Tennessee Supreme Court Upholds Traditional Collateral Source Rule: Defendants Cannot Introduce Evidence of Discounted Rates Paid by Plaintiffs’ Medical Insurer

By | Trial Practice, Uncategorized | No Comments

The Tennessee Supreme Court has unanimously declined to change the law on what evidence can be used to prove medical expenses in cases involving personal injury.

In Jean Dedmon v. Debbie Steelman et al., W2015-01462-SC-R11-CV (11/17/17), the Court has held that Tennessee law continues to allow plaintiffs to use full, undiscounted medical bills to prove their medical expenses instead of the discounted amounts paid by insurance companies, and defendants cannot introduce evidence of those insurance payments.

Jean Dedmon had sued for injuries she sustained in a car accident, and attached the bills from her hospital and doctors to her complaint. While the case was pending, the Tennessee Supreme Court issued its opinion in West v. Shelby County Healthcare Corporation, 459 S.W.3d 33 (Tenn. 2014), and held that based upon the specific provisions of Tennessee’s hospital lien statutes, T.C.A. §§ 29-22-101-107, the hospital’s lien was limited to the discounted amounts paid by the patients’ insurance companies.

After West, the defendants in Dedmon argued that the West decision also changed the law in Tennessee for all cases involving personal injuries, contending that personal injury plaintiffs who have insurance can no longer use the full medical bills to prove their medical expenses. The trial court agreed and limited the plaintiffs’ proof on medical expenses to the discounted payments the hospital and doctors had contractually agreed to accept from Mrs. Dedmon’s insurance company.

The plaintiffs appealed to the Court of Appeals, which reversed the trial court, holding that West does not apply in personal injury cases outside the context of the lien statute, Dedmon v. Steelman, 2016 LEXIS 386 (Tenn. App. 2016).  However, while plaintiffs who have insurance can use full, undiscounted medical bills to prove medical expenses, the Court of Appeals also said that defendants could use discounted insurance payments to prove that the undiscounted bills were not reasonable. That, of course, opens the door to collateral source evidence.

The Tennessee Supreme Court agreed that its holding in West was not intended to apply to all personal injury cases, but reversed the Court of Appeals on the collateral source issue, holding that insurance payments and other benefits received by plaintiffs that do not come from the defendant (benefits that come from “collateral sources”), may not be used to reduce the defendant’s liability to the plaintiff.

The Supreme Court explained that Tennessee has always followed the collateral source rule, and that it prevents defendants from telling juries about plaintiffs’ insurance and other such benefits.  So, after a thorough review, the Supreme Court declined to alter existing law in Tennessee, and held that the collateral source rule applies. Therefore, the plaintiffs may introduce evidence of Mrs. Dedmon’s full, undiscounted medical bills as proof of her reasonable medical expenses, and the defendants may not introduce the discounted rates paid by Mrs. Dedmon’s insurance company for any purpose.  The defendants can use other evidence to show that the full medical expenses are not reasonable, however, as long as that evidence does not violate the collateral source rule.

One very interesting point made by the Court was: “it is evident that medical expenses cannot be valued in the same way one would value a house or a car,” since “health care services are highly regulated and rates are skewed by countless factors, only one of which is insurance.” The Court concluded that there is no reason to believe that discounted insurance rates are a more accurate way to determine the value of medical services.

The bottom line:  While the Supreme Court acknowledged that the collateral source rule is imperfect, it remains the law in Tennessee.

 

Cooler Weather Brings More Fog – Drive Safely

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As we look forward to cooler weather this fall, we should be reminded we are more likely to encounter fog on our highways.  Fog is prevalent in areas where moisture is abundant, such our southern rivers and lakes. However, fog can occur anywhere. Abundant condensation nuclei enhances the formation of fog. Fog may form (1) by cooling air to its dew point, or (2) by adding moisture to air near the ground. Fog can also be be prevalent in industrial areas where byproducts of combustion provide a high concentration of these nuclei.  Fog often develops along I-75 and other roads close to the Hiwassee River in Tennessee, near Bowater and Arch/Olin Chemical. Be careful.

Here are a few simple guidelines for driving in foggy conditions:

FOG

Are Liability Medicare Set-Aside Accounts (LMSA’s) Now Mandatory?

By | Medicare | No Comments

As of October 1, 2017, the Centers for Medicare and Medicaid (CMS) has implemented a new policy regarding Medicare Secondary Payer (MSP) reimbursements and what are known as liability Medicare set-asides or LMSA’s. At the request of CMS, the Medicare Administrative Contractor will begin to track the existence of any LMSA’s related to a claim and deny payment for items or services that it deems should be paid from that LMSA rather than being paid for by Medicare. According to CMS, “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

What does this mean? Medicare’s authority in this area has not changed, nor has there been any statutory or regulatory change. However, this new policy will likely generate confusion and raise additional issues when liability cases for Medicare eligible clients are settled. It is important to understand that this new policy does not affirmatively create a new mandate for Medicare beneficiaries to create a liability set-aside.

Under Medicare Secondary Payer (MSP) provisions, Medicare Set-Asides are not a requirement; they are a recommendation for protecting Medicare’s best interests. Medicare beneficiaries are required to notify Medicare when a liability claim is made against a defendant with liability insurance. If the litigation results in a settlement, Medicare will expect reimbursement for any expenses it has covered that should have otherwise been paid for out of the settlement. If Medicare is billed and pays for any future injury-related medical costs, Medicare may also seek reimbursement should it determine its future interest was not adequately protected.

It is important that Medicare’s interests be considered when a liability case is settled.  When Medicare has paid some of the medical expenses it is mandatory, and Medicare has to be reimbursed. If the settlement includes money for future medical care, the situation is more complicated.  In those cases where the client is Medicare eligible, a LMSA may be appropriate, and perhaps recommended.  In any event, in all cases, Medicare’s interest should be carefully considered if the settlement includes any money for future medical expenses. At minimum, clients should be advised that Medicare could decide that some future medical expense was caused by an injury for which the client has already received compensation, and that Medicare would refuse to pay for it.

CMS has yet to provide a framework for reviewing LMSAs as it has for Workers’ Compensation Medicare Set-Asides, making it difficult to determine their necessity and whether the MSA is being funded with the appropriate amount.  For the time being, liability settlements will have to be evaluated on a case-by-case basis.

Tennessee Supreme Court Holds That Wrongful Death Claim Belongs to Surviving Spouse

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Although the circumstances were unusual, the Tennessee Supreme has clarified that under Tennessee law a wrongful death claim did not belong to the decedent, but passed to decedent’s husband upon her death, Linda Beard v. James William Branson and Trinity Hospital, L.L.C.   The husband had filed a pro se wrongful death malpractice lawsuit shortly before the one-year statute of limitations lapsed. After expiration of the limitations period, he retained an attorney and filed an amended complaint. The decedent was also survived by two daughters. The defendants filed motions for summary judgment arguing that the husband’s initial pro se complaint was filed in a representative capacity on behalf of the decedent and the other statutory beneficiaries and that it was, therefore, void ab initio.  They contended that the amended complaint could not relate back to the date of the initial complaint, and the lawsuit was therefore time-barred. The trial court denied the summary judgment motions and held a jury trial where the jury found both defendants liable and awarded damages.  The Court of Appeals had reversed and held that the claim belonged to the decedent and therefore the husband could not file a lawsuit without a lawyer.

This all started back in 2004, when Ruth Hartley was admitted to Trinity Hospital in Erin, Tennessee for elective colon surgery.  She developed complications from the surgery and died.  It is a sad commentary on our judicial system that this case has gone on for 13 years.  A unanimous Supreme Court held that under the plain language of Tennessee’s wrongful death statutes, the decedent’s right of action “pass[es] to” the surviving spouse upon the decedent’s death, and the surviving spouse asserts the right of action for the benefit of himself and other beneficiaries. Tenn. Code Ann. § 20-5-106, reversing the Court of Appeals, but sending the case back to the intermediate appellate court for consideration of other issues.

The opinion by Justice Holly Kirby is recommended reading, as she discusses Tennessee’s confusing statutory wrongful death scheme, which she describes as “a hybrid between the survival and wrongful death statutes, resulting in a statutory scheme with a ‘split personality.'”

Is Tennessee Ready for Self-Driving Cars?

By | New Laws | No Comments

Effective June 6, 2017, self-driving or “robot” cars are legal in Tennessee, provided a human being is in the car, and provided that the vehicle is covered by at least $5,000,000 in liability insurance (Senate Bill 151).

The new law defines “automated driving system” or “ADS” as “technology installed on a motor vehicle that has the capability to drive the vehicle on which the technology is installed in high or full automation mode without any supervision by a human operator. The technology includes specific driving mode performance by the automated driving system of all aspects of the dynamic driving task that can be managed by a human driver. It also includes the ability to automatically bring the motor vehicle into a minimal risk condition in the event of a critical vehicle or system failure or other emergency event.”

Under the new law, when the ADS is fully engaged, the ADS is the driver for purposes of determining liability. This is important for liability purposes, as it means that we do not have to prove a product liability case when there is an accident caused by a robot or self-driving car.  Products liability cases are typically complex and expensive to pursue, involving lots of expert witnesses and industry stone-walling. It appears that the ADS will be judged just like a human driver.  For instance, did the robot vehicle run a red light or did it have a green light?  Did it fail to yield the right of way?  Was it speeding?

According to the National Conference of State Legislatures, the number of states considering legislation related to autonomous vehicles has gradually increased in recent years, and now includes Tennessee:

  • In 2017, 33 states have introduced legislation. Last year, 20 states introduced legislation.
  • Sixteen states introduced legislation in 2015, up from 12 states in 2014, nine states and D.C. in 2013, and six states in 2012.
  • Since 2012, at least 41 states and D.C. have considered legislation related to autonomous vehicles.
  • Nineteen states—Alabama, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Louisiana, Michigan, New York, Nevada, North Dakota, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Vermont—and Washington D.C. have passed legislation related to autonomous vehicles.
  • Governors in Arizona,MassachusettsWashington and Wisconsin issued executive orders related to autonomous vehicles.

Only New Law Taking Effect in Georgia July 1st Affecting Tort Cases Involves Minor Change to Venue Provisions of State Tort Claims Act

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Typically, many laws passed by the Georgia legislature take effect July 1st.  This year, the only substantive change affecting some civil lawsuits is a minor change to the venue provisions of the State Tort Claims Act. Senate Bill 126 amended the Code section relating to venue for tort actions against the State by adding certain specifications. Currently, under O.C.G.A. § 50-21-28, tort actions against the state must be brought in the state or superior court of the county where the loss occurred; SB 126 requires that tort actions against the state be brought in the state or superior court of the county where the tort that gave rise to the loss occurred. The bill also codified longstanding case law indicating that wrongful death actions against the state may be brought in the county where the tort giving rise to the loss occurred or the county where the decedent died. This bill resulted from the State’s concern that a 2015 case interpreted the “where the loss occurred” to allow plaintiffs to file tort claims act cases in any county where they experienced symptoms from the injuries sustained in the incident giving rise to the tort claim or in any county where they incurred medical bills for the injury. The new provisions only affect causes of action filed on or after July 1, 2017.

Here is the full text of the amended statute, § 50-21-28:

“All tort actions against the state under this article shall be brought in the state or superior court of the county wherein the tort giving rise to the loss occurred; provided, however, that, wrongful death actions may be brought in the county wherein the tort giving rise to the loss occurred or the county wherein the decedent died, and provided, further, that in any case in which an officer or employee of the state may be included as a defendant in his or her individual capacity, the action may be brought in the county of residence of such officer or employee. All actions against the state for losses sustained in any other state shall be brought in the county of residence of any officer or employee residing in this state upon whose actions or omissions the claim against the state is based.”

Florida Supreme Court Holds Caps on Noneconomic Damages in Medical Malpractice Cases to be Invalid

By | Tort Reform | No Comments

Complications from carpal tunnel surgery left the plaintiff severely injured. She suffered horrible injuries as a result of what was supposed to be routine surgery for carpel tunnel syndrome, including several weeks in a drug induced coma.  After trial, her noneconomic damages were capped by provisions of Florida law, which provided that the noneconomic damages award could not exceed $500,000 per claimant in medical malpractice cases, unless the malpractice caused a permanent vegetative state or death, or if the negligence caused a catastrophic injury and a manifest injustice would occur unless increased damages were awarded, and then damages could be awarded up to $1 million. Other provisions limited damages to $750,000 and $1.5 million, respectively, when the injury resulted from the negligence of nonpractitioners. As a result, the trial court reduced a jury verdict of over $4,000,000 to about $2,000,000.

On June 8, 2017, in North Broward Hospital v. Kalitan, SC15-1858, the Florida Supreme Court held that the caps on personal injury noneconomic damages in medical negligence actions violated the Equal Protection Clause of the Florida Constitution, and declared the caps invalid, relying on the Court’s earlier decision in Estate of McCall v. United States, 134 So. 3d 894 (Fla. 2014), which held that a cap on wrongful death noneconomic damages also violated the Equal Protection Clause of the Florida Constitution.

The Georgia Supreme Court declared similar caps on noneconomic damages in medical malpractice cases invalid in 2010 in Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 286 Ga. 731.

In 2011, the Tennessee legislature imposed a cap of $750,000 on noneconomic damages in all personal injury and death cases, but the Tennessee Supreme Court has yet to rule on the caps. Let’s hope the Tennessee justices show the same courage as those in Florida and Georgia and do what is right for the severely injured.

FMCSA Backs Off From Increasing Minimum Liability Insurance Limits

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For over two years, the Federal Motor Carrier Safety Administration has been considering requiring trucking companies to carry more liability insurance to protect the public. Unfortunately, under the Trump administration, FMCSA has just withdrawn its November 28, 2014 advance notice of proposed rulemaking (ANPRM) concerning financial responsibility for motor carriers, freight forwarders, and brokers. FMCSA is authorized to establish minimum levels of financial responsibility for motor carriers at or above the minimum levels set by Congress. In the ANPRM, FMCSA sought public comment on whether to exercise its discretion to increase the minimum levels of financial responsibility, and, if so, to what levels. Currently motor carriers, i.e. trucking companies, only have to carry $750,000 of liability insurance. The agency was considering increasing the minimum limits to as much as $5,000,000.  FMCSA now claims that after reviewing all public comments to the ANPRM, it has determined that it has insufficient data or information to support moving forward with a rulemaking proposal, at this time.  That means they have bowed to political and lobbying pressure from the trucking industry and backed down, leaving the motoring public at risk from financially irresponsible operators who cause catastrophic wrecks.

Jefferson County Circuit Judge Strikes Down Alabama’s Workers’ Compensation Act.

By | Alabama Workers Compensation | No Comments

On May 8, 2017, an Alabama Circuit Court judge declared the state’s entire workers’ comp system unconstitutional.

Judge Pat Ballard of the 10th Judicial Circuit in Jefferson County took issue with two statutory provisions that cap attorney fees and permanent partial disability benefits – but because the Alabama Workers’ Compensation Act contains a non-severability clause, he tossed the whole thing.

He stayed enforcement of his order for 120 days to give lawmakers a chance to cure the deficiencies he identified in Alabama Code Sections 25-5-68 and 25-5-90.But the legislative session ends in less than two weeks, so lawmakers will have to act fast.

In Clower v. CVS Caremark Corp., Ballard found that Section 25-5-68 impermissibly subjects workers to differential treatment depending on whether they had permanent disabilities that were partially or totally disabling. Section 25-5-68 provides that the maximum compensation payable for PPD “shall be no more than the lesser of $220 per week or 100% of the average weekly wage.” Unlike the benefits available for totally disabling injuries, this is a hard cap that is not adjusted for inflation and increases in the cost of living.

Temporary total and permanent total disability benefits in Alabama are tied to the statewide average weekly wage, which is revised every year, but “PPD rates have stagnated in place at $220 per week for three decades,” Ballard noted. Providing temporarily disabled workers “with an indexed system of benefits and denying it to those permanently disabled (to an extent less than totally) makes no rational sense at all,” he opined. Ballard also said he also thought there was “little credibility” for a benefit structure that pays the same $220 weekly benefit to a worker who had been making $350 per week and a worker who had been making $3,000 per week.

“There cannot conceivably be any more arbitrary, capricious, irrational, or attenuated idea than telling both workers that ‘equal protection of the laws’ means that they each get the identical amount,” Ballard contended. What’s more, Ballard said an income of $220 per week would have kept a family of four above the poverty line when the Section 25-5-68 cap was imposed 30 years ago – but now that amount is 46.4% of the poverty level for the same family. “What once qualified as an adequate ‘remedy’ for those partially disabled no longer does,” Ballard said. As the cost of living continues to rise, Ballard reasoned that the value of a $220 weekly benefit has “rotted away” to the point that it is “too infirm to qualify as a ‘remedy’ sufficient to meet the requirement that the Workers’ Compensation Act involve adequate ‘quid pro quo’ to pass constitutional muster.”

Ballard then went on to find the attorney fee cap in Section 25-5-90(a) unconstitutional as well. The statute limits a claimants’ attorney to a fee of no more than 15% of the compensation awarded to an injured worker – without any exception.

Last year, the similarly unyielding nature of Florida’s attorney fee statute led that state’s Supreme Court to strike the statute down as unconstitutional. Ballard said he found the Florida Supreme Court’s reasoning in Castellanos v. Next Door Co. to be persuasive. He also said he agreed with the reasoning of the Utah Supreme Court, which declared the Utah fee state unconstitutional in Injured Workers’ Association of Utah v. State. The Utah court’s decision had been based on the fact that the state constitution placed the regulation of attorney fees falls within the judicial branch’s authority. In Alabama, Ballard said, the task of regulating attorney fees has historically been a function of the judiciary as well. He said he viewed Section 25-5-90(a) as a “legislative trespass into a function reserved to the judicial branch of government.”

The low rate of PPD meant an attorney’s prospective fee from taking on a client with a PPD claim wouldn’t be very much, and so the joint operation of Sections 25-5-68 and 25-5-90 discourages lawyers from taking the cases, leaving the injured workers at the mercy of the employer and insurer.

Will Pena-Rodriguez v. Colorado Permit Challenges to Civil Jury Verdicts Based on Racial Bias?

By | Trial Practice | No Comments

In Edmonson v. Leesville Concrete Co., 500 U.S. 614 (1991) the Supreme Court held that a private litigant in a civil jury trial may not use racially‐motivated peremptory strikes any more than a government prosecutor may during a criminal trial, “Racial discrimination has no place in the courtroom, whether the proceeding is civil or criminal.” The Supreme Court explained that, for the limited purpose of jury selection, private litigants act as “government actors” and thus cannot violate the jurors’ constitutionally guaranteed equal protection rights.  Although mostly used in criminal cases, such Batson challenges to a racially motivated peremptory strike are occasionally utilized in civil cases during the selection process.

Recently, in Pena-Rodriguez v. Colorado, 197 L. Ed. 2d 107 (3/6/17), the Supreme Court has held that inquiry can be made into the validity of a jury verdict to permit the trial court to consider evidence of a juror’s statement suggesting that racial bias influenced his decision to find a defendant guilty of harassment and unlawful sexual contact.  One juror told the other jurors that he believed defendant was guilty because, in his experience as a former law enforcement officer, “Mexican men had a bravado that caused them to believe they could do whatever they wanted with women”

Although Pena-Rodriguez v. Colorado involved a criminal conviction, it is likely that it will be applicable in civil cases as well, as the Supreme Court cited Edmonson after stating: “To guard against discrimination in jury selection, the Court has ruled that no litigant may exclude a prospective juror on the basis of race.”

In civil cases, racial bias can play a role, either for or against a particular litigant.  Generally the sanctity of jury verdicts is upheld by the courts and inquiry into why or how a jury reached a particular verdict has not been permitted.  However, the U.S. Supreme Court has apparently opened the door to such inquiry if there is evidence of racial bias affecting the outcome.

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