so defendants will have to pay for their refusal to be reasonable and stipulate. Be prepared and stand up for your clients. With proper planning and preparation, the issue of the reasonableness of your client’s medical bills can usually be resolved favorably without extra burdens on you and your client.