Hall v. USF Holland, Inc., 152 F. Supp. 3d 1037

On June 12, 2013, plaintiff Theaudry Hall was injured in a collision with a tractor-trailer allegedly operated by USF Holland, Inc. and received medical treatment.
Plaintiffs’ providers billed $90,641.85 in undiscounted medical charges; Plaintiffs’ insurer paid $40,414.88 pursuant to negotiated contracts.
Defendant moved (treated as a motion in limine) to exclude evidence of undiscounted medical bills and limit recovery to amounts actually paid by insurer.
The dispute centers on whether undiscounted provider charges or the insurer-paid, negotiated amounts constitute “necessary and reasonable” medical expenses under Tennessee law.
The court, applying Tennessee substantive law (diversity jurisdiction), considered Tennessee Supreme Court precedent in West v. Shelby County Healthcare Corp.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether undiscounted medical bills may be admitted as "reasonable and necessary" damages when insurer paid a negotiated discounted amount	Plaintiffs: full undiscounted bills are recoverable and reducing them violates the collateral source rule	Defendant: only the amount actually paid by insurer is the reasonable market cost and admissible	Court: Exclude undiscounted bills; only insurer-paid negotiated amounts represent reasonable and necessary charges
Whether using insurer-paid amounts to limit recovery violates the collateral source rule	Plaintiffs: discounted payments are third-party benefits protected by collateral source and should not reduce defendant's liability	Defendant: collateral source does not expand damages to include expenses never actually incurred; reasonableness requirement controls	Court: No violation — collateral source preserved but plaintiff may only recover reasonable and necessary expenses; discounted amounts may be shown without revealing third-party payment details

West v. Shelby Cnty. Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014) (hospital lien context: "reasonable and necessary" charges are the amounts actually paid in the marketplace)
Borner v. Autry, 284 S.W.3d 216 (Tenn. 2009) (plaintiff must prove medical expenses are necessary and reasonable)
Gasperini v. Center for Humanities, Inc., 518 U.S. 415 (1996) (federal courts in diversity must apply state substantive law)
Fye v. Kennedy, 991 S.W.2d 754 (Tenn. Ct. App. 1998) (purpose of collateral source rule: tortfeasor compensates all harm regardless of third-party benefits)
Howell v. Hamilton Meats & Provisions, Inc., 52 Cal.4th 541 (2011) (discounted insurer payments do not expand recoverable damages to include charges never actually incurred)
Blasky v. Wheatley Trucking, Inc., 482 F.2d 497 (6th Cir. 1973) (damages are substantive matters governed by state law)