Hoffman v. 21st Century N. Am. Ins. Co.

• Decision Date: 02 October 2015
• Docket Number: No. 2014–C–2279.,2014–C–2279.
• Citation: 209 So.3d 702
• Parties: Eddie HOFFMAN v. 21ST CENTURY NORTH AMERICA INSURANCE COMPANY and Carolyn Elzy.
• Court: Louisiana Supreme Court

209 So.3d 702

Eddie HOFFMAN
v.
21ST CENTURY NORTH AMERICA INSURANCE COMPANY and Carolyn Elzy.

No. 2014–C–2279.

Supreme Court of Louisiana.

Oct. 2, 2015.
Rehearing Denied Dec. 7, 2015.

209 So.3d 703

GUIDRY, Justice.

We are presented with a question of first impression as to whether a write-off from a medical provider, negotiated by the plaintiff's attorney, may be considered a collateral source from which the tortfeasor receives no set-off. Applying Louisiana law and the principles set forth in our Civil Code, we find that such a write-off does not fall within the scope of the collateral source rule. For the reasons set forth below, we affirm the lower courts' rulings.

FACTS and PROCEDURAL HISTORY

Eddie Hoffman was injured in October 2010, when his vehicle was rear-ended by a vehicle driven by Carolyn Elzy. The accident occurred at or near the intersection of Old Hammond Highway and Sharp Road in Baton Rouge, Louisiana. Mr. Hoffman filed suit against Ms. Elzy and her insurer, 21st Century North America Insurance Company ("Century"), for damages allegedly resulting from the accident.

A bench trial was conducted in September 2012 on the issue of liability and damages. At trial, the only witnesses were Mr. Hoffman and Ms. Elzy. The evidence introduced at trial consisted of Mr. Hoffman's medical records, the deposition transcript of the responding law enforcement officer, photographs of both vehicles involved, and Century's insurance policy. At the conclusion of trial, the court ruled in favor of Mr. Hoffman as to the issue of liability. It found Ms. Elzy one-hundred percent (100%) at fault for the accident. The trial court awarded Mr. Hoffman $4,500.00 in general damages and $2,478.00 for special medical expenses for a total award of $6,978.00.

Mr. Hoffman appealed the verdict alleging inter alia that the award for special damages was erroneous. With regard to special damages, Mr. Hoffman asserted the trial court erred in awarding only

209 So.3d 704

$2,478.00 for past medical expenses even though Mr. Hoffman had presented evidence of $4,528.00 in past medical expenses. The appellate court affirmed the verdict of the trial court in all respects. On rehearing, the appellate court affirmed its previous decision, reasoning the trial court had been presented with two conflicting medical bills and its choice between them was not manifestly erroneous.

At issue before this court, therefore, is the award for past medical expenses of $2,478.00, even though Mr. Hoffman submitted bills totaling $4,528.00. Specifically, Mr. Hoffman argues the requested medical expenses included charges for two MRIs, each for $1,500.00 (a total of $3,000.00). At trial, Mr. Hoffman introduced a medical statement for $3,000.00 from the imaging center. However, Mr. Hoffman was awarded a total of $950.00 ($475.00 for each MRI) based upon a medical statement from the imaging center introduced by the defendant that showed charges totaling $3,000.00, $950.00 in payments from the attorney, and a bill "ajust [sic]" in the amount of $2050.00. The itemized portion of the statement indicated an "ATT W/O" of $1025.00 for each MRI. The trial court noted that plaintiff's attorney had "an arrangement" with the medical provider. Mr. Hoffman contends, under the collateral source rule, he is entitled to the total billed amount, including the portion of the bill that was "adjusted," or "written-off," and his recovery is not limited to merely the portion actually paid. We granted certiorari to determine the res nova issue of whether the collateral source rule applies to the "written-off" portion of a medical bill when the plaintiff's attorney negotiated the discount.

LAW

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. Louisiana Dep't of Transp. & Dev. v. Kansas City S. Ry. Co., 02–2349 p. 6 (La.5/20/03), 846 So.2d 734, 739. Under this doctrine, any payments received by the plaintiff from an independent source are not deducted from the award the injured party would otherwise receive from the wrongdoer. Id. In short, the tortfeasor is not allowed to benefit from the victim's foresight in purchasing insurance and other benefits. Bozeman v. State, 03–1016 p. 9 (La.7/2/04), 879 So.2d 692, 698.

The collateral source rule can be traced back to its common law roots. The Propeller Monticello v. Mollison, 58 U.S. (17 How.) 152, 15 L.Ed. 68 (1854). Two ships (the Propeller Monticello and Northwestern ) were involved in a wreck, causing the Northwestern to sink. The Northwestern, however, was insured and the insurance paid for the loss of the ship and its cargo. The Supreme Court was presented with the issue of whether the owner of the other ship was released from liability because of the insurance payment. The court held the "contract with the insurer is in the nature of a wager between third parties, with which the trespasser has no concern. The insurer does not stand in the relation of a joint trespasser, so that satisfaction accepted from him shall be a release of others." Id.

Even though originating as a common law doctrine, the collateral source rule has been recognized under the jurisprudence of this state. See Bozeman, pp. 8–11, 879 So.2d at 697–99. Though many other states have enacted legislation governing the application of the collateral source rule within those jurisdictions, the rule has not been altered statutorily in Louisiana. Kansas City. S. Ry., p. 7, 846 So.2d at 739. In Kansas City S. Ry., this court cited the

209 So.3d 705

Restatement (Second) of Torts § 920A (1979), which states:

(1) A payment made by a tortfeasor or by a person acting for him to a person whom he has injured is credited against his tort liability, as are payments made by another who is, or believes he is, subject to the same tort liability.

(2) Payments made to or benefits conferred on the injured party 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.

We have explained that the rule serves several public policy purposes. The most oft-cited reason is that the tortfeasor should not gain an advantage from outside benefits provided to the victim independently of any act of the tortfeasor. Kansas City S. Ry., p. 7, 846 So.2d at 739. We have also recognized the collateral source rule promotes tort deterrence and accident prevention. Id. Finally, absent such a rule, the reasoning goes, victims would be dissuaded from purchasing insurance or other forms of reimbursement...