On May 9, 2019, the Louisiana Supreme Court issued an important opinion restricting application of the collateral source rule in personal injury lawsuits. In Simmons v. Cornerstone Investments, LLC, et al., 2018-CC-0735 (La. 5/8/19), the Court held the collateral source rule inapplicable to medical expenses charged above the amount actually paid by a workers’ compensation insurer pursuant to the workers’ compensation medical fee schedule.
Kerry Simmons, a Cintas warehouse employee, was injured on the job and received workers’ compensation benefits from Cintas, including disability and medical expenses. Id. Invoices from healthcare providers totaled $24,435, but the charges were reduced to $18,435 in accordance with the Louisiana Workers’ Compensation Act Medical Reimbursement Schedule, resulting in a “write off” of $6,000. Id. In Simmons’ tort suit against the third party building owner and its insurer, the defendants filed a motion in limine to exclude any evidence of medical expenses “written off” by the workers’ compensation insurer. The trial court granted the defendants’ motion and ruled that the only evidence to be presented to the jury was that of amounts actually paid under the fee schedule. The court of appeal denied the plaintiff’s writ in a 2-1 decision. Thereafter, the Louisiana Supreme Court granted the writ to determine the applicability of the time-honored collateral source rule to the medical write off.
The Court began its analysis noting that the question of whether a plaintiff may benefit from the “written off” portion of medical expenses is subject to a two-part analysis:
- Whether the plaintiff paid any consideration, or suffered any diminution to patrimony, for the “written off” amount; and
- whether application of the rule will further the major policy goal of tort deterrence.
The Court held that neither consideration applied and upheld the lower courts’ exclusion of the “written off” amount. Id. at 9. In support, it relied on Bozeman v. State, 03-1016 (La. 7/2/04), 879 So.2d 692, and Hoffman v. 21st Century North American Ins. Co., 14-2279(La. 10/2/15), 209 So.3d 702. Both opinions held the collateral source rule did not apply when a plaintiff had paid no consideration for the benefits. Simmons at 3-4. In Bozeman, the Court considered whether the collateral source rule applied to medical expenses “written off” under the Medicaid program and concluded that because Medicaid is a free medical service for which no consideration is given by a patient, the plaintiff was unable to recover the write off amount. Bozeman, 879 So.2d at 705. Similarly, in Hoffman, the Court declined to apply the collateral source rule to an attorney-negotiated medical discount, finding the discount, obtained through the litigation process, fell outside the ambit of the collateral source rule since the plaintiff suffered no diminution of his patrimony. Hoffman, 209 So.3d at 706.
The Court also looked to the recent United States Fifth Circuit opinion of Deperrodil v. Bozovic Marine, Inc., 842 F.3d 353 (5th Cir. 2016), a decision that was “legally indistinguishable,” albeit only persuasive and non-binding. Simmons at 7. In Deperrodil, the Fifth Circuit held that a plaintiff may not recover from a third-party tortfeasor the amount of medical expenses “written off” by its employer/carrier under the Longshore and Harbor Workers’ Compensation Act.
The Simmons Court followed this line of jurisprudence and found the “written off” amount under the state workers’ compensation act was a “phantom charge that [p]laintiff has not ever paid nor one he will ever be obligated to pay.” Simmons, 2018-0735, p. 7. With this reasoning, the Court concluded there was no basis to differentiate the “written off” amount created by a reduced reimbursement fee under workers’ compensation and those of a Medicaid program or an attorney-negotiated medical discount. The Court gave only brief consideration to the argument that inclusion of the “written off” costs would further the policy of tort deterrence. While acknowledging the importance of tort deterrence in the tort system, the Court found that “there is no true deterrent effect to allowing [p]laintiff to recover expenses over and above what was actually paid” and noted that a ruling allowing plaintiff to recover such a windfall would amount to an unauthorized award of punitive damages Id. at 9. As a result, the Court ruled the collateral source rule did not apply. Id. at 9-10.
The decision in Simmons is yet another substantial and appropriate clarification in the law (1) denying recovery of costs that were never incurred and (2) allowing recovery of only actual medical costs paid.
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