In John Joerg, Jr., et al v. State Farm Mutual Automobile Insurance Company, No. SC13-1768 (October 15, 2015), the Florida Supreme Court held that evidence regarding a plaintiff’s receipt of future social legislation benefits, such as Medicare, are excluded from evidence by the collateral source rule. The decision expressly receded from the court’s prior decision in Florida Physician’s Insurance Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984), which held that evidence of free or low cost services from governmental or charitable agencies available to anyone with specific disabilities is admissible on the issue of future damages.
Under well-established Florida common law, the admission of evidence of social legislation benefits such as Medicare, Medicaid, or Social Security is considered highly prejudicial. However the decision in Stanley constituted a notable, narrow exception to the common law evidentiary rule precluding the admission of social benefits. In Stanley the plaintiffs alleged that the defendants’ medical negligence resulted in intellectual disability and cerebral palsy for their son. After the plaintiffs presented evidence of future damages, the court permitted the defendants to introduce evidence of “free or low-cost charitable and governmental programs available in the community to meet” the needs of plaintiffs son. The court reasoned that keeping evidence of benefits available to all citizens should be admissible for the jury in determining reasonable future care cost, to avoid an unnecessary and undeserved windfall to the plaintiff.
After the decision in Stanley, in an effort to reduce insurance costs and prevent plaintiffs from receiving windfall recoveries, that Florida legislature promulgated Florida statute § 768.76, which requires trial courts to reduce damage awards by the amount of benefits paid or otherwise available to claimants, from all collateral sources. §768.76 (1). There are no reductions, however, “for collateral sources for which a subrogation or reimbursement right exists.” Id. The statute also expressly states that benefits received under Medicare or similar federal programs which provide for a lien on or a right to reimbursement from plaintiff’s recovery are not considered collateral sources. § 768.76(2)(b).
In Joerg, the Court was specifically faced with the question of whether the exception to the collateral source rule created in Stanley applies to future benefits provided by social legislation such as Medicare. The plaintiff in Joerg was a developmentally disabled adult who due to his disabilities, was entitled to reimbursement from Medicare for his medical bills. After being struck by a car, the plaintiff filed suit against State Farm Automobile Insurance Company (“State Farm”). The trial court precluded State Farm from introducing evidence of plaintiff’s future Medicare or Medicaid benefits, and judgment was entered on behalf of the plaintiff. On appeal, the Second District noted that the promulgation of the Florida statute left the viability of Stanley in question, but ultimately held that the plaintiff’s benefits were free and unearned, and therefore admissible under Stanley.
On appeal, the Supreme Court concluded that “future Medicare benefits are both uncertain and a liability under Stanley, due the right of reimbursement that Medicare retains.” In reaching that conclusion, the Court discussed the Medicare Secondary Payer Act (“MSPA”) and the various enforcement tools employed by the Centers for Medicare and Medicaid Services (“CMS”) to enforce the right of reimbursement of Medicare benefits under the MSPA, such as the right to file an independent cause of action against any entities required to make a payment under a primary plan. The Court noted that “regardless of whether an individual has directly paid for his or her Medicare benefits, all Medicare beneficiaries who receive an award for future medical damages will be liable to reimburse Medicare, if Medicare makes a conditional payment on their behalf,” therefore the benefits provided are not free. Moreover, the Court found that ‘the uncertainty of the future for any social legislation benefits is far too great to permit damage reductions.” Lastly, the Court noted that its decision was supported by additional policy concerns. Specifically, the Court noted that its decision is consistent with the recognition of the highly prejudicial effect of evidence of collateral source benefits, and the basic principle that tortfeasors, and those who insure against the actions of tortfeasors, should not receive a windfall due to benefits available to injured parties, at the expense of taxpayers who fund social legislation benefits.
Tortfeasors, insurers, and defense attorneys, who litigate on their behalf, should take note of this holding and the impact it will have on their ability to defend against claims of future damages.