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A re-examination of the collateral source rule in maritime law.

TABLE OF CONTENTS

I. Introduction                                       74
 A. Hypothetical                                      74
 B. Purpose and Objective                             75
II. Historical Foundation                             78
 A. English Law                                       78
 B. U.S. Law                                          79
III. The Old Paradigm                                 81
 A. Justification and Criticism of the Rule           81
 B. Development of Equitable and Conventional
    Subrogation                                       82
 C. The Impact of ERISA                               85
IV. The Collateral Source Rule in Maritime Law        93
 A. Rule of Evidence versus Substantive Rule of Law   93
 B. Seamen's Claims and Section 55 of the Federal
    Employer's Liability Act                          95
 C. Government Entitlements--Medicaid and Medicare   108
 D. The Effect of State Law in a Maritime Claim      111
 E. Charting a New Course?                           120
V. CONCLUSION                                        122


I. INTRODUCTION

A. Hypothetical

Consider the following hypothetical situation: Your vessel is moored to a wharf and then is struck by another vessel heading downstream on the Mississippi River. The collision is solely due to the error of the downriver vessel. Your hull underwriter indemnifies you for the cost of repairs less any deductible. You file suit against the errant vessel seeking damages for economic losses as well as for the full cost of the repairs.

Under this scenario, the errant vessel owner now asserts that his obligation to reimburse you for your losses is extinguished by the indemnity you received from your hull insurer. The negligent vessel owner maintains that to recover both from it as well as your insurer amounts to a double recovery. But, you assert that the insurance you procured for your benefit does not serve as a release or satisfaction of the debt owed to you by the tortfeasor; nor is the tortfeasor a third-party beneficiary of the insurance contract. To allow the tortfeasor to be exonerated for its liability is poor social policy, for one of the purposes of the tort system is to deter negligent conduct. In the U.S., the collateral source rule applies, as the insurance the damaged vessel owner procured is for its benefit, not for the benefit of the negligent party.

The collateral source rule is both a rule of evidence and of substantive law. (1) As a rule of evidence, it prohibits the tortfeasor from introducing into evidence any other sources of payment to the injured party. Admission of such payment by a third party can prejudice the trier of fact in awarding damages and leads to the tortfeasor failing to respond in the amount of damages caused by its negligence or fault. It is also a rule of substantive law as it applies to the amount the injured party has a right as a matter of law to recover. Conventional rights of subrogation along with similar contractual rights of reimbursement, however, also are involved.

The rule has been criticized as it potentially allows a claimant to recover twice for the same damage. Nonetheless, the rule as it developed in English common and maritime law, as well as in U.S. maritime law, is based on sound legal principles for the times in which the rule was in its seminal stages. Simply stated, the obligation of the insurer to indemnify the insured for a covered loss is a separate and distinct obligation from the delictual obligation of the tortfeasor. If the loss falls within coverage of the policy, the insurer is contractually obligated to indemnify the insured according to the provisions of the policy. Neither negligence nor fault of the insured is a factor in that recovery. On the other hand, the basis of the quasi-obligation of the tortfeasor to compensate for damage is predicated on fault or negligence.

B. Purpose and Objective

The purpose of this article is to explore the historical origins of the collateral source rule under English and U.S. law, including the arguments advanced in support of it and those critical of it; the development of equitable and contractual subrogation in insurance law to mitigate or eliminate double recovery; the expansion of health insurance as well as employer-provided benefits in the late twentieth century; the effect of the "tort reform movement" in various states to abandon or modify the rule; how the courts have interpreted the rule and applied it almost robotically until recently; and finally, the battle over medical write-offs, that is, the reduced fee insurers negotiate for medical services covered under the policy. Aside from its origin in insurance law, the rule has broader applications in light of the late twentieth century developments of employer-sponsored pension plans, employer-provided health insurance and government entitlements, as well as the Affordable Care Act. (2)

This article reviews the jurisprudence which has developed in federal district and appellate courts but predominantly in the U.S. Fifth Circuit with respect to the collateral source rule in Jones Act suits and with respect to maintenance and cure. It will also attempt to distill from what are seemingly conflicting judicial opinions regarding the application of the collateral source rule and the seaman's employer or vessel owner claim for a set-off from damages (3) in the amount of the insurance payment. This article maintains that a claim for set-off is not an appropriate remedy in this context. Rather, because of common subrogation clauses in insurance policies, the question of which party has the right of action to assert a claim for medical costs and expenses should be one focus of the inquiry and that the seaman's claim for reimbursement should appropriately be limited to the amount actually paid if the seaman is not liable for any sums written off by the health care provider as his patrimony is not reduced or affected by the write off typically negotiated by insurers.

The recovery of gross versus net medical charges is one of the more contentious current issues. To what extent, if any, does the collateral source rule apply? As health coverage either through private or employer-provided insurance or government entitlements (namely Medicare and Medicaid) has expanded along with the expected further wider coverage under the eponymous Obamacare, (4) the amount of medical expenses which may be recovered by the injured party will continue to be the subject of debate in the maritime context and in general tort law. It is further complicated by the various remedies a seaman has for personal injury and death based not only on negligence or fault but also the no-fault maintenance and cure remedy. Though states have restricted recovery of medical expenses to the amount actually paid rather than the amount billed by the medical provider, such state action has little if any effect when maritime law applies, but may nonetheless serve as a guide in maritime cases. (5)

Federal courts have also utilized several legal principles and found support in various arguments to analyze the issue to determine what amount of medical expenses may be recovered by the claimant and whether a benefit or plan provided by the employer is a collateral source or may be used to set-off liability under the Jones Act (6) as the provisions of the Federal Employer's Liability Act (FELA) apply. (7) This article, in addition, proposes that a synthesis of these developments if adopted and applied by courts in maritime law suits, in particular those brought under the Jones Act, will lead to a more uniform rule so all parties can know their rights, duties, and legal obligations, and will avoid a windfall for any party. Further, this article will assert that the full abolition of the collateral source rule in maritime suits is without justification or foundation. Its viability and application to employer-provided benefits, such as pension plans, remains sound and is justified and should also apply to suits and claims against third parties who should not benefit from protection purchased solely by the claimant.

In addition, as it is a rule of evidence as well a rule of substantive law, the evidentiary prohibition to the admissibility of insurance payments remains sound and should be maintained. Juries will likely be influenced by the introduction of such evidence and fail to award the sums claimed in damages though paid by the claimant's insurer. More often than not, counsel can stipulate to the sum.

Finally, when the insurer has contractually subrogated to the rights of the claimant, and even with the inclusion of a "preference and priority" clause in the contract, the insurer's claim should be proportionately reduced by the amount of any fault or negligence attributed to the insured. The insurer as subrogee, which is substituted in the place of the insured, has no greater rights than the insured. Its claim is purely derivative and subject to the same restrictions as the insured's claim against the tortfeasor.

II. HISTORICAL FOUNDATION

A. English Law

The source of what has become known as the "collateral source" rule is none other than Lord Mansfield, whose name is well known in the marine insurance field as also the author of the seminal case which established the doctrine of good faith in marine insurance. (8) His decision in Mason v. Sainsbury (9) established the common law principle now known in the U.S. as the "collateral source" rule, though the term was not used in that decision and did not arise apparently until 1871 in Harding v. Townshend, a decision of the Vermont Supreme Court. (10)

In Mason v. Sainsbury, the owner of a house damaged as a result of a riot sued on behalf of the insurer which previously paid the loss to its insured, the home owner. The defendant maintained that there was a satisfaction by payment of the insurer and that the owner had two courses to pursue, that is, either to seek indemnity from the insurer or damages from the defendant. Thus, having chosen one, indemnity from the insurer, the other, a suit in tort against the tortfeasor, was no longer available. The payment by the insurer, therefore, extinguished the tortfeasor's obligation. (11)

The argument fell on deaf ears. As reasoned by Lord Mansfield, the insurer and the defendant are not co-obligors. As insurance is a contract of indemnity, the insurer is substituted for the insured and hence the insured may recover from the defendant regardless of the insurance payment. (12) Justice Buller, who agreed, maintained that the insurer and the insured are one; payment by the insurer does not discharge the obligation of the tortious defendant. (13)

The English court extended this rationale in a maritime context in Yates v. Whyte. (14) The vessels GAZELLE and SEOSTRIS collided, resulting in a claim for the cost of repairs and detention damages. A judgment was entered for repairs, but detention damages were denied. (15) The parties then went to arbitration to determine the amount of the repairs. The arbitrator reduced the award for repairs by the amount received from the insurer. (16) In an action to void the award, Chief Judge Tindall for an unanimous court relied exclusively on the precedent of Mason v. Sainsbury stating that decision established the rule that "a recovery upon a contract with the insurers is no bar to a claim for damages against the wrongdoer." (17) Though in Mason v. Sainsbury the action was brought on behalf of the insurer, here the action was brought solely by the insured. This, however, was not relevant as the same principle applied. The insurer may then recover from the insured. (18) The insurer and the insured are one person. Payment by the insurer is not an accord and satisfaction of the debt of the offending party. (19)

B. U.S. Law

In the United States, the precedent of the English courts was followed by the U.S. Supreme Court in what is considered the first case to address the issue, coincidentally in a collision between two vessels. In The PROPELLER MONTICELLO v. Mollison, (20) a steamboat was held solely at fault for the collision, which resulted in the sinking of a schooner in Lake Huron along with the loss of its cargo of salt. (21) Judgment was awarded for the value of the lost vessel and cargo. The defendant vessel maintained that the payment by the schooner's hull insurer operated as a satisfaction of the debt. (22) Justice Grier for a unanimous Court, (23) and citing Yates v. Whyte, affirmed the judgment for the sunken schooner's owner reasoning that the insurer and the tortfeasor are not joint tortfeasors. (24)

Part of the rationale of the Court was based on the common law rule that a claim in tort is not assignable; thus, the injured party alone has the right of action to bring the suit either solely or in the name of an equitable claimant, the insurer. (25) Hence, the tortfeasor may not raise the equities between the nominal claimant and equitable claimant as a defense. Although in admiralty the equitable party may sue in its own name, the tortfeasor also is prohibited from raising the equitable interests of the parties. (26) The insurer has an equitable right, either wholly or partially, to intervene where it can show there was an abandonment of the vessel and become the dominus litus, thus divesting the insured and original plaintiff of any right. (27) Alternatively, the insurer may intervene to claim the damages awarded and equitably entitled to them. (28)

Significantly, the Court recognized that the insurer and the tortfeasor are not joint tortfeasors and are not bound as solidary obligors or jointly and severally. In addition, it is equally important to note that the Court acknowledged the right of the insurer to substitute wholly or partially as the litigant or alternatively to intervene and claim its equitable right to the proceeds awarded. (29) But, despite this well-reasoned and legally sound basis for the decision, the rationale was lost, with the rule leading supporters and advocates for the abolition of the rule resorting to fallacious arguments.

III. THE OLD PARADIGM

A. Justification and Criticism of the Rule

Supporters of the collateral source rule maintained that the primary intent of the rule is "(1) to punish the tortfeasor, or (2) to ensure that the injured party receives benefits from which he or she has contracted." (30) Others asserted that the rule had other objectives such as "to prevent unjust enrichment of the loss causer, to deter future loss causing conduct, and to prevent unjust enrichment of the loss-victim vis-a-vis the loss insurer." (31) Even others rationalized the doctrine on the basis that the rule compensated the claimant whose compensation is reduced by a contingency fee. (32) These arguments to justify the rule, however, miss the point as do the critiques of the rule.

Critics of the rule steadfastly maintain that the claimant recovers twice for the same damage which is contrary to the tort principle restitutio in integrum (33) and hence, the claimant is unjustly enriched. Such double recovery also contributes to higher insurance costs and premiums. Although attractive at first, this critique not only fails to recognize the equitable right of the insurer either to intervene to recover its payment or to maintain an action against the insured to recoup its funds, a right recognized by the courts in England (34) as well as the U.S. Supreme Court in The PROPELLER MONTICELLO (35) this also fails to recognize the development and prevalence of subrogation clauses in insurance policies which became more common in the middle of the nineteenth century and are virtually standard in all insurance policies now. (36) Thus, the insurer, by indemnifying the insured for a loss, is conventionally subrogated to the rights of the insured and may then pursue an action against the tortfeasor to recoup the damages. Alternatively, the insurer may seek reimbursement (37) from the insured who recovered from the negligent party. Whether the insurer chooses to exercise its right of subrogation or reimbursement, it is a decision personal to the insurer and likely occurs quite rarely in the latter case. The tortfeasor should rightfully not be excused from paying the damages sustained by the plaintiff insured.

B. Development of Equitable and Conventional Subrogation

But, even absent a contract provision subrogating the insurer to the rights of the insured, English courts (38) as well as the U.S. Supreme Court (39) from the inception recognized the equitable right of the insurer either to intervene in the suit brought by the insured to seek reimbursement of the amount the insurer paid or an independent right of action of the insurer to seek reimbursement from the insured as a result of any recovery of the insured.

The legal term "subrogation" is apparently of rather recent origin, (40) though it derives from the Latin word "subrogare" to substitute. The term appears in neither the early English cases nor the decision of the Supreme Court, The PROPELLER MONTICELLO. Lord Mansfield in Mason v. Sainsbury nonetheless clearly expressed the principle when he stated: "Every day the insurer is put in the place of the insured." (41) Roman law did not use the term either, though the concept certainly existed in ancient Roman law. (42) There were two types of personal subrogation, conventional, that is by contract, and legal. (43) The only differences between the two are the provisions in the subrogation clause. (44) Though the equitable right of the insurer was clearly recognized at common law in England, the issue was not free from doubt in the civil law. Early commentators of French Civil Law disagreed whether the insurer's right to subrogate existed. Those which disfavored the right theorized that there is no right of subrogation either on the basis that payment by the insured extinguished the right of action of the insured, who then could not assign a right which did not exist, (45) or that the satisfaction of the loss by the tortfeasor gave rise of the insurer's right ex contractu. (46) Those which favored the right agreed the action must be brought in the name of the insured. (47)

In common law, the English courts recognized the equitable right of subrogation as shown and clearly provided a basis to avoid unjust enrichment of the injured party. In the United States, however, state courts denied the insurer an equitable right of subrogation in the event of a partial indemnity by the insurer. Full indemnity was required which then allowed the insurer to subrogate or intervene in the litigation. (48) Requiring full indemnity then by the insurer as a condition precedent to recognizing its right of subrogation virtually extinguished any recovery by the insurer. Courts rationalized the result on the basis that the injured party is not unjustly enriched absent full compensation. (49)

The solicitude for plaintiffs was expanded further when courts in the United States denied any right of an insurer to intervene in any personal injury case. (50) The decision of the United States Supreme Court in Insurance Co. v. Brame (51) was the foundation upon which courts began to deny the insurer any right of subrogation in a personal injury case. That case, however, established the rule later applied in The Harrisburg (52) that in maritime law, there was no cause of action for wrongful death. Its extension to deny any right of the insurer to recover funds paid, albeit on a life insurance policy, belies the fact that if the beneficiary had no right or cause of action, a fortiori, the insurer claiming a right of subrogation can have no greater right than the beneficiary. There can be no right of subrogation if the underlying claim is not recognized as a matter of law. The life insurer's obligation to compensate the insured is again a separate and distinct obligation arising from the contract of insurance and is independent of any right of action which the insured may have against a third party.

In 1903, the issue of equitable subrogation in a personal injury action was squarely raised in Aetna Life Insurance Co. v. J. B. Parker & Co., (53) purportedly the first case to deny any right of the insurer to subrogate either in whole or in part to the rights of the insured where the insured recovered from a negligent third party. (54) The insurance company issued a policy to indemnify the insured for lost time due to injury. (55) The Texas Supreme Court fully adopted the decision of the Texas Court of Appeals which distinguished personal injury claims from life insurance claims on the basis that such claims are not identical to the insurance paid for by the insured because the insurance payment is not based on negligence and the indemnity sought from the negligent party is for more than that provided by the insurance. (56) This lack of identity in the claims of the insured vis-a-vis the negligent party and the claim of the insurer denied the insurer any subrogation right. Other courts followed suit denying any equitable right of the insurer to subrogate in personal injury suits or because contractual subrogation constituted a prohibited assignment under common law. (57)

According to Maher and Pathak, (58) insurers increasingly then included subrogation and "reimbursement" clauses in the contracts, thus creating a contractual right of the insurer to subrogate to the claims of the insured as well as an obligation of the insured to reimburse the insurer from any proceeds received in litigation which were also covered by the insurance policy. The increase in medical insurance in the post-World War II era developed a dual line of jurisprudence which upheld the clauses (59) on the one hand or limited recovery under contractual subrogation clauses to equitable principles. (60)

C. The Impact of ERISA (61)

The enactment of the Employee Retirement and Income Security Act (62) (ERISA) altered the arena further for it regulates, as a matter of federal law, the relationship between the insured and insurer, which provides health care coverage in employer-provided plans and for the most part preempts state laws. (63) By statute, either the participant, beneficiary, or fiduciary may bring a civil action "to obtain appropriate equitable relief... (ii) to enforce any provisions... of the plan." (64) Congress intended the statute to preempt state law, making ERISA the exclusive federal remedy. (65) If the relief sought is historically an equitable remedy when courts were divided between law and equity courts, then the relief is available. (66)

In three decisions, namely, Massachusetts Mutual Life Insurance Co. u. Russell, (67) Mertens u. Hewitt Associates, (68) and Great-West Life & Annuity Insurance Co. v. Knudson, (69) the Supreme Court exhumed the long dead division between equity and law, (70) casting doubt on what circumstances in which the plan may recover funds paid on behalf of a beneficiary who recovers from a third party as well as the remedies available to plan beneficiaries for breaches of any duties owed by the ERISA plan. (71) The Court in Russell held that another provision of ERISA, 29 U.S.C. [section] 1109(a) and the regulations promulgated pursuant to it, did not "provide for a recovery from either the plan itself or from its administrators" (72) for any delay in assessing the merits of an application for benefits and thus reversed the Ninth Circuit, which held that compensatory and punitive damages were available for the delay. In Mertens, a divided Court held that ERISA, namely, 29 U.S.C. [section] 1132(a)(3)(B), "does not authorize a suit for money damages against nonfiduciaries who knowingly participate in a fiduciary's breach" of such duty. (73) It held that "equitable relief under 29 U.S.C. [section] 1132(a)(3)(B) is limited to "those categories of relief typically available in equity (such as injunction, mandamus, and restitution... )." (74) In Knudson, the Court denied recovery of the medical insurer where the funds received in settlement of a tort suit were placed in a medical trust, determining that the relief was not "appropriate equitable relief under 29 U.S.C. [section] 1132(a)(3)(B). (75)

The decision in Knudson is of particular relevance for this discussion as the insurer sought to recover out of preference and priority for the medical expenses incurred when the insured was severely injured in a vehicular accident. (76) The insured was a quadriplegic as a result of the accident. (77) The plan paid medical benefits on her behalf in excess of $400,000 with the exception of $75,000. (78) The provisions of the policy gave the plan '"the right to recover from [the beneficiary] any payment for benefits' paid by the Plan that the beneficiary is entitled to recover from a third party." (79) Further, the policy gave the plan a "first lien" on any recovery, not to exceed the amount paid by the plan, and a right in personam for personal liability if the insured failed to reimburse the plan. (80) The insurer, Great-West, was informed of the state court settlement in the amount of $650,000 of which $236,745 was allocated for a special needs trust for medical care, $373,426 for attorney's fees and costs, $5,000 for the California Medicaid Program, and $13,828 for the portion attributed to past medical expenses to satisfy the lien of Great-West which never cashed the check it received. (81) Great-West sought a temporary restraining order in federal court to enjoin the insureds from distributing any of the funds. The federal court denied the relief after the state court approved the settlement. (82) The federal trial judge held that the plan was limited to reimbursement for past medical expenses which were previously determined by the state court to be $13,828. (83) The Ninth Circuit Court of Appeals affirmed on the basis that the relief sought was not equitable in nature. (84)

Responding to the argument that the claim of the plan was for "restitution," a form of equitable relief, the Supreme Court stated that not all claims for restitution are available in equity. (85) An equitable lien was recognized as a claim in equity if the property had not been dissipated and could be traced to and in the possession of the defendant. (86) Upon approval of the settlement by the state court, the funds were distributed in two checks: one to the special needs medical trust and the other to the attorney for his fees and costs with the remainder being placed in the attorney's trust account for further distribution. (87) The action was one to impose personal liability on the insured which is not equitable in nature. (88) Accordingly, the claim for restitution was denied. Justices Stevens, Ginsburg, Souter, and Breyer dissented, again chastising the majority for requiring parties now to explore the "rarified rules" of equity which were but a "fading memory" when Congress enacted ERISA. (89)

As a result of this jurisprudence, it is clear ERISA creates pitfalls for plans governed by that statute. Whether and when the insurer (fiduciary under ERISA) can assert an equitable right to recover funds it paid in medical expenses where the beneficiary of the plan recovered medical expenses from a third-party tortfeasor has been the subject of several decisions of the Supreme Court. Although the Court in Sereboff v. Mid Atlantic Medical Services, Inc. (90) held that the covered plan has an "equitable remedy" to recover funds paid, it is not an absolute right as a result of the most recent decision of the Supreme Court in Montanile v. Bd. of Trs. of the Nat'l Elevator Indus. Health Ben. Plan. (91)

The facts and provisions of the plan in Sereboff is in order. The insured beneficiaries were injured in a vehicular accident and filed suit in state court in California seeking compensatory damages for their injuries. Having learned of the suit, Mid Atlantic, which paid the medical expenses, informed the Sereboffs' attorney of its lien on any proceeds received and repeated its claim for several years throughout the pendency of the suit and as additional medical expenses accrued. (92) Eventually, the suit was settled for $750,000; but, no sums were paid to the insurer. (93) Though the settlement funds were distributed, the insurer filed suit against the insured and sought a temporary restraining order and preliminary injunction to require the insureds to set aside the amount the insurer sought to recover. (94)

The trial and appellate courts held that the remedy which Mid Atlantic sought was equitable and therefore permissible under ERISA. (95) The Supreme Court in a unanimous decision by Justice Roberts agreed on the basis that the plan provisions identified specific funds separate from the general assets of the Sereboffs, that is, funds recovered from a third party as well as a particular amount owed. In reaching its conclusion that the relief sought was equitable in nature, the Court relied on Barnes v. Alexander. (96) As the insurer was able to track an identifiable amount of money which the insured received, the insurer then could "impose on that portion a constructive trust or equitable lien." (97) The Court rejected the Sereboffs' argument that the claim of the insurer was an equitable subrogation claim which was only viable when the insured is "fully compensated" (98) by the tortfeasor for the injuries sustained stating that the claim "is not considered equitable because it is a subrogation claim." (99) Rather, the equitable remedy created is "indistinguishable from an action to enforce an equitable lien established by agreement...." (100)

But, the equitable lien established and recognized as enforceable in Sereboff was contingent on the traceability of the funds into the hands of the insureds. This was made abundantly clear in Montanile (101) in which the Court held that where the plan beneficiary exhausts all the settlement funds "on non-traceable items," (102) the action by the plan was not "appropriate equitable relief under the civil enforcement provision of ERISA. (103)

The beneficiary of the plan was severely injured in a vehicular accident. The medical plan paid in excess of $120,000 on behalf of Mr. Montanile. (104) The plan documents gave it a right of reimbursement out of preference and priority from any recovery and regardless of how any proceeds received by the insured from a third party in settlement or otherwise are characterized and regardless of whether the beneficiary is made whole or only recovers a part of damages. (105) The underlying claim was settled for $500,000. (106) The plan asserted a right of reimbursement and entered into unsuccessful negotiations with counsel for Mr. Montanile from June 2011 until January 2012. (107) The plan then filed suit on July 11, 2012 to enforce the lien it asserted. (108) At the trial court level and on appeal, the insured argued that the insurer could not enforce a lien against general assets once the settlement fund was exhausted. Neither the trial judge (109) nor court of appeals agreed ruling in favor of the insurer. (110)

The Supreme Court granted writs to resolve the circuit conflict "over whether an ERISA beneficiary could enforce an equitable lien against a defendant's general assets" (111) after the plan recipient has dissipated the funds which are no longer traceable. (112) While recognizing the general equitable nature of the remedy sought by the insurer, the lien was equitable by agreement. It attached when the insured had title to the funds and "would have been equitable had [the insurer] immediately sued to enforce the lien against the settlement fund ...." (113) Referencing treatises on equity, the Court stated that the equitable lien attaches to specific property and is not in itself a right to recover a specific sum; it is enforceable only if a court can exercise jurisdiction over the specific property. (114) Once the property is dissipated or otherwise disposed of, the lien is extinguished. (115) The remaining action is one at law to recover from the general assets of the debtor. (116)

In distinguishing Sereboff, the Court stated that the identifiable fund in that case could be traced into the hands of the beneficiaries of the plan. (117) Critically, the plan in Montanile procrastinated in attempting to enforce its rights. After settlement of the underlying tort suit and deduction of counsel's fees and expenses, sufficient funds remained in the attorney's trust account to satisfy the lien. Even after settlement negotiations between the insurer plan and the insured's attorney failed, counsel informed the insurer that the funds would be distributed within fourteen days unless the plan objected. (118) Though the Court held that the fund's remedy to seek reimbursement from the general assets of the insured was determined to be a legal and not equitable remedy, the Court, nonetheless, remanded the matter for the lower court to determine how much of the funds remained and whether the settlement assets were mixed with the insured's general funds. (119)

In a terse, yet trenchant dissent, (120) Justice Ginsburg renewed her criticism, albeit now the lone voice, first expressed in Knudsen (121) of the majority's resurrection of the distinction between law and equity prior to the merger in the United States and the quagmire created by the jurisprudence established by Russell, Mertens, and Knudsen. She laconically criticizes the majority for reaching the "bizarre conclusion that a plan recipient can evade the obligation to reimburse the plan by spending the settlement funds rapidly on non-traceable items." (122) It remains to be seen whether Justice Ginsburg's concerns will be an issue in the future. The Montanile decision certainly hinged on the lapse of time between the initial receipt of the settlement funds, the more than seven months of failed negotiations, as well as the apparent lack of diligence by the plan to assert a claim even after it was given a fourteen day deadline either to accept the last offer of settlement or to file suit. (123) Even then, counsel for the insured waited nearly a month to release the funds when the client requested the money. (124) By the time the insurer actually filed suit, significantly less than the amount claimed remained. (125) It also remains to be seen whether the Supreme Court will continue to follow the course of requiring the insurer to identify specific funds in the hands of the insured to enforce its lien in a similar case in which an insured beneficiary fails to inform or notify the insurer of any suit though obligated to and exhausts any funds received in either settlement or judgment. In any event, the insurer or trust must perform due diligence and act promptly to enforce its rights by filing suit for a temporary restraining order to prevent distribution of funds as in Sereboff, intervene in the suit to protect the plans rights, or actively participate in the prosecution of the suit which many insurers are likely reluctant to do. It also remains to be seen whether medical trusts established from either settlement funds or judgments will also remain exempt from claims of the insurer to exercise the equitable lien established by agreement as it did in Knudson. (126)

These legal restrictions apply only to plans subject to ERISA. A Protection & Indemnity policy is a liability and indemnity policy which covers the legal liability of the vessel owner; accordingly, the restrictions governing ERISA health and hospitalization policies do not apply. But, as the U.S. Supreme Court has left the interpretation of those insurance policies which cover marine risks such as the hull and protection and indemnity policies up to state law for the most part due to its decision in Wilburn Boat Co. v. Fireman's Fund Ins. Co., (127) a uniform rule has yet to emerge.

Despite the application of ERISA to health insurance plans provided by employers, its application is not universal. Various states have enacted legislation either prohibiting or otherwise restricting the rights of both the injured party and the insurer to recover medical expenses even in light of the enactment of the Affordable Care Act. (128) This legislation has led to a Balkanization of laws and a patchwork of conflicting and inconsistent rules dependent on the state where an action may be pending. (129) Adam Todd in his article maintains that most states recognize both the subrogation rights of the insurer, either contractual, statutory, or as a matter of law and the collateral source rule, and that these concepts are not contradictory. (130) Some of these states, however, abolish the collateral source rule only in medical malpractice cases. (131) In others, the rule remains unchanged with a prohibition on the insurer's subrogation right. (132) The states which have abolished the rule for damages, however, have retained it as a rule of evidence prohibiting introduction of collateral sources at trial. (133)

IV. THE COLLATERAL SOURCE RULE IN MARITIME LAW

A. Rule of Evidence versus Substantive Rule of Law

It appears courts in the U.S. have conflated the collateral source rule as an evidentiary rule and as a substantive rule of the law of damages, generally maintaining that any third-party source of payment is a collateral source and thus can neither be admitted into evidence nor serve to reduce any judgment. The rule under English common law as discussed previously was a rule of substantive law. The negligent defendant maintained that the payment by the insurer was a satisfaction of the debt. However, the court through Lord Mansfield reasoned that the obligations of the insurer are different than the obligation of the tortfeasor, one being based on contract and the other on principles of negligence. American courts then expanded the rule and applied it to prevent the admissibility of insurance to avoid the potential prejudicial effect it may have on juries.

Rules 401-415 of the Federal Rules of Evidence establish the guidelines for the relevance of evidence. Generally, evidence is relevant if it makes a fact more or less probable than without the evidence or it has consequence in determining the action. (134) Rule 403 gives the trial judge wide discretion to exclude any evidence "if its probative value is substantially outweighed" if unduly prejudicial, can lead to confusion of the issues, may mislead the jury, cause undue delay, waste time, or amount to cumulative evidence. (135) Rule 411 of the Federal Rules of Evidence prohibits the admissibility of insurance to prove negligent or non-negligent conduct but permits it to prove "bias or prejudice or proving agency, ownership or control." (136) If evidence of insurance is inadmissible to prove negligent conduct or may prejudice a jury in its award of damages, then by the same token evidence that the plaintiffs medical expenses have been paid by an insurer is equally as prejudicial to the plaintiff; its probative value is outweighed by the prejudicial effect on the trier of fact and can mislead the jury. Also, as will be demonstrated in cases in which status is contested, admission of collateral sources such as workers' compensation benefits not only can severely prejudicial and lead a jury to conclude ipso facto that the claimant is not a seaman but also fail to compensate the claimant fully with the knowledge he or she received compensation benefits and had medical expenses paid.

Under Rule 403, submission of medical payment by a medical insurer, Medicare or Medicaid, including any write-offs, subrogation, and reimbursement obligations, whether contractual or statutory, should likewise be inadmissible at trial as this would avoid not only any prejudicial effect it would have on a jury but also any confusion of a jury in awarding damages. (137) But, as maritime claims may be brought in either state or federal court under the saving-to-suitors clause, (138) state procedural rules will apply unless it materially prejudices '"[a] characteristic featur[e] of the general maritime law."' (139) Yet, most state rules of evidence now mirror the Federal Rules of Evidence. (140)

B. Seamen's Claims and Section 55 of the Federal Employer's Liability Act (141)

Tipton v. Socony Mobil Oil Co. illustrates the potential prejudicial effect introduction of a collateral source can have on a jury particularly in cases in which status is contested. (142) It is the first case in which the United States Supreme Court addressed the collateral source rule in a Jones Act case. In doing so, it reversed the U.S. Court of Appeals for the Fifth Circuit, which allowed the defendant to introduce into evidence the plaintiffs receipt of worker's compensation benefits. (143) The primary issue in the case was the status of the plaintiff employee as a seaman. The Supreme Court stated that the evidence misled the jury "to place undue emphasis on the availability of compensation benefits in determining the ultimate question of whether [he] was a seaman under the Jones Act." (144) As one of the purposes of the collateral source rule was to prevent obfuscation of ultimate issues, the Court reversed the case for retrial but went no further to explore the details of the rule. The exclusion of such evidence is crucial especially when the question of seaman status "is inherently a factual question left to the jury's determination...." (145)

However, Section 55 of the Federal Employer's Liability Act is another issue as it allows the employer a set-off for certain benefits provided to covered employees. It provides:
Any contract, rule, regulation, or device whatsoever, the purpose or
intent of which shall be to enable any common carrier to exempt itself
from any liability created by this chapter [45 U.S.C.
[section][section] 51-60 (2012)], shall to that extent be void:
Provided, That in any action brought against any such common carrier
under or by virtue of any of the provisions of this act [45 USCS
[section][section] 51 et seq.J, such common carrier may set off therein
any sum it has contributed or paid to any insurance, relief benefit, or
indemnity that may have been paid to the injured employee or the person
entitled thereto on account of the injury or death for which said
action was brought. (146)


A few short months later, the Supreme Court addressed the admissibility of disability pension payments under the Railroad Retirement Act of 1937 (147) and set-off provision in Eichel v. New York Cent. R. Co. (148) The trial judge denied an attempt of the employer to introduce the evidence of receipt of pension payments to impeach the credibility of the claimant employee and thus excluded the evidence. (149) The Second Circuit reversed, maintaining that the jury was capable to comply with an instruction from the court of the purpose and proper use of the evidence. (150) Nonetheless, a majority of the Supreme Court was concerned and wary that the introduction of such evidence could mislead the jury and held that the trial judge properly excluded the evidence as there was other sufficient evidence for the jury to determine the credibility of the claimant employee. (151) Subsequently, trial courts and federal courts of appeal liberally interpreted the decision as a blanket rule to exclude from the jury any knowledge of payments to the claimant employee whether for impeachment or other purposes and not for the fact of payment despite potential limiting instructions by the trial judge. (152)

Nonetheless, these decisions only dealt with the potential prejudicial effect the evidence, if admitted, would have particularly on seaman's status. Evidence of payment of compensation benefits under either a state statute or the Longshore and Harbor Workers Compensation Act to the claimant, regardless of any limiting instruction by the trial judge, would likely lead all but the most discerning jury to deny seaman's status particularly in those cases in which status is heavily contested. In neither Tipton nor Eichel, both per curiam opinions, was the Supreme Court required to examine the actual nature of the benefits or the ultimate effect any payments by the employer would have on any damage award. These decisions in effect can and should be limited to and read in conformity with the present Federal Rules of Evidence which limits admissible evidence to that which is relevant. In neither case was the evidence relevant to the ultimate issues for the jury to determine. In Tipton, the introduction of payment of compensation benefits is manifestly prejudicial in light of the fact that the employer defendant on appeal to the Fifth Circuit argued that "the fact that appellant received such payments went to show that appellant considered himself a drilling employee rather than a seaman...." (153) Neither decision actually purports to address whether such payments are in fact collateral sources.

In the context of FELA, which is the legal basis for a seaman's negligence claim against the employer, Section 5 of the Act is of significance as it provides a set-off for any covered employer for "any sum it has contributed or paid to any insurance, relief, benefit, or indemnity that may have been paid to the injured employee or the person entitled there to on account of the injury or death for which the said action was brought." (154)

What constitutes either a collateral source for which there is no set-off or any payment recognized under Section 5 of FELA has been "grist for the judicial mill" (155) for decades. The test to determine if the funds are a collateral source is the actual nature of the source of the benefits paid. Where a state fund or other fund to which the employer did not contribute made payments to the seaman, courts have denied any set-off to the employer's maintenance and cure obligation for damages awarded under the Jones Act. (156) Thus, a court must first determine the nature and character of the funds more so than the actual source. (157)

However, Section 5 of the Federal Employer's Liability Act allows a covered employer to offset "any sum it has contributed or paid to any insurance, relief, benefit or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought." (158) This provision was added to FELA to recognize the prior existing relief departments which were established by railway companies but also to prohibit them from relieving the employer from liability imposed by the Act. Before FELA, "relief departments," to which employees contributed from their wages along with additional employer contributions in the event of any deficit in the fund, were established in exchange for benefits in the event of personal injury or death. Should the employee or beneficiary sue, benefits were denied unless and until the suit was withdrawn or dismissed. (159) These agreements were invalidated by Section 5 of FELA in 1908 but had been enforced prior to the Act. (160) Section 5, nonetheless, permitted the employer to set-off its liability under FELA to the extent of the employer contributions to the fund as long as it did not release the employer from liability imposed by the Act. (161) The Supreme Court previously declared FELA a constitutional exercise of Congress. (162) In addressing Section 5, it stated that "if Congress possesses the power to impose that liability, which we here hold that it does, it also possesses the power to insure its efficacy by prohibiting any contract, rule, or regulation or device in evasion of it." (163) Thus, though the employer is entitled to a set-off from liability to any damages awarded under the Act, it could not otherwise be discharged from liability. (164) Thus, covered employers under FELA have been allowed to set-off supplemental disability benefit programs, disability plans, employer funded health care insurance, and similar benefits as long as these benefits are not part of the total compensation package and were voluntarily established by the employer. (165)

The difficulty, however, has been in determining whether the benefit established by the employer is part of the total compensation package or whether it falls within the intent of Section 5 of FELA. The key is to determine if the benefit was established for "which said action was brought." (166) If the benefit or plan is established by the employer "to indemnify itself against liability by payment into a fund for that purpose," (167) then the setoff is allowed. On the other hand, for employer contributions which are made either "directly or indirectly into a fund for an independent reason, or whether such payment by the employer should be considered in the nature of a fringe benefit or deferred compensation," (168) set-off is denied even if "the employer is the sole source of the fund." (169)

Even where the pension plan was established pursuant to a collective bargaining agreement between the seamen's union and the shipping association to which the employer belonged, set-off was denied by the Ninth Circuit in Russo v. Matson Navigation Co. (170) Benefits were based on the length of employment, retirement, and extent of disability whether or not the injury or illness was employment related. (171) Similarly, the U.S. Court of Appeals for the Second Circuit denied the FELA employer a set-off for medical expenses where the medical insurance policy covered all health care whether incurred in the course and scope of employment or not. (172) Judge Friendly's concurrence deserves scrutiny as he asserted that the decisions cited by Judge Thomsen were inapposite except for one, Hall v. Minnesota Transfer Railway, Co., (173) which he found unpersuasive. He concurred because the employer could have negotiated a specific provision in the collective bargaining agreement to allow set-off of the indemnity the plan provided but failed to do so. (174)

Judge Friendly's opinion in Blake served as the basis, however, for the decision of the U.S. Court of Appeals for the Ninth Circuit to allow a set-off in Folkestad v. Burlington Northern. (175) In that case, a health and welfare insurance plan was established pursuant to a collective bargaining agreement between the railway employer and the employee union. The agreement expressly provided that any payments would fulfill any employer obligations to the covered employee. (176) The trial judge entered judgment for $490,000 but refused the employer's claim for a set-off of $57,000 paid pursuant to the health and welfare agreement interpreting Section 5 as a blanket prohibition to any set-off. (177) The Ninth Circuit panel unanimously agreed that the set-off was improperly denied. In reaching its conclusion, it noted that Judge Friendly's concurrence in denying the set-off in Blake had to be read and understood in conjunction with the decision of the U.S. Court of Appeals decision in Thomas v. Humble Oil and Refining Co., (178) a maintenance and cure case.

In Thomas, the seaman sought to recover maintenance and cure from the employer in addition to payments made by a private disability plan maintained exclusively at the expense of the employer. As the plan fulfilled the maintenance and cure obligation of the employer, the seaman was denied relief. (179) The plan did not violate Section 5 of FELA as it did not purport to relieve the employer of liability. (180) Although the Thomas decision can be distinguished due to the unique basis of the seaman's remedy for maintenance and cure, (181) the plan established in the collective bargaining agreement precluded concurrent payment of benefits and maintenance. (182) The seaman's claim for additional benefits under the plan was, thus, denied. (183) Following this cue, the Ninth Circuit in Folkestad reversed the trial judge and held that the employer was entitled to a set-off. (184)

The U.S. Court of Appeals for the Fifth Circuit in Phillips v. Western Co. of North America (185) reversed a jury finding in favor of the defendant employer on the basis that the evidence of disability benefits was found to be prejudicial but noted the difficulty in applying the collateral source rule when the defendant has proved the benefit and thus also entitled to a set-off. (186) The court noted that mere payment by the employer into a fund which provides a benefit to the seaman does not automatically exclude the application of the collateral source rule and then proceeded to analyze and adopt the factors enunciated by the Federal District Court of Maine in Allen v. Exxon Shipping Co. (187)

In Allen, the court addressed several Motions in Limine. One was whether the employer was entitled to a set-off for the short and long term disability payments established under Exxon's disability plan. In determining whether the plan qualified as a fringe benefit or indemnification of the employer for its liability, the trial judge enumerated five factors:
(1) whether the employer makes any contribution to funding of the
disability payment; (2) whether the benefit plan arises as the result
of a collective bargaining activity; (3) whether the plan and payments
thereunder cover both work related and non-work related injuries; (4)
whether payments from the plan are contingent upon length of service of
the employee; and (5) whether the plan contains any specific language
contemplating a set-off of benefits received under the plan from a
judgment recovered in a tort action. (188)


The court in Allen found some factors favoring Exxon and some favoring the employee. The plan was not the result of a collective bargaining agreement and provided "for a suspension of benefits in the discretion of the employer as to any employee who obtains a judgment against the employer." (189) Though the plan provided benefits both for work and non-work related injury, he concluded that the primary purpose was to indemnify the employer against any liability under the law. (190) The employer was entitled to a set-off for past short- and long-term disability payments as well the "value of the right to receive future long-term disability payments." (191) As the amount of the past benefits was known, he precluded introduction of evidence of the amount of these reserving unto himself the right to reduce any monetary award by the past disability paid. (192) The judge permitted Exxon to introduce evidence of the long-term disability at trial but not the amount of the disability payments. (193) He did, however, permit evidence of the amount of future long-term disability the seaman would receive for life as long as he was unable to work. The jury would then be charged to compute any reduction for a set-off "for those future payments on an arithmetic theory that is consistent with the basis of the jury's computation of future damages." (194)

In Phillips, the Fifth Circuit endorsed these five factors but found no evidence in the record to apply them to the benefits especially as there was no evidence that the plan was intended to offset any legal liability of the employer. (195) The majority also adopted the procedure applied in Allen. Evidence of the amount of past benefits paid was inadmissible. But, the employer could introduce evidence of future long-term benefits allowing the jury then to determine the amount of set-off from future damages. (196) It would appear, however, that the solution to allow the jury to determine future damages and then for the court to perform the simple mathematical calculation of the value of future long-term benefits both parties. The jury is not prejudiced knowing the value of the future benefits and can, thus, determine the damages. The defendant also obtains the benefit of the set-off. The determination of whether a plan benefit provided by the employer is a collateral source can be a close question. The Fifth Circuit again applied the Allen factors in Davis v. Odeco, Inc. (197) and upheld the trial judge who held that a plan maintained by the employer was a collateral source. Odeco contributed 10% to funding the major medical portion of the plan, which covered exclusively non-work related injuries and did not expressly provide for any set-off to any liability of the employer. (198) Though the court of appeals supported the trial judge in denying the set-off for tort liability under the Jones Act or general maritime law, it was uncertain whether the employer could nonetheless claim a set-off to its obligation to pay maintenance and cure as the employer failed to the raise the set-off defense timely. (199) Nonetheless, the court addressed it in "obiter dictum to provide guidance in an area of law that is but sparsely populated with relevant jurisprudence." (200)

The panel noted the long-established precedent that the employer of a seaman may not deduct money a seaman earns while a claim for maintenance and cure is pending, (201) nor refuse to pay maintenance and cure when the seaman personally purchases medical or other insurance. (202) But, where the seaman pays nothing for the benefit, (203) the employer is entitled to a set-off from the maintenance and cure award. (204)

The earlier Gauthier (205) decision of the Fifth Circuit deserves mention here particularly in light of the Fifth Circuit's more recent decision in Manderson v. Chet Morrison Contractors, Inc. (206) With strikingly similar facts, the decisions appear on their face to be totally contradictory.

Leonard Gauthier filed suit against Crosby Marine under the Jones Act, for breach of the warranty of seaworthiness under general maritime law and for maintenance and cure for injuries sustained while attempting to load tools onto a tug from a dock in Louisiana. (207) In addition, state law claims were also brought against the owner of the dock under Louisiana law. (208) A jury verdict in favor of Crosby on both the Jones Act negligence and general maritime law claims was affirmed by the Fifth Circuit along with the directed verdict on the state law claim against the owner of the dock. (209) The claim for maintenance and cure was heard solely by the trial judge (210) who denied the employer's claim that the medical insurance payments under the policy purchased solely by the seaman without any employer contribution (211) fulfilled its obligation for maintenance and cure. (212) Relying on Gypsum Carrier, Inc. v. Handelsman, (213) the court affirmed the trial judge and held that "where a seaman has alone purchased medical insurance, the shipowner is not entitled to a set-off from the maintenance and cure obligation moneys the seaman receives from the insurer." (214)

In Manderson, the Fifth Circuit was squarely presented with the question in which both the seaman and employer contributed to the premiums for the medical insurance. (215) Like the plaintiff in Gauthier, the seaman lost both the Jones Act negligence and unseaworthiness claims which was affirmed on appeal, (216) but was entitled to recover maintenance and cure. (217) The employer asserted that the amount it was required to pay for cure was the net amount actually paid by the seaman's medical insurer and not the gross amount billed by the medical provider. (218) The Fifth Circuit panel noted that it was an issue "of first impression." (219)

Leon Manderson paid one-half of the medical insurance premiums for about one and one half months and then all of them for the remaining eleven months he was eligible for cure. (220) The trial court held that as he paid most of the premium, the insurance was a collateral source and awarded recovery of the gross amount billed by the medical providers. (221) The Fifth Circuit reversed on this point. (222)

The court reasoned that a seaman may only recover the expenses actually incurred for maintenance and cure. (223) "Accordingly, the relevant amount is that needed to satisfy the seaman's medical charges." (224) The employer, in essence, then becomes a beneficiary of the lower payment negotiated by the seaman's insurer. (225)

The distinction between the two cases is subtle yet important. The employer in Gauthier claimed a set-off by deducting the medical insurance payments made by the seaman's medical insurer from the cure it owed. In Manderson, the employer maintained that the amount of cure it owed in reimbursement was limited to the net payment made by the seaman's medical insurer.

To illustrate the difference, assume medical expenses paid by the insurer are $100,000 and the amount of cure owed is $150,000. Applying the ruling of Gauthier, the employer is not entitled to any set-off and would owe $150,000. But, where the employer can prove that the medical provider's charges have been paid at a lower negotiated rate by the seaman's medical insurer, it benefits from this and reimburses the lower sum. The court in Manderson stressed that the amount which is relevant is "that [sum] needed to satisfy the seaman's medical charges...." (226) It appears that it would make no difference if the seaman also paid fully for the insurance with no employer contributions for the employer contributions in that case were substantially less than those of the seaman. However, the court noted that "the benefit conferred on [the employer] may... have presented a problem in the tort context," (227) but not for maintenance and cure in which fault is not an issue.

Another decision which requires review is Johnson v. Cenac Towing, Inc. (228) Leroy Johnson, a tankerman was employed by Cenac Towing and filed suit under the Jones Act for the employer's negligence, the general maritime law for unseaworthiness, and to recover maintenance and cure for back injuries sustained while working on a Cenac vessel. (229) After a bench trial, the judge entered judgment for the seaman on the Jones Act and unseaworthiness claims but denied maintenance and cure (230) finding that the seaman willfully concealed a pre-existing back injury. (231)

The employer appealed on several grounds. (232) The trial court's ruling that the Blue Cross insurance plan was a collateral source denying any set-off of those payments from any damage award is relevant to this discussion. (233) After applying the five factors adopted in Phillips v. Western Co. of North America, (234) it concluded that it seemed "to point toward a finding that the Blue Cross payments were not a collateral source." (235) It noted that it was not a bargained for benefit pursuant to a collective bargaining agreement, and neither was the employee's term of employment relevant to coverage nor was the employee entitled to coverage as it excluded work related injuries. (236) The employee would neither be under nor overcompensated allowing the set-off, nor would the employer reap a windfall. (237)

The panel, however, felt bound by the ruling of a prior panel in Davis. (238) In that case the seaman developed a rare disease which affected the lungs, kidney, and immune system. (239) The group health and disability plan, funded primarily by the employer for non-work related injuries and illness, paid the medical expenses and disability payments. (240) Despite the tenuous relationship between the alleged chemical exposure and the disease, the appellate court affirmed the jury award for the seaman and the trial court's determination that the payments made by the plan constituted a collateral source denying the employer a set-off from any monetary judgment (241) and excluding from the jury evidence of such payment. (242)

The employer in Davis paid 90% of the premiums for the plan which only covered non-work related claims and which had no specific language to offset any legal liability of the employer. (243) The plan was a fringe benefit and thus a collateral source. (244)

Though the panel in Johnson felt constrained to follow Davis and held the plan was a collateral source, it criticized the Davis panel stating that its explanation that the plan's payments were a collateral source "ignores that [the employee] was not entitled to receive any benefits from the particular plan for work related injuries." (245) The dispositive factor was that the plan covered only non-work related injuries. (246) Nonetheless, the Johnson court highlights the vicious circle and potential conundrum for the employer which could be exposed not only to pay the employee the medical and disability payments after having paid the premiums for the coverage, but also have to indemnify the insurer in an independent claim for recovery, thus placing the employer "in the position of paying three times for [the] injury. That result cannot be justified under the collateral source rule." (247)

Despite the panel's misgivings about the result and the vicious circle created, Magistrate Hanna in Blanchard v. United States (248) required the U.S. to pay not only the medical expenses of the seaman who was injured on the vessel to which he was assigned due to the sole negligence of the a Corps of Engineers' vessel in the Atchafalaya River, but also the employer which made a claim for indemnity for the maintenance and cure payments it made to the employee seaman. (249) After reviewing the decisions in Johnson and Manderson, he determined that the tortfeasor must bear the entire loss. (250) He distinguished the case further, maintaining that the employer which pays maintenance and cure has no statutory or conventional right of subrogation; the claim for reimbursement is separate and derivative. Thus, "the tortfeasor must make [the employer] whole and not at the expense of reducing the plaintiffs recovery as a matter of law." (251) The employer, also a defendant but exonerated from fault, made a claim against the U.S. for reimbursement of its maintenance and cure payments which avoided any double recovery or payment. (252)

C. Government Entitlements--Medicaid and Medicare

The first case addressing the issue of whether government entitlements such as Medicare or Medicaid constitute a collateral source is Moran Towing & Transp. Co. v Lombas. (253) After the seaman was injured on the vessel, his physician refused to accept the Medicare allowance for the surgery. (254) He then made demands on the employer, which, however, took the position that the seaman should change physicians to one which would accept Medicare, unless there were none available. (255) The employer then sought a declaratory judgment to establish its cure obligation. (256)

The Second Circuit affirmed the trial court which drew the analogy between Medicare and Public Health Hospitals which previously existed with Medicare as the "functional equivalent ...." (257) The court noted the compensatory nature of cure. (258) As the seaman incurred no expenses, there was no claim. The employer's obligation then was limited to the amount allowed by Medicare. Had the employee had the surgery, nonetheless, would the employer then be obligated to pay the initial surgeon's fee? It would seem that it would be required to prove the fee was excessive and not the reasonable and customary fee for the procedure in that area.

In any event, this decision led to the belief that a seaman's employer could shift its cure obligation to publicly available sources such as Medicare and Medicaid once the seaman qualified to receive either. Also, it would seem that as there was less expensive cure available, the court may also have been reluctant to require the employer to pay the higher amount. Nonetheless, the decision led some employers to maintain that once a seaman qualifies for any government benefits, its obligation to provide maintenance is satisfied. Only a handful of decisions address whether publicly provided benefits such as Medicare, Medicaid, and Social Security income are a collateral source.

In In re RFJ Int'l Corp., (259) the employer brought a motion to terminate its maintenance and cure obligation because the seaman became eligible for Parts A and B of Medicare benefits and monthly Social Security payments. In denying the motion, the trial judge relied on the Medicare Secondary Payer Statute (260) to hold that the employer could not shift the duty to pay maintenance and cure to Medicare. (261) The purpose of the statute was to shift the burden of paying for medical services from the government to private health insurance companies or when workers' compensation insurance otherwise provided coverage. (262) The employer urged the court to follow the lead of Moran Towing & Transp. Co. v. Lombas, which, as previously discussed, drew the analogy between Medicare and the prior Public Health Service Hospital. The court declined, reasoning that the Medicare Secondary Payer Statute prohibits Medicare from paying for medical services "for which payment has been made or can reasonably be expected to be made under a 'primary plan."' (263)

But, even if the provision did not exist, it is poor social and economic policy to shift the burden to pay maintenance and cure to the publicly funded social network once a claimant becomes eligible for Medicare or Medicaid. It is one thing to consider Medicare or Medicaid which may pay first if the employer fails to provide maintenance and cure. It is, yet, quite another to shift the financial cost to the public merely because the seaman has become eligible for either program.

Likewise, in Toulson u. Ampro Fisheries (264) the seaman sought damages under the Jones Act, breach of the warranty of seaworthiness, and maintenance and cure. On a Motion for Partial Summary Judgment, the employer maintained that the availability of Medicare and Medicaid satisfied its obligation to provide cure. (265) The employer relied on Moran Towing & Transp. Co., Inc. v. Lombas (266) which the court decided to follow. (267) But, the Court did not view Medicare and Medicaid as the functional equivalent of the services formerly provided by the Public Health Services Hospitals. Rather, it emphasized "the compensatory nature of cure," and that the seaman must incur out of pocket expenses or be personally liable for them to recover from the employer. (268) The seaman also maintained that Medicare and Medicaid are collateral sources as he also made contributions through his taxes. In a footnote, the judge dismissed this argument noting that the Public Health Service Hospital System was publicly funded and was considered cost free. (269)

Most recently, a court in the Southern District of Georgia also addressed the issue of maintenance and cure and the availability of Medicaid in Blige v. M/V Geechee Girl. (270) The seaman sued under the Jones Act, for breach of the warranty of seaworthiness and for maintenance and cure for injuries he sustained on a shrimp boat. (271) The court suggested that payment by a public source such as Medicaid, when the obligation of the employer to provide cure is based on tortious conduct or fault of the employer, should be considered a collateral source, especially when presented as part of past medical incurred under the Jones Act and General Maritime Law. (272) But, only one claim exists. Recovery of past medical under the Jones Act cannot be duplicated in an additional award for cure. (273) As the plaintiff waived the argument that the payments by Medicaid are a collateral source, the employer was not liable to reimburse any medical expenses paid by Medicaid. (274)

In another case, In re Gulf Pride Marine Services, (275) the vessel owner sought limitation in a claim in which the seaman was injured and then treated in New Orleans at Charity Hospital where she underwent numerous surgeries. (276) Much of the medical was paid by Medicaid, which the employer maintained should be credited toward the total medical expenses claimed. However, the trial judge applied the collateral source rule holding that "[t]he Medicare/Medicaid payments fall within the collateral source rule and the defendant is not entitled to take a credit for them." (277) However, in so far as a claim was made for maintenance and cure, the trial judge followed both Moran Towing (278) and Toulson (279) denying recovery. (280) The trial judge also stated that whether the employer at the time of the injury paid any amount into the Medicare fund is immaterial, noting that "the particular source of public funding for such social programs is irrelevant." (281) But, any deductible or out of pocket expense paid by the employee must be reimbursed. (282)

The public medical provider, which paid for the medical services, filed and perfected liens on any judgment which the court recognized but only allowed recovery on the net medical expenses after reducing the sum for the comparative negligence of the employee. (283)

D. The Effect of State Law in a Maritime Claim

Substantive maritime law applies uniformly regardless of whether the suit is brought in state court under the saving-to-suitor's clause or even if the federal court has admiralty jurisdiction or under the Jones Act, as well as diversity or other federal jurisdictional foundation. (284) Nonetheless, the lacunae in substantive federal maritime law may be filled by state law. (285) As stated by the Supreme Court in Grubart v. Great Lakes Dredge & Dock Co., the "exercise of federal admiralty jurisdiction does not result in automatic displacement of state law." (286) The U.S. Supreme Court, for example, relied on developments in state law to expand the parameters of the Federal Employers Liability Act, (287) allowing claims for negligent infliction of emotional distress, and also to establish guidelines to review excessive punitive damage awards under maritime law. (288) But, determining when state substantive law may be adopted in a maritime action pending in state or federal court can be a challenging task. (289) Even distinguishing between what may be procedural and substantive law can be daunting. (290) Because the collateral source rule is applicable in Jones Act negligence cases (291) and other maritime tort cases, (292) federal courts should adopt a uniform standard rule as a matter of the substantive maritime law of damages to avoid the vagaries and discrepancies of state laws but also should not turn a blind eye to developments in state law as it regards the collateral source rule.

The U.S. Fifth Circuit Court of Appeals in Hoffman v. Halcott Shipping Corp. (293) looked to state law to address the subrogation exception of the collateral source rule and Louisiana law to deny the plaintiffs' recovery for medical expenses paid by the employer's health insurance plan. The plaintiffs' employer provided water taxi service to carry passengers and material to vessels anchored in the Mississippi River in the Port of New Orleans. (294) The men were injured when moving vessels from a wharf to safety and out of the way of the defendant's vessel, a 551 tanker, which was heading downriver out of control and directly for the wharf. (295)

The claimants sought recovery of all medical expenses paid. Though the medical insurer failed to intervene and was not a party to the litigation, the trial court denied recovery from the defendant. The Fifth Circuit affirmed in a per curiam opinion. The only evidence of any conventional right of subrogation in favor of the insurer was the summary of the plan and not the specific provisions of the policy. (296) The panel relied on the decisions of the Louisiana Court of Appeal for the Third Circuit in Kidder u. Boudreaux. (297)

This exception to the collateral source rule under Louisiana civil law is like the collateral source rule in the common law, both a substantive rule of law (298) and procedural, but it is an incorporeal right which may be partial or entire. (299) In civil law, from which maritime law developed, subrogation is either conventional, that is, contractual, or by operation of law, that is, by statute. Equitable subrogation, a common law concept, does not exist under civil law in Louisiana. (300) Once a party proves there is a contractual right of subrogation, and even if the subrogee fails to enforce its right, the defendant may challenge the right of the claimant to bring the claim as the right of action belongs solely to the subrogee. (301) There was sufficient proof in Hoffman of a contractual subrogation provision which transferred the right to the insurer. The insureds were no longer the proper parties to seek recovery of the medical costs incurred but only to the extent of the payments made by the health insurer. (302) The plan summary subrogated the insurer only to the extent of payments made by the plan. (303) Any out of pocket expenses incurred by the plaintiffs not reimbursed by the plan could be recovered.

The payment by the health care insurer and its contractual right of subrogation obviates any resort to the collateral source rule. But, as its right of recovery is purely derivative of the insured's right, any reduction of the insured's recovery in general damages for comparative negligence or fault also should proportionately reduce any claim of the insurer.

The conundrum over the extent to which state law may supplement or be borrowed by the general maritime law rule regarding collateral sources is demonstrated most recently in Jones v. Carnival Corp. (304) and Buccina v. Grimsby. (305) The issue in both cases was the admissibility of evidence of the medical writeoff obtained by the medical insurer or set-off (306) of the discounts obtained by the medical provider. In the former, a personal injury suit under general maritime law brought by a passenger on a cruise vessel, the trial judge determined that under the collateral source rule under general maritime law, the evidence was not only inadmissible but that the state law conflicted potentially with general maritime law. (307) In the latter, the claimant who was injured as a passenger in a recreational vessel on the Maumee River in Ohio, (308) the trial judge, after discussing Jones v. Carnival Corp. came to the conclusion "that there appears to be no uniform maritime rule governing the admissibility of contractual discounts, and that it is not inappropriate for a federal court exercising admiralty jurisdiction to look to state law for guidance." (309) As there was no general rule under general maritime law regarding the medical write-offs, Judge James G. Carr followed the precedent established by the Ohio Supreme Court in Robinson v. Bates. (310) Though the suits were maritime claims, both trial judges considered state law in drawing opposite conclusions.

In Jones v. Carnival Corp., the litigants agreed that the discounted medical payments were a collateral source. (311) The defendant did not seek to introduce evidence of a collateral source but rather sought to exclude evidence of the gross value of the costs of medical services. (312) The court phrased the issue differently: '"Does the contractual discount count as a payment to [the plaintiff]?"' (313) Finding no precedent under general maritime law, Judge Jordan turned to Florida state law (314) and relied on the decision of the Florida Supreme Court in Goble v. Frohman (315) which determined that the discount was a discharge of a debt and is a payment. (316) Thus, it constitutes a collateral source.

In Goble v. Frohman, (317) the Florida Supreme Court interpreted a Florida statute (318) and held that the discount qualified as a collateral source as defined in the statute which also provided for a reduction in damages awarded for reasonable and necessary medical expenses. (319) Finding that there was no statute to govern the case under general maritime law, Judge Jordan, nonetheless, held that as the discount qualified as a collateral source, the rule prohibited exclusion of the evidence of the total medical costs billed. (320) The effect of the state law was that it permitted "conflicts with general maritime law, specifically, the collateral source rule." (321)

Judge James Carr of the Northern District of Ohio in Buccina v. Grimsby (322) addressed the Jones v. Carnival Corp. decision and discerned that it is the only case to address the issue of the medical write-offs under general maritime law and as such "that there appears to be no uniform maritime rule governing the admissibility of contractual discounts" (323) and consequently, state law could be examined as a guide. (324) He then looked to the decision of the Ohio Supreme Court in Robinson v. Bates. (325) The Ohio Supreme Court held that under Rule 402 of the Rules of Evidence and Ohio statute R.C. 2315.20 (326) the full value of the medical services is relevant evidence of the reasonableness of the value of the medical services. (327) This creates a rebuttable presumption shifting the burden to the defendant to introduce evidence to challenge the reasonableness of the value of the medical services provided. The defendant can then introduce evidence of the amount actually accepted as payment by the medical provider. (328) The jury then can determine the factual issue of the reasonable value of medical expenses incurred. Judge Carr then concluded that the collateral source rule under general maritime law does not "require exclusion of such evidence." (329) This does, however, conflate the evidentiary rule with the substantive rule. Introduction of both the amount billed and the amount paid may well confuse the jury.

With respect to the collateral source rule, numerous states have adopted a plethora of laws to address the issue either by abolishing the collateral source rule in its entirety or substantially altering it in particular cases. (330) Some states have enacted legislation specifically addressing medical write-offs. (331) Others such as Louisiana have confronted the issue through the judicial process especially the question of medical write-offs, Medicaid, and by extension, Medicare.

The Louisiana Supreme Court addressed the impact and effect of the collateral source rule to Medicaid payments and medical write-offs or negotiated medical discounts in two cases, Bozeman v. State (332) and more recently in Hoffman v. 21st Century N. Am. Ins. Co. (333) In the former case, the plaintiff was seriously injured in a vehicular accident which ultimately resulted in his death three years later. (334) Prior to his death, he was approved for Medicaid which ultimately paid $291,863 in medical expenses. (335) The matter went to trial with a finding of 25% fault on the decedent. (336) The trial court awarded the full amount of medical expenses billed which were in excess of $613,626. (337) The Louisiana Court of Appeal for the Second Circuit reversed in light of an intervening decision (338) which held "that the collateral source rule does not allow for recovery of expenses in excess of the Medicaid payments." (339) On remand in Bozeman, the trial court reduced the medical award to the amount paid by Medicaid, less the fault of the claimant. (340)

The Louisiana Supreme Court granted writs. (341) Reviewing and analyzing jurisprudence from Louisiana as well as common law jurisdictions addressing Medicaid write-offs and the collateral source rule, the court summarized the various approaches taken by courts to address the issue into three categories: "(1) reasonable value of services[,] (2) actual amounts paid[,] and (3) benefit of the bargain." (342) It ultimately adopted the "benefit of the bargain" approach which allows a claimant to recover the full amount billed by the health care providers if the health care insurance premiums are paid in whole or in part by the claimant himself or herself. (343) "However[,] where the plaintiff pays no enrollment fee, has no wages deducted, and otherwise provides no consideration for the collateral source benefits he receives, we hold that the plaintiff is unable to recover the 'write-off amount." (344) The patrimony (345) is not reduced. (346) The medical care is free. (347) Thus, the claimant is unable to recover the actual amount billed; but, where the claimant has paid consideration, such as insurance premiums or an enrollment fee (such as Medicare), the patrimony is in fact reduced by those payments allowing the claimant to recover the entire full amount billed by the medical provider. (348)

More recently, the Louisiana Supreme Court again addressed the issue of medical write-offs; but, when negotiated by the claimant's attorney in Hoffman, (349) the court in an unanimous opinion by Justice Guidry phrased the issue as follows: "[W]hether a plaintiff can invoke the collateral source rule to recover for medical expense write-offs negotiated by his attorney, without having first diminished his patrimony...." (350) In ultimately holding that the collateral source rule does not apply in such a case, the court relied on a decision from California (351) which "held the collateral source rule should not expand the scope of economic damages to include expenses the plaintiff never incurred." (352) The attorney-negotiated discounts did not diminish the patrimony of the claimant nor did it cost the claimant anything. (353) The court, nonetheless, seems to suggest through the repeated use of the phrase "attorney-negotiated 'write-off[,]'" and with the emphasis on that phrase in the conclusion, (354) that if the claimant personally negotiates the discounts rather than the attorney this may be sufficient to reduce the patrimony and thus allow the claimant to recover the full amount billed rather than only the discounted sum.

But, these decisions miss the point. In the first place, whether the claimant even has the right of action to recover any medical expenses is the real issue as in Hoffman v. Halcott Shipping Corp.; it appears that no party raised it. Furthermore, any diminution in the patrimony of the claimant is the amount of premiums paid during the term of the policy, which hardly seems to justify recovery of an amount which may well be far in excess of the total premiums paid. In addition, with the suggestion that the claimant negotiate the write-off, the court seems to endorse a surreptitious end run around the rule announced in its opinion. There is nonetheless a windfall to the claimant if the claimant is not, and will never be, legally obligated to pay the amount which was written off. Also, it is poor social policy to allow a Medicare recipient to recover the full amount of medical expenses billed solely because he or she has paid benefits into the Medicare system. One federal court of appeals has addressed this in the maintenance and cure context. (355) Thus, even if a claimant has paid into Medicare, which has incurred the medical costs, to allow the claimant to recover the excess over what Medicare has paid is illogical and contributes to increases in overall costs.

E. Charting a New Course?

Most recently, the U.S. Court of Appeals for the Fifth Circuit again reviewed the application of the collateral source rule in a claim brought by a passenger on an offshore supply vessel against the owner and operator of the vessel. (356) The trial court, in awarding the full amount of medical expenses billed by the medical providers and paid at a reduced amount by the workers' compensation insurer of the employer, reasoned that the compensation insurer's obligation to pay medical expenses was collateral to the liability of the vessel owner but that this was a "benefit" as an incident of employment with his employer. (357) "Thus, while the complainant did not pay money for a fringe benefit, he clearly provided his work services as a benefit to his employer." (358)

The vessel owner appealed. The Fifth Circuit distinguished its precedent in Davis v. Odeco Inc., (359) Bourque v. Diamond M Drilling Co., (360) and Phillips v. Western Co. (361) on the basis that these cases arose in an employer-employee context. (362) Here, the employer was neither negligent, nor a defendant; (363) rather, the third-party vessel owner was solely at fault. (364) The court noted that there was no direct authority on which it could rely regarding reduced medical payments made by the compensation insurer in the context of a maritime tort. (365) It, therefore, considered other maritime analogs and state law. (366) Finding numerous rules under state law within the Fifth Circuit alone, (367) the court, nonetheless, found a maritime analog in the cure obligation owed to a seaman; and, in Manderson v. Chet Morrison Contractors, Inc., (368) a seaman can only recover the amount of cure payments actually incurred whether discounted or not. Like cure, the employer of a covered employee under the Longshore and Harbor Workers' Compensation Act (369) (LHWCA) is imposed by law and is not based on fault. The rule enunciated by Manderson to prohibit the recovery of any excess medical expenses over the amount actually paid by the employer or its workers compensation insurer likewise applies in the context of maritime torts for those covered under the LHWCA. (370) A claimant "may not recover for expenses billed, but not paid." (371)

The court reached the correct result but continued to adhere to and apply the collateral source rule to the payment of the medical expenses by the compensation insurer of the claimant's employer when the claimant paid nothing for the coverage as it is imposed by law. Though the payments by the workers' compensation insurer are collateral to the liability of the negligent third party, to apply the collateral source rule to the recovery of the injured claimant is inconsistent with the historic concept within which the rule was developed. The rule appropriately should be applied to the insurance which the injured claimant purchases, not the workers' compensation insurance which the employer is required by law to provide and which must be paid regardless of the fault of the employer. Thus, the insurance payments are collateral to the insured employer, not the employee. The question then is which party has the right of recovery and the extent of that recovery. Neither the court nor any party considered that the right to recover the medical expenses belonged to the insurer itself, which has a legal right of subrogation and likely a contractual right of subrogation.

Whether the rule announced in this most recent pronouncement of the Fifth Circuit will apply to other maritime torts remains to be seen, as the court drew the analogy between the cure obligation of the employer of a seaman and the legally imposed obligation of the covered employer under the LHWCA. This analogy does not apply to others who are not covered employees under the Longshore Act or presumably, any other workers' compensation statute. Would a passenger who is not a covered employee under the LHWCA be in a different position and then be able to recover the excess amount of medical expenses billed? Would a passenger on a cruise ship likewise be able to recover the amount of medical expenses billed as opposed to the net amount paid by a medical insurer? Would the rule of DePerrodil also apply to recreational maritime torts? The court may well continue to cling to the historic collateral source rule as the claimants in these situations likely paid for the insurance in whole or in part. Nonetheless, to continue to ignore the conventional subrogation right of the insurer, which has the right of action, perpetuates the conundrum. The continued adherence of the courts to an anachronistic rule of law can lead to such anomalies and continue to disrupt the uniformity for which maritime law often strives.

V. CONCLUSION

The legal foundation of the collateral source rule, as it has become known in U.S. law, from its common law roots in the late eighteenth century in Lord Mansfield's decision of Mason v. Sainsbury (372) and its incorporation into American law in The PROPELLER MONTICELLO v. Mollison, (373) was sound for its time and in the context of property or hull insurance. The obligation of the insurer to indemnify the insured stems from the contractual provisions of the insurance contract and is not dependent on negligence or fault. Conversely, the obligation or quasi-obligation of a tortfeasor to pay damages is solely based on its breach of legal duty based on its negligence or fault. Where the tortfeasor is not at fault, no damages are paid. However, the obligation of the insurer is not dependent on whether there is any recovery from a third party. If the claim of the insured is covered by the policy the insurer is contractually obligated to pay. At the time these cases were determined, insurers did not include subrogation clauses in their contracts or clauses requiring the insured to reimburse the insurer. There certainly were no social benefits provided by the state such as Medicaid or Medicare. Prior to World War II, there were few employer-provided benefits such as health insurance.

Despite the substantial economic changes in the U.S. economy with government social services such as Medicaid and Medicare; employer-provided health insurance, which may be funded by the employer exclusively or more often than not by both employer and employee; and discounted medical services and write-offs, courts continue to adhere to a rule which is clearly a relic of far simpler times. Prior to the incorporation of subrogation and reimbursement provisions in insurance contracts, and well before any government entitlements or write-offs for medical services, it made legal and logical sense to allow an insured to recover the loss it incurred due to the negligence or fault of a tortfeasor and not reduce recovery by an insurance paid to the claimant. It makes less sense currently to allow a claimant to recover in excess of the amount he or she is legally responsible to reimburse or could even be held legally liable to pay. In continuing to support a rule of law which no longer fits into the modern world except in rare circumstances, the courts have lost sight of the fundamental principle of tort law, restitutio in integrum.

While supporters of the collateral source rule defend its vitality today by continuing to cling to the now less than convincing, if not specious, argument that allowing full recovery of the damages including the full amount of the medical expenses paid makes the claimant whole, such rationalization is nothing more than an apologia. It is a windfall pure and simple. To allow such a windfall when the claimant has no legal obligation to reimburse any other party has no real support in law other than the blind adherence to an arcane doctrine. The argument that the maintenance of the rule deters negligence and encourages people to have insurance is again nothing more than a pretext. All states require licensed vehicle operators to have certain minimum amounts of insurance. No mortgage company would lend money for purchase of property without requiring the mortgagee to have insurance. With the rising costs of medical services and the advent of the Affordable Care Act, fewer and fewer individuals fail to have health insurance. It is poor social policy to allow any claimant to recover the excess medical expenses which have been reduced as a result of negotiations by the insurer or the government and written off by the medical provider. The insured claimant reaps the benefit with lower premiums.

As discussed previously, where the medical insurance is governed by an ERISA plan, courts have honored subrogation and reimbursement clauses but only where the right of the plan has been timely exercised and when those funds have been traceable into the hands of the insured. (374) In most maritime and Jones Act suits, this will only become an issue if the medical payments have been made by the ERISA health plan. Generally, however, medical expenses as an element of cure, as well as additional daily maintenance, will be paid by the employer's Protection and Indemnity Insurer along with any medical expenses awarded for employer negligence or for breach of the warranty of seaworthiness.

Attorneys representing employers and vessel owners should determine if the medical insurance policy of any claimant has a subrogation provision and assert that the sole party which has the right of action is the insurer following the precedent of Hoffman v. Halcott Shipping Corp. While a court may consider that the claimant is nonetheless the injured party, his or her right is equitable in nature and as such is derivative of the right of the insurer to recover absent any out of pocket expenses of the insured. As this right is derivative, the amount reimbursed should be limited to that paid by the medical insurer.

Continued homage to the collateral source rule is no longer justified and only adds to the costs of insurance. Courts, lawyers, and academicians have long recognized that the rule provides a windfall. This was true prior to the advent of subrogation and reimbursement clauses in contracts and medical write-offs. Though the insurer and the tortfeasor are not joint obligors bound together and payment by one does not extinguish the obligation of the other, where the insurer is contractually subrogated, the right of recovery belongs to the insurer. This is particularly true in property damage cases. The insurer subrogates to the right of the insured to the extent of payment and then may or may not seek recovery against the tortfeasor. No one would question that the insured then has no right of action against the tortfeasor, except to the extent of any deductible. The same rule should apply even in personal injury and death cases. To allow a claimant to recover more medical expenses than those which have been paid and for which the insured is not legally liable can no longer be justified nor can it be sustained economically, as the windfall provided by the collateral source rule is merely passed on to the ultimate consumer, adding to the cost of insurance. The legal prestidigitation courts have employed to adhere to a rule of law that has little vitality now can no longer be defended. It is time to pull the plug on a doctrine that has been on life support for too long, especially with respect to discounted medical expenses and medical write-offs. No one is entitled to a windfall in those circumstances. By returning to the fundamental tort maxim restitutio in integrum, a claimant is compensated fully for the damages sustained and no party enjoys a windfall.

Arthur A. Crais, Jr.(*)

(*) B.A., Tulane University; J.D., Tulane University School of Law; Adjunct Professor of Maritime Law, Loyola University of New Orleans College of Law; Member of the Louisiana State Bar Association and Maritime Law Association. The author gratefully acknowledges the research assistance of Leon E. Roy, IV, J.D. Candidate, Loyola University College of Law, 2017.

(1.) James L. Branton, The Collateral Source Rule, 18 ST. MARY'S L.J. 883 (1987).

(2.) Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 125 Stat. 119 (Mar. 23, 2010) (codified as amended in scattered sections of 25, 26, 29, 42 U.S.C.) [Affordable Care Act].

(3.) The cases use the terms "set-off and "off-set" interchangeably. Either term, both of which are used in this article, refers to an employer/vessel owner's claim for a reduction in the damage award based on the payments made by a seaman's insurer, usually for medical expenses and services as well as for disability.

(4.) Affordable Care Act, supra note 2.

(5.) The interplay of federal maritime law and state law is discussed in Hon. John W. DeGravelles, The Application of State Law in a Maritime Case: A Primer on "The Devil's Own Mess," 15 L0Y. MAR. L.J. 5 (2016).

(6.) 46 U.S.C. [section] 30104 (2012).

(7.) Ch. 149, [section] 1, 35 Stat. 65 (Apr. 22, 1908) (current version at 45 U.S.C. [section][section] 51-60 (2012)).

(8.) Carter v. Boehm [1766] 97 Eng. Rep. 1162 (K.B.), 3 Burr. 1905.

(9.) [1792] 99 Eng. Rep. 538 (K.B.), 3 Doug. 61.

(10.) 43 Vt. 536 (1871), 1870 WL 2837; see also Kevin S. Marshall & Patrick W. Fitzgerald, The Collateral Source Rule and Its Abolition: An Economic Perspective, 15 KAN. J.L. & PUB. POL'Y 57, 59 (2005).

(11.) [1792] 99 Eng. Rep. at 539-40.

(12.) [1792] 99 Eng. Rep. at 540.

(13.) Id.

(14.) [1838] 132 Eng. Rep. 793 (K.B.), 4 Bing. (N.C.) 273.

(15.) Id.

(16.) Id.

(17.) Id. at 797.

(18.) Id.

(19.) [1838] 132 Eng. Rep. at 797.

(20.) 58 U.S. 152 (17 How.) (1854).

(21.) Id.

(22.) 58 U.S. at 155 (17 How.) (1854).

(23.) Justice Daniel dissented, but only on the basis that he believed the Court lacked jurisdiction. Id. at 156.

(24.) The Monticello, 58 U.S. at 155.

(25.) Id.; see also Lexington Ins. Co. v. S.H.R.M., 567 F.3d 182 (5th Cir. 2009) (holding that general maritime law prohibits assignments of unliquidated personal injury claims). In Ondimar Transportes Maritimos v. Beatty St. Props., 555 F.3d 184 (5th Cir. 2009), the Fifth Circuit previously voided an assignment of a claim for property damage. In both cases, the court reasoned that such assignments would subvert the proportionate liability scheme of McDermott, Inc. v. AmClyde, 511 U.S. 202 (1994), but are not generally prohibited at law.

(26.) The Monticello, 58 U.S. at 155.

(27.) Id. at 156.

(28.) Id.

(29.) Id.

(30.) Joel J. Jacobsen, The Collateral Source Rule and the Role of the Jury, 70 OR. L. REV. 523, 528 (1991).

(31.) Brendan S. Maher & Radha A. Pathak, Understanding and Problematizing Contractual Tort Subrogation, 40 LOY. U. CHI. L.J. 49, 51 (2008); see also Adam G. Todd, An Enduring Oddity: The Collateral Source Rule in the Face of Tort Reform, The Affordable Care Act and Increased Subrogation, 43 McGEORGE L. REV. 965, 973 (2012); Rebecca Levenson, Allocating the Costs of Harm to Whom They Are Due: Modifying the Collateral Source Rule After Health Care Reform, 160 U. PA. L. REV. 921 (2012).

(32.) Jacobsen, supra note 30, at 534.

(33.) Restitutio in integrum means to restore to the original condition. See Graham v. Egan, 15 La. Ann. 97, 98 (La. 1860).

(34.) [1838] 132 Eng. Rep. at 797 (Park, J.).

(35.) The Monticello, 58 U.S. at 156.

(36.) Maher & Pathak, supra note 31, at 60.

(37.) Id. at 54.

(38.) See, e.g., [1792] 99 Eng. Rep. 538 (K.B.), 3 Doug. 61.

(39.) See The Monticello, 58 U.S. 152 (17 How.) (1854).

(40.) Maher & Pathak, supra note 31, at 60.

(41.) [1792] 99 Eng. Rep. 538 (K.B.), 3 Doug. 61, at 64.

(42.) S.F. DIXON, A TREATISE ON THE LAW OF SUBROGATION 7 (1862).

(43.) Id.

(44.) Id.

(45.) See DIXON, supra note 42, at 155-56.

(46.) ID. AT 158.

(47.) Id.

(48.) Maher & Pathak, supra note 31, at 64. The U.S. Supreme Court, however, in The Propeller Monticello, nonetheless, clearly recognized the right of the insurer to intervene "to the whole or part of the damages." See The Monticello, 58 U.S. (17 How.) at 156.

(49.) Maher & Pathak, supra note 31, at 65.

(50.) Id. at 66.

(51.) 95 U.S. 754 (1877).

(52.) 119 U.S. 199(1886).

(53.) 72 S.W. 168 (1903).

(54.) Aetna Life Ins. Co. v. J. B. Parker & Co., 72 S.W. 621 (1902); Maher & Pathak, supra note 31, at 66-67.

(55.) 72 S.W. at 621.

(56.) Id. at 622.

(57.) See Maher & Pathak, supra note 31, at 69-70 nn. 107-08.

(58.) Id. at 72-73.

(59.) Maher & Pathak, supra note 31, at 74.

(60.) Id. at 74-75.

(61.) 29 U.S.C. [section][section] 1001-1461 (2012).

(62.) Maher & Pathak, supra note 31, at 74-75.

(63.) Id. at 78.

(64.) Id. at 79; see also 29 U.S.C. [section] 1132(a)(3) (2012).

(65.) Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (holding "[a]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy... is preempted").

(66.) Maher & Pathak, supra note 31, at 79-80.

(67.) 473 U.S. 134 (1985).

(68.) 508 U.S. 248 (1993).

(69.) 534 U.S. 204 (2002).

(70.) See also, John H. Langbein, What Erisa Means By "Equitable": The Supreme Court's Trial of Error in Russell, Mertens and Great-West, 103 CoLUM. L. REV. 1317, 1365 (2003), in which the author criticizes the Court for failing to align ERISA remedy law "with the trust remedial tradition that Congress intended in the grant of 'appropriate equitable relief."'

(71.) The issue confronting the court is the language in 29 U.S.C. [section] 1132(a)(3)(B) (2012), which grants any "participant, beneficiary, or fiduciary" the right "to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan (emphasis added).

(72.) Russel, 473 U.S. at 144.

(73.) Mertens, 508 U.S. at 252.

(74.) Id. at 256.

(75.) Knudson, 534 U.S. at 218.

(76.) Id. at 207.

(77.) Id.

(78.) Id.

(79.) Id.

(80.) Knudson, 534 U.S. at 207.

(81.) Id. Approximately $21,000 remained of the settlement after all the deductions were made.

(82.) Id. at 208.

(83.) Id.

(84.) 208 F.3d 221 (9th Cir. 2000).

(85.) 534 U.S. at 212.

(86.) Id. at 213.

(87.) Id. at 214.

(88.) Id.

(89.) 534 U.S. at 224 (Ginsburg, J., dissenting).

(90.) 547 U.S. 356 (2006).

(91.) 136 S. Ct. 651 (2016).

(92.) Sereboff, 547 U.S. at 360.

(93.) The medical lien was $74,89.37 plus interest. Id. at 360. The trial court reduced the lien by 10%, representing the ratio of the lien to the total settlement based on the deduction rule for the insured's attorneys' fees and costs; but then, the trial court awarded the insurer attorney's fees to secure its reimbursement. Mid Atlantic Med. Servs. v. Sereboff, 303 F. Supp. 2d 691; 316 F. Supp. 2d 265 (D. Md. 2004). The Fourth Circuit Court of Appeals affirmed the judgment for the insurer and the reduction for the fees based on the deduction rule but reversed the attorney fee award for the insurer. 407 F.3d 212 (4th Cir. 2005).

(94.) Sereboff, 547 U.S. at 360. The specific provisions of the plan may be found at 303 F. Supp. 2d at 697-98.

(95.) 29 U.S.C. [section] 1132(a)(3) (2012).

(96.) 212 U.S. 117 (1914).

(97.) Sereboff, 547 U.S. at 364.

(98.) Id. at 368.

(99.) Id.

(100.) Id.

(101.) See Montanile, 136 S. Ct. 651.

(102.) Id. at 655.

(103.) 29 U.S.C. [section] 1132 (a)(3)(B) (2012).

(104.) 136 S. Ct. at 656.

(105.) Bd. of Trs. of the Natl Elevator Indus. Health Ben. Plan v. Montanile, No. 12-80746-CIV-Brannon, 2014 U.S. Dist. LEXIS 36309, at *4-6 (S.D. Fl. Mar. 17, 2014).

(106.) Id. at *7. After deducting $200,000 for attorney's fees and an additional $63,788 in costs, the net amount paid to the injured party was $236,212. See Petition for Writ of Certiorari at 10, Montanile, 136 S. Ct. 651 (No. 17-723). In addition, the insured signed a subsequent agreement reaffirming his obligation to reimburse the plan. Id. at 656.

(107.) Bd. of Trs., 2014 U.S. Dist. LEXIS 36309, at *8; Montanile, 136 S. Ct. at 656.

(108.) Id.

(109.) Id.

(110.) Montanile, 136 S. Ct. at 656.

(111.) Id.

(112.) Id. at 655.

(113.) Id. at 658.

(114.) Id. at 658-59.

(115.) Montanile, 136 S. Ct. at 659.

(116.) Id.

(117.) Id. at 660-61.

(118.) Montanile, at 656.

(119.) Id. at 663.

(120.) Id. at 662. Justice Ginsburg echoes the dissent of Justice White in the 5-to-4 decision of the Court in Mertens. Mertens, 508 U.S. at 263. In Mertens, Justice White, whose dissent was joined by then Chief Justice Rehnquist and Justices Stevens and O'Conner, criticized the majority's restrictive view of what equitable remedies are available under ERISA and was of the opinion that the common law of trusts should be the basis for determining the "appropriate equitable relief contemplated under 29 U.S.C. [section] 1132(a)(3) (2012). Id. at 265.

(121.) Knudsen, 534 U.S. at 234 (Ginsburg, J., dissenting) ("Today's decision needlessly obscures the meaning and complicates the application of [section] 502(a)(3). The Court's interpretation of that provision embroils federal courts in 'recondite controversies better left to legal historians, [quoting Justice Brennan in Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 576 (1990)], and yields results that are demonstrably at odds with Congress' goals in enacting ERISA. Because in my view Congress cannot plausibly be said to have 'carefully crafted' such confusion,... I dissent.").

(122.) 136 S. Ct. at 662.

(123.) See Petition for a Writ of Certiorari at 12, Montanile, 136 S. Ct. 651.

(124.) Id.

(125.) Id. Mr. Montanile paid separate counsel to represent him in the negotiations with the insurer from these funds and for care of his minor daughter.

(126.) 534 U.S. 204 (2002).

(127.) 348 U.S. 310(1955).

(128.) Todd, supra note 31, at 968-69. Rebecca Levenson, in her Comment, argues quite forcefully that the mandate of the Affordable Care Act undermines the deterrent rational for maintaining the collateral source rule as juries will likely assume the claimant is insured and rewards those claimants who do choose not to have coverage with full recovery of the cost of medical services including any write-offs obtained by the insurer. Levenson, supra note 31, at 935.

(129.) Todd, supra note 31, at 988.

(130.) Id. at 990-91.

(131.) Id. at 990, n.193.

(132.) Id. at 992.

(133.) Id. at 993-94.

(134.) FED. R. EVID. 401.

(135.) Id. at 403; see McGrath v. CONRAIL, 136 F.3d 838, 841 (1st Cir. 1998) and Crowther v. CONRAIL, 680 F.3d 95, 99 (1st Cir. 2012) in which former Associate Justice Souter relying on the precedent of McGrath stated that the trial judge is vested with wide discretion under Rule 403 to admit or exclude evidence of a collateral source.

(136.) FED. R. EVID. 411.

(137.) See also Levenson, supra note 31, at 941.

(138.) 28 U.S.C. [section] 1333 (2012).

(139.) American Dredging Co. v. Miller, 510 U.S. 443, 450 (1993) (quoting Southern Pacific Co. v. Jensen, 244 U.S. 205, 216 (1917)).

(140.) For example, the Louisiana Rules of Evidence on Relevancy clearly parallel or are verbatim of the equivalent articles in the Federal Rules of Evidence. LA. CODE EVID. ANN. arts. 401-03 (West, Westlaw current through 2016).

(141.) 45 U.S.C. [section][section]51, 55(2012).

(142.) 375 U.S. 34 (1963).

(143.) Id. at 36.

(144.) Id. at 37.

(145.) THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW [section] 4-9, 255 (5th ed. 2011).

(146.) 45 U.S.C. [section] 55 (2012) (emphasis added).

(147.) Railroad Retirement Act of 1937, June 24, 1937, ch. 382, 50 Stat. 307 (codified as amended at 45 U.S.C. [section][section] 228(c), 231 (2012)).

(148.) 375 U.S. 253 (1963).

(149.) Id. at 254.

(150.) 319 F.2d 12, 20 (2d Cir. 1963).

(151.) Eichel, 375 U.S. at 255.

(152.) See Bourque v. Diamond M. Drilling Co., 623 F.2d 351 (5th Cir. 1980); see also Victor E. Schwartz & Gary Silverman, Toppling the House of Cards That Flowed from an Unsound Supreme Court Decision: End Inadmissibility of Railroad Disability Benefits in FELA Cases, 30 TRANSP. L.J. 105 (2003).

(153.) Tipton, 315 F.2d at 662. The payment of compensation benefits was forcefully argued to the jury by defense counsel as discussed in detail by Judge John R. Brown in his dissent. Id. at 663-67 (Brown, J., dissenting).

(154.) 45 U.S.C. [section] 55 (2012).

(155.) Moragne v. States Marine Lines, 398 U.S. 375, 408 (1970).

(156.) See Gypsum Carrier, Inc. v. Handelsman, 307 F.2d 525 (9th Cir. 1962).

(157.) Haughton v. Blackships, Inc.. 462 F.2d 788, 790 (5th Cir. 1972).

(158.) 45 U.S.C. [section] 55 (2012).

(159.) Philadelphia, B. & W. R. Co. v. Schubert, 224 U.S. 603, 607 (1912).

(160.) Schwartz & Silverman, supra note 152, at 114.

(161.) Schubert, 224 U.S. at 612-13.

(162.) See generally Mondou v. New York, N.H., & H.R. Co., 223 U.S. 1 (1912).

(163.) Id. at 52.

(164.) Schubert, 224 U.S. at 613; Schwarz and Silverman, supra note 152, at 115.

(165.) Schwarz & Silverman, supra note 152, at 115-116.

(166.) 45 U.S.C. [section] 55 (2012).

(167.) Haughton v. Blackships, Inc., 462 F.2d 788, 791 (5th Cir. 1972).

(168.) Id.

(169.) Clark v. Burlington Northern, 726 F.2d 448, 450 (8th Cir. 1983) (quoting Haughton v. Blackships, 462 F.2d 788, 791 (5th Cir. 1972). Here, the disability plan was fully funded by the employer and specifically provided for an offset from liability under FELA. Id. at 451.

(170.) 468 F.2d 1018, 1021 (9th Cir. 1973).

(171.) Id.

(172.) Blake v. Delaware & H.R. Co., 484 F.2d 204, 207-08 (2d Cir. 1973) (dissenting Judge Lumbard would have allowed the offset); see also United States v. Price, 288 F.2d 448 (4th Cir. 1961).

(173.) 322 F. Supp. 92 (D. Minn. 1971).

(174.) Blake, 484 F.2d at 207.

(175.) 813 F.2d 1377, 1382 (9th Cir. 1977).

(176.) Id. at 1379.

(177.) Id.

(178.) 420 F.2d 793 (4th Cir. 1970). This case was cited also by Judge Friendly in his concurring opinion in Blake, 484 F.2d at 207.

(179.) Thomas, 420 F.2d at 794.

(180.) Id. at 795.

(181.) The obligation to provide maintenance and cure to a seaman arises from the employment contract between the seaman and employer and is not fault based. See THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW [section][section] 6-28-6-36, 505-32 (5th ed. 2011).

(182.) Thomas, 420 F.2d at 794.

(183.) Id. at 795.

(184.) 813 F.2d at 1383-84.

(185.) Phillips, 953 F.2d 923 (5th Cir. 1992).

(186.) Id. at 930.

(187.) Id. at 932 (citing Allen, 639 F. Supp. 1545, 1547-48 (D. Me. 1986).

(188.) Id. at 1548.

(189.) Allen, 639 F. Supp. at 1549.

(190.) Id.

(191.) Id.

(192.) Id.

(193.) Id. at 1549-50.

(194.) Allen, 639 F. Supp. at 1550.

(195.) Phillips, 953 F.2d at 933.

(196.) Id. at 934.

(197.) 18 F.3d 1237, 1244 (5th Cir. 1994).

(198.) Id. at 1245.

(199.) Id.

(200.) Id.

(201.) Id. at 1256 (citing Vaughan v. Atkinson, 369 U.S. 533 (1962)).

(202.) Davis, 18 F.3d at 1246 (citing Gauthier v. Crosby Marine Serv. Inc., 752 F.2d 1085 (5th Cir. 1985)).

(203.) Id.

(204.) Id.

(205.) Gauthier v. Crosby Marine Serv., Inc., 752 F.2d 1085 (5th Cir. 1985).

(206.) 666 F.3d 373 (5th Cir. 2012).

(207.) Gauthier, 752 F.2d at 1087.

(208.) Id. at 1088.

(209.) Id. at 1087. The claim under Louisiana state law was brought against the dock owner.

(210.) Id.

(211.) Id. at 1089.

(212.) Gauthier, 752 F.2d at 1089.

(213.) 307 F.2d 525 (9th Cir. 1962).

(214.) Gauthier, 752 F.2d at 1090.

(215.) 666 F.3d 373, 380 (5th Cir. 2012).

(216.) Id. at 377.

(217.) Id. at 375.

(218.) Id. at 380.

(219.) Id.

(220.) Manderson, 666 F.3d at 381.

(221.) Id.

(222.) Id. at 382.

(223.) Id.

(224.) Id.

(225.) Manderson, 666 F.3d at 832.

(226.) Id.

(227.) Id.

(228.) 544 F.3d 296 (5th Cir. 2008).

(229.) Id. at 299, 300.

(230.) Id. at 299.

(231.) See McCorpen v. Cent Gulf S.S. Corp., 396 F.2d 547 (5th Cir. 1968).

(232.) The trial court was reversed on the issue of whether the willful concealment of the prior injury could also constitute contributory negligence of the seaman. Johnson, 544 F.3d at 303-04.

(233.) Id. at 304.

(234.) Phillips, 953 F.2d 923.

(235.) Johnson, 544 F.3d at 305.

(236.) Id.

(237.) Id. at 305-06.

(238.) Davis v. Odeco, Inc., 18 F.3d 1237 (5th Cir. 1994).

(239.) Id. at 1240.

(240.) Davis, 18 F.3d at 1240.

(241.) Id. at 1243.

(242.) Id. at 1244.

(243.) Id. at 1245.

(244.) Id.

(245.) Johnson, 544 F.3d at 306.

(246.) Id. In addition, as stated by the court in Davis, the plan did not indicate it was established to "reduce the [employer's] legal liability ...." Davis, 18 F.3d at 1245.

(247.) Johnson, 544 F.3d at 307.

(248.) No. 12-CV-3140, 2014 U.S. LEXIS 131958 (W.D. La. Sept. 19, 2014).

(249.) Blanchard, 2014 U.S. LEXIS 131958, at *2-3.

(250.) Id. at *10.

(251.) Id. at *13.

(252.) Id. at *2-3.

(253.) 58 F.3d 24 (2d Cir. 1995).

(254.) Id. at 25.

(255.) Id.

(256.) Id.

(257.) Id. (citing Moran Towing & Transp. Co., Inc. v. Lombas, 843 F. Supp. 885, 882 (S.D.N.Y. 1994)).

(258.) Moran Towing, 58 F.3d at 27.

(259.) 332 F. Supp. 2d 458 (D.R.I. 2004).

(260.) Id. at 461-62.

(261.) Id. at 467.

(262.) Id. at 462.

(263.) Id. at 465.

(264.) 872 F. Supp. 271, 272 (E.D. Va. 1995).

(265.) Id. at 273.

(266.) 843 F. Supp. 885 (S.D.N.Y. 1994).

(267.) Toulson, 872 F. Supp. at 276.

(268.) Id. at 277 (citing Gasnell v. Sea-Land Services, Inc., 782 F2d 464 (4th Cir. 1986)).

(269.) Id. at 277 n.11.

(270.) 180 F. Supp. 2d 1349 (S.D. Ga. 2001).

(271.) Id. at 1352.

(272.) Id. at 1356.

(273.) Blige, 180 F. Supp. 2d at 1357.

(274.) Id.

(275.) No. 96-1104, 1997 U.S. Dist. LEXIS 3210 (E.D. La. Mar. 14, 1997).

(276.) Gulf Pride, 1997 U.S. Dist. LEXIS 3210, at *10.

(277.) Id. at *30.

(278.) See Moran Towing, 58 F.3d 24.

(279.) See Toulson, 872 F. Supp. 271.

(280.) Gulf Pride, 1997 U.S. Dist. LEXIS 3210, at *37.

(281.) Id. at *38.

(282.) Id. at *40.

(283.) Id. at *49.

(284.) Stanley v. Bertram-Trojan, Inc., 868 F. Supp. 541, 542 (S.D.N.Y. 1994) ("Even though a maritime claim includes a diversity basis for jurisdiction, the parties' rights and liabilities are controlled by federal principles of maritime law.") (quoting Neal v. McGinnis, Inc., 716 F. Supp. 996, 998 (E.D. Ky. 1989)). See also DeGravelles, supra note 5, at 10; Lexington Ins. Co. v. S.H.R.M., 567 F.3d 182; Ondimar Transportes Maritimos v. Beatty St. Props., 555 F.3d 184; McDermott, Inc. v. AmClyde, 511 U.S. 202.

(285.) THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW [section] 4-2 (5th ed. 2011).

(286.) 513 U.S. 527, 545 (1995).

(287.) Consolidated Rail Corp. v. Gottschall, 512 U.S. 532, 544 (1994).

(288.) Exxon Shipping Co. v. Baker, 554 U.S. 471, 495 (2008).

(289.) DeGravelles, supra note 5, at 8.

(290.) Id. at 10.

(291.) See Phillips, 953 F.2d 923.

(292.) See Tipton, 375 U.S. 34.

(293.) 93 F. App'x 658, 661 (5th Cir. 2004).

(294.) Hoffman, 93 F. App'x at 659.

(295.) Id.

(296.) Id. at 661.

(297.) 93-859 (La. App. 3 Cir. 4/6/94); 636 So. 2d 282; writ denied, 94-1150 (La. 10/7/94); 644 So. 2d 629.

(298.) See La. Civ. Code arts. 1825-28.

(299.) See La. Civ. Code art. 697.

(300.) See La. Civ. Code art. 1825. See also Great Sw. Fire Ins. Co. v. CNA Ins. Co., 547 So. 2d 1339, 1343 (La. App. 3 Cir. 1989).

(301.) Hoffman, 93 F. App'x at 660; see also Guillory v. Terra Int'l., Inc., No. 92-63 (La. App. 3 Cir. 2/3/93); 613 So. 2d 1084, 1093.

(302.) Hoffman, 93 F. App'x at 661.

(303.) Hoffman, 93 F. App'x at 661.

(304.) No. 04-20407-CIV-JORDAN, 2006 U.S. Dist. LEXIS 101999, at *3 (S.D. Fl. Jan. 24, 2006).

(305.) 157 F. Supp. 3d 704, 705 (N.D. Ohio 2016).

(306.) The medical write-off is the discount negotiated by the medical insurer. It is to be distinguished from the set-off sought by the employer for any payments made by or on behalf of the employer under Section 55 of FELA. Nonetheless, courts often use these terms interchangeably.

(307.) Carnival Corp., 2006 U.S. Dist. LEXIS 101999, at *6.

(308.) Buccina v. Grimsby, 96 F. Supp. 3d 706, 708 (N.D. Ohio 2015).

(309.) Buccina, 157 F. Supp. 3d at 706.

(310.) 857 N.E.2d 1195 (Ohio 2006).

(311.) Carnival Corp., 2006 U.S. Dist. LEXIS 101999, at *3.

(312.) Id.

(313.) Id. at *3-4.

(314.) Id. at *4.

(315.) 901 So. 2d 830 (Fla. 2005).

(316.) Id. at 832.

(317.) Id.

(318.) Fla. Stat. Ann. [section] 768.76 (Current through the 2016 Second Regular Session of the Twenty-Fourth Legislature).

(319.) Goble, 901 So. 2d at 833.

(320.) Id.

(321.) Id. at 835.

(322.) Buccina, 157 F. Supp. 3d at 704.

(323.) Buccina, 157 F. Supp. 3d at 706.

(324.) Id.

(325.) Robinson, 857 N.E.2d 1195.

(326.) Id. at 1198 n.l. Though the Ohio statute went into effect after the accident happened, the court considered it relevant. The statute does not permit the evidence to be admitted "if the source of collateral benefits has a mandatory self-effectuating federal right of subrogation, a contractual right of subrogation, or a statutory right of subrogation or if the source pays the plaintiff a benefit that is in the form of a life insurance payment or a disability payment. However, evidence of the life insurance payment or disability payment may be introduced if the plaintiff's employer paid for the life insurance or disability policy, and the employer is a defendant in the tort action." Id.

(327.) Id.

(328.) Id. at 1197.

(329.) Buccina, 157 F. Supp. 3d at 707.

(330.) See DAN B. HOBBS & PAUL T. HAYDEN, TORTS AND COMPENSATION: PERSONAL ACCOUNTABILITY AND SOCIAL RESPONSIBILITY FOR INJURY 880-81 (5th ed. 2005); Levenson, supra note 31, at 926 nn.21-23 (2012); Giullermo Gabriel Zoragastus, Comment, Improperly Divorced from Its Roots: The Rationales of the Collateral Source Rule and Their Implications for Medicare and Medicaid, 55 KAN. L. REV. 463, 463-64 nn.5-7 (2007).

(331.) See, e.g., Tex. Civ. Prac. & Rem. Code [section] 41.0105 (Vernon 2003) ("In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.").

(332.) 879 So. 2d 692 (La. 2004).

(333.) No. 2014-C-2279, 2015 La. LEXIS 1962, 2014-2279 (La. 10/2/15).

(334.) Bozeman, 879 So. 2d at 694.

(335.) Id. at 695.

(336.) Id. at 694. Louisiana is a pure comparative fault state for torts like in maritime law. See La. Civ. Code Ann. art. 2324. Thus, any fault of a claimant proportionately reduces any damage award. But, unlike maritime law, a tortfeasor is liable only to the extent of any negligence or fault attributed to it making the obligation joint and divisible and not solidary or joint and several. La. Civ. Code art. 2224.

(337.) Bozeman, 879 So. 2d at 694-95.

(338.) Terrell v. Nanda, 759 So. 2d 1026, 1032 (La. Ct. App. 2 Cir. 5/10/00).

(339.) Id. at 1031.

(340.) The final award was adjusted to $355,206.97 which also included medical expenses denied or paid in full by Medicaid. Bozeman v. State, Dep't of Trans., Nos. 36,665-CA, 36,803-CA (La. App. 2 Cir. 6/6/03); 839 So. 2d 960, 968.

(341.) Bozeman v. State, Dep't of Trans., 845 So. 2d 1074 (Mem), 2003-1016 (La. 6/6/03).

(342.) Bozeman, 879 So. 2d at 701.

(343.) Id. at 703-04.

(344.) Id. at 705.

(345.) In civil law, patrimony is defined as "the sum total of a person's assets and liabilities." 2 A.N. Yiannopoulos, LA. CIV. L. TREATISE, Property [section] 8.1 (Thomson Reuters 5th ed. 2016).

(346.) Bozeman, 879 So. 2d at 705.

(347.) Id.

(348.) Id.

(349.) Hoffman, 2015 La. LEXIS 1962.

(350.) Id. at *8.

(351.) Hoffman, 2015 La. LEXIS 1962, at *13 (citing Howell v. Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Ca. 2011)).

(352.) Id. at *13.

(353.) Id. The court in dictum suggested that "a lawyer who negotiates a discount with a medical provider and then attempts to recover the undiscounted full 'cost' from the defendant might run afoul of Rule 4.1 of the Rules of Professional Conduct ...." Id. at *12.

(354.) Id. at *13.

(355.) See Moran Towing & Transp., Co. v. Lombas, 58 F.3d 24, 26 (2d. Cir. 1995) ("[T]he particular source of public funding for such social programs is [not] relevant to the analysis." (quoting Moran Towing & Trans. Co., Inc. v. Lombas, 843 F. Supp. 885, 888 (S.D.N.Y. 1994)).

(356.) DePerrodil v. Bozovic Marine, Inc., 842 F.2d 352 (5th Cir. 2016).

(357.) DePerrodil v. Bozovic Marine, Inc., No. 6:13-CV-849, 2015 U.S. Dist. LEXIS 165919, at *13 (W.D. La. Dec. 3, 2015).

(358.) Id. To view the legal obligation of the employer to pay workers' compensation under either state or federal law as a fringe benefit lacks any legal support or justification. It is not analogous in any way to other medical benefits provided by the employer or retirement plans whether employer furnished or contributed to by the employee.

(359.) See Davis, 18 F.3d 1237.

(360.) See Bourque, 623 F.2d 351.

(361.) See Phillips, 953 F.2d 923.

(362.) DePerrodil, 842 F.2d at 359.

(363.) Suit was brought under the admiralty jurisdiction of the court against Bozovic Marine, Inc. and Clayton Williams Energy, Inc. Clayton Williams Energy was dismissed prior to trial. See DePerrodil, 2015 U.S. Dist. LEXIS 165919, at *2 &n.l.

(364.) Id. at *2.

(365.) Id. at *12-13.

(366.) DePerrodil, 2015 U.S. Dist. LEXIS 165919, at *13.

(367.) Id.

(368.) Manderson, 666 F.3d at 382.

(369.) 33 U.S.C. [section][section] 901-50 (2012).

(370.) DePerrodil, 842 F.2d at 360-61.

(371.) Id. at 361.

(372.) [1792] 99 Eng. Rep. 538 (K.B.), 3 Doug. 61.

(373.) The Monticello, 58 U.S. (17 How.) 152, 156 (1854).

(374.) Sereboff, 547 U.S. at 368.
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