09/29/2023
IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
October 5, 2022 Session
ROBERT CROTTY, ET AL. v. MARK FLORA, M.D.
Appeal by Permission from the Court of Appeals
Circuit Court for Davidson County
No. 17C614 Joe P. Binkley, Jr., Judge
___________________________________
No. M2021-01193-SC-R11-CV
___________________________________
ROGER A. PAGE, C.J., concurring in part and dissenting in part.
This interlocutory appeal involves two pretrial orders. I concur with the holding
and analysis of the majority as to the first pretrial order involving Rule 8.03 and George v.
Alexander, 931 S.W.2d 517 (Tenn. 1996). However, I respectfully dissent from the
majority’s holding and analysis as to the second pretrial order involving Tennessee Code
Annotated section 29-26-119 and the collateral source rule. This issue requires the Court
to interpret the meaning of section 29-26-119. I would hold that, when section 29-26-119
governs damages in a health care liability action, the statute’s clear language contemplates
only “actual economic losses suffered . . . paid or payable,” thereby abrogating the
collateral source rule. Thus, I would reverse the trial court’s pretrial order.
I.
As explained by this Court in Dedmon v. Steelman, 535 S.W.3d 431 (Tenn. 2017),
“the collateral source rule has evolved as both a substantive rule of law and an evidentiary
rule.” Id. at 443. “Substantively, it affects the amount of damages that may be awarded
against a defendant by prohibiting reduction of a plaintiff’s recovery by benefits from
sources unrelated to the tortfeasor.” Id. “The evidentiary component of the collateral
source rule flows from the rule of law. If a plaintiff’s recovery may not be reduced by
collateral benefits, then ‘evidence that a plaintiff has received benefits or payments from a
collateral source independent of the tortfeasor’s procuration or contribution’ must be
excluded.” Id. at 444 (quoting Bozeman v. State, 879 So. 2d 692, 699 (La. 2004)). With
this common law rule in mind, the language of section 29-26-119 provides:
In a health care liability action in which liability is admitted or established,
the damages awarded may include (in addition to other elements of damages
authorized by law) actual economic losses suffered by the claimant by reason
of the personal injury, including, but not limited to, cost of reasonable and
necessary medical care, rehabilitation services, and custodial care, loss of
services and loss of earned income, but only to the extent that such costs are
not paid or payable and such losses are not replaced, or indemnified in whole
or in part, by insurance provided by an employer either governmental or
private, by social security benefits, service benefit programs, unemployment
benefits, or any other source except the assets of the claimant or of the
members of the claimant’s immediate family and insurance purchased in
whole or in part, privately and individually.
Tenn. Code Ann. § 29-26-119 (2012).
The parties’ arguments on appeal boil down to the correct interpretation of section
29-26-119. They dispute whether the trial court abused its discretion by applying an
incorrect legal standard when it ruled that the “‘cost of reasonable and necessary medical
care’ refers to the amount charged by the provider, not the amount paid,” and that “the
collateral source rule is in full force and effect” in this case.
“Generally, the admissibility of evidence is within the sound discretion of the trial
court.” Borne v. Celadon Trucking Servs., Inc., 532 S.W.3d 274, 294 (Tenn. 2017)
(quoting Mercer v. Vanderbilt Univ., Inc., 134 S.W.3d 121, 131 (Tenn. 2004)). However,
a “trial court’s decision to admit or exclude evidence will be overturned on appeal only
where there is an abuse of discretion,” such as applying an incorrect legal standard. Id.
(quoting Mercer, 134 S.W.3d at 131).
The majority holds that “[a]ssuming . . . Mr. Crotty’s claimed medical expenses
were paid ‘in whole or in part by insurance’ that was ‘purchased in whole or in part
privately and individually,’ the trial court did not err in holding that ‘the collateral source
rule is in full force and effect’ as the premise for its ruling on the parties’ cross-motions in
limine.” As with the majority, I also “defer to the trial court’s conclusion that Mr. Crotty’s
claimed medical expenses were paid ‘in whole or in part by insurance’ that was ‘purchased
in whole or in part privately and individually.’” However, in contrast with the majority, I
do not believe that fact determines the outcome of this issue.
II.
We review questions of statutory interpretation, like the one presented here, de
novo. Lawson v. Hawkins Cnty., 661 S.W.3d 54, 59 (Tenn. 2023). When interpreting a
statute, “[w]e look to ‘the language of the statute, its subject matter, the object and reach
of the statute, the wrong or evil which it seeks to remedy or prevent, and the purpose sought
to be accomplished in its enactment.’” Yebuah v. Ctr. for Urological Treatment, PLC, 624
-2-
S.W.3d 481, 486 (Tenn. 2021) (quoting Spires v. Simpson, 539 S.W.3d 134, 143 (Tenn.
2017)). “The text of the statute is of primary importance.” In re Kaliyah S., 455 S.W.3d
533, 552 (Tenn. 2015) (quoting Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn.
2012)). “[O]ur role is to determine how a reasonable reader would have understood the
text at the time it was enacted.” Lawson, 661 S.W.3d at 59 (citing State v. Deberry, 651
S.W.3d 918, 924 (Tenn. 2022)). “We give terms their natural and ordinary meaning in
their statutory context unless the statute defines them.” Id. (citing Mills, 360 S.W.3d at
368). “In the absence of statutory definitions, we look to authoritative dictionaries
published around the time of a statute’s enactment.” Deberry, 651 S.W.3d at 925 (citing
State v. Edmondson, 231 S.W.3d 925, 928 & n.3 (Tenn. 2007)). Further, “[c]ourts presume
that every word in a statute has meaning and purpose and that these words ‘should be given
full effect if the obvious intention of the General Assembly is not violated by so doing.’”
Johnson v. Hopkins, 432 S.W.3d 840, 848 (Tenn. 2013) (quoting Lind v. Beaman Dodge,
Inc., 356 S.W.3d 889, 895 (Tenn. 2011)). If a statute is in derogation of the common law,
it must be “strictly construed and confined to [its] express terms.” Moreno v. City of
Clarksville, 479 S.W.3d 795, 809 (Tenn. 2015) (quoting Doyle v. Frost, 49 S.W.3d 853,
858 (Tenn. 2001)).
III.
Although section 29-26-119 is certainly “not a model of clarity” as the majority
admits, in my view, its language is still sufficiently clear to conclude that it abrogates the
collateral source rule and only permits recovery of the actual amounts paid or payable by
Plaintiffs or their insurance. The first half of the statute (beginning with “In a health care
liability action” and ending with “loss of earned income”) provides the overarching rule of
the statute. Tenn. Code Ann. § 29-26-119. This portion outlines what “the damages
awarded may include” in a health care liability action. Id. Section 29-26-119 states that
“the damages awarded may include (in addition to other elements of damages authorized
by law) actual economic losses suffered by the claimant by reason of the personal injury.”
Id. (emphasis added). As the majority highlights, the statute does not define the term
“actual economic losses,” but instead provides some non-exclusive examples. Although
the list of non-exclusive examples is useful in attempting to ascertain the meaning of
“actual economic losses suffered,” it is still necessary to first interpret the preceding
undefined language that provides the overarching rule of the statute. See Lawson, 661
S.W.3d at 59.
The word “actual” means “[i]n existence; real; factual.” Actual, The American
Heritage Dictionary of the English Language 14 (1969). The adjective “economic” means
“[o]f or pertaining to matters of finance.” Economic, The American Heritage Dictionary
of the English Language 413 (1969). The noun “loss” means “[s]omething or someone
that is lost” or “[t]he amount of a claim on an insurer by an insured.” Loss, The American
Heritage Dictionary of the English Language 771 (1969). Piecing these definitions
-3-
together, “actual economic losses” under section 29-26-119 “may include” a financial
amount that is lost and in existence, or the real financial amount of a claim on an insurer
by an insured. Critically, section 29-26-119 also requires that these losses be “suffered.”
The verb “suffer” means to “sustain loss, injury, harm, or punishment.” Suffer, The
American Heritage Dictionary of the English Language 1286 (1969).
Based on this language, it is evident that the losses contemplated by this statute only
involve the actual amounts paid by Plaintiffs or their insurance rather than the full,
undiscounted amounts. The majority highlights the definition of the word “actual” to make
the point that the undiscounted costs do exist and are not legally imputed. However, as
emphasized above, the statute does not stop there. Importantly, the word “suffered”
requires that the losses actually be sustained. Here, neither Plaintiffs nor their insurance
sustained a loss for the full, undiscounted medical bills. Rather, the losses sustained in this
instance were the expenses actually paid by Plaintiffs or their insurance. Any negotiated
rate differential or write-off cannot be said to have been “suffered” under the statute if
neither Plaintiff nor their insurance will ever be required to pay it. In contrast to the facts
of this case, the majority provides a hypothetical in which “a patient’s insurance company
denies his claim,” and the “patient gets no benefit from any discounts negotiated by the
insurance company.” However, in that hypothetical, the undiscounted fees would be
“suffered” under the statute because the patient would actually sustain those losses by being
obligated to pay them.
Before moving to the second half of section 29-26-119, it is also necessary to
address the following language: “cost of reasonable and necessary medical care.” Similar
language was also at issue in Dedmon, 535 S.W.3d at 446–50, and West v. Shelby County
Healthcare Corporation, 459 S.W.3d 33, 43–44 (Tenn. 2014) (holding that “reasonable
charges” for medical services under the Tennessee Hospital Lien Act are the discounted
amounts a hospital accepts as full payment). While Dedmon provided that “West was
intended only to construe the phrase ‘reasonable charges’ in the context of determining the
maximum amount of a hospital’s HLA lien,” 535 S.W.3d at 450, it is important to note that
Dedmon did not involve a specific statutory scheme like this case or the West case. See id.
at 450–51. Rather, Dedmon interpreted the phrase “reasonable medical expenses” in the
context of generic personal injury cases. Id. at 437.
Here, we are faced with a statutory scheme in the specific context of the Health Care
Liability Act. Similar to the Court in West interpreting the phrase “reasonable and
necessary charges for hospital care” in the context of the Hospital Lien Act, 459 S.W.3d at
44, we must interpret the phrase, “cost of reasonable and necessary medical care,” in the
context of section 29-26-119. The “cost of reasonable and necessary medical care” is
among the list of examples of “actual economic losses” provided in the statute. Tenn. Code
Ann. § 29-26-119. And as explained above, the overarching rule of section 29-26-119
explicitly contemplates only “actual economic losses suffered.” Thus, in the context of
-4-
this statute, the “cost of reasonable and necessary medical care” refers to the expenses
actually paid by Plaintiffs or their insurance.
In addition to the plain meaning of the first half of the statute, the plain meaning of
the second half of the statute (beginning with the phrase “but only to the extent”) further
supports the conclusion that section 29-26-119 abrogates the collateral source rule. I agree
with the amicus that the second portion of the statute “defines when a plaintiff has borne
or ‘suffered’ an ‘actual economic loss.’” To reiterate the statute’s language, “actual
economic losses” may be recovered,
but only to the extent that such costs are not paid or payable . . . by insurance
provided by an employer either governmental or private . . . or any other
source except the assets of the claimant or of the members of the claimant’s
immediate family and insurance purchased in whole or in part, privately and
individually.
Tenn. Code Ann. § 29-26-119 (emphasis added).
The language “paid or payable” further supports the plain meaning of “actual
economic losses suffered” interpreted above. The word “paid” is the past tense of “pay”
and means “[t]o remunerate or recompense for goods or services rendered” or “[t]o give
the indicated amount of; discharge (a debt or obligation).” Pay, The American Heritage
Dictionary of the English Language 963 (1969). In this case, the amount remunerated and
that discharged the financial obligation was the amount actually paid by Plaintiffs or their
insurance. Further, the word “payable” means “[r]equiring payment on a certain date; due”
or “[t]hat can or may be paid.” I agree with Defendant’s argument that if “neither the
Plaintiff nor his insurance company is obligated to pay the ‘charged’ amount, . . . then the
charged amount cannot be defined as payable.” Thus, stated in positive terms, if the “actual
economic losses suffered” are “paid or payable” by “the assets of the claimant or of the
members of the claimant's immediate family and insurance purchased in whole or in part,
privately and individually,” then the losses actually sustained are recoverable under the
statute.
This conclusion finds direct support from multiple federal decisions and two recent
decisions from the Tennessee Court of Appeals. In Nalawagan v. Dang, the United States
District Court for the Western District of Tennessee ruled that section 29-26-119 “limits
damages to costs ‘paid or payable.’” No. 06-2745-STA-dkv, 2010 WL 4340797, at *3
(W.D. Tenn. Oct. 27, 2010). Basing its conclusion on the “plain meaning” of the terms of
the statute, the court concluded that “it is clear that medical expenses are limited to
expenses already paid or such expenses yet to be paid, and not simply the amounts billed.”
Id.; see also Calaway v. Schucker, No. 2:02-cv-02715-STA-cgc, 2013 WL 12033182, at
*1 (W.D. Tenn. Aug. 12, 2013) (approving of the ruling of Nalawagan by limiting a
-5-
plaintiff’s damages to amounts “paid or payable,” and providing that the plaintiff could not
recover the “amounts billed,” the “gross price,” or the “sticker price”); Guthrie v. Ball, No.
1:11-cv-333-SKL, 2014 WL 5094140, at *1–2 (E.D. Tenn. Oct. 10, 2014) (also approving
of the ruling and rationale of Nalawagan).
In addition to these federal decisions, two recent decisions of the Tennessee Court
of Appeals provide support for the conclusion that section 29-26-119 only contemplates
the recovery of the amount actually paid by Plaintiffs or their insurance. In Stevens v. State,
No. M2017-01114-COA-R3-CV, 2018 WL 1128476 (Tenn. Ct. App. Feb. 6, 2018), the
Court of Appeals considered the question of whether a provision of the Claims Commission
Act abrogated the collateral source rule and limited the plaintiffs’ recovery to the amounts
actually paid. Id. at *3. The statute at issue in Stevens provided:
The state will be liable for actual damages only. No award shall be made
unless the facts found by the commission would entitle the claimant to a
judgment in an action at law if the state had been a private individual.
Tenn. Code Ann. § 9-8-307(d) (2017) (emphasis added).
The Court of Appeals held in favor of the plaintiff by construing “actual damages”
to mean “compensatory damages.” Stevens, 2018 WL 1128476, at *3; see also Estate of
Tolbert v. State, No. M2017-00862-COA-R3-CV, 2018 WL 1124511, at *3 (Tenn. Ct.
App. Feb. 28, 2018) (holding the same). The intermediate court explained that “[n]othing
in the Claims Commission Act indicates that the General Assembly intended to deviate
from the well-recognized common law meaning of ‘actual damages.’ Thus, the language
used in subsection (d) falls far short of the clear expression of legislative intent necessary
to abrogate the collateral source rule.” Stevens, 2018 WL 1128476, at *3. However, the
Court of Appeals went further and stated that their “conclusion is buttressed by a
comparison of the language used in subsection (d) to the language the General Assembly
used to abrogate the collateral source rule in health care liability actions. There, the
General Assembly expressly limited recoverable damages to[] ‘actual economic
losses’ . . . .” Id. (citation omitted). Thus, it appears the Court of Appeals was of the view
that there is a difference between the language of “actual damages” and “actual economic
losses suffered by the claimant,” such that the latter “abrogate[d] the collateral source rule
in health care liability actions.” Id.
Despite the persuasive authority from these federal and state opinions that directly
address the specific issue before us today, the majority opinion cites to other
distinguishable cases. See Nance by Nance v. Westside Hosp., 750 S.W.2d 740, 743–44
(Tenn. 1988) (holding that while worker’s compensation benefits fall under the phrase “any
other source” in section 29-26-119, where “benefits carry a right of subrogation,” the
plaintiff’s losses are not “replaced or indemnified” under the statute); Hunter v. Ura, 163
-6-
S.W.3d 686, 710–11 (Tenn. 2005) (holding that because an employee deferred a portion of
his income to a death benefit program, that deferment qualified under the phrase “insurance
purchased in whole or in part, privately and individually”); Steele v. Ft. Sanders Anesthesia
Grp., P.C., 897 S.W.2d 270, 282 (Tenn. Ct. App. 1994) (holding that section 29-26-119
“permits a plaintiff to introduce medical expenses when the plaintiff has paid part of the
insurance premium”). These cases do not consider the issue on appeal currently before us,
do not interpret the language “actual economic losses suffered,” and the opinions do not
appear to mention whether any health insurance write-offs or discounts were actually
involved. Also of significance, the facts and issue in Hunter primarily involved a
decedent’s death benefits, not medical bills. Hunter, 163 S.W.3d at 710–11. Overall,
Nance, Hunter, and Steele are distinguishable and do not provide meaningful guidance
concerning the specific issue before us today.
Although I would conclude that the statute’s language is unambiguous, which is
sufficient to end the analysis at that point, see Eastman Chem. Co. v. Johnson, 151 S.W.3d
503, 507 (Tenn. 2004) (providing that when “the statutory language is clear and
unambiguous, we must apply its plain meaning in its normal and accepted use”), the
legislative purpose of the Medical Malpractice Review Board and Claims Act of 1975
(“Medical Malpractice Act”) also lends support to the conclusion that the statute abrogates
the collateral source rule. See Yebuah, 624 S.W.3d at 486 (“We look to . . . ‘the wrong or
evil which [a statute] seeks to remedy or prevent[] and the purpose sought to be
accomplished in its enactment.” (quoting Spires, 539 S.W.3d at 143)).
As Dedmon highlights, the “purpose of [the Medical Malpractice Act] was to
contain the cost of medical malpractice litigation and control the cost of health care.” 535
S.W.3d at 445–46. Indeed, not long after the passage of the Medical Malpractice Act, this
Court highlighted that “this state and the nation were in the throes of what was popularly
described as a ‘medical malpractice insurance crisis.’ Because of alleged increasing
numbers of claims, insurance companies had grown reluctant to write medical malpractice
policies. Where policies were available, premiums had risen astronomically.” Harrison v.
Schrader, 569 S.W.2d 822, 826 (Tenn. 1978). Demonstrating the crisis,
[a] special report of a committee established under the Secretary of Health,
Education and Welfare, issued in 1973, indicated that between 1960 and
1970 insurance premiums rose on a national average of 540.8% [f]or
physicians and 949.2% [f]or surgeons. In Tennessee alone[,] the increase of
insurance premiums between 1968 and 1975 was approximately 700%.
Id. at n.5. Therefore, based on the state of affairs that existed around the time of the passage
of section 29-26-119, it is more than conceivable that the legislature intended to abrogate
the collateral source rule by passing legislation aimed at combating the rising costs of
malpractice insurance premiums and health care costs in general. The “purpose[s] sought
-7-
to be accomplished” by section 29-26-119 are certainly advanced by forbidding recovery
of any costs not actually incurred by patients or their insurance. Yebuah, 624 S.W.3d at
486 (quoting Spires, 539 S.W.3d at 143).
The majority opinion asserts that the legislature likely “would not have had in mind
the current situation, where HMOs contractually require health care providers to discount
fees and pay insureds’ medical expenses partly by requiring providers to forgive a portion
of them.” Indeed, that may be true. Nevertheless, we must still apply the plain language
of section 29-26-119 to the facts of this case that involve modern-day managed care
insurance practices. While a reasonable reader of this statute in 1975 likely would not have
envisioned modern-day health insurance billing, he or she would have understood “actual
economic losses suffered” to mean that a plaintiff cannot recover losses that are never
sustained.
In sum, when considering the plain meaning of this statute in combination with the
legislative purpose of the Medical Malpractice Act, “actual economic losses suffered” must
mean that a plaintiff may only recover losses that are actually sustained. Although statutes
in derogation of the common law must be “strictly construed,” the “express terms” of this
statute simply do not permit recovery of full, undiscounted medical bills that neither a
plaintiff nor insurance are ever required to pay. Moreno, 479 S.W.3d at 809 (quoting
Doyle, 49 S.W.3d at 858).
III.
For the reasons stated above, I respectfully dissent from the majority’s decision to
affirm the trial court’s pretrial order involving Tennessee Code Annotated section 29-26-
119.
_______________________________
ROGER A. PAGE, CHIEF JUSTICE
-8-