In John Joerg, Jr., etc., et al. v. State Farm Mutual Automobile Insurance Co., No. SC13-1768 (October 15, 2015), the Florida Supreme Court held that 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. The Joerg decision has significant ramifications because it removes a tool that could be used to diminish the jury award for the plaintiffs’ future damages.

Background

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 sources.

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. 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. The Court held that the evidence was admissible because it was relevant to the issue of determining damages for the plaintiffs’ future expenses. Since the Stanley 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.

In Joerg, the plaintiff was struck by a car while riding his bicycle. He was considered 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.

Supreme Court’s Rationale

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 in Stanley.

The Court further noted it was speculative to attempt to calculate damage 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 when 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 was also proper to ensure that tortfeasors do not enjoy a windfall at the expense of taxpayers who fund social legislation benefits.

Analysis

The result will have a significant impact for tortfeasors and their insurers. The tortfeasors have lost a tool to establish there will be limited future damages based on the probable existence of benefits that will reduce the cost of the plaintiff’s future medical expenses. Defense attorneys will have to find creative ways to protect their clients from this ruling and its impact on the changing face of litigation. These could include using experts to address reasonable anticipated costs of future medical treatment; aggressively deposing the billing employees of medical providers to find errors in the use of CPT codes that inflate past charges; or obtaining admissions that the providers never actually received payment for full amounts.