Collateral Damage: The Legislature’s Response to Greer v Advantage Health and the Future of Damages in Medical Malpractice Cases

On April 10, 2017, medical liability providers and defense attorneys across the state breathed a sigh of relief with the enactment of MCL 600.1482 – the statute supposedly set to quell the three-year hysteria that resulted from the Greer v Advantage Healthdecision. [1] MCL 600.1482 ensures that plaintiffs are awarded fair compensation for medical expenses actually incurred rather than windfall recoveries based on delusory “sticker prices” (i.e., amounts billed but never actually paid by the patient or the insurer)- at least that’s the intent. While MCL 600.1482 certainly will put an end to windfall awards, there remain some unanswered questions.

The Greer dilemma dates back to 2014, when the Michigan Court of Appeals ruled that a Plaintiff could recover the entire billed amount for medical expenses incurred, even though the medical providers had accepted a reduced amount from the Plaintiff’s health care insurer to satisfy the amount owed. Under Greer, the situation would play out like this: a patient incurred $1 million in medical expenses for care related to a botched surgery. The patient’s health care insurer (not surprisingly) negotiates the amount owed down to $400,000. The medical provider agrees, the two parties shake hands, and the $400,000 is paid in full satisfaction of the $1 million owed. Down the road, the patient decides to sue. Under Greer, the patient would be entitled to recover the full $1 million, not just the $400,000 paid. Not a bad deal . . . until you realize that allowing a patient to pocket $600,000 for medical expenses that will never be paid in full defies the bounds of logical reasoning.

Most expected the Michigan Supreme Court would overturn Greer. People grew hopeful when the Supreme Court granted leave in December 2014 and entertained oral argument in October 2015.

However, it was not to be. On July 8, 2016, the Supreme Court did what all attorneys fear – they punted. Instead of ruling on Greer, the Court vacated its order granting leave to appeal. Thus, Greer, and its creation of exorbitant windfalls to Plaintiffs across the land, was carved into the bedrock of the law for the remainder of eternity.

Well, not really. Even though the Supreme Court punted Greer for another day, Justice Brian Zahra implored the Michigan Legislature to take action and forever put an end to plaintiffs’ abilities to recover medical expenses that were never incurred or paid by anyone.

In September 2016, Senator Mike Shirkey heard Justice Zahra’s cry in the night, and introduced Senate Bill 1104. The Bill was signed into law in January 2017, with resounding support from health care institutions, liability providers and (not surprisingly) the defense bar.

On April 10, 2017, the Bill, as codified as MCL 600.1482, came into full effect. MCL 600.1482 provides that, in medical malpractice actions, the damages recoverable for past medical expenses or rehabilitation expenses shall be limited to “actual damages for medical care,” which is defined as the “dollar amount actually paid for past medical expenses or rehabilitation service expenses, including payments made by insurers, but excluding any contractual discounts, price reductions or write-offs.”

Under MCL 600.1482, our hypothetical plaintiff would be awarded the $400,000 actually paid by his insurer for his medical expenses. While all seems well and good in the realm of medical malpractice damages, there remains some shades of gray:

  1. what happens to those cases caught in litigation limbo, filed after Greer, but before the enactment of MCL 600.1482; and
  2. with MCL 600.1482, what are the implications for plaintiffs’ abilities to recover the cost of future medical expenses?

Michigan courts will soon face motions from nervous defendants with cases filed in 2015 and 2016 seeking retroactive application of  MCL 600.1482. The statute’s legislative history indicates it will apply to actions filed on or after April 10, 2017 and will prospectively remedy Greer. However, attorneys do have several strategies, based on common law and statutory arguments, which can be utilized in cases involving significant past medical expenses.

In addition, courts will be forced to consider how MCL 600.1482 will impact the collateral source rule and a patient’s ability to recover the cost of future medical expenses. The tenuous political landscape surrounding the Affordable Care Act (ACA) or its replacement will certainly complicate the issue. Nevertheless, reform is certainly necessary for the sake of judicial uniformity, as well as to limit recovery for future medical expenses to a plaintiff’s estimated annual out-of-pocket expenses. Given the passage of Senate Bill 1104 and implementation of MCL 600.1482, this goal certainly seems feasible.

[1] 305 Mich App 192; 852 NW 2d 198 (2014). In Greer, the Michigan Court of Appeals held that payments the plaintiff’s health insurers made to the plaintiff’s healthcare providers and insurance discounts were excluded from statutory collateral source benefits rule, MCL 600.6303.