By: Tiffany M. Shrenk, Esq.

In Lacy v. Bayhealth Medical Center, C.A. No. K20-10-005 NEP, the Delaware Superior Court ruled that a former serviceman pursuing a medical malpractice claim was barred from recovering the full amount of his medical bills, and instead, was limited to recovering only the amounts paid by his government health insurance carrier, TRICARE.

Traditionally, Delaware state law did not provide for limiting a plaintiff’s medical expenses to the amount actually paid. This was because Delaware law has followed the collateral source rule, which provided that the defendant would not receive the benefit when the plaintiff receives compensation for the injury from an independent source, such as the plaintiff’s health insurance plan.

This rule was altered by the Delaware Supreme Court’s decision in Stayton v. Delaware Health Corp., 117 A.3d 521, 526 (Del. 2015), which determined that a Medicare beneficiary would be limited to recovering only the amounts of medical expenses paid by Medicare rather than the full amount billed by the medical provider. This ruling was expanded to a Medicaid beneficiary in Smith v. Mahoney,150 A.3d 1200 (Del. 2016). In Stayton and Smith, the Court recognized the collateral source at issue as government-sponsored health insurance programs.

At issue in Lacy was payments made for medical expenses by TRICARE, which the Court explained is” a Department of Defense healthcare program for active duty servicemembers, active duty family members, retirees and retiree family members, survivors, and certain former spouses worldwide.” In comparing TRICARE to Medicare and Medicaid, the Court found no compelling reason to differentiate TRICARE from Medicare or Medicaid in the collateral source context. TRICARE like Medicare and Medicaid was found to be dependent upon taxpayer funds. Given the public nature of the fund, the benefit derived by the write-offs taken by the medical providers were not determined to be benefits to the injured plaintiff, but instead viewed as benefits to the taxpayers.

The effect of Stayton, Smith, and now Lacy, is the limitation of medical expenses that can be recovered in a personal injury case when the plaintiff is a Medicare, Medicaid, or TRICARE beneficiary. With the Lacy decision, a injured plaintiff who has his medical bills paid by his TRICARE health insurance plan, can only seek to recover what has actually been paid while those with private insurance can recover the full amount billed by a provider for his medical expenses.

Tiffany is a partner at MacElree Harvey, a full-service law firm serving Delaware and Pennsylvania.  Licensed to practice law in Delaware and Pennsylvania, Tiffany represents clients in personal injury cases, trust and estate litigation, adult guardianships, and real estate litigation.  She joined MacElree Harvey in the summer of 2016 and spends her time in the Centreville, Delaware office and the Kennett Square office.  Contact Tiffany at (302) 654-4454 or [email protected] to discuss your car accident or other personal injury matter. 

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