Collateral Source Benefits From Government Sources Weighed in Smith v. Mahoney

Gregg Hollander | November 11, 2016 | Car Accidents

Florida law generally does not allow defendants in personal injury lawsuits to present evidence of collateral benefits plaintiffs receive from third parties. These would include benefits like health insurance or workers’ compensation. The concern is that such evidence might confuse the jury. Still, F.S. 768.76 requires judges to reduce the jury’s verdict by any collateral source benefits received by the plaintiff, except in cases where there is a reimbursement or subrogation right. Further, the statute specifically states that benefits received under federal programs, such as Medicare or Medicaid, aren’t considered collateral sources. 

Still, evidence that a person qualifies for Medicare or Medicaid is typically deemed highly prejudicial, so it’s not usually admissible. The 1984 case of Florida Physician’s Insurance Reciprocal v. Stanley did allow for one narrow exception, which is that defendants can introduce evidence of low-cost or free governmental and charitable programs that are available in the community to cover portion’s of a person’s health care costs. However, courts in this state had struggled since then with whether future Medicare and Medicaid benefits should be admissible. It was only last year, in the case of Joerg v. State Farm, that the Florida Supreme Court drew a line in the sand: Defendants are not allowed to introduce collateral source benefits a plaintiff might receive in the future from Medicare or Medicaid. The rationale is that there is no guarantee a plaintiff can for sure count on these programs in the future.

Recently, the Delaware Supreme Court held that, just like in Florida, Medicare and Medicaid write-offs do not fall under the collateral source rule. However, the court also held that future medical expenses were not subject to Medicaid reimbursement limitations. 

The case is Smith v. Mahoney. According to court records, plaintiff was injured in two car accidents. Although she was gainfully employed at the time of the crashes, she was eligible for Medicaid coverage. Initially, her treating physician sought to recover his standard charges of $23,000 from the proceeds of any personal injury settlement. However, the doctor later opted to just bill Medicaid for the charges and accepted $5,200. Medicaid in turn asserted a lien in that amount on any future recovery by lawsuit or settlement.

Plaintiff filed a lawsuit against the two negligent drivers and presented evidence of her doctor’s $23,000 bill plus a $2,000 MRI bill and expert witness testimony indicating she would need $3,300 annually in future medical treatment. Jurors did not hear that medical providers were never paid the difference between what Medicaid paid and the doctor originally billed.

A jury returned a verdict for $25,000 in prior medical expenses, $10,000 for future medical expenses and $15,000 for pain and suffering.

The court later issued an opinion reducing the prior medical expenses award from $25,000 to $5,200 – the amount actually accepted by the provider.

Plaintiff appealed. The state supreme court had already held that the collateral source rule did not extend to Medicare, but its most recent ruling determined that this legal reasoning also applies to Medicaid reimbursements. However, just like in Florida, justices ruled that the uncertainty of future Medicaid benefits (which are predicated on one’s income) can’t be used to limit a plaintiff’s future medical expenses.

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West Palm Beach, FL 33401
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Additional Resources:

Smith v. Mahoney, Nov. 3, 2016, Delaware Supreme Court