Louisiana Supreme Court Finds Collateral Source Rule of Evidence Does Not Apply to Medical Expenses Charged But Not Paid by Workers’ Compensation Carrier

Louisiana (June 28, 2019) – In Simmons v. Cornerstone Investments, LLC, et al, 2018-0735 (La. 05/08/19), a tort case involving a third party tortfeasor, the Louisiana Supreme Court recently held that the amount of medical expenses charged by a provider above the amount actually paid by a workers’ compensation insurer does not qualify as a collateral source under Louisiana evidentiary law, and thus, the “written off” amounts are admissible at trial.

Background

The plaintiff, Kerry Simmons, was employed by Cintas Corporation No 2 at its warehouse in Pineville, Louisiana. In October 2011, while in the course and scope of his employment, Simmons was injured while attempting to close a roll-up bay door which had become jammed. Simmons asserted a claim for workers’ compensation benefits against Cintas and its carrier, for disability and medical benefits. The medical bills charged by Simmons’ medical providers totaled $24,435. This amount was reduced in accordance with the Louisiana Workers’ Compensation Act Medical Reimbursement Schedule, resulting in a “write off” of $6,000.

Thereafter, Simmons filed suit against Cornerstone, the owner of the building at issue, and its insurer. Simmons alleged that the bay door was defective, and that, but for this unreasonably dangerous defect, his accident would not have occurred. Cintas and is workers’ compensation carrier intervened for reimbursement of the amounts paid in disability and medical benefits. Simmons subsequently settled with Cintas and its carrier and filed a motion in limine seeking admission into evidence of the entire amount of medical bills and arguing that the written off amount was a collateral source and should be excluded.

The Trial

Under Louisiana’s well established collateral source rule, a tortfeasor may not benefit, and an injured plaintiff’s recovery may not be reduced, because of monies received by the plaintiff from sources independent of the tortfeasor’s procuration or contribution. Under this doctrine, payments received from an independent source are not deducted from the award that “the aggrieved party would otherwise receive from the wrongdoer.” Louisiana Dept. of Transp. and Dev. v. Kansas City Southern Railway Co., p. 6 (La. 5/20/03), 846 So.2d 734, 739. The usual application of this rule results in a plaintiff recovering as damages the full amount charged by a health care provider. Evidence of the written off amounts not actually paid by the carrier is collateral source and not admissible.

The court first addressed the recent influx of cases challenging the rule’s application to medical expenses, including Bozeman v. State, 03-1016 (La. 7/2/04), 879 So.2d 692, which found that a plaintiff could not benefit from the full amount of the medical charged to Medicare but not paid; Bellard v. Amer. Cent. Ins. Co., 07-1335 (La. 4/18/08), 980 So.2d 654, holding that an employer’s uninsured motorist carrier was entitled to a credit in the amount of workers’ compensation benefits paid to or on behalf of the plaintiff and such evidence was not subject to the collateral source rule; Cutsinger v. Redfern, 08-2607 (La. 5/22/09), 12 So.3d 945, finding that the collateral source rule did not apply to prevent the plaintiff’s uninsured motorist carrier from receiving a credit for workers’ compensation benefits paid by her employer, even though the plaintiff paid for the UM coverage herself; and lastly, Hoffman v. 21^st Century North American Ins. Co., 14-2279 (La. 10/2/15), 209 So.3d 702, declining to apply the collateral source rule to an attorney-negotiated medical discount.

Applying the analysis as set forth in these previous opinions, the Simmons court affirmed the lower court’s rulings that the collateral source rule does not apply, and evidence of the amount of medical expenses incurred and charged to the workers’ compensation carrier, but not paid and instead “written off,” was admissible evidence. According to the court, the patrimony of the plaintiff was not reduced in any way to secure workers’ compensation coverage, which is statutorily mandated and paid by an employer. In addition, the goal of making the tort victim whole is protected as the “written off” amount is a “phantom charge that Plaintiff has not ever paid nor one he will ever be obligated to pay.” Id. P. 7. Note the Fifth Circuit reached the same result in Deperrodil v. Bozovic Marine, Inc., 842 F.3d 353 (5^th Cir. 2016).

Analysis

Prior to this most recent ruling by the Louisiana Supreme Court, Louisiana appellate courts differed regarding the application of the collateral source rule to medical benefits paid via the workers’ compensation statutory scheme in a third party tort action. The court’s recent ruling further restricts plaintiffs from recovering medical amounts in excess of those actually paid to the providers. As set forth by the Simmons Court, although tort deterrence has an important role in litigation, “to stretch the argument to include the award of un-incurred medical expenses, in addition to those actually paid, is to effectively authorize the assessment of punitive damages in the absence of statutory authority.”

Author:

Cynthia G. Sonnier, Partner