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Goble, ThyssenKrupp, and the collateral source rule: resolving the ongoing conflict.

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At common law, the collateral source rule prohibited a verdict from being set off by benefits received or payments made by collateral sources of indemnity. (1) Further, the existence of such collateral sources was considered inadmissible at trial because they tended to mislead the jury. (2) The Tort Reform and Insurance Act of 1986 drastically redefined Florida's common law collateral source rule via F.S. [section] 768.76 (1986). The act allowed defending parties to reduce an "award by the total amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources; however, there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists." (3) Although verdicts may be setoff under the act, the common law collateral source rule still persists and bars the admission of the existence of collateral sources of indemnity at trial. (4)

In Gormley v. GTE Products Corp., 587 So. 2d 455 (Fla. 1991), the court denied the admission of an insurance document because the insurance document alluded to the existence of a collateral source of indemnity. (5) The court "reason[ed] that the introduction of collateral source evidence misleads the jury on the issue of liability and, thus, subverts the jury process." (6) Further, "because a jury's fair assessment of liability is fundamental to justice, its verdict on liability must be free from doubt, based on conviction, and not a function of compromise." (7) The court disagreed with respondent's claim that [section] 768.76 generally allows the introduction of collateral sources of indemnity, "subject to a probative-prejudice balancing test." (8) The court stated that [section] 768.76 does not "require[] the admission of any collateral source into evidence... rather [it] require[s] that some collateral sources shall reduce damages." (9)

Since Gormley was decided in 1991, after the Tort Reform and Insurance Act of 1986, the court's intent to maintain at least this part of the common law collateral source rule is apparent. As such, the act did not completely abrogate the common law rule. (10) Summarily, F.S. [section] 768.76 (2010), simply requires the court to reduce an award by the amount which has been paid for the benefit of the claimant from a collateral source because evidence of the collateral source is barred at trial. (11)

Although Florida's collateral source rule operates routinely and rather innocuously in Florida's courtrooms, cases still arise which afford appellate courts the opportunity to review and clarify [section] 786.76. This article will focus on two cases in particular: Goble v. Frohman, 901 So. 2d 830 (Fla. 2005), and ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547 (Fla. 4th DCA 2004). In Goble, the Florida Supreme Court declared that "contractual discounts" negotiated by the injured party's HMO fall within the statutory definition of a collateral source. (12) Because "contractual discounts" are considered collateral sources, they are barred from being placed into evidence at trial and are subject to a setoff post-verdict. (13) In ThyssenKrupp Elevator Corp., the Fourth District Court of Appeal addressed the issue of how to properly handle benefits provided by Medicare. (14) The court held that when Medicare is satisfying debts incurred as a result of the defendant's negligence, the jury is permitted to know of the availability of benefits provided under Medicare on behalf of the plaintiff. (15)

Many courts presently face difficulties in applying ThyssenKrupp and Goble properly. This may be a result of the Florida Supreme Court's decision not to review ThyssenKrupp or the apparent conflict created between the two cases. Additionally, various districts have voiced discrepant opinions regarding Medicare, Medicaid, and other free or low-cost charitable governmental benefits as they apply to the collateral source rule. (16) As such, it is certainly reasonable that the rule is still being applied incorrectly, even with abundant case law on point.

In Goble, the plaintiff was injured in a car accident as a result of the defendant's negligence and incurred $574,554.31 in medical services. (17) The plaintiff paid $15,000 in co-payments for coverage through his HMO. (18) Subsequently, the plaintiff's HMO agreed to pay $145,970.76 to the medical providers in complete satisfaction of the plaintiff's debt incurred as a result of the medical treatment. (19) The difference between the amount charged by the medical providers and the amount the plaintiff's HMO paid in complete satisfaction is known as the "contractual discount." (20) In Goble, the "contractual discount" totaled $413,583.55. (21)

An agreement between the HMO and the medical providers prohibited the medical providers from seeking reimbursement or subrogation for the "contractual discount." (22) At trial, the jury awarded the plaintiff the full amount of his past medical bills. (23) The defendant moved for a setoff under F.S. [section] 786.76 (1999) to make the award parallel the amount the HMO agreed to pay in complete satisfaction of the plaintiff's medical expenses. (24) The motion was granted and promptly appealed by the plaintiff. (25)

In deciding the case, the court referred directly to the collateral source rule promulgated in F.S. [section] 786.76.26 The statute reads in pertinent part: 786.76--Collateral Sources of Indemnity

In any action to which this part applies in which liability is admitted or is determined by the trier of fact and is in which damages are awarded to compensate the claimant for losses sustained, the court shall reduce the amount of such award by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources; however, there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists....

"Collateral sources" means any payments made to the claimant, or made on the claimant's behalf, by or pursuant to... any contract or agreement of any group, organization, partnership, or corporation to provide, pay for, or reimburse the costs of hospital, medical, dental, or other health care services. (27)

The issue, then, became whether the contractual discount constitutes a "payment made" on the plaintiff's behalf, and thus a collateral source subject to setoff. (28) To determine whether the contractual discount is a "payment," the court referenced Webster's Dictionary. (29) The dictionary noted that a payment may be the act of discharging a debt. (30) In light of this, the court reasoned that the contractual discount was a "payment made" on behalf of the claimant because it discharged the claimant from any potential liability for his medical bills. (31) According to the court, the discharged debt is just as much a benefit for the plaintiff as it is for the HMO and the medical providers. (32) Since the contractual discount provided by the HMO was a collateral source, it was proper to set off the award post-verdict. (33)

During appeal of Goble, but before the case was heard before the Florida Supreme Court, another important case was being litigated in the Fourth District Court of Appeal. ThyssenKrupp presented the question of how to handle benefits received by the plaintiff on behalf of Medicare. (34) In ThyssenKrupp, the plaintiff was injured when an elevator door manufactured by the defendant closed on her leg. (35) The plaintiff suffered a broken hip, and the jury awarded her $269,000 in past medical expenses. (36)

During trial, the defendant attempted to move into evidence the amount that Medicare had agreed to pay the plaintiff's medical providers in complete satisfaction of the plaintiff's past medical expenses. (37) The trial judge denied the evidence and allowed the plaintiff to present to the jury the entire amount originally billed to the plaintiff. (38) On appeal, the defendant argued that because the medical providers could legally never seek subrogation or reimbursement for the contractual discount created by Medicare, the plaintiff would never be liable for any amount beyond what Medicare paid in satisfaction of the medical bills. (39) The Fourth District agreed and held that it was reversible error to deny the defendant's request to limit the medical expenses to the amount Medicare agreed to pay in complete satisfaction of the plaintiff's medical bills. (40)

Further, the ThyssenKrupp court made certain to clarify on rehearing that in cases involving Medicare, the existence of such government benefits are admissible at trial. (41) In the same vein, it would be improper to allow a setoff post-verdict because it is contrary to [section] 786.76.42 The case was reversed and remanded for a new trial. (43) The issue was certified to the Florida Supreme Court, but was not heard. (44)

Although the holding in ThyssenKrupp never explicitly stated that Medicare is not a collateral source, its reliance on Florida Physician Insurance Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984), made it clear that this was the court's intent, because the court in Stanley stated that the benefits of the collateral source rule should be reserved for those who in some way earn the benefits received from a third party. (45) Since Medicare is not earned and is freely available, the underlying policy of the collateral source rule, as stated in Stanley, should not apply. Because ThyssenKrupp relies on this reasoning, the logical nexus is that the ThyssenKrupp court intended to adopt that reasoning in its holding.

At first blush, Goble and ThyssenKrupp appear to revolve around similar concepts. In each case, an independent third party made a payment on behalf of the claimant, for which the medical provider had no right of subrogation for the contractual discount. (46) Further, both the HMO in Goble and Medicare in ThyssenKrupp had subrogation rights if the plaintiffs were awarded verdicts. (47) Finally, upon complete satisfaction of the medical bills, vis-a-vis the HMO or Medicare, the plaintiffs were no longer liable for contractual discounts. (48) Despite the similarities, the cases are categorically different.

As alluded to earlier, the collateral source rule is both a rule of evidence and a rule of damages. (49) In ThyssenKrupp, the rule acted as a rule of evidence because it controlled the admissibility of evidence pertaining to the alleged existence of a collateral source. (50) The ThyssenKrupp court made it clear on rehearing that its ruling is one of evidence and does not pertain to setoffs or other rules of damages. (51) In contrast, Goble is a decision based on the rule of damages. Goble required a setoff because evidence of the plaintiff's HMO was inadmissible at trial. (52) To perpetuate the policy underpinning the statute and to avoid a windfall for the plaintiff, the court held that trial courts must reduce the award to the amount for which the plaintiff will actually be held liable. (53)

As ThyssenKrupp resolved an evidentiary error, its scope is quite limited in application. The holding in ThyssenKrupp applies only to the narrow circumstances in which Medicare is providing payments on behalf of the claimant. However, it can be reasonably inferred that the holding would also apply to "any other federal program providing for a Federal Government lien on or right of reimbursement from the plaintiff's recovery, the Workers' Compensation Law, the Medicaid program of Title XIX of the Social Security Act or from any medical services program administered by the Department of Health," because these services are also explicitly mentioned in [section] 768.76(2)(b), which excludes Medicare as a collateral source. (54) The statute states that "benefits received under Medicare... shall not be considered a collateral source." (55) This is relevant because benefits received under Medicare cannot be offset post-verdict. (56)

To handle this discrepancy, the ThyssenKrupp court determined--independent of [section] 786.76(b)--that because benefits received under Medicare are not a collateral source, the existence of benefits provided under Medicare are admissible at trial. This proposition is supported in Cooperative Leasing, Inc. v. Johnson, 872 So. 2d 956 (Fla. 2d DCA 2004). In Cooperative Leasing, the court held that when a plaintiff is covered by Medicare, it is reversible error to present to the jury medical bills in excess of what Medicare agreed to pay. (57) The court concluded that the "appropriate measure of compensatory damages for past medical expenses when a plaintiff has received Medicare benefits does not include the difference between the amount that Medicare providers agreed to accept and the total amount of the plaintiff's medical bills." (58) Because ThyssenKrupp and [section] 768.76 disallow a setoff post-verdict when Medicare is involved, the logical conclusion would be that the existence of benefits received under Medicare are admissible at trial. Further, the appropriate procedure would be to simply enter the reduced medical bills during trial.

ThyssenKrupp, Cooperative Leasing, Stanley, and [section] 768.76(b) stand for the proposition that Medicare benefits are not a collateral source and benefits received under Medicare must be disclosed at trial to allow the jury to determine proper past and future medical expenses. Despite the abundant case law on point and that [section] 768.76(b) clearly excludes Medicare as a collateral source, courts often do not come to the same conclusion, even within the same district. (59) Velilla v. VIP Care Pavilion Ltd., 861 So. 2d 69 (Fla. 4th DCA 2003), a case often discussed in conflict with ThyssenKrupp, originated in the same district as ThyssenKrupp and was heard by the same district court of appeal, just under three months before ThyssenKrupp. (60) VIP Care Pavilion is often referenced colloquially to define Medicare as a collateral source. The case refers to Stanley and Parker v. Hoppock, 695 So. 2d 424 (Fla. 4th DCA 1997), and declared the discussion in those cases regarding free and low-cost charitable governmental benefits as nonbinding dicta. (61) The categorization of these discussions as dicta is suspect at best. Both Stanley and Parker addressed the issue of whether Medicare and other various forms of free or low-cost charitable governmental benefits are collateral sources, and thus, inadmissible at trial. (62) The language in these two cases, which VIP Care Pavilion denounced as dicta, goes to the heart of the legal issue raised in Stanley and Parker because they aptly explain why Medicare and other various forms of free or low-cost charitable governmental benefits are not collateral sources. Furthermore, ThyssenKrupp, in adopting the language from Stanley and Parker, was decided after VIP Care Pavilion. (63) Since ThyssenKrupp was decided after VIP Care Pavilion, it evidences the intention of the court to move away from the language in VIP Care Pavilion.

This whole discussion is extraneous because [section] 768.76(2)(b) explicitly states that benefits received under Medicare are not a collateral source of indemnity. (64) Regardless of the court's assertion in VIP Care Pavilion--that "the term 'collateral sources' has never been limited to those benefits that a plaintiff has earned or paid for"--the legislature made its desire to change this clear when it specifically drafted [section] 768.76. While the classification of other sources of free and low-cost charitable governmental medical services as collateral sources may still be debatable, it can be firmly stated that if the services are defined by [section] 768.76(2)(b), then they are not collateral sources because the statute explicitly states that they are not collateral sources of indemnity.

Because Goble is a decision based on a rule of damages, it operates under different circumstances than ThyssenKrupp. Section 786.76 specifically states that "collateral sources means any payment made to the claimant... by or pursuant to... any contract or agreement of any group [or] organization ... to provide, pay for, or reimburse the costs of... health care services." (65) The legislature specifically defined an HMO as a collateral source. (66) As such, payments made under an HMO are inadmissible at trial to prove the reasonable value of medical services. (67) To correct this problem and prevent a possible windfall to the plaintiff, the Goble court directed the judge to "reduce the award by all amounts which have been paid for the benefit of the claimant" by the HMO. (68)

Section 768.76, and its subsequent interpretation in Goble, is a drastic departure from the common law collateral source rule. The statute now requires a setoff post-verdict to effectuate the legislative policy behind the statute. (69) The Tort Reform and Insurance Act of 1986 was adopted in light of a perceived crisis in liability insurance. (70) The statute is a remedial measure "intended to ensure the widest availability of liability insurance at reasonable rates." (71) To accomplish this, judges are now required to reduce awards by any amount a collateral source has paid, or agreed to pay on behalf of the plaintiff. (72) Goble mirrors the legislature's intent because the Florida Supreme Court required a setoff post-verdict for the amount the plaintiff's HMO agreed to pay in complete satisfaction of the plaintiff's medical expenses. (73) However, this departure from the common law collateral source rule is not unmanageable. It can almost be said that the departure carved out an exception to the common law collateral source rule. Regardless of how [section] 768.76 is perceived, Goble and Gormley allow the statute and the common law collateral source rule to coexist without conflict.

Because Medicare is not a collateral source, it operates independently of [section] 768.76 and the common law collateral source rule. In contrast, HMOs are collateral sources of indemnity and subject to [section] 768.76 and the common law collateral source rule. If a case involves benefits paid to the claimant through Medicare, then it is necessary to reduce the medical bills to the amount Medicare agreed to pay before such evidence is presented to the jury. On the other hand, if a case involves benefits paid to the claimant through an HMO, then the existence of the HMO can never be disclosed to the jury. Furthermore, the total amount of the plaintiff's medical expenses must be put into evidence, and any award must be reduced post-verdict to the amount the HMO has paid, or agreed to pay, on behalf of the claimant.

The issue of how collateral source payments are to be handled before a jury should be resolved before trial by stipulation or motion in limine. If payments were made by Medicare or other governmental plan, only the amounts paid should be allowed into evidence (ThyssenKrupp). If payments were made by an HMO or other health insurer, the full amount of the bills should be placed into evidence and, assuming the insurer has a right of subrogation and the providers have no right to seek payments for the balances, the amount of the contractual discounts should be set off post verdict (Goble).

It is important to note that the holding in ThyssenKrupp applies only to benefits received under Medicare. In contrast, the holding in Goble may be applied to any payment made for the benefit of the claimant from any collateral source. Although the issue presented in ThyssenKrupp has never been heard by the Florida Supreme Court, the statute and case law on point leave little speculation as to how the court would rule.

(1) Goble v. Frohman, 848 So. 2d 406, 408 (Fla. 2d D.C.A. 2003).

(2) Gormley v. GTE Prods. Corp., 587 So. 2d 455, 458 (Fla. 1991).

(3) Fla. Stat. [section] 768.76 (2010).

(4) Gormley, 587 So. 2d at 458; Parker v. Hoppock, 695 So. 2d 424, 427-8 (Fla. 4th D.C.A. 1997).

(5) Gormley, 587 So. 2d at 458-9.

(6) Id. at 458.

(7) Id.

(8) Id. at 459. The respondent's argument was based on the legislature's enumeration and definition of certain and specific collateral sources of indemnity. As mentioned above, the court disagreed and concluded that the "legislature intended neither the admission of privately-obtained insurance benefits in the liability trial, nor the reduction of damages based on these insurance benefits." Id.

(9) Id.

(10) Goble v. Frohman, 901 So. 2d 830, 833 (Fla. 2005); Gormley, 587 So. 2d at 459.

(11) Id.

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

(13) Id.

(14) ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547, 548 (Fla. 4th D.C.A. 2004).

(15) Id. at 550.

(16) Compare ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547 (Fla. 4th D.C.A. 2004) (holding that Medicare is not a collateral source of indemnity), with Velilla v. VIP Care Pavilion Ltd., 861 So. 2d 69 (Fla. 4th D.C.A. 2003) (holding that Medicare is a collateral source of indemnity). Additionally, fellow attorneys have noted discrepant outcomes when handling cases involving Medicare.

(17) Goble, 848 So. 2d at 408.

(18) Id.

(19) Goble v. Frohman, 901 So. 2d 830, 831 (Fla. 2005).

(20) Goble, 848 So. 2d at 408.

(21) Id.

(22) Id.

(23) Goble, 901 So. 2d at 832.

(24) Id.

(25) Id.

(26) Id.

(27) Fla. Stat. [section][section] 768.76(1) and (2)(a) (2010).

(28) Goble v. Frohman, 848 So. 2d 406, 409 (Fla. 2d D.C.A. 2003).

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

(30) Id.

(31) Id.

(32) Id.

(33) Id.

(34) ThyssenKrupp Elevator Corp. v. Lasky, 868 So. 2d 547, 548 (Fla. 4th D.C.A. 2004).

(35) Id.

(36) Id.

(37) See ThyssenKrupp, 868 So. 2d at 550 (on motion for rehearing).

(38) Id.

(39) Id. at 449.

(40) Id. at 550.

(41) Id. (on motion for rehearing).

(42) See id. at 551 (on motion for rehearing).

(43) ThyssenKrupp, 868 So. 2d at 550.

(44) ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547 (Fla. 4th D.C.A. 2004), cert. dismissed, 873 So. 2d 1225 (table) (Fla. 2004).

(45) Florida Physician's Ins. Reciprocal v. Stanley, 452 So. 2d 514, 515 (Fla. 1984).

(46) See Goble v. Frohman, 901 So. 2d 830, 832 (Fla. 2005); ThyssenKrupp, 868 So. 2d at 549.

(47) Id.

(48) Id.

(49) See Gormley v. GTE Prods. Corp., 587 So. 2d 455, 457 (Fla. 1991) (citing Jerome H. Nates et al., Damages in Tort Actions [section] 17 (1988)) (holding that "[t]he collateral source rule functions as both a rule of damages and a rule of evidence").

(50) ThyssenKrupp, 868 So. 2d at 551.

(51) Id. at 550 (on motion for rehearing).

(52) Goble v. Frohman, 901 So. 2d 830, 833 (Fla. 2005).

(53) Id.

(54) Fla. Stat. [section] 768.76(2)(b) (2010).

(55) Id.

(56) See ThyssenKrupp, 868 So. 2d at 550-1 (on motion for rehearing).

(57) Cooperative Leasing, Inc. v. Johnson, 872 So. 2d 956, 960 (Fla. 2d D.C.A. 2004).

(58) Id.

(59) Compare ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547 (Fla. 4th D.C.A. 2004) (holding that Medicare is not a collateral source of indemnity), with Velilla v. VIP Care Pavilion Ltd., 861 So. 2d 69 (Fla 4th D.C.A. 2003) (holding that Medicare is a collateral source of indemnity). Additionally, fellow attorneys have noted discrepant outcomes when handling cases involving Medicare.

(60) Velilla v. VIP Care Pavilion Ltd., 861 So. 2d 69, 69 (Fla. 4th D.C.A. 2003).

(61) Id. at 71.

(62) See Florida Physician's Ins. Reciprocal v. Stanley, 452 So. 2d 514, 515 (Fla. 1984); Parker v. Hoppock, 695 So. 2d 424, 426-7 (Fla. 4th D.C.A. 1997).

(63) See ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547, 547 (Fla. 4th D.C.A. 2004); VIP Care Pavilion, 861 So. 2d at 69.

(64) Fla. Stat. [section] 768.76(2)(b) (2010).

(65) Fla. Stat. [section][section] 786.76(2)(a) and (2)(a)(3) (2010).

(66) Fla. Stat. [section] 768.76(2)(a)(3) (2010).

(67) See generally Goble v. Frohman, 901 So. 2d 830 (Fla. 2005); Gormley v. GTE Prods. Corp., 587 So. 2d 344 (Fla. 1991).

(68) Fla. Stat. [section] 786.76(1) (2009); Goble, 901 So. 2d at 831-3.

(69) Goble, 901 So. 2d at 832-3.

(70) Goble v. Frohman, 848 So. 2d 406, 408 (Fla. 2d D.C.A. 2003).

(71) Id.

(72) Fla. Stat. [section] 768.76(1) (2010).

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

Robert E. Gordon is a founding member of Gordon & Doner, P.A., in Palm Beach Gardens. He is a board certified civil trial lawyer and focuses his practice in the areas of personal injury and wrongful death.

Justin Linn is a second-year law student at Nova Southeastern University, where he is ranked first in his class. He is a member of the Nova Law Review and the Nova Trial Association.
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Date:Dec 1, 2010
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