Collateral Source Rule in Georgia

Probably the biggest sore spot in litigation between plaintiff’s and defense lawyers in Georgia these days revolves around the collateral source rule and related issues that arise with medical funding companies.

The beginning point of the analysis is the proposition that the injured plaintiff can recover all “reasonable and necessary” medical expenses flowing from the injury. MCG Health, Inc. v. Knight, 325 Ga. App. 349 (2013).

The fights begin when there is a delta between the retail price of the procedure and the amount that actually gets paid to the Doctors. The shield that allows the plaintiff to present the retail price to juries is the collateral source rule which prevents the defense from showing any other source (think health insurance) paid for the treatment. Kelly v. Purcell, 301 Ga. App. 88 (2009).

When it comes to third party medical lien care providers, the trial court decisions are all over the map and so far appellate courts have not chimed in on whether the rate actually paid to the Doctors is admissible. You will generally find four areas of argument:

1. The doctor held the lien themselves, meaning they only get paid if the plaintiff gets a verdict or settlement.
2. The doctor gets paid a set amount by a third party lien lending company and then the company charges a much higher price on paper to the plaintiff and to show the jury.
3. The doctor gets paid by a pre-set schedule of prices by a third party insurer or workers comp or the like.
4. The bills get written off in full or partially by the hospital or provider.

When the doctor holds the lien themselves, it is probable that evidence of the financial interest in the outcome of the case can not only lead to the Doctor’s name being read to the jury but also the evidence of their financial stake coming into evidence. It is hard to argue that the Doctor is not as risk for bias when there are thousands of dollars riding on their testimony.

When the Doctor gets paid a set amount by a third party lien provider, that evidence should not come in as it is likely still a collateral source. The lowered price structure is the result of the strength of market share buying power, similar to negotiated health insurance rates. Some trial courts are allowing the evidence in under the argument that the numbers negotiated are admissible as evidence of market price. Some defense lawyers are taking it a step further and arguing that the lien providers are colluding with the doctors and then trying to smear the medical merits of the plaintiff’s case. The Plaintiff’s legal argument is that the third party lien is a collateral source. A collateral source is “a third party which has voluntarily provided a benefit through a bargained-for agreement, such as an insurer, or as a gratuity.” Olariu v. Marrero, 248 Ga. App. 824, 826 (2001).There is no distinction whether paid by “insurance companies or beneficent boss or helpful relatives.” Hoeflick v. Bradley, 292 Ga. App. 123, 124 (2006).

With the traditional collateral sources, there is little argument that their existence is to be shielded but we still see attacks by the defense on the reasonable cost of the bills. They are pointing to a discovery argument found in MCG Health, Inc. v. Knight, 325 Ga. App. 349 (2013) to argue the proposition that health insurance and medicare rates are relevant to the actual cost of the medical care. The law is pretty clear that with health insurance, that pre-set price is inadmissible evidence of collateral source of benefits. In that situation, the major fight is now whether they can introduce evidence of fee schedules to show that the reasonable and ordinary cost of medical care is lower than the sticker retail price. Allstate is currently on an idiotic kick where they are disputing every bill from every provider, no matter how legitimate.

Lastly, situations in which the hospital writes it off should be excluded. Evidence of gratuitous payments such as free or reduced rate medical care; continued salary or wage payments and payments made by beneficent employers or helpful relatives are also inadmissible. Hoeflick v. Bradley, 282 Ga. App. 123, 124, 637 S.E.2d 832, 833 (2006) and Bennett v. Haley, 132 Ga. App. 512, 523, 208 S.E.2d 302, 310 (1974).