Ruling Makes It More Difficult for Defendants to Deal with Claims for Future Medical Expenses at Trial
It is not uncommon for a defendant in a product liability case at trial to be faced with an inflated and exaggerated claim for future medical expenses for the injured plaintiff. In those instances, the defendant will want to show that the plaintiff will be entitled to receive benefits from collateral sources in the future, which reduces the overall amount the plaintiff can recover from the defendant if it is found liable.
The Florida Supreme Court recently handed down a decision we believe will change the way personal injury claims are tried in Florida. In general, benefits awarded to the plaintiff from collateral sources are not admissible at trial under Florida law. This type of evidence is regarded as highly prejudicial to the plaintiff’s case. However, there are exceptions to this exclusionary rule, and in the past a defendant in a personal injury case was able to introduce evidence of benefits the plaintiff will receive from Medicare.
The Florida Supreme Court in John Joerg, Jr., etc., et al. v. State Farm Mutual Automobile Insurance Co., No. SC13-1768 (October 15, 2015), has made one exception even more narrow. In Joerg, it was held that all defendants are precluded from introducing evidence regarding collateral source benefits that plaintiffs may receive in the future from social legislation, such as Medicare and Medicaid. The decision receded from the Court’s prior decision in Florida Physician’s Insurance Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984), which had allowed limited admission of evidence concerning certain free or low-cost future collateral source benefits. Given the fact that most plaintiffs will be entitled to receive Medicare benefits at a certain stage in their lives, the Joerg decision has significant ramifications. This is particularly concerning to those who defend product liability cases stemming from serious accidents, which often involve claims for future medical expenses.
Florida law generally holds that evidence of collateral source benefits is not admissible because it will likely confuse the jury. However, Florida Statute §768.76 requires the court to reduce the jury verdict by any collateral source benefits received by the plaintiff. There is no reduction of collateral source benefits for which a subrogation or reimbursement right exists, and the reduction shall be offset to the extent of any amount that has been contributed on behalf of the plaintiff to secure the benefits. The statute specifically notes that benefits received under Medicare and similar federal programs are not considered collateral source benefits.
In Florida, evidence that a claimant is qualified to receive benefits from social legislation such as Medicare or Medicaid is considered highly prejudicial and is typically not admissible at trial. However, the Stanley decision created a potential narrow exception. In Stanley, the plaintiffs alleged that the defendants’ medical negligence resulted in the intellectual disability and cerebral palsy suffered by their son. In that decision, the Court determined the defendants were permitted to introduce evidence of “free or low-cost charitable and governmental programs available in the community” to pay portions of the son’s future health care because it was relevant to the issue of determining damages for the plaintiff’s future expenses. Since theStanley decision, the trial courts have wrestled with the issue of whether future benefits that may be provided by Medicare and similar programs are “free or low-cost” benefits that are relevant admissible evidence.
Supreme Court’s Rationale
In Joerg, the plaintiff was struck by a car while riding his bicycle. He was a developmentally disabled adult who lived with his parents his entire life, and as a result of his disabilities he was entitled to reimbursement from Medicare for his medical bills. He sued State Farm Mutual Automobile Insurance Company, and received a judgment at trial. The trial court did not permit the introduction of evidence concerning the plaintiff’s future Medicare benefits, and State Farm pursued an appeal.
On appeal, the Supreme Court held it is improper to introduce evidence concerning Medicare benefits because plaintiffs are required to reimburse Medicare for any future benefits that are provided, and because the future benefits are uncertain. The Court explained that the Centers for Medicare and Medicaid Services have several tools to require the plaintiff to repay future Medicare benefits pursuant to the Medicare Secondary Payer Act. Thus, regardless of whether an individual paid for the benefits, the Court found they are not “free” benefits that should be admissible under the rationale used in Stanley.
The Court further noted it was speculative to attempt to calculate damages awards based on benefits that a plaintiff had not yet received and may never receive. This is particularly true should the plaintiff’s eligibility or the benefits become insufficient or cease because they are dependent on limited public funding and unpredictable legislative action. Thus, the Court receded from the Stanley decision to the extent that it supported admission of evidence of future benefits potentially available through social legislation.
The Court bolstered its decision, saying that it was consistent with public policy concerns. It pointed out that excluding evidence of the collateral source benefits avoids the inherently prejudicial effect on the plaintiff. Further, the Court concluded that exclusion also was proper to ensure that liable defendants do not enjoy a windfall at the expense of taxpayers who fund social legislation benefits.
The result of the Joerg Court’s decision will likely have a significant impact for manufacturers, distributors and their insurers. Product liability defendants in Florida litigation have lost a useful tool to manage plaintiffs’ claims for future damages. It will be more difficult for defendants to introduce evidence that the plaintiff will be entitled to receive Medicare benefits to establish that there will be limited future damages. Defense attorneys will have to adapt to protect their clients from this ruling and its impact on the changing face of litigation. Among the steps they may need to take are (1) using experts to address reasonable anticipated costs of future medical treatment; (2) aggressively deposing the billing employees of medical providers to determine if any errors exist in the use of CPT codes that inflate past charges; or (3) obtaining admissions that the providers never actually received payment for full amounts.