Bozeman v. State

• Decision Date: 02 July 2004
• Docket Number: No. 2003-C-1016.,2003-C-1016.
• Citation: 879 So.2d 692
• Parties: Linda BOZEMAN, Individually and on Behalf of Tommy Bozeman v. STATE of Louisiana, and the Department of Transportation and Development.
• Court: Louisiana Supreme Court

879 So.2d 692

Linda BOZEMAN, Individually and on Behalf of Tommy Bozeman v. STATE of Louisiana, and the Department of Transportation and Development.

No. 2003-C-1016.

Supreme Court of Louisiana.

July 2, 2004.

Rehearing Denied September 3, 2004.

Jack M. Bailey, Jr., James A. Cooper, Jr., Shreveport, Mary Lou Salley, Counsel for Applicant.

Claude W. Bookter, Jr., Shreveport, Charles Foti, Jr., Attorney General, LaVon D. Raymond, Counsel for Respondent.

David A. Abramson, Stevan C. Dittman, New Orleans, Counsel for Louisiana Trial Lawyer's Association (Amicus Curiae).

JOHNSON, Justice.

This personal injury case is the first instance where this court has addressed the application of the collateral source rule to medical expenses "written-off" or contractually adjusted by healthcare providers pursuant to the federal Medicaid program. Under the collateral source rule, a tortfeasor may not benefit, and an injured plaintiff's tort recovery may not be reduced, because of monies received by the plaintiff from sources independent of the tortfeasor's procuration or contribution. When an injured plaintiff is a Medicaid recipient, federal and state law require that the healthcare providers accept as full payment, an amount set by the Medicaid fee schedule, which, invariably, is lower than the amount charged by the healthcare provider. The difference between what is charged by the healthcare providers and what is paid by Medicaid is referred to as the "write-off" amount. We granted this writ of certiorari to determine whether this plaintiff, who was a Medicaid recipient, is entitled to recover medical damages that were "written-off" by his healthcare providers, under the collateral source rule. After a thorough review of the record and relevant law, we affirm the lower courts' determinations that Medicaid recipients are unable to recover the "write-off" amounts as damages.

FACTS AND PROCEDURAL HISTORY

Tommy Bozeman was catastrophically injured on May 12, 1993, while driving west on Highway 173, also called Shreveport-Blanchard Road, near its intersection with Industrial Park Drive, just north of Shreveport in Caddo Parish, when his right tires dropped off the paved portion of the highway onto the shoulder just as Mr. Bozeman came upon a curve. As a result of the accident, Mr. Bozeman suffered brain damage, and numerous fractures, bruises, and abrasions.

A helicopter flew Mr. Bozeman from the accident scene to the LSU Medical Center in Shreveport, where he stayed until June 1993. Thereafter, Mr. Bozeman was transferred to Summit, a long-term care facility where he received around the clock care. Mr. Bozeman remained in long-term care facilities, in a semi-conscious state, until his death on August 29, 1996, although he did return to LSU Medical Center in August 1993 for surgery.

On November 2, 1993, Mr. Bozeman, with his wife, Linda Bozeman, as his signing representative, applied for, and was subsequently granted, Medicaid benefits. Ten days later, on November 12, 1993, Linda Bozeman filed a Petition for Personal Injuries against the State of Louisiana, Department of Transportation and Development (DOTD).¹ Subsequently, plaintiff filed second and third supplemental petitions that added Chrysler Corporation, Jeep-Eagle Corporation, and other related co-defendants. By July 1998, all defendants, except for the State of Louisiana, were dismissed. Thus, the State of Louisiana, DOTD, was the sole defendant when the case proceeded to a bench trial on January 19, 2000.

At trial, both parties jointly introduced exhibit J-1, a document from the Louisiana Department of Health and Hospitals (DHH), the agency that administers Louisiana's Medicaid program, which details the medical services of healthcare providers and the amounts paid by Medicaid for Mr. Bozeman's care. The trial court denied the State's request for a credit to DOTD for those amounts paid by Medicaid. Ultimately, the trial court found the State of Louisiana 75% at fault and apportioned 25% of the fault to Mr. Bozeman. Plaintiff was awarded damages and $613,626.64 in medical expenses, which included $498,350.68 from the joint exhibit, J-1, and additional invoices filed into evidence by the plaintiff.

This award was appealed by the State of Louisiana, DOTD, which argued that the trial court erred in its liability determinations and its damages awards, which included the award of $613,626.64 for medical expenses. DOTD asserted that the trial court should have awarded medical expenses against the State of Louisiana for $321,763.08. This figure represents the difference between, $613,626.64, the total amount of Mr. Bozeman's medical expenses, and $291,863.56, the amount of Mr. Bozeman's medical expenses paid by Medicaid, through DHH, as shown on the joint exhibit, J-1.

On April 4, 2001, the Court of Appeal affirmed the trial court's judgment with respect to liability and damages, with the exception of the trial court's award of medical expenses. Bozeman v. State of Louisiana, and the Dep't. of Transp. and Dev., 34,430 (La.App. 2 Cir. 4/4/01), 787 So.2d 357 (hereinafter Bozeman I). The court noted that the trial court's ruling preceded the Second Circuit's opinion in Terrell v. Nanda, 33,242 (La.App.2d Cir.5/10/2000), 759 So.2d 1026, and remanded to the trial court "so that the court may fix the amount of special damages for medical expenses in view of the Terrell opinion and to the extent that that ruling may be applicable." Bozeman I, at 369.

On April 28, 2002, the trial court rendered its ruling. The trial court reduced the medical damages award from $613,626.64 to $344,999.59, after consideration of the Terrell opinion, and held that the medical expenses "written off" pursuant to the Medicaid program requirements are not recoverable by this plaintiff. The trial court rendered a separate ruling on May 14, 2002 denying a Motion to Withdraw Funds filed by the State of Louisiana, Department of Health and Hospitals (DHH). Plaintiff and DHH both appealed these separate rulings which were consolidated on appeal.

In Bozeman v. State of Louisiana, and the Department of Transportation and Development (DOTD), 36,665, 36,803 (La. App. 2 Cir. 3/5/03), 839 So.2d 960, 967, (hereinafter "Bozeman II"), the Court of Appeal affirmed the trial court's rulings, but amended the amount of the medical damages award from $344,999.59 to $355,206.97 to reflect the correct amount of claims paid and denied by Medicaid. Consistent with the Terrell decision, the Court of Appeal held that plaintiff is prevented from recovering those medical expenses that were contractually adjusted or "written-off" by the healthcare providers pursuant to the Medicaid program. The court's reasoning was based on three main factors: (1) the absence of a natural obligation for the "write-off" amount, (2) that no windfall should accrue to either the plaintiff or the defendant when the plaintiff is prohibited from recovering the "write-off" amount, and (3) that federal and state Medicaid statutes dictate that the healthcare providers must accept the payment set by the Medicaid fee schedule as payment in full.

The Court reasoned that the goal of tort recovery is to make the victim whole and "(i)n the instant case, the plaintiff is made whole by recovering the amounts actually paid by Medicaid, which are the only expenses incurred by the recipient under the program." Id. at 966. The Court relied on the discussion in Terrell regarding natural obligations for its conclusion. Similar to the case sub judice, the issue in Terrell was whether plaintiffs in a medical malpractice action could collect medical expenses written off by plaintiff's healthcare providers pursuant to a Medicaid program. Id. at 1027. The Second Circuit held that the plaintiff was unable to recover medical expenses contractually written off pursuant to the Medicaid program.

In Terrell, the Court concluded that no natural obligation existed because there was never any obligation on the part of plaintiffs to satisfy the medical expenses that were written off. The court referred to four requirements that must be present in order for a duty to be considered a natural obligation. Those requirements are the following:

(1) The moral duty must be felt towards a particular person, not all persons in general.

(2) The person involved feels so strongly about the moral duty that he truly feels he owes a debt.

(3) The duty can be fulfilled through rendering a performance whose object is of pecuniary value.

(4) A recognition of the obligation by the obligor must occur, either by performing the obligation or by promising to perform. This recognition brings the natural obligation into existence and makes it a civil obligation. Id. at 1030, citing Litvinoff, The Law of Obligations section 2.4, 5 Louisiana Civil Law Treatise (1992), as cited in Thomas v. Bryant, 25,855 (La.App.2d Cir.6/22/94), 639 So.2d 378.

In Terrell, the court focused on medical expenses "incurred" by the plaintiff. The Court stated that "(a) plaintiff may ordinarily recover reasonable medical expenses, past and future, which he incurs as a result of injury." Id. at 1031, citing Whitthorne v. Food Lion, Inc., 30,105 (La. App.2d Cir.1/21/98), 706 So.2d 193, where incur was defined as "to become liable." According to the Court, there was no liability on the part of the plaintiffs for expenses above those paid by Medicaid. Thus, the Court concluded that the plaintiffs did not "incur" the write-off amounts because there was no natural obligation to pay it.

In Bozeman II, the court also relied on the requirements for participation in the Medicaid program as a basis for its conclusion. According to the court, under state law,² healthcare providers "are specifically required to accept Medicaid payment as payment in full and are prohibited from the billing or collecting of additional amounts from the recipient or the recipient's responsible party." Thus, Medicaid provides for full payment to...