Getting the injured party fully compensated for the cost of future medical care is a primary concern in most personal injury cases. The Plaintiff has one shot in court to get the jury to award an adequate amount of money to cover the cost of these future medical expenses. Expert and lay evidence is presented on the issue. Once the decision is made, the Plaintiff cannot return to court to seek more money.
It is not uncommon for medical charges to exceed the amount medical providers willingly accept as payment. This is typically the case, for example, for payments made by health insurance and Medicare. Providers often agree with health insurance carriers to accept reduced payments as payment in full. Medicare, on the other hand, has a schedule of allowable charges for every service, usually well below usual and customary charges. A provider that accepts Medicare cannot balance bill the patient.
The courts and legislature have considered whether evidence of these collateral sources of payment should be presented to a jury for its consideration in determining future medical expenses. In my opinion, some of the conclusions are disturbing.
In Gormley v. GTE Prods. Corp., 587 So. 2d 455 (Fla. 1991), Florida’s Supreme Court announced that Florida’s common law collateral source rule “functions as both a rule of damages and a rule of evidence.” Id. at 457.
The rule of damages “is designed to prevent tortfeasors from benefiting unjustly from the injured parties’ receipt of collateral benefits for their injuries and it avoids penalizing parties who purchase insurance, which would create a disincentive to buy coverage in the first instance. … The rule also maintains a level of deterrence against tortfeasors that would be lost if awards against them were reduced by collateral sources, and the rule obviously promotes full recovery for injured parties versus some reduced or diminished level of compensation.” State Farm Mutual Automobile Insurance Company v. Joerg.
The rule of evidence is based on a different policy concern. It was designed to prevent the introduction of evidence that “misleads the jury on the issue of liability and, thus, subverts the jury process. Because a jury’s fair assessment of liability is fundamental to justice, its verdict on liability must be free from doubt, based on conviction, and not a function of compromise.” Gormley at 458.
Gormley involved a property damage claim against the manufacturer of a product that allegedly malfunctioned and caused a house fire. The homeowner’s own insurance company performed a damage estimate that was lower than the damages being claimed at trial against the manufacturer. The trial court allowed the estimate into evidence over the Plaintiff’s collateral source rule objection. The jury returned a verdict of no liability.
The Supreme Court majority quashed the decision below and remanded for a new trial on liability and damages. It reasoned that the admission of evidence of a collateral source to reduce damages is reversible error precisely because it prejudices the jury’s determination of liability, pointedly noting that the Third DCA declined to apply its own precedent on the issue, announced in Cook v. Eney, 277 So.2d 848 (Fla. 3d DCA), cert. denied, 285 So.2d 414 (Fla. 1973).
Although Gormley involves past damages, the concern about tainting the jury on liability applies equally to future damages.
Since Gormley, the rule of damages with regard to past damages has been modified. See Coop. Leasing, Inc. v. Johnson, 872 So. 2d 956, 959-960 (Fla. 2d DCA 2004) (noting legislative policy of preventing undue windfalls to plaintiffs in tort cases under the Act) (citing § 768.76); see also Goble v. Frohman, 901 So. 2d 830, 832 (Fla. 2005) (“forcing an insurer to pay for damages that have not been incurred, would result in a windfall to the injured party”); and Thyssenkrupp Elevator Corp. v. Lasky, 868 So. 2d 547, 550 (Fla. 4th DCA 2003) (allowing the admission of evidence of excess charges is “contrary to the public purpose of reducing health care costs to allow inflated damage recoveries to stand without reduction”).
Because past damages collateral source payments are in play, methods have been devised to prevent jury prejudice on liability. Trial judges are able to reduce verdicts post-judgment or limit the evidence considered by the jury. Consider the following hypothetical: A crash victim’s past medical charges are $200,000. However, collateral source payments, such as health insurance or workers’ compensation, pay only $50,000, while also leaving the patient owing nothing to the medical providers. If the full $200,000 in charges is allowed into evidence — in my view, full charges should be allowed into evidence to demonstrate the seriousness of the injuries — and awarded by the jury, the court will reduce the jury’s verdict post-trial to the actual amount paid. The other option is for the judge to limit to $50,000 the evidence presented to the jury regarding incurred medical charges. (This option misleads the jury with regard to the full extent of the injuries.) Both procedures prevent the jury from learning of collateral sources.
Unfortunately, there is a troubling exception to the fundamental concern of avoiding prejudice by preventing juries from learning of collateral sources.
In State Farm Mutual Insurance Co. v. Joerg, a 2013 case, the Second District Court of Appeal ruled that the trial court erred in disallowing evidence that the Plaintiff, a developmentally disabled adult who was struck by a car while riding a bicycle, could have his future medical expenses reduced under the Medicare program. The appeal court threw out the jury’s $469,076 award for future medical expenses, ruling that the jury should have been allowed to learn of the collateral source.
The Joerg court grounded its opinion on Florida Physician’s Insurance Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984). In Stanley, a medical malpractice case, the jury was allowed to hear evidence as to the charitable and governmental sources available at little or no cost for special therapy and education needed by the injured minor plaintiff. The district court, in Stanley v. U.S. Fidelity & Guaranty Co., 425 So.2d 608 (Fla. 1st DCA 1982), had decided that the jury verdict had been tainted by improperly adduced evidence as to the charitable and governmental sources. However, it asked the Supreme Court to take up the issue on certiorari as being one of great public importance. The Supreme Court accepted the invitation to address the following certified question:
Should Florida courts exclude from jury consideration evidence of the availability of free public schools, and free or low-cost public or private non-profit therapy services to all members of the public because of the common law collateral source rule?
The Supreme Court answered No, reversing the district court.
The court reasoned that “the common-law collateral source rule should be limited to those benefits earned in some way by the plaintiff.” It took its lead from the Illinois Supreme Court, which, in Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill.2d 353, 362-63, 29 Ill.Dec. 444, 448, 392 N.E.2d 1, 5 (1979), stated: [T]he policy behind the collateral-source rule simply is not applicable if the plaintiff has incurred no expense, obligation, or liability in obtaining the services for which he seeks compensation.”
While this reasoning is consistent with part of the holding in Gormley — “[The rule of damages] … avoids penalizing parties who purchase insurance, which would create a disincentive to buy coverage in the first instance.” — it doesn’t get to the important concerns outlined in Gormley, namely:
- The rule of damages “is designed to prevent tortfeasors from benefiting unjustly from the injured parties’ receipt of collateral benefits for their injuries. …”
- “The rule [of damages] also maintains a level of deterrence against tortfeasors that would be lost if awards against them were reduced by collateral sources. …”
- The rule of evidence is designed to prevent the introduction of evidence that “misleads the jury on the issue of liability and, thus, subverts the jury process. Because a jury’s fair assessment of liability is fundamental to justice, its verdict on liability must be free from doubt, based on conviction, and not a function of compromise.”
Gormley was decided after Stanley. Why weren’t the other Gormley concerns addressed in Joerg? Are those who may be eligible for public assistance not also entitled to an untainted jury on the issue of liability?
In personal injury civil trials, liability and damages are distinctly separate issues. One should not be allowed to unduly influence the other. The concern, as expressed in Gormley, is that the jury, hearing of collateral sources, might be inclined to improperly compromise its verdict on liability.
Another concern with having future damages decided by consideration of collateral sources, is that the availability of collateral sources is not guaranteed. What may be available today, may not be available tomorrow. However, once the Plaintiff’s future damages are reduced by consideration of collateral sources, it’s a done deal. The Plaintiff cannot return to court at a later date to modify the award if, for example, the collateral source benefit is no longer available.
Gormley had it right.
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