Clanton v USA et al

Filing 73

ORDER GRANTING 54 Motion in Limine Regarding Collateral Source Payments by Medicare filed by Plaintiff Kevin Clanton. Signed by Judge Nancy J. Rosenstengel on 8/3/16. (klh2)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
KEVIN CLANTON,
Plaintiff,
vs.
UNITED STATES OF AMERICA,
Defendant.

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Case No. 15-CV-124-NJR-PMF

MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
Plaintiff Kevin Clanton filed this lawsuit against the United States under the
Federal Tort Claims Act, alleging that his medical providers at the Southern Illinois
Healthcare Foundation were negligent in diagnosing and treating his high blood
pressure. He further alleges that his uncontrolled and unmanaged hypertension led to
chronic kidney disease, and ultimately kidney failure, requiring hemodialysis and a
kidney transplant.
This matter is currently before the Court on the Motion in Limine filed by Plaintiff
asking the Court to prevent the United States from offering evidence, or even
referencing, that Plaintiff’s past and future medical expenses were (or will be) covered
by Medicare (Doc. 54). Plaintiff claims that the Medicare payments for his medical
expenses are collateral source payments and, therefore, under the collateral source rule,
the United States is prohibited from introducing any evidence that part of Plaintiff’s
losses were covered by Medicare, and the Medicare payments cannot be used to limit his
damages in any manner (Doc. 54).
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APPLICABLE LAW
In a case brought under the Federal Tort Claims Act, the law of the state in which
the incident in question occurred governs the substantive issues, including damages.
28 U.S.C. § 1346(b)(1) (the United States is liable for the torts of its employees “if a
private person, would be liable to the claimant in accordance with the law of the place
where the act or omission occurred.”); Gil v. Reed, 535 F.3d 551, 558 n.2 (7th Cir. 2008)
(“In FTCA cases, state law applies to substantive questions and federal rules govern
procedural matters.”); Arpin v. United States, 521 F.3d 769, 776 (7th Cir. 2008) (“[I]n a suit
under the Federal Tort Claims Act . . . the damages rules of the state whose law governs
the substantive issues in the case bind the federal court; damages law is substantive
law.”); Davis v. United States, 375 F.3d 590, 592 (7th Cir. 2004) (“Under the Federal Tort
Claims Act . . . the nature and measure of damages are assessed according to state law.”).
Here, the alleged negligence occurred in Illinois, and therefore Illinois’ damage rules
apply.
Illinois recognizes the collateral source rule, which provides that the amount of
damages to which a plaintiff is entitled from a tortfeasor will not be decreased by
benefits the plaintiff received “from a source wholly independent of, and collateral to,
the tortfeasor.” Wills v. Foster, 892 N.E.2d 1018, 1022 (Ill. 2008) (citing Arthur v. Catour,
803 N.E.2d 647, 649 (Ill. App. Ct. 2004)). Put differently, “[p]ayments made to or benefits
conferred on the [plaintiff] from other sources are not credited against the tortfeasor’s
liability, although they cover all or a part of the harm for which the tortfeasor is
liable.” Wills, 892 N.E.2d at 1022 (citing RESTATEMENT (SECOND) OF TORTS § 920A(2), at p.

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513 (1979)). As a substantive rule of damages, the collateral source rule “bars [the]
defendant from reducing the plaintiff’s compensatory award by the amount the plaintiff
received from the collateral source.” Wills, 892 N.E.2d at 1023 (citation and internal
quotation marks omitted). As a rule of evidence, the collateral source rule “prevents
[the] defendant from introducing any evidence that all or part of a plaintiff’s losses have
been covered by insurance.” Wills, 892 N.E.2d at 1023 (citation omitted).
DISCUSSION
Plaintiff was diagnosed with end stage renal disease (“ESRD”) and received
hemodialysis treatments as well as a kidney transplant in late 2015 (Doc. 65). In the
future, Plaintiff will require additional hemodialysis and may also require additional
transplant surgeries (Doc. 65). The cost of Plaintiff’s past treatments for ESRD was
covered by Medicare, and it is expected that most of Plaintiff’s future treatments will
also be covered by Medicare (Doc. 65). 1 These Medicare benefits were (or will be) paid
for by the federal government. And any recovery that Plaintiff may obtain in this case,
including the reasonable value of past and future medical expenses, also will be paid for
by the federal government. Thus, at first blush, it appears that the federal government
will have to pay in tort for medical expenses that it already paid through Medicare, and
Plaintiff will recover twice. However, that is not actually the case.
“[T]here is no double recovery as long as plaintiff has contributed to the original
source of the payments received” and is thus “entitled to the payments irrespective of
the damages award.” Laird v. Illinois Cent. Gulf R. Co., 566 N.E.2d 944, 955 (Ill. App. Ct.
The Court was unable to definitively determine from the parties’ submissions whether Plaintiff’s past
medical expenses were covered by Medicare Part A or Part B (see Docs. 54, 65, 66, 67, 69). It is clear to the
Court, however, that payments under both Part A and Part B are at issue here.

1

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1991); Molzof v. United States, 6 F.3d 461, 466 (7th Cir. 1993) (internal citation omitted).
Based on this principle, courts have long held that state collateral source rules apply
against the Government in FTCA cases when the payments at issue were Medicare
payments and the plaintiff contributed to the funding of their Medicare-covered
services. See Molzof, 6 F.3d at 466. See also Manko v. United States, 830 F.2d 831, 837 (8th
Cir. 1987) (holding that Medicare program was a collateral source under Missouri law,
and therefore damages should not be reduced by the amount of Medicare Part A or Part
B benefits, because plaintiff paid Social Security taxes while he was employed and
Medicare premiums were withheld from his Social Security retirement benefits); Berg v.
United States, 806 F.2d 978, 985 (10th Cir. 1986) (holding that because plaintiff paid Social
Security taxes while he was employed, the Medicare benefits he received were properly
characterized as a collateral source payment under Colorado law); Titchnell v. United
States, 681 F.2d 165, 176 (3d Cir. 1982) (holding that Pennsylvania’s collateral source rule
applied to Medicare payments because plaintiff contributed to Medicare Part A and Part
B, and therefore the trial court properly refused to deduct those payments from the
FTCA damage award); but see Overton v. United States, 619 F.2d 1299, 1308 (8th Cir. 1980)
(Missouri’s collateral source rule did not apply to Medicare payments because plaintiff
made no contribution to Medicare Part A, and therefore, the Medicare benefits plaintiff
received should have been deducted from the FTCA damage award); Wills v. Foster, 892
N.E.2d 1018, (Ill. 2008) (assuming that Medicare and Medicaid payments are collateral
source payments and holding that a plaintiff is entitled to recover entire amount of his
billed medical expenses even if Medicare/Medicaid negotiated and paid a lesser

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amount).
Thus the question for the Court is whether Plaintiff contributed to the Medicare
benefits that he received. In order to answer this question, an understanding of the
Medicare program and how it is financed is required. 2 Medicare is the federal health
insurance program for people that are 65 years of age or older and people under 65 with
certain disabilities or ESRD. There are four different parts of Medicare, but only Part A
and Part B are relevant here. Medicare Part A is referred to as hospital insurance, and it
covers inpatient hospital services, post-hospital extended care services, and hospice care.
Part A services are paid from the Hospital Insurance trust fund, which is maintained by
the United States Treasury and funded primarily through a compulsory payroll tax paid
by employers, employees, and the self-employed. Medicare Part B provides
supplemental medical insurance, and it covers services such as physician visits, durable
medical equipment, preventative services, and diagnostic tests. Part B services are paid
from the Supplementary Medical Insurance trust fund, which is also maintained by the
United States Treasury and funded primarily through general tax revenues and monthly
premiums paid by individuals enrolled in Part B.
The evidence submitted to the Court shows that Plaintiff paid compulsory
Medicare taxes during the time he was employed (see Doc. 54-1). Thus it is clear that he
contributed to Medicare Part A. The evidence also shows that after Plaintiff stopped
working and started receiving Social Security Disability Insurance benefits, Medicare
2 All information in this paragraph is taken from the website MEDICARE.GOV. What’s Medicare,
https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-medicare/whats-medicare/whatis-medicare.html
(last
visited
Aug.
3,
2016);
How
is
Medicare
Funded,
https://www.medicare.gov/about-us/how-medicare-is-funded/medicare-funding.html (last visited
August 2, 2016).

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premiums were deducted from his monthly social security check (Doc. 66-2; Doc. 67-1).
Thus he contributed to Medicare Part B. Because Plaintiff contributed to Medicare and
was enrolled in the program, the Government became obligated to pay for his medical
expenses covered by Medicare regardless of Government’s liability under the FTCA. If
Plaintiff had never filed his FTCA claim, or if he were to dismiss or lose this case, the
Government would still have an obligation to pay Plaintiff’s Medicare benefits.
Accordingly, the Court concludes that Plaintiff’s Medicare benefits are collateral source
payments, and the United States is prohibited from introducing any evidence that any of
Plaintiff’s past or future medical expenses were (or will be) covered by Medicare. The
Government makes a number of arguments in an attempt to avoid this conclusion (see
Docs. 65, 67), but in the Court’s view, those arguments are meritless and warrant no
discussion.
CONCLUSION
Plaintiff Kevin Clanton’s Motion in Limine Regarding Collateral Source Payments
by Medicare (Doc. 54) is GRANTED.
IT IS SO ORDERED.
DATED: August 3, 2016
NANCY J. ROSENSTENGEL
United States District Judge

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