In Nebraska, comparing what is charged in medical expenses to what was actually accepted as a complete payment of those medical expenses, including the patient deductible, is important in litigating every medical malpractice case. The measure of recovery for medical expenses is the reasonable value of the medical services rendered. Stanek v. Swierczek, 209 Neb. 357, 307 N.W.2d 807 (1981). Plaintiff’s attorneys frequently cite a provision of Nebraska’s hospital lien statute to claim their clients are entitled to recover the amounts health care providers billed, regardless of whether the providers accepted less as full payment for the services provided. See Neb. Rev. Stat. § 52-401. That provision provides, in the context of calculating hospital liens, “The measure of damages for medical expenses in personal injury claims shall be the private party rate, not the discounted amount.” This misuse of the hospital lien statute could result in huge windfalls for personal injury plaintiffs.
The reasonable value of medical expenses is the proper measure by which a plaintiff must prove their damages for the cost of medical treatment. See Steinauer v. Sarpy County, 217 Neb. 830, 843, 353 N.W.2d 715, 724 (1984) (providing that a person who suffers personal injury due to “the negligence of another is entitled to recover for the reasonable value of medical care and expenses incurred to the time of trial” as well as reasonably certain to be incurred in the future) (emphasis added). If the amount of medical charges is disputed, then the reasonableness of those amounts becomes a question for the jury. Renne v. Moser, 241 Neb. 623, 634 (1992). In order to recover personal injury damages, those damages must be fair and reasonable. N.J.I.2d Civ. § 4.01, the general instruction on damages, requires the jury to consider only “2. The reasonable value of the medical (hospital, nursing, and similar) care and supplies reasonably needed by and actually provided to the Plaintiff (and reasonably certain to be needed and provided in the future).”
Evidence of the amounts providers accepted as payment is necessary to establish this element of damages because the amount billed virtually never represents the fair value of those services. Changes in the delivery and financing of healthcare services have profoundly influenced medical billing in recent decades. While the ability of healthcare providers to set their own charges remains, the ability to collect the full amounts charged, referred to as “charge-master rates” has dramatically decreased. Michael K. Beard and Dylan H. Marsh, Arbitrary Healthcare Pricing and the Misuse of Hospital Lien Statutes by Healthcare Providers, 38 Am. J. Trial Advoc. 255 (2014); Michael K. Beard, The Impact of Changes in Health Care Reimbursement Systems on the Recovery of Medical Expenses in Personal Injury Suits, 21 Am. J. Trial Advoc. 453 (1998). The frequency at which patients are charged full charge-master rates has declined significantly over the recent past, and numbers that were once based in fact are now largely based in fiction. Indeed, the charge-master rates have become so inflated that even hospital officials admit that the rates now serve as little more than the starting point from which hospitals begin negotiations with insurers over what the agreed fees will be. Courts have also recognized the exorbitant and arbitrary nature of charge-master rates. Information obtained from studies conducted by the Center for Medicare and Medicaid Services (CMS) has recently been released in an attempt to bring transparency to charge-master rates. According to the studies, these rates often vary widely for no apparent reason, even among neighboring hospitals. Beard, 38 Am. J. Trial Advoc. at 256 (emphasis added); see, also, Howell v. Hamilton Meets & Provisions, Inc., 257 P.3d 1130, 1142-43 (“For this reason as well, it is not possible to say generally that providers’ full bills represent the real value of their services, nor that the discounted payments they accept from private insurers are mere arbitrary reductions”).
It is important to make a record on the issue of what the fair and reasonable value of a medical service is and ask that the jury be allowed to decide that by looking at both. The retail amount should not be the deciding factor in deciding the amount of damages. The amount accepted as full payment is the better evidence of the fair and reasonable value of medical services provided.