SUPREME COURT MAKES HISTORY
  

 

Following a nearly two-year long appellate battle, which included a majority opinion with a three member dissent1 and the granting of rehearing, the Supreme Court did an about face on June 3 when it issued a new opinion reversing its prior decision (www.kscourts.org/kscases/supct/2005/20050603/20050603.htm). In its prior decision, Rose v. Via Christi Health System, Inc., 276 Kan. 539, 78 P.3d 798 (2003), overruled, ____ Kan. ____ (Kan. 2005), the majority of the Supreme Court held that Medicare write-offs could not be "charged" back to the patient under federal law and that such write-offs constituted a collateral source which could not be used to reduce the medical expense damages recoverable from a defendant. The net effect of this prior decision would have meant that hospitals and other health care provider defendants who had written-off part of the medical bills pursuant to a Medicare contract could be forced to pay a successful malpractice plaintiff the amount they had previously written-off. Thus, a losing health care provider defendant would have been at risk at having to pay back not only the amount they were paid for their services, but also the amount they had previously written-off.

 

Two historic events occurred that changed this result. First, the Supreme Court granted rehearing, which rarely happens. Second, and most importantly, the Supreme Court then reversed its prior decision. Significant in this reversal is that the dissenting Justices from the prior opinion were joined by one Justice who had originally voted against them and also by a new Justice who was added to the Supreme Court after the original decision was issued but before rehearing on the case was granted. The decision on rehearing was 4 - 2 with Justice Gernon not participating due to his recent death.

 

The Rose case is significant because it involves important questions concerning the amount of medical expenses recoverable as damages when a substantial part of those expenses are written off by a health care provider. In such case, the reality is the plaintiff is never at risk of having to pay for such damages, but still attempts to recover these written off amounts from the health care provider in suit. When the provider who writes off the medical bills is then required to pay the amount written-off to the plaintiff, the plaintiff not only gets the benefit of a double recovery, but the defendant is also hit twice; once in writing off the medical bills original and a second time when it has to pay the cost of that write-off back to a successful plaintiff.

 

Recognizing this, on rehearing, the Kansas Supreme Court held that a Medicare health care provider who originally wrote-off part of the medical bills pursuant to its Medicare contract, and is subsequently sued by the patient, is entitled to a credit against any award for medical expenses which are duplicative of the medical expenses previously written off under the Medicare contract. Under this new decision, once the amount is written-off, it can never again be claimed by the patient as a damage recoverable from the provider who wrote-off such bill.

 

Just as significant to what the Court decided is what the Court refused to decide. The Supreme Court declined to consider the significant question of whether the collateral source rule would prohibit a similar credit for providers other than the one who originally wrote-off part of the medical bills. For instance, if a hospital and a physician were both sued and the hospital wrote-off $50,000 of a $100,000 medical bill, under the Court's current ruling the hospital would get a credit and only be responsible for $50,000 of the medical bills if a patient were successful in a subsequent malpractice action. However, left open and not answered by the Rose decision is whether the physician would then be responsible for the entire $100,000 or if he could also obtain a credit for the amount written of by the hospital pursuant to Medicare. Such a credit was previously permitted under the rationale of an unpublished Court of Appeals decision that was issued during the time the Rose case was on rehearing. See Fischer v. Farmers Ins. Co., Inc., Appellate Case No. 90,246 (Kan. App. Feb. 18, 2005) (unpublished opinion). However, since the decision was unpublished, it is technically not binding upon trial courts in deciding this issue in future cases.

 

Wayne T. Stratton, Charles R. Hay, and Anne M. Kindling of Goodell, Stratton, Edmonds & Palmer, LLP were counsel for the Kansas Hospital Association which filed Amicus Curiae briefs both originally and on rehearing in the Rose case.

 

1There are seven Justices of the Kansas Supreme Court when all positions on the Court are filled. There are currently only six Justices sitting on the Court at this time due to the recent death of Justice Gernon, who wrote the original majority opinion in Rose.

 
 

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