Analysis questioning rates at Ballad hospital won't be part of lawsuit against Johnson City

David Floyd • Sep 25, 2019 at 9:00 PM

Findings from a consultant questioning the reasonableness of rates charged at Johnson City Medical Center won’t be considered as part of a personal injury suit against Johnson City.

City resident Theresa Doty is seeking $300,000, according to a complaint filed in February 2018, after a city-owned tractor collided with the vehicle she was traveling in along Buffalo Road on April 6, 2017.

Erick Herrin, the attorney representing the city in the case, said the road was slick after a light rain and the tires did not sufficiently grip the pavement as the driver was braking. Doty was 78 at the time of the accident.

The driver of the vehicle, Ronald Weaver, and the city are both defendants in the case.

After the crash, Johnson City Medical Center charged Doty $9,728 for a visit to the emergency room and $194,468 for surgery on her shoulder. Court documents say these charges were ultimately satisfied by Medicare payments totaling $13,443.71.

"Ballad Health accepts Medicare payment and associated copays and deductibles as payment in full," Ballad Health said in response to a request for comment.

Judge Jean Stanley decided during a hearing at the George Jaynes Courthouse on Monday that information from the defendant provided by Marc Chapman, the owner of a firm that conducts reviews of medical bills, violates the collateral source rule and therefore does not adequately challenge the reasonableness of using Doty’s non-discounted medical bills as part of her claim.

Stanley is still deciding whether the court should exclude portions of the testimony from the physician who performed Doty’s shoulder surgery, Dr. Gregory Stewart. Doty’s attorney, Sandy Gothard, made the request in a motion filed in June.

The collateral source rule, according to the Upper Cumberland Business Journal, prevents defendants in personal injury lawsuits from introducing evidence that shows the plaintiff received payments or benefits from a third party, like a health insurance provider, for damages.

In Tennessee, medical bills are presumed reasonable in cases like this unless they are adequately challenged by the defendant.

In a motion filed by the city in April, Chapman argued that, based on his calculations, Johnson City Medical Center, which is part of the Ballad Health system, should have charged $39,952 rather than $204,196, for Doty’s total medical expenses.

Herrin has said high incurred medical expenses are a national issue and are not isolated to Johnson City Medical Center.

Chapman said in his report that hospital prices in the U.S. have risen disproportionately faster than costs. Billed charges, Chapman wrote, have also “risen excessively” compared to the actual amount of money collected by hospitals.

He wrote in his report that Johnson City Medical Center on average collects 16.4% of the money it bills to patients and that private payers are on average paying about 20% of the hospital’s billed charges.

In a response to the city’s motion, Gothard argued that Chapman does not have the “scientific, technical or specialized knowledge” to help the court determine whether the city has adequately rebutted the reasonableness of the medical expenses. He also noted that the city’s motion violates the collateral source rule.

"Right now the law of the land is evidence regarding discounted medical rates or anything that an insurance might pay is inadmissible,” Gothard said after the hearing.

Stanley said Doty’s case against the city isn’t too different from the circumstances of Dedmon vs. Steelman, a case heard by the Tennessee Supreme Court in 2017 where the court stated that the collateral source rule applies in personal injury suits.

“If I’m an attorney and I work for poor people and I charge $300 and collect $30 an hour, that doesn’t mean my $300 is not reasonable,” Stanley said, “so I don’t think in and of itself the collected amount has any real connection to the issue of the reasonableness of the amount.”

In his interpretation of the Dedmon opinion, Herrin said Tuesday that he believes he’s only precluded from introducing Doty’s discounted medical payments, not general data, as proof that the non-discounted billing is unreasonable.

“We have a difference of view about what approach can be taken to establish when a medical bill is reasonable or unreasonable,” Herrin said “and at this point I don’t know any other way to establish that other than to look at extrapolated data of what medical providers are willing to accept.”

Looking at the disparity between non-discounted rates and discounted rates, Herrin argues that the judicial system is being asked to handle fictional rates that in general don’t represent actual payments.

“We are allowing a fiction that takes place in how we pay for medical care, both at hospitals and other providers, a fiction of it to be transported into the judicial system and resulting in a judgment that also contains fiction,” he said.

Fundamentally, Gothard said the individual who pays for health insurance should be the one who receives those benefits.

“They shouldn’t go to somebody else,” he said. “So let’s say I get hurt and you cause me to have $2,000 worth of medical bills. Well, my insurance company will get a discount and pay it. Well, the total charge is total amount of damages, and someone that causes harm shouldn’t get the credit for something that I paid for.”

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