SULLIVAN, J.
The amount of medical expenses actually paid by the plaintiff in this personal injury case was discounted from the amount originally billed because of arrangements between the plaintiff’s health insurance company and the medical service providers. The defendant sought to introduce evidence of the discounted amount actually paid over the plaintiff’s objection that Indiana’s “collateral source” statute bars evidence of insurance benefits. To the extent the discounted amounts may be introduced without referencing insurance, they may be used to determine the reasonable value of medical services.
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. . . [B]oth the trial court and the Court of Appeals held that it would have violated Indiana’s “collateral source” statute for defendant Stanley to present evidence to the jury that plaintiff Walker’s medical providers had accepted $4,750 less than the amount they had originally billed in satisfaction of the medical bills occasioned by Stanley’s negligence. . . .
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An injured plaintiff is entitled to recover damages for medical expenses that were both necessary and reasonable. See Cook v. Whitsell-Sherman, 796 N.E.2d 271, 277 (Ind. 2003). Thus we are confronted with the question of how to determine the reasonable value of medical services when an injured plaintiff’s medical treatment is paid from a collateral source at a discounted rate.
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Indiana Evidence Rule 413 provides one method of proving the reasonable value of med-ical expenses. It reads as follows:Â [s]tatements of charges for medical, hospital or other health care expenses for diagnosis or treatment occasioned by an injury are admissible into evidence. Such statements shall constitute prima facie evidence that the charges are reasonable.
By its terms, Rule 413 allows actual past medical charges to serve as prima facie evidence that the charges are reasonable.
The purpose of Rule 413 is to provide a simpler method of proving amount of medical expenses when there is no substantial issue that they are reasonable and were caused by the tort. If there is a dispute, of course the party opposing them may offer evidence to the contrary, including expert opinion. By permitting medical bills to serve as prima facie proof that the expenses are reasonable, the rule eliminates the need for testimony on that often uncontested issue. Finally, the fact that a statement was submitted is at least some evidence that the charge is normal for the treatment involved, and it was necessary to be performed.
Cook, 796 N.E.2d at 277-78. Thus, medical bills can be introduced to prove the amount of medical expenses when there is no substantial issue that the medical expenses are reasonable. However, in cases where the reasonable value of medical services is disputed, the method outlined in Rule 413 is not the end of the story. See Cook, 796 N.E.2d at 277. The opposing party may produce contradictory evidence to challenge the reasonableness of the proffered medical bills, including expert testimony. See id. Additionally, reasonableness of medical expenses can be proven, in part, by demonstrating that the plaintiff paid the actual amounts incurred. Smith v. Syd’s, Inc., 598 N.E.2d 1065, 1066 (Ind. 1992). This is premised on the notion that a plaintiff would not pay an unreasonable bill. Id. The paid bill certainly may constitute evidence of the reasonable value of services, but it is not dispositive. See id.
The law of Indiana will allow a plaintiff to recover neither the actual amount of medical bills charged to him nor the amount of medical bills paid by him, but rather, the reasonable and fair value of medical expenses necessarily incurred by him. The actual amount charged to the plaintiff or the amount actually paid by him may tend to prove the reasonable and fair value of the services rendered to him but are not conclusive on the issue.
Chemco Transp., Inc. v. Conn, 506 N.E.2d 1111, 1115 (Ind. Ct. App. 1987) (quoting Herrick v. Sayler, 160 F.Supp. 25, 29 (N.D. Ind. 1958)), rev’d on other grounds, 527 N.E.2d 179 (Ind. 1988).
In sum, the proper measure of medical expenses in Indiana is the reasonable value of such expenses. This measure of damages cannot be read as permitting only full recovery of medical expenses billed to a plaintiff. Id. Nor can the proper measure of medical expenses be read as permitting only the recovery of the amount actually paid. Id. The focus is on the reasonable value, not the actual charge. This is especially true given the current state of health care pricing. The complexities of health care pricing structures make it difficult to determine whether the amount paid, the amount billed, or an amount in between represents the reasonable value of medical services. . . .
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Given the current state of the health care pricing system where, to repeat, authorities suggest that a medical provider’s billed charges do not equate to cost, the jury may well need the amount of the payments, amounts billed by medical service providers, and other relevant and admissible evidence to be able to determine the amount of reasonable medical expenses. To assist the jury in this regard, a defendant may cross-examine any witness called by the plaintiff to establish reasonableness. The defendant may also introduce its own witnesses to testify that the billed amounts do not represent the reasonable value of services. Additionally, the defendant may introduce the discounted amounts into evidence to rebut the reasonableness of charges introduced by the plaintiff. We recognize that the discount of a particular provider generally arises out of a contractual relationship with health insurers or government agencies and reflects a number of factors – not just the reasonable value of the medical services. However, we believe that this evidence is of value in the fact-finding process leading to the determination of the reasonable value of medical services. The collateral source statute does not bar evidence of discounted amounts in order to determine the reasonable value of medical services. To the extent the adjustments or accepted charges for medical services may be introduced into evidence without referencing insurance, they are allowed.
In accordance with Rule 413, Walker introduced his original medical bills as prima facie evidence of the reasonable value of medical services. He presented billing statements showing gross charges of $11,570. Stanley attempted to introduce evidence representing that “other amounts of money actually represent the reasonable amount [for the medical expenses] . . . .” (App. 69.) Stanley argues that he was entitled to demonstrate that the amounts paid and accepted by Walker’s medical providers contradicted Walker’s prima facie evidence of reasonable medical expenses. As discussed above, when there is a dispute as to the prima facie evidence of the reasonable cost of medical expenses, the opponent may introduce contradictory evidence. Stanley conceded that he “[could not] ask Mr. Walker the amount of the expenses that were paid by [Anthem], that’s the collateral source.” (App. 66.) Instead, Stanley contends that he wanted to enter into evidence the amount that two parties have agreed to as “reasonable” as evidenced by the discounts. Stanley wanted to submit evidence to the jury that would show that the amount accepted in satisfaction of the medical charges totaled $6,820, that is, $4,750 less than the $11,570 originally billed. Because Stanley sought to do so without referencing insurance, his evidence should have been admitted. The jury was instructed that:
The proper measure of damages for medical services is the reasonable and fair value of medical expenses necessarily incurred by a Plaintiff. As such, the proper measure of damages for medical services is not the actual amount of medical bills charged to a Plaintiff nor the amount of medical bills paid by a Plaintiff.
Statements of charges for medical, hospital or other health care expenses for diagnosis or treatment occasioned by an injury constitute prima [facie] evidence that the charges are reasonable and fair.
App. 132. The first two sentences of this instruction were perfectly proper. But the third sentence was not. As just noted, the trial court should have allowed Stanley’s evidence of the discounted amount actually paid. To the extent that the trial court included in the instruction reference to the amount initially billed as evidence of reasonable and fair value, it should also have referred to the discounted amount actually paid (after having earlier allowed that amount to have been admitted into evidence).
Because the amount at issue constitutes such a small percentage of the overall damages award, we affirm the judgment and remand this case to the trial court with orders to reduce the damage award by $4,750. If Walker will not accept this remittitur, he is free to retry the issue of damages before another jury.
Boehm, J., concurs with a separate opinion in which Shepard, C.J., joins.
Dickson, J., dissents with a separate opinion in which Rucker, J., concurs.
Boehm, J., concurring.
I concur in the majority opinion. I write separately to respond to some points that Justice Dickson makes.
First, and obviously, we hold today only that the discounted price actually paid for medical services is admissible evidence as to the reasonable value of those services. We do not hold that it is conclusive. Evidence Rule 413 provides that the bills for a medical service are admissible and are “prima facie evidence” of the reasonable price for the service. Prima facie evidence is not conclusive and may be rebutted by other evidence. The issue thus is simply whether the discounted prices from sticker prices for today’s medical services are relevant under the Rules of Evidence. I think it is obvious that they are, because they reflect the amounts that the providers are willing to accept for their services. As we all know, most but not all Americans have some form of employer or group based health insurance. See Carmen DeNavas-Walt, Bernadette D. Proctor & Jessica C. Smith, U.S. Census Bureau, Income, Poverty, and Health Insurance Cover-age in the United States: 2007 at 19 (2008), available at http://www.census.gov/prod/2008pubs/p60-235.pdf (“The percentage of people covered by employment-based health insurance [was] 59.3 in 2007 . . . .”). And, as the majority opinion ex-plains, many of these plans include prices that are not trivially discounted from the stated price that is rarely collected. Transactions at these discounted prices presumably constitute the majority in the market for any service provided by physicians or hospitals, and in any case constitute a sizable share of all transactions. Because these discounted prices are the bulk of all pricing for a given service, I cannot conclude that they are irrelevant to determining the reasonable price of that service.
Second, some managed health care programs confer some or all of the benefits to health care providers that Justice Dickson identifies as hidden additions to the discounted price to reach the real reasonable value of the services provided. But some of these-prompt payment and avoiding collection costs-are provided by credit card companies for relatively insignificant charges compared to the discounts from sticker price for many health care services. I do not believe the most important of these-access to a large population-is properly considered as a benefit conferred by the third party on the health care provider. Rather, it is something the insured and the insurer have arranged to pool their bargaining power against the provider, and the provider has agreed to sell at that bargained price. Moreover, many, including many of the largest insurers, do not control the insured’s selection of the provider. By obtaining reduced prices for their insureds, they encourage the insureds to choose a participating provider, and by presenting this large pooled bargaining power, they obtain lower prices from the providers. But that does not suggest that these prices are not reasonable. To the contrary, because the majority of transactions occur at those prices, unless the providers are mispricing their services, these prices should be those that provide a reasonable compensation to the provider. Third, Justice Dickson identifies a number of complexities he sees in establishing the reasonable price for the service if we do not take the sticker price as conclusive by holding inadmissible evidence of the discounted price. But if we were to choose between the sticker price that most people do not pay and the discounted price that most people do pay, we should hold that the sticker price is to be excluded from evidence as the less realistic evidence of the reason-able value of these services that the real market for them reflects. Cf. James McGrath, Over-charging the Uninsured in Hospitals: Shifting a Greater Share of Uncompensated Medical Care Costs to the Federal Government, 26 Quinnipiac L. Rev. 173, 185 (2007) (noting that health care payment systems have rendered hospitals’ list prices “relatively meaningless”).
Shepard, C.J., joins.
Dickson, J., dissenting.
The majority holds that defendants in personal injury cases may introduce evidence of reduced amounts actually paid and accepted to satisfy accounts for medical services under arrangements between a plaintiff’s insurer and the medical service providers “[t]o the extent the discounted amounts may be introduced without referencing insurance.” I believe this new rule contravenes the express requirements of the collateral source statute, Ind. Code § 34-44-1-2, and is also unfair and undesirable judicial policy.
Although only four thousand or so dollars is actually at stake in this appeal, the majority’s decision impacts more than just the calculation of medical expense damages that an injured plaintiff is entitled to receive from a defendant whose wrongful acts caused the injury. The amount of reasonable medical expenses incurred by a plaintiff is an important factor that influences juries in their assessment of additional general damages. As a plaintiff’s medical expenses increase or decrease, a corresponding effect on the award of general damages is often observed. It is thus not surprising that the amici curiae Defense Trial Counsel of Indiana and Indiana Trial Lawyers Association are strongly asserting opposing views.
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The collateral source statute expressly declines to authorize the admission of evidence of payments in the form of “insurance benefits for which the plaintiff or members of the plaintiff’s family have paid for directly.” Ind. Code § 34-44-1-2(1)(B). The trial court’s exclusion of the defendant’s evidence in this case was thus consistent with the statutory requirements. The rule pronounced by today’s opinion, which invites admission of “discounted amount[s] actually paid,” Maj. slip op. at 2, seems diametrically opposed to the statute’s clear and unequivocal language. Statutory modification or nullification is best left to the General Assembly.
I also dissent to express my disagreement with the majority’s statement that the collateral source statute abrogated the common law collateral source rule. Supra at 4. The statute contains no words expressly abrogating the common law collateral source rule. Rather, the statute’s precise language appears to create a limited exception to the common law rule, which is otherwise left intact. From the statute’s “the court shall allow” and “other than” language, I understand the statute merely to modify the common law rule to allow the admission of some collateral source payments but to deny this admission to life insurance, other death benefits, insurance benefits paid for by the plaintiff and the plaintiff’s family, and government payments, thus leaving the common law rule in place as to these. The statute establishes a carefully crafted exception to the rule that narrowly allows only collateral source payments “other than” payments of benefits conferred from a plaintiff’s own insurance or from government payments.
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Given the controversial and significant evidentiary issues involved in the collateral source rule and any modification thereof, I am convinced the General Assembly carefully ba-lanced strongly asserted competing interests and crafted statutory language to reflect a legislative intent to delicately modify but not abrogate the common law rule.
As to the defendant’s sole appellate claim that the trial court erroneously excluded his evidence of discounted payments for medical services, I believe that the trial court properly followed the collateral source statute and that the resulting judgment should be affirmed.
I also oppose the new rule because it is incomplete, misleading, and unfair, and will add layers of complexity, time, and expense to personal injury litigation, impairing the efficient administration of justice.
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. . . [I]f we authorize consideration of the amount of discounted payments as evidence of the reasonable value of a plaintiff’s medical services, juries will receive a distorted, misleading, and incomplete picture unless they are also able to consider the pecuniary value of all the benefits conferred upon health care providers in their symbiotic exchange with medical insurers. While today’s new rule does not foreclose the admission of such essential evidence, its gathering and presentation will significantly burden both injured plaintiffs and efficient judicial administration. A new level of discovery will be needed to determine and quantify the value to providers. Plaintiffs will be required to expend considerable resources to marshal and present such evidence, thereby prolonging trials. New appellate issues will result. Not the least of these will be the challenge of devising a methodology to implement the majority’s caveat that discounted amounts may be introduced only if done “without referencing insurance.” Supra at 2, 9. Regardless of the technique used, it seems virtually impossible to deceive the common-sense inference of juries that insurance is the source of any discounted amounts paid to satisfy medical care accounts.
This all seems very unnecessary. Under today’s new rule, the existence and extent of any improvement to the accuracy of verdicts seems overwhelmed by the significant probability of incompleteness, confusion, and resulting unfairness, all further compounded by detrimental effects on the fair and efficient administration of justice. These negative aspects can easily be avoided, without sacrificing fairness and justice, by recognizing that when medical providers agree to accept discounted amounts, the extent of the discount presumably reflects the value of the tangible and intangible benefits the providers receive in return. For these reasons, I favor adherence to the common law collateral source rule, as narrowly modified by Indiana’s collateral source statute, both of which were properly applied by the trial court in this case.
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For the reasons expressed above, I dissent. But since the majority has chosen a new path, I find not unreasonable the procedural template implied and approved by the actual holding in today’s majority opinion. The discounted medical expenses actually paid by the plaintiff’s insurer are considered post-verdict, without the jury’s general damage assessment having been contaminated with such information and the almost inevitable resulting implication that the plaintiff received insurance benefits. This avoidance of toxic evidence is parallel to the pro tanto post-verdict adjustment procedure we have approved when a plaintiff has received a pre-verdict partial settlement. See, e.g., Morris, 528 N.E.2d at 473-74.
Rucker, J., concurs.