The collateral source rule is one that limits or prohibits evidence of benefits paid by third parties to plaintiffs in injury lawsuits. The basis for the rule is that defendants should not be permitted to pay less for wrongdoing simply because an injured person was protected by third-party insurance or other benefits.
Primarily, this applies to evidence of health insurance and workers’ compensation insurance. However, there was a narrow exception carved out for evidence pertaining to free or low-cost benefits, such as those provided through the government via Medicare or Medicaid.
Now, the Florida Supreme Court has changed that in the recent case of Joerg v. State Farm, following an appeal from Florida’s Second District Court of Appeal. The court ruled that all defendants will be precluded from presenting evidence of future government benefits because:
- Evidence of collateral source benefits in general is inherently prejudicial;
- Medicare beneficiaries who receive an award for future medical damages will be liable to reimburse Medicare if a conditional payment is made on their behalf (which prevents double recovery by plaintiff);
- Evidence of eligibility for programs like Medicare, Medicaid, welfare and similar social programs may have a significant prejudicial impact on juries;
- Calculating damage awards based on benefits plaintiff hasn’t received and may never receive is speculative, as such benefits are contingent on a number of factors, including legislative action.
In the Joerg bicycle accident case, plaintiff is a man who is developmentally disabled, has never worked and has lived his whole life with his parents. His disabilities entitle him to receive reimbursement through Medicare for medical bills.
Eight years ago, plaintiff was struck by a car while riding his bicycle in Venice. He later filed a lawsuit against the at-fault driver, as well as plaintiff’s own insurance company, seeking uninsured motorist (UM) benefits. The case ultimately proceeded solely against the insurer.
Plaintiff sought to exclude evidence of any collateral source benefits he received under both Medicaid and Medicare. The court ultimately granted this request, precluding the insurer from introducing any evidence of future benefits paid through these sources.
Following a trial, jurors awarded plaintiff $1.5 million, which approximately $470,000 of that in future medical expenses.
Defense appealed, and the 2nd DCA reversed, finding Medicare benefits were unearned and also free and therefore shouldn’t be excluded as evidence under the collateral source rule. The reward for future damages was reversed and the case remanded.
Plaintiff appealed to the Florida Supreme Court, which accepted review.
In affirming the trial court’s decision, the state supreme court receded from the 1984 precedent set in the case of Florida Physician’s Insurance Reciprocal v. Stanley. Further, the court ruled appeals court misapplied that case law.
This is important because even if a plaintiff does not receive such benefits currently, they may at some point be entitled to them if they reach a certain age. But to determine how much those benefits would be and to what extent they would be provided to coverage of treatments.
The effect of this decision is an assurance that defendants who acted negligent won’t be allowed to reduce their overall damage awards through speculation of future government benefits.
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Joerg v. State Farm, Oct. 15, 2015, Florida Supreme Court
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