Collateral Source Rule in Louisiana Automatic Reduction by Health Care Providers Not Subject to Rule
Guillory v. StarrIndem. & Liab. Co., 2020U.S. Dist. LEXIS 33985 *, 2020 WL 967572 (W.D. La., Feb. 26, 2020, Doughty, J.)
The collateral source rule has undergone quitea few changes over the years. In its simplest form, if the tortfeasor did notcontribute to the benefit, liability could not be reduced by the amount of the sourceof income provided to the claimant. The rule stems from English insurance law,which was initially misunderstood by U.S. courts. Though the claimant may havea windfall, it was better to allow that than to let the tortfeasor benefit. Therule certainly makes sense in the insurance context where the claimant has paidfor insurance and is paid by the insurer. The insurer’s obligation iscontractual while the tortfeasor’s obligation is delictual. But, generally inmodern insurance contracts, once the insured is paid, the insurer iscontractually subrogated to the rights of the insured. Health insurance, though,presented a different issue. Many companies provide health insurance toemployees and reduce charges via contract with health care providers. Medicareand Medicaid also create additional quandaries and the conundrum: Can theinjured claimant recover the full amount of the medical charges or only thatwhich was paid by the insurer or state? What can be recovered if the healthcare provider voluntarily reduces the charge for medical services andvoluntarily writes off an amount for which the claimant will not be liable?
Some of the changes in the robotic applicationof the rule began in the maritime field[1] and soonspilled over into state law.[2] The LouisianaSupreme Court began to erode the rule in Bozeman v. State[3],which the Supreme Court held that a recipient of state Medicaid could notrecover the full amount of medical expenses billed when the recipient of theaid pays nothing toward receiving the benefits. However, the Louisiana FifthCircuit Court of Appeal modified the rule when the claimant personallynegotiated a reduction in the medical charges and was allowed to recover thefull amount charged.
In the case at bar, Judge Doughty determinedthat as the healthcare providers voluntarily reduced the charges obligating theclaimant to pay only the outstanding charges and nothing more, he has notsuffered a diminution in his patrimony and thus cannot recover the full amountcharged for medical expenses. “These discounts or write-offs, therefore, do notfall within the ambit of the collateral source rule and will be excluded fromevidence.”[4]
[1] Davis v. Odeco, Inc., 18 F.3d 1237, 1243 (5thCir. 1994); Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373, 381(5th Cir. 2012); DePerrodil v. Bozovic Marine, Inc., 842 F.3d 352 (5thCir. 2016).
[2] See also: Bobo v. TVA, 855 F.3d 1294, 1311 (11th Cir.2017) applying Alabama state law: “[A]mounts that were written off byproviders under contractual agreements with insurers are not amounts that aplaintiff has paid or is obligated to pay within the meaning of the AlabamaSupreme Court's decisions.” The written off amounts must be excluded fromthe damage award.
[3] 2003-1016 (La. 7/2/04), 879 So. 2d 692 (La.2004).
[4] 2020 U.S. Dist. LEXIS 33985 at *11.
