Value Paid by the Medical Lien Holder Alone Will Not Establish the Reasonable Value Medical Expenses

In Uspenskaya v. Meline (filed October 28, 2015), the California Court of Appeal for the Third District held that evidence of payments made by a medical lien holder offered to prove the reasonable value of medical services was properly excluded.

Plaintiff brought a negligence action against defendant for injuries arising out of a vehicle collision. The uninsured plaintiff entered into an agreement with her medical providers, including her physician and hospital, to repay the full amount of her medical bills, secured by a lien on any recovery derived from her lawsuit. Subsequently, the lien was purchased by a third party, MedFin, for less than the billed amounts.

During trial, defendant sought to introduce testimony of the billing administrators to establish that the MedFin payments were the reasonable value of plaintiff’s medical services. However, the trial court determined that MedFin payments were inadmissible because their introduction would be unfairly prejudicial and cause jurors to speculate whether the number was a reasonable valuation. The trial court further clarified that the result may have been different had defendant offered evidence, such as expert testimony, to establish the payments represented the reasonable value of plaintiff’s medical services.

The Court of Appeal upheld this ruling, distinguishing this case from others involving the traditional buyer and seller of health care scenario which triggered application of the collateral source rule. In contrast, this case involved the sale of an asset––the right to collect on the uninsured injured party’s debt––to a third party, where the injured party remained liable for the full amounts of any medical bills owed.

Considering the facts of this case, the Court of Appeal found that the MedFin payments were relevant as they had a tendency in reason to prove the reasonable value. However, the Court concluded that presentation of evidence, without foundation, created a substantial danger of misleading the jury to conclude that the MedFin payments were a reasonable value of the medical services rather than a reasonable valuation of plaintiff’s likelihood to ultimately pay her debt. Accordingly, the Court found that the exclusion of the evidence was proper.

This case suggests that payments of a third party lien holder may be used to serve as evidence of the reasonable market value of medical services so long as two elements are met. First, the payments must be determined relevant. Second, a party must present evidence to demonstrate a nexus between the purchase price and the reasonable market value of the medical services to guard against any unfair prejudice or confusion by the jury.

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November 2, 2015