In Schemelzer v. Muncy, a federal district court explained why expert testimony about the reasonableness of medical bills is not only admissible but necessary. The court rejected the plaintiff’s attempt to use the testimony of non-experts to prove that their medical bills were reasonable. In light of its ruling, the court allowed the plaintiffs to retain a medical billing expert and to add that expert to its expert witness disclosure.
Facts of the Case
Steven Schemelzer collided with a tractor-trailer driven by Mark Muncy. Schemelzer alleged that Muncy was negligent when he tried to back his rig into a private driveway. Not realizing that the road was obstructed, Schemelzer crashed into Muncy’s truck.
Schemelzer suffered severe injuries, including traumatic brain injuries and bone fractures in his face. Schemelzer’s lawsuit sought recovery of his medical expenses as well as other categories of damages.
Schemelzer understood that, under Illinois law, he needed to prove that his medical expenses were reasonable. He planned to supply that proof with the testimony of a billing employee at the hospital where he was treated. Muncy objected, arguing that only an expert witness can testify about the reasonableness of medical bills.
Proof of Reasonableness
Like other jurisdictions, Illinois permits a plaintiff to recover only those medical bills that are reasonable. Illinois places the burden on the plaintiff to prove the reasonableness of the bills that the plaintiff seeks to recover.
Illinois is among the states that treat the payment of a medical bill as prima facie evidence that the bill is reasonable. That rule is premised on the assumption that people generally do not pay unreasonable bills. If someone (usually the plaintiff’s insurance company) paid the bill, that payment stands as evidence that the bill was reasonable.
Evidence of payment may therefore be sufficient to establish that paid bills are reasonable if reasonableness is not contested. A defendant is nevertheless free to present the testimony of a medical billing expert to establish that the paid bills were not reasonable.
In jurisdictions that regard payment of medical bills as prima facie evidence of reasonableness, a plaintiff might not need a medical billing expert, but only if: (1) the plaintiff does not want to recover damages for medical bills that have not been paid, and (2) the defense does not contest reasonableness by calling a medical billing expert of its own.
As a practical matter, medical bills are usually paid by insurance and insurance companies rarely pay the full bill. A plaintiff who can afford to do so might pay the co-pay or deductible required by the policy, but the insurance company will pay “adjusted” charges, regardless of the amount of the bill.
Plaintiffs who decide to recover only the amount of a medical bill that has been paid are typically leaving money on the table. Hiring a medical billing expert to prove the reasonableness of a larger charge than the charge paid by insurance is a smart investment when the difference between a paid bill and a full reasonable bill is substantial.
Only an Expert Witness Can Testify About Reasonableness
Schemelzer intended to have billing personnel from the hospitals where he was treated testify that the charges billed by the hospitals were reasonable. He expected the billing clerks to say that the charges are the customary and usual charges for similar services in the area.
Muncy objected that the billing clerks were not identified as experts. In federal court, Rule 26 of the Federal Rules of Civil Procedure requires the disclosure of expert witnesses.
Schemelzer responded that the billing clerks were not being asked to testify as expert witnesses. He argued that they were fact witnesses and thus were not subject to expert witness disclosure requirements.
The billing clerks would have testified that their job required them to calculate the hospital bills and to determine what the customary charges were for similar services at other facilities. Because their proffered testimony was based on facts gathered as part of their work, Schmemelzer argued that their testimony about usual and customary charges was testimony about facts rather than opinions.
The district court agreed that the amount of the billed charges is a fact. The billing clerk could therefore testify as fact witnesses about the amount of the charges that were billed to Schemelzer. She could also testify about the portion of the bill that was paid and the amount that remains unpaid.
Whether the unpaid charges were reasonable, on the other hand, was a matter that required expert opinion. If the determination of a fact requires specialized knowledge, only a witness who has such knowledge can provide testimony that will guide the jury’s decision.
The court noted that “the average layperson does not have knowledge of the rates charged for medical services in a particular area.” Since the fact of reasonableness can only be determined by a person who has specialized knowledge, testimony about reasonableness must come in the form of an expert opinion.
The court did not allow the billing clerks to testify about reasonableness because they were not designated as expert witnesses. Fortunately for Schemelzer, the court extended his deadline for identifying an expert witness to establish the reasonableness of the unpaid medical bills.
The Advantage of Using Medical Billing Experts to Prove Reasonableness
A billing clerk might claim that she has specialized knowledge about medical costs in her community, but Rule 702 of the Federal Rules of Evidence demands more. An expert witness cannot simply assert that “this is my opinion.” The expert must prove that the opinion was based on sufficient facts and a reliable methodology.
Cross-examination of a billing clerk is likely to expose the absence of any methodology that supports the clerk’s opinion. If the clerk cannot identify a reliable methodology, it is unlikely that the opinion will be admitted into evidence.
Medical billing experts have developed reliable methodologies that support admissible opinions. Medical billing experts gather facts about actual charges billed by all healthcare practitioners for particular services in a specified geographic area. Billing experts use established databases to compare a client’s billing to the charges that are typical within the community for the same services.
Billing experts identify a range of reasonableness using standards that are generally accepted within their field. Their opinion as to the reasonableness of a particular bill is based on whether the billing falls within that range. By basing opinions on sufficient facts and a reliable methodology, billing experts are able to provide admissible evidence of reasonableness that billing clerks and other lay witnesses cannot give.