Medicare and Medicaid Benefits are not Admissible as Collateral Sources

Published: April 2016

By: Ted Babbitt

In Florida Physician’s Insurance Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984) the Supreme Court concluded that Fla. Stat. 768.76(1), Fla. Stat. (2014) required the admission into evidence of all collateral sources which were available to the plaintiff free of charge.  At 516 the Court held

[E]vidence of free or low cost services from
governmental or charitable agencies available
to anyone with specific disabilities is admissible
on the issue of future damages. . . .  Such
evidence violates neither the statutory nor the
common-law collateral source rule and does not,
therefore, require a new trial.

. . . .

We believe that the common-law collateral source
rule should be limited to those benefits earned in
some way by the plaintiff.  Governmental or
charitable benefits available to all citizens,
regardless of wealth or status, should be admissible
for the jury to consider in determining the reasonable
cost of necessary future care.  Keeping such
evidence from the jury may provide an undeserved
and unnecessary windfall to the plaintiff.

 

The Stanley opinion has been difficult to apply.  Exceptions to its application have been frequently made.  In Gormley v GTE Prods. Corp., 587 So. 2d 455 (Fla. 1991) the Court held that Stanley did not apply to homeowner’s insurance benefits because plaintiffs had paid for the insurance.  In Nationwide Mut. Fire Ins. Co. v. Harrell, 53 So. 3d 1084 (Fla. 1st DCA 2010) the Court concluded that Stanley did not apply to allow the admission of payments made by private health insurer.  In Weaver v. Wilson, 532 So. 2d 67 (Fla. 1st DCA 1988) the Court declined to apply Stanley to employer benefits.

In Joerg v. State Farm Mut. Auto. Ins. Co., 176 So. 3d 1247 (Fla. 2015) the Court was faced with the question of whether future Medicare or Medicaid benefits were admissible.  In the District Court case of State Farm Mutual Automobile Insurance Co. v. Joerg, 38 Fla. L. Weekly D1378 (Fla. 2d DCA June 21, 2013) the Second District applied Stanley to reverse a jury verdict where the trial court had refused to allow the defendants to place future Medicare benefits in evidence.  The Second District concluded that under Stanley these benefits constituted free or low cost services from a governmental agency and were thus admissible under Stanley.  In Joerg, supra, the Florida Supreme Court receded from Stanley and held that future Medicare and Medicaid benefits are not admissible in evidence and, indeed, that all social legislation benefits fall in the collateral source category and should not be admitted in evidence.  In Joerg the Supreme Court reviewed the steps taken by Medicare to require reimbursement when the plaintiff obtains an award which includes the medical benefits for which he or she obtained benefits through Medicare.  At 1254, the Court holds:

Regardless of whether an individual has directly
paid for his or her Medicare benefits, a factual
matter which is unclear from the record before
this Court, all Medicare beneficiaries who receive
an award for future medical damages will be liable
to reimburse Medicare, if Medicare makes a
conditional payment on their behalf.  Therefore,
the assertion by State Farm that any Medicare and
Medicaid benefits provided to Luke are free and
admissible under Stanley is unsupported under
the law.

 

The reasoning behind this decision is that where the right of reimbursement exists as it does with Medicare and Medicaid, there is no windfall to the plaintiff by recovering for those damages without allowing the jury to know about the Medicare or Medicaid benefits.  The Court concluded that it is inherently prejudicial to permit admission of evidence showing that plaintiff has obtained a governmental benefit and there is no certainty that payment under governmental programs will, in fact, occur.  At 1255, the Court holds:

Moreover, it is absolutely speculative to attempt
to calculate damage awards based on benefits
that a plaintiff has not yet received and may
never receive, should either the plaintiff’s
eligibility or the benefits themselves become
insufficient or cease to continue.  Even where
very particular benefits exist, extensive waiting
lists may prevent an individual from actually
receiving the benefit.  The continued existence
and sufficient funding of public services depend
upon legislative action, which is by no means a
predictable matter.  “To encourage juries to
mitigate damages based on tenuous public
resources forces plaintiffs, like the foolish house
builder in the parable, to rebuild lives on shifting
sands.  The floods may come, and the winds blow,
and great will be the fall.”  Cates v Wilson, 361
S.E.2d 734, 739 (N.C. 1987)  In cases that
involve presumptive Medicare reimbursements,
it is even more speculative to anticipate a
reduction of future damages because the
structure of the MSPA is intended to prevent
Medicare from paying if there is forthcoming
payment from a primary payer.

See Cochran, 291F.3d at 777-78.

Finally, to consider Medicare, Medicaid, and other
similar social legislation benefits as exceptions
to the general rule that precludes admission of
collateral sources circumvents the purpose of the
collateral source rule.  It is a basic principle of
law that tortfeasors should not receive a windfall
due to benefits available to the injured party,
however those benefits were accrued.

This opinion clarifies the inadmissibility of Medicare and Medicaid payments as collateral sources and precludes the admission of those benefits in a personal injury suit.