Joe runs a red light and crashes into Jane’s car, sending Jane to the ER. When Jane later receives the ER bill, it lists the amount owed as $10,000. On her behalf, the hospital submits the bill to her health insurer, who pays a reduced rate of, say, $4,000 pursuant to a previously arranged agreement with the hospital. Jane eventually files a personal injury lawsuit against Joe seeking recovery for, among other things, her medical bills. Can Jane introduce evidence at trial that her bills were $10,000, or is she limited to the $4,000 figure? Until recently, Jane would have been entitled to recover the entire “billed” amount of $10,000. Since 2011, however, due to the legislature’s enactment of Rule of Evidence 414, Jane is only entitled to introduce evidence of the “paid” amount – in this example, $4,000. Rule 414, sometimes called the "billed v. paid" rule, reads:
Evidence offered to prove past medical expenses shall be limited to evidence of the amounts actually paid to satisfy the bills that have been satisfied, regardless of the source of payment, and evidence of the amounts actually necessary to satisfy the bills that have been incurred but not yet satisfied. This rule does not impose upon any party an affirmative duty to seek a reduction in billed charges to which the party is not contractually entitled.
Because Rule 414 only applies to claims that arose on or after October 1, 2011, and given the length of time it takes for a plaintiff to file suit and for the case to work its way through the litigation process, we have only recently begun to see how Rule 414 works in practice. A perhaps unanticipated development in the implementation of Rule 414 has been a trend among certain medical care providers to refuse to submit bills to a patient’s health insurer in cases involving the potential for third party liability.
At first glance, it is difficult to understand why a provider would refuse to submit its own bill to be paid by a health insurer. Don’t the providers want to get paid? Of course they do – in fact, counter-intuitively, the likely explanation for this trend is the providers’ desire to maximize their recovery.