Late et al v. United States of America
Filing
44
MEMORANDUM re pltfs' MOTION in Limine 30 to Exclude Defendant's Expert Mark Weinstein, MBA from Opining on the Present Value of the Future Medical Expenses (Order to follow as separate docket entry) Signed by Honorable Sylvia H. Rambo on 08/14/14. (ma)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
CHRISTINA LATE AND NATHAN
ARMOLT, AS PARENTS AND
NATURAL GUARDIANS OF D.A.,
A MINOR AND IN THEIR OWN
RIGHT,
Plaintiffs,
v.
UNITED STATES OF AMERICA
Defendant
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CIVIL NO. 1:13-CV-0756
JUDGE SYLVIA H. RAMBO
MEMORANDUM
Presently before the court is a motion in limine implicating whether an
award of future medical expenses must be reduced to present value during a bench
trial. This motion relates to a claim for personal injury brought against the United
States of America under Section (b)(1) of the Federal Tort Claims Act (“FTCA”), 42
U.S.C. § 1346, wherein Plaintiffs seek to recover, inter alia, future medical expenses
for the alleged personal injuries suffered by minor-plaintiff during his birth. The
parties have fully briefed the issues, and, for the reasons that follow, the court will
deny the motion in its entirety.
I.
Discussion
Resolution of the matter sub judice hinges on whether the Medical Care
Availability and Reduction of Error (“MCARE”) Act, 40 P.S. § 1303.509, requires
an award of future medical expenses to be reduced to present value. Plaintiffs argue
that the court should grant their motion in limine to exclude Defendant’s expert,
Mark Weinstein, MBA, from opining as to the present value of Defendant’s life care
plan because the statute neither requires nor permits a reduction to present value.
(See Doc. 31, pp. 3-6.) Defendant urges the court to deny Plaintiffs’ motion because
the statute at least requires a present value calculation for purposes of determining
counsel fees, but contends that future medical expenses should be paid periodically
based on the present value of the expenses awarded by the trier of fact.1 (Doc. 40, p.
12-14 of 16.)
Section 1303.509 of the MCARE Act provides, in pertinent part, as
follows:
(a)
General rule. – In a medical professional liability
action, the trier of fact shall make a determination
with separate findings for each claimant specifying
the amount of all of the following:
***
(2)
Future damages for:
(i)
(ii)
loss of earnings or earning capacity in a
lump sum; and
(iii)
(b)
medical and other related expenses by
year;
noneconomic loss in a lump sum.
Future damages. –
(1)
Except as set forth in paragraph (8), future
damages for medical and other related
expenses shall be paid as periodic payments
after payment of the proportionate share of
counsel fees and costs based upon the present
value of the future damages awarded pursuant
to this subsection. The trier of fact may vary
the amount of periodic payments for future
Defendant also argues that the court should deny Plaintiffs’ motion as untimely. (Doc. 40,
p. 7-8 of 16.) However, because the court will deny the motion on other grounds, it need not address
this argument.
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damages as set forth in subsection (a)(2)(i)
from year to year for the expected life of the
claimant to account for different annual
expenditure requirements, including the
immediate needs of the claimant. The trier of
fact shall also provide for purchase and
replacement of medically necessary equipment
in the years that expenditures will be required
as may be necessary.
(2)
The trier of fact may incorporate into any
future medical expense award adjustments to
account for reasonably anticipated inflation
and medical care improvements as presented
by competent evidence.
(3)
Future damages as set forth in subsection
(a)(2)(i) shall be paid in the years that the trier
of fact finds they will accrue. Unless the court
orders or approves a different schedule for
payment, the annual amounts due must be paid
in equal quarterly installments rounded to the
nearest dollar. Each installment is due and
payable on the first day of the month in which
it accrues.
(4)
Interest does not accrue on a periodic payment
before payment is due. If the payment is not
made on or before the due date, the legal rate
of interest accrues as of that date.
(5)
Liability to a claimant for periodic payments
not yet due for medical expenses terminates
upon the claimant’s death.
(6)
Each party liable for all or a portion of the
judgment shall provide funding for the
awarded periodic payments . . . by means of
an annuity contract, trust or other qualified
funding plan which is approved by the court.
***
(8)
Future damages for medical and other related
expenses shall not be awarded in periodic
payments if the claimant objects and stipulates
that the total amount of the future damages for
medical and other related expenses, without
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reduction to present value, does not exceed
$100,000.
40 P.S. § 1303.509.
Although Plaintiffs argue that the MCARE Act does not require
reduction to present value, it is undisputable that the plain language of subsection
(A)(1) necessitates a present value calculation. See id. at (A)(1) (“based upon the
present value of the future damages awarded . . . .”). The question is whether
subsection (b)(1) requires the future medical damages award to be reduced to present
value solely for the purpose of determining the “payment of the proportionate share
of counsel fees and costs,” or whether the future medical damages award should be
reduced to present value for purposes of calculating the total damages award to be
paid to the claimant. As both parties have acknowledged, the language of subsection
(b)(1) “is not the model of clarity.” (Doc. 31, p. 4 of 8; Doc. 40, p. 11 of 16.)
However, after examining the statute as a whole, the court finds that it requires a
future medical expenses award to be reduced to present value for purposes of
proportioning counsel fees and costs, but that the periodic payments should be issued
in the amount set forth by the fact finder pursuant to Subsection (a)(2)(i), without
reduction to present value.
The statute requires the trier of fact to make a determination specifying,
inter alia, the amount of future damages for “medical and other related expenses by
year.” 40 P.S. § 1303.509(a)(2)(i) (emphasis supplied). This is in stark contrast to
the requirement that the amounts to be awarded for future lost earnings or earning
capacity and noneconomic loss are to be determined “in a lump sum.” Id. at
(a)(2)(ii)-(iii) (emphasis supplied). In determining the amount of each periodic
payment for future medical damages, the trier of fact “may vary the amount . . . from
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year to year for the expected life of the claimant to account for different annual
expenditure requirements” and to “provide for purchase and replacement of
medically necessary equipment in the years that expenditures will be required . . . .”
Id. at (b)(1). The trier of fact may also “incorporate into any future medical expense
award adjustments to account for reasonably anticipated inflation and medical care
improvements . . . .” Id. at (b)(2). The “[f]uture damages as set forth in subsection
(a)(2)(i) shall be paid in the years that the trier of fact finds they will accrue.” Id. at
(b)(3) (emphasis supplied). Thus, the statute specifically provides, albeit
circuitously, that the specific dollar amount allocated by the fact finder for each year
future medical expenses are awarded must be paid to the claimant, without a
reduction to present value, in periodic payments in the year they accrue.2
These periodic payments for future medical and related expenses,
however, “shall be paid . . . after payment of the proportionate share of counsel fees
and costs based upon the present value of the future damages awarded pursuant to
[subsection (b)(1)].” Id. at (b)(1) (emphasis supplied). Thus, the statute requires the
court to determine the present value of the total amount of future damages awarded
under subsection (a)(2)(i) for the purpose of providing the proportionate payment of
counsel fees and costs in a lump sum up front, rather than by future installments as
the periodic payments of future medical expenses become due. After the lump sum
payment of counsel fees and costs is made, subsection (b)(3) provides that the future
periodic payments – “as set forth in subsection (a)(2)(i)” – will be paid to the
claimant in the years that the trier of fact found they will accrue. Id. at (b)(3)
Future damages for medical and other related expenses will not be awarded in periodic
payments, however, “if the claimant objects and stipulates that the total amount [of the award], without
reduction to present value, does not exceed $100,000.” 40 P.S. § 1303.509 (b)(8).
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(emphasis supplied). Significantly, there is no mention of reducing the periodic
payments to present value.3 See id.
Not only does the court’s interpretation of the statute as requiring
reduction solely for purposes of proportioning the counsel fees and costs “give effect
to all its provisions, so that no provision is mere surplusage,” Rodgers v. Lorenz, 25
A.3d 1229, 1231 (Pa. Super. Ct. 2011), such an interpretation is also consistent with
the very purpose of a present value reduction to a future damages award. As the
Pennsylvania Supreme Court explained in Helpin v. Trustees of University of
Pennsylvania:
In 1916, the United States Supreme Court held that, when
damages are based upon the deprivation of future
pecuniary benefits, any lump-sum award should be
discounted to the “present value” of those benefits.
Implicit in this holding was the Court’s assumption that
any monetary award would be safely invested by the
awardee, and accordingly would earn interest for the
duration of the award. Relying on the principle that
damages should be limited to compensating the injured
party for the deprivation of future benefits, the High Court
determined that “adequate allowance [must] be made,
according to circumstances, for the earning power of the
money.” If the earning power of the monetary damage
award were not taken into account, then the true value of
the award would be greater than the amount to which the
aggrieved party was entitled, resulting in over
compensation. Although finding it “self[-]evident that a
given sum of money in hand is worth more than the like
sum of money payable in the future,” the Court declined to
set forth a formula that should be used to calculate the
discount of a damages award to present value. Rather, the
Court left such matters to “the law of the forum.”
In contrast, the MCARE Act specifically provides that “[f]uture damages for loss of
earnings or earning capacity in a medical professional liability action shall be reduced to present value
based upon the return that the claimant can earn on a reasonably secure fixed income investment.” 40
P.S. § 1303.510.
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Helpin, 10 A.3d 267, 270-71 (Pa. 2010) (internal citations omitted).4 Thus, where
the award is not payable by lump-sum up front but rather incrementally in the future,
the awardee is not provided the opportunity to safely invest the money and earn
interest, thus negating the purpose of reducing the award to present value to avoid
over-compensating the aggrieved party. Accordingly, the court finds that the statute
requires reduction to present value for purposes of determining counsel fees and
costs.
However, such a reduction may also be relevant, as Defendant points
out, to a court in assessing a defendant’s proposed plan for funding the periodic
payments. Under subsection (b)(6), if a defendant is found liable, the defendant must
“provide funding for the awarded periodic payments . . . by means of an annuity
contract, trust or other qualified funding plan which is approved by the court.” Id. at
(b)(6). It is therefore possible for a defendant to fund the future medical expenses
award with an amount that is significantly less than the sum total of the periodic
payments. For example, the defendant may propose purchasing an annuity, which
will grow over time to fund the periodic payments and terminate upon the claimant’s
In 1980, the Pennsylvania Supreme Court adopted the total offset method for calculating
future lost income in Kaczkowski v. Bolubasz, 421 A.2d 1027(Pa. 1980), wherein “a court does not
discount the [lost future earnings award] to its present value but assumes that the effect of the future
inflation rate will completely offset the interest rate, thereby eliminating any need to discount the award
to its present value.” Helpin, 10 A.3d at 272 (quoting Kaczkowski, 421 A.2d at 1036.) In Helpin, the
court cautioned that it decided Kaczowski narrowly, specifically stating that “with respect to the
calculation of future damages ‘in other contexts,’ [it] did not wish to disturb the requirement that an
award be discounted to present value.” Id. at 274 (quoting Kaczkowski, 421 A.2d at 1037 n.21). The
issue before the Helpin court was whether the total offset method should be extended to awards of future
lost income derived from business profits. While the court elected to extend it to such a scenario, the
court noted that the defendant did not propose that Kaczkowski be overturned and suggested that, if the
issue is properly presented in the future, it would consider whether Kaczkowski was wrongly decided
and should be overturned. See id., 10 A.3d at 277 n.6. Accordingly, the total offset method does not
apply to awards for future medical damages.
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death. In this regard, an expert could assist the court by reducing the future medical
expenses and suggesting the appropriate amount to fund the annuity.
Accordingly, the court finds that, if Defendant is found liable, the
reduction of future medical expenses to present value will be necessary under the
MCARE Act to ascertain the appropriate proportion of counsel fees and costs.5 In
addition, such a calculation may also assist the court, if necessary, in approving
Defendant’s proposed funding plan.
II.
Conclusion
For the reasons set forth above, the court will deny Plaintiff’s motion in
limine to exclude Defendant’s expert Mark Weinstein from opinion on the present
value of future medical expenses.
s/Sylvia H. Rambo
United States District Judge
Dated: August 14, 2014.
The court recognizes that the apportionment of counsel fees and costs is a post-verdict
consideration, and therefore evidence in this regard ordinarily would not be relevant for purposes of
liability at trial. However, this is a bench trial and the court is confident it can separate the issues. If
Defendant is found liable and future medical expenses are awarded, the court will not consider any
present value reduction to future medical expenses for purposes of determining the amount of damages.
Rather, as discussed above, such a reduction will only be used to determine the proportion of counsel
fees and costs, which requires a reduction to present value.
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