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Date ArticleType
3/2/2016 Other
An Update on Patchett v. Lee

On November 19, 2015, the Indiana Court of Appeals released a landmark decision in the case of Patchett v. Lee. The ruling signified a major shift in Indiana tort law relative to the determination of medical specials damages. Under Indiana law, an injured plaintiff is entitled to recover the reasonable value of his or her medical expenses as determined by a jury. Prior to the Court of Appeals' ruling, the court allowed the plaintiff to enter into evidence the cost of the medical services billed by providers, and allowed the defendant to enter into evidence the amount actually paid to the provider in full satisfaction of the claims. This method provided the jury with a range from which to select a reasonable value.

However, the Court of Appeals, in Patchett, broke from this precedent established by the Indiana Supreme Court and determined that in cases involving government-insured individuals (Medicare and Medicaid), the amount paid by the government in full satisfaction of a plaintiff's claim is inadmissible as evidence. This decision greatly impacts the financial liability and exposure to lawsuits of any business or entity that interacts frequently with government-insured individuals, like long-term care providers.

Fortunately, the appellant in Patchett, has decided to seek transfer to the Indiana Supreme Court in an effort to overturn the decision of the Court of Appeals. Due to the major impact on the IHCA membership, the IHCA Board elected to engage the law firm of Quarles & Brady to draft an amicus curiae brief to support and supplement the appellants' case. This brief was submitted to the court on February 19, and has been accepted by the court. The brief focuses on the direct impact that the decision has on the IHCA members, and provides the Supreme Court with reasoning as to how the decision negatively impacts the industry as a whole.

The brief focuses on three main points. The first point is that in the case of government-insureds, the Court's decision has created a separate class of plaintiffs. Their reimbursements are no longer admissible into evidence, and therefore a jury will only see the arbitrarily high provider-billed amount when attempting to determine reasonable value of health care services. This will likely lead to skyrocketing jury awards and settlement agreements because juries are shielded from information necessary to make an informed decision regarding the reasonable value of medical services.

The second point is that IHCA members are at far greater risk for exposure to lawsuits and financial liability than any other businesses or entities. The brief cites the extraordinarily high number of government-insured individuals, the State's indigent and most vulnerable, served by IHCA member facilities on a daily basis. With such a large number of government-insured individuals in the facilities, these facilities are unfairly placed at greater risk.

The final point made in the brief is that a blanket proclamation from the Court that all government-set rates are unequivocally unreasonable (and should never be seen by a jury) is unjustified, unsupported, and unfair to providers, and likely contradictory because such a proclamation will undoubtedly drive up provider costs all while the Court has deemed their reimbursements to be unreasonably low.

If you would like further information about the case, or a copy of the amicus curiae brief submitted to the Supreme Court on behalf of the IHCA, please do not hesitate to contact Grant Krevda at gkrevda@ihca.org.