Williams et al v. IQS Insurance Risk Retention Group, Inc. et al
Filing
128
ORDER AND REASONS: Granting in Part and Denying in Part 86 Motion in Limine as set out in document. Signed by Judge Jay C. Zainey on 2/25/2019. (Reference: All Cases)(ajn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JUDY WILLIAMS, ET AL.
CIVIL ACTION
VERSUS
NO: 18-2472 C/W 186113
IQS INSURANCE RISK RETENTION,
ET AL.
SECTION: "A" (5)
ORDER AND REASONS
REF: ALL ACTIONS
The following motion is before the Court: Motion in Limine (Rec. Doc. 86) filed by
Plaintiffs, Judy Williams, Mary Wade, and Lucinda Thomas. Defendants Southern
Refrigerated Transport, Inc., IQS Insurance Risk Retention Group, Inc., Eric Darnell Martin,
and Zurich American Insurance Co., oppose the motion. The motion, noticed for submission
on February 20, 2019, is before the Court on the briefs without oral argument.
This suit arises out of personal injuries that Plaintiffs allegedly sustained in a car
accident on June 6, 2017. Defendant Eric Martin was driving the other vehicle. On March 6,
2018, and June 5, 2018, Plaintiffs filed two petitions against Defendants in state court.
Defendants removed both actions to this Court. All three plaintiffs underwent surgery before
suit was filed.
A jury trial is scheduled to commence on June 3, 2019. (Rec. Doc. 36).
Plaintiffs now move in limine to exclude certain evidence at trial.
I.
Based on the questions asked by Defendants at the depositions of Plaintiffs’
physicians, and based on the list of additional witnesses that Defendants seek to depose,
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Plaintiffs have concluded that Defendants may try introduce evidence at trial as to the
external source that has funded Plaintiffs’ medical treatment. Specifically, Plaintiffs’ counsel
contracted with a litigation funding company that engages medical providers to render
services at pre-negotiated discount rates to litigants in personal injury lawsuits. Plaintiffs do
not dispute that Defendants have the right to question whether the medical treatments were
causally related to the accident at issue, or even medically necessary, but they contend that
Defendants should not be able to reference the guarantee of the medical, how the medical
has been or will be paid, or that any medical charges are not owed and due. Plaintiffs argue
that the collateral source rule applies to preclude Defendants from making such arguments
and introducing evidence related to these issues.
Defendants agree that under Louisiana law Plaintiffs are entitled to recover medical
expenses paid or guaranteed by collateral sources. (Rec. Doc. 99 at 1). Defendants argue,
however, that the collateral source rule does not apply in this case because Plaintiffs have
testified in their depositions that they do not know how their medical bills are being paid or
funded and that they have not signed any guarantees in that regard. (Id. at 2). Defendants
argue that Plaintiffs’ counsel’s payment or guarantee of payment to a third party for medical
payments is not recoverable. Defendants analogize this case to Hoffman v. 21st Century
North American Insurance Co., 209 So. 3d 702 (La. 2015). Alternatively, Defendants argue
that Plaintiffs’ motion is premature because discovery is ongoing.
In a diversity case state law governs whether and to what extent the collateral
source rule applies. See Kadlec Med. Ctr. v. Lakeview Anesth. Assocs., 527 F.3d 412, 42526 (5th Cir. 2008); Parker v. NGM Ins. Co., No. 15-2123, 2016 WL 2625875, at *1 (May 9,
2016) (Morgan, J). Under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), this Court first
looks to the final decisions of the Louisiana Supreme Court in order to determine Louisiana
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law. Howe v. Scottsdale Ins. Co., 204 F.2d 624, 627 (5th Cir. 2000) (citing Labiche v. Legal
Sec. Life Ins. Co., 31 F.3d 350, 351 (5th Cir. 1994)). If the Louisiana Supreme Court has not
ruled on an issue then a federal court must make an “Erie guess” to determine “as best it
can” what the Louisiana Supreme Court would decide. Id. (quoting Krieser v. Hobbs, 166
F.3d 736, 738 (5th Cir. 1999)). In making an Erie guess in the absence of a ruling from the
state’s highest court, a federal court may look to the decisions of intermediate appellate
state courts for guidance. Id. (citing Matheny v. Glen Falls Ins. Co., 152 F.3d 348, 354 (5th
Cir. 1998)).
The collateral source rule is a rule of evidence and damages. Bozeman v. State of
La., 879 So. 2d 692, 697 (La. 2004). Although in their motion Plaintiffs frame the issue as
one of evidence alone, i.e., that Defendants should not be allowed to admit evidence of the
funding arrangement that paid for their medicals, Defendants’ opposition (and Plaintiffs’
reply memorandum) makes clear that the parties are also disputing the quantum of special
damages that will be recoverable in light of the third party funding arrangement used in this
case.
The Court begins with the damages aspect of the collateral source issue raised in
this case. All three Plaintiffs underwent surgery. It is the Court’s understanding that the
physicians’ bills have been satisfied so that the treating doctors are owed no additional
money from Plaintiffs, their attorney, or any other source. It is also the Court’s
understanding that the medical bills were not paid by Defendants. Assuming that
Defendants are at fault for causing the accident, and that Plaintiffs establish that the
medical treatment was necessary and causally related to the accident for which Defendants’
are at fault, the collateral source rule prohibits Defendants from reducing their liability based
on the medical funding that Plaintiffs obtained independently of and without contribution
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from Defendants. See La. Dept. Transp. & Dev. V. Kan. City So. Ry., 846 So. 2d 734, 739
(La. 2003) (citing Bryant v. New Orleans Pub. Serv., Inc., 406 So. 2d 767,768 (La. App. 4th
Cir. 1981)). In other words, if found legally responsible for Plaintiffs’ injuries, Defendants
cannot be “exonerated from paying the full consequences of [their] act” simply because
Plaintiffs’ hired an attorney who contracted with an entity for provision of medical services.
Id. at 740. The major policy reason for applying the collateral source rule to damages has
been and continues to be tort deterrence. Bozeman, 879 So. 2d at 700. Allowing
Defendants to avoid paying for medical treatment necessitated by their fault based on the
funding scheme employed would render the goal of tort deterrence nugatory. Pretermitting
for the moment consideration of any discounts, at least as to the amounts that were actually
paid to the physicians for treatment, the collateral source rule applies will full force to those
amounts regardless of the funding structure employed. 1 Therefore, Plaintiffs may recover
those amounts as special damages in this lawsuit even if they never agreed to be
personally liable for the charges.2 Furthermore, evidence as to the collateral source that
The Court does not glean from Defendants’ opposition that they believe that the amounts that
were actually paid to and accepted by the physicians were excessive. Even if the “full billed”
charges had been excessive, the providers were only entitled to receive 40 percent of their bills.
As to Wade and Williams, the numbers in Defendants’ opposition suggest that the providers
actually received much less than 40 percent. (Rec. Doc. 99, Opposition at 4). To the extent that
Defendants do believe that the charges are excessive, they are free to hire their own medical
experts to opine as what would be the reasonable and customary charges for the services
rendered. Any such expert reports must be produced by March 15, 2019. (Rec. Doc. 36,
Scheduling Order at 2).
1
As to the actual amounts that were paid to and accepted by the medical providers on Plaintiffs’
behalf, the Court is persuaded that there is no legal significance to the fact that Plaintiffs
themselves did not pay for the benefit themselves or pay the charges themselves. To hold
otherwise would be inconsistent with Bozeman, wherein the plaintiff was allowed to recover as
special damages amounts that were paid by Medicaid. 879 So. 2d at 705-06. In that case the
court specifically acknowledged that Medicaid is a free medical service for which the plaintiff
had paid no consideration. Id. at 705. Likewise, in Hoffman, the medical services had been
provided through an arrangement with the plaintiff’s attorney and the attorney (not the plaintiff)
had paid the actual amounts accepted by the doctors. 209 So. 3d at 704. The question whether
2
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paid the charges is inadmissible because from an evidentiary standpoint, the collateral
source rule bars the introduction of evidence that a plaintiff has received benefits or
payments from a collateral source independent of the tortfeasor’s procuration or
contribution. Patterson v. State Farm Mut. Auto. Ins. Co., 244 So. 3d 800 (La. App. 2nd Cir.
2017) (citing Bozeman, 879 So. 2d at 700).
The real point of contention insofar as the damages aspect of the collateral source
rule is concerned is whether Plaintiffs can recover the difference between what the treating
physicians billed for their services and the amounts that the physicians accepted as full
payment for their services to Plaintiffs. Plaintiffs’ medical bills were paid by a financing
company that has contracts with medical providers who treat personal injury plaintiffs.
Plaintiffs’ counsel contracted with the financing company, which has been promised
payment of the provider’s “full billed rate.” (Rec. Doc. 99-5, Exhibit E). The provider, on the
other hand, is paid 40 percent of the “full billed charges.” (Rec. Doc. 99-6, Exhibit F). So for
example, if the physician’s full billed rate for treatment was $100,000, he received at most
$40,000 in full satisfaction of his bill, and the remaining $60,000 (hereinafter referred to as
“the Difference”) is owed by Plaintiffs’ counsel to the finance company. Significantly,
Plaintiffs themselves were not parties to any of these agreements,3 and while they would
the plaintiff paid for the collateral source or suffered “some diminution in her patrimony” due to
the availability of the benefit is of particular importance where double recovery might result from
applying the collateral source rule, but this is not the determinative factor in deciding whether
the collateral source rule applies. Cutsinger v. Redfern, 12 So. 3d 945, 954 (La. 2009). In this
case, double recovery is not an issue with respect to the actual amounts that were paid to and
accepted by the medical providers, but even if it were, the paramount concern of the collateral
source rule is ensuring that liable parties do not escape responsibility for the damages that they
cause. See La. Dept. Transp. & Dev., 846 So. 2d at 740.
3
In fact, in their depositions Plaintiffs testified that they were unaware of how their medical bills
were being paid.
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have presumably agreed vis à vis their attorney that the Difference must come out of their
recovery as a cost of the litigation, no suggestion has been made that Plaintiffs themselves
agreed to be responsible to anyone for any medical bills or for the Difference should their
recovery at trial fall short.
The Court has reviewed the gamut of collateral source decisions from the Louisiana
Supreme Court and from the courts of appeal in this state, and this Court’s Erie
determination is that under Louisiana law Plaintiffs cannot recover the Difference as an
element of special damages. To be sure, in Louisiana write-offs and discounts that are akin
to the Difference in this case may be recoverable and subject to the collateral source rule
even if they constitute a “windfall” to the plaintiff. See, e.g., Patterson v. State Farm Mut.
Auto. Ins. Co., 244 So. 3d 800 (La. App. 2nd Cir. 2017) (holding that the collateral source
rule applies to write-offs that medical providers negotiated with the plaintiff’s health insurer);
Lockett v. UV Ins. Risk Retention Grp., Inc., 180 So. 3d 557 (La. App. 5th Cir. 2015) (holding
that the collateral source rule applies to the write-off where the plaintiff herself negotiated
the medical discount with the provider); Johnson v. Neill Corp., No. 15-430, 2015 WL
9464625 (La. App. 1st Cir. 2015) (unpublished) (holding that the collateral source rule
applies in cases where medical discounts are granted as a professional courtesy). But the
common thread that runs through all of these decisions is that in order to recover the
undiscounted or full billed medical charge (when the physician has accepted a lesser
amount), the plaintiff must have either paid for the benefit or be able to demonstrate that
she suffered some diminution in her patrimony in order to be in a position to receive the
benefit. This is the principle that the Supreme Court’s decisions in Hoffman and Bozeman
recognize.
In this case, Plaintiffs cannot establish that they paid any benefit or suffered any
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diminution in their patrimony in order to obtain the discounted medical payments. The
discounts were obtained via a series of contractual agreements that apparently triggered no
obligations on Plaintiffs’ part. Again, the Court assumes that Plaintiffs have agreed vis à vis
their attorney that the Difference must come out of their recovery as a cost of the litigation,
but in Hoffman the Supreme Court rejected the argument that this contractual obligation
constitutes the type of payment or diminution in patrimony necessary to recover
undiscounted medical expenses that were never incurred. Hoffman, 209 So. 3d at 707. The
collateral source rule does not apply to the Difference so as to allow Plaintiffs to recover it
as an element of special damages.4
Even though the Court has determined that the collateral source rule does not apply
to the Difference from a damages standpoint, it does not follow that evidence of the funding
arrangement in this case is admissible. The collateral source rule aside, evidence must be
relevant in order to be admissible at trial. Fed. R. Evid. 402. Evidence is relevant if it has
any tendency to make a fact more or less probable than it would be without the evidence,
and the fact is of consequence in determining the action. Fed. R. Evid. 401. Even relevant
evidence is subject to exclusion if its probative value is substantially outweighed by danger
of unfair prejudice, confusion, or undue delay. Fed. R. Evid. 403.
The Court can discern no legitimate reason for admitting evidence of the funding
4
In their reply memorandum Plaintiffs cite Kelly v. Bayou Fleet, Inc., No. 05-6871, 2009 WL
1668490 (E.D. La. June 12, 2009), a decision where Judge Barbier found that the defendant
was responsible for the full billed charges that the financing company was owed. The critical
distinction between this case and Kelly is that in Kelly the plaintiff had contracted with the
financing company in order to fund his medical care and the plaintiff himself was obligated to
cover the full cost of the services rendered. In this case Plaintiffs did not incur such an
obligation, which again is essential to the cases that apply the collateral source rule to allow a
plaintiff to recover for medical charges that were not actually paid. Simply, Plaintiffs herein are
not similarly situated to the plaintiff in Kelly.
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mechanism that was used in this case now that the Court had held that Plaintiffs cannot
recover beyond what their medical providers were actually paid. The amounts that the
physicians were actually paid in satisfaction of Plaintiffs’ medical bills should be easily
ascertainable, and In fact, in their opposition memorandum Defendants recite the amounts
actually paid and accepted. (Rec. Doc. 99, Opposition at 4). The Court expects the parties
to stipulate to the amounts that were actually paid to the providers, should the jury find
Defendants at fault and liable for special damages.
Evidence of the third party funding arrangement with Plaintiffs’ attorney has nothing
to do with any issue being tried, the most significant of which is whether Defendants’
negligence harmed Plaintiffs and necessitated medical intervention. It will only serve to
confuse the jury and unfairly prejudice Plaintiffs to admit the evidence. The Court remains
unpersuaded by Defendants’ speculative suggestion that there may be other reasons to
admit evidence of the funding scheme or that Plaintiffs’ motion in limine is premature in light
of ongoing discovery.5
II.
Plaintiffs also move to exclude any suggestion by Defendants that the jury should
make an adverse inference from Plaintiffs’ failure to call all of their treating physicians.
Defendants did not respond to this aspect of Plaintiffs’ motion in limine.
Assuming that Plaintiffs would call fewer doctors simply to avoid presenting
cumulative or unnecessary evidence, the Court agrees that allowing Defendants to argue
5
The Court notes that Defendants have pending before the magistrate judge a motion for leave
to take additional depositions (Rec. Doc. 116), many of which relate to the funding arrangement
that the Court has now ruled to be irrelevant and evidence of which will not be admitted at trial.
The Court would suggest that these depositions are likely no longer necessary and will only
serve to increase costs in this case, costs for which Defendants will be responsible if Plaintiffs
prevail at trial.
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nefarious motives to the jury would be unfair and misleading.
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Motion in Limine (Rec. Doc. 86) filed by Plaintiffs, Judy
Williams, Mary Wade, and Lucinda Thomas is GRANTED IN PART AND DENIED IN PART
as explained above.
February 25, 2019
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE
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