Joerg v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 15 October 2015
• Docket Number: No. SC13–1768.,SC13–1768.
• Parties: John JOERG, Jr., etc., et al., Petitioners, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Respondent.
• Court: Florida Supreme Court

176 So.3d 1247

John JOERG, Jr., etc., et al., Petitioners,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Respondent.

No. SC13–1768.

Supreme Court of Florida.

Oct. 15, 2015.

Tracy Raffles Gunnof Gunn Appellate Practice P.A., Tampa, FL, for Petitioners.

Mark David Tinkerand Charles William Hallof Banker Lopez Gassler P.A., Saint Petersburg, FL, for Respondent.

Mark Kenneth Delegaland Matthew Harrison Mearsof Holland & Knight LLP and William Wells Large, Florida Justice Reform Institute, Tallahassee, FL, for Amicus Curiae Florida Justice Reform Institute.

Philip Mead Burlingtonand Nichole Johnston Segal of Burlington & Rockenbach, P.A., West Palm Beach, FL, for Amicus Curiae Florida Justice Association.

Maria Elena Abateand Charlyne Michelle Patterson of Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb, P.A., Fort Lauderdale, FL, for Amici Curiae Property Casualty Insurers Association of America and National Association of Mutual Insurance Companies.

Opinion

LEWIS, J.

Petitioner John Joerg, Jr. (Joerg), on behalf of himself and as the natural father and guardian of his son Luke Joerg (Luke), seeks review of the decision of the Second District Court of Appeal in State Farm Mutual Automobile Insurance Co. v. Joerg,––– So.3d ––––, 38 Fla. L. Weekly D1378, 2013 WL 3107207 (Fla. 2d DCA June 21, 2013), on the ground that it expressly and directly conflicts with the decision in Florida Physician's Insurance Reciprocal v. Stanley,452 So.2d 514 (Fla.1984). We agree that the Second District misapplied Stanley,and we have jurisdiction. Seeart. V, § 3(b)(3), Fla. Const.

BACKGROUND

The Collateral Source Rule

At common law, the collateral source rule governed both evidence and damages. See, e.g., Gormley v. GTE Prods. Corp.,587 So.2d 455, 457 (Fla.1991). Historically, the damages aspect of the collateral source rule prevented the reduction of damages by collateral sources available to the plaintiff. Id.This rule rested on the principle that a tortfeasor should not benefit from the collateral sources available to the plaintiff. Id.However, the Legislature has abrogated the common law damages rule. Today, trial courts must reduce awards “by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources....” § 768.76(1), Fla. Stat. (2014). This statutory modification was intended to reduce insurance costs and prevent plaintiffs from receiving windfalls. See Goble v. Frohman,901 So.2d 830, 832 (Fla.2005); Coop. Leasing, Inc. v. Johnson,872 So.2d 956, 959 (Fla. 2d DCA 2004).

There are certain exceptions to this rule. For example, there are no reductions “for collateral sources for which a subrogation or reimbursement right exists.” § 768.76(1), Fla. Stat. The statute also explicitly states:

[B]enefits received under Medicare, or any other federal program providing for a Federal Government lien on or right of reimbursement from the plaintiff's recovery, the Worker's Compensation Law, the Medicaid Program of Title XIX of the Social Security Act or from any medical services program administered by the Department of Health shall not be considered a collateral source.

§ 768.76(2)(b), Fla. Stat. This exception does not result in a windfall to plaintiffs because Medicare and similar collateral sources retain a right of subrogation or reimbursement. See Pollo Ops., Inc. v. Tripp,906 So.2d 1101, 1104 n. 3 (Fla. 3d DCA 2005); Coop. Leasing,872 So.2d at 960. Additionally, this Court has determined that section 768.76does not allow reductions for futuremedical expenses. Allstate Ins. Co. v. Rudnick,761 So.2d 289, 292–93 (Fla.2000).

As an evidentiary rule, payments from collateral source benefits are not admissible because such evidence may confuse the jury with respect to both liability and damages. Sheffield v. Superior Ins. Co.,800 So.2d 197, 203 (Fla.2001)(citing Gormley,587 So.2d at 458).

[I]ntroduction of collateral source evidence misleads the jury on the issue of liability and, thus, subverts the jury process. Because a jury's fair assessment of liability is fundamental to justice, its verdict on liability must be free from doubt, based on conviction, and not a function of compromise. Evidence of collateral source benefits may lead the jury to believe that the plaintiff is trying to obtain a double or triple payment for one injury, ... or to believe that compensation already received is sufficient recompense.

Gormley,587 So.2d at 458(citing Clark v. Tampa Elec. Co.,416 So.2d 475, 476 (Fla. 2d DCA 1982); Kreitz v. Thomas,422 So.2d 1051, 1052 (Fla. 4th DCA 1982)) (internal quotation marks omitted). It is also well established in Florida that the admission of evidence of social legislation benefits such as those received from Medicare, Medicaid, or Social Security, is considered highly prejudicial and constitutes reversible error. See Sheffield,800 So.2d at 203; Velilla v. VIP Care Pavilion Ltd.,861 So.2d 69, 71 (Fla. 4th DCA 2003)(citing Parker v. Hoppock,695 So.2d 424, 428 (Fla. 4th DCA 1997)); see also Benton v. CSX Transp., Inc.,898 So.2d 243, 245 (Fla. 4th DCA 2005)(“The inadmissibility of collateral sources evidence enjoys a long history of legal precedent.” (citing Eichel v. N.Y. Cent. R.R. Co.,375 U.S. 253, 84 S.Ct. 316, 11 L.Ed.2d 307 (1963))).

Unlike the common law damages aspect of the collateral source rule, the evidentiary collateral source rule remains largely intact. See Gormley,587 So.2d at 459. The notable exception at issue here is the rule announced by this Court in Stanley.¹The plaintiffs in Stanleyalleged that the defendants' medical negligence resulted in the intellectual disability and cerebral palsy

suffered by their son. 452 So.2d at 515. To establish future damages, the plaintiffs presented evidence that their son would require physical therapy, speech therapy, and special education over the course of his life. The defendants were permitted to introduce evidence of “free or low-cost charitable and governmental programs available in the community to meet” the needs of the plaintiffs' son. Id.This Court held:

[E]vidence of free or low cost services from governmental or charitable agencies available to anyone with specific disabilities is admissible on the issue of future damages.... Such evidence violates neither the statutory nor the common-law collateral source rule and does not, therefore, require a new trial.

....

We believe that the common-law collateral source rule should be limited to those benefits earned in some way by the plaintiff. Governmental or charitable benefits available to all citizens, regardless of wealth or status, should be admissible for the jury to consider in determining the reasonable cost of necessary future care. Keeping such evidence from the jury may provide an undeserved and unnecessary windfall to the plaintiff.

Id.The Court emphasized that such evidence should not limit how the jury calculates damages:

The jury remains free to find that the publicly available services do not meet the plaintiff's future needs. The jury may find private care at higher cost more appropriate in some circumstances, but the jury should consider those future services available to all, regardless of wealth or status, when deciding on the proper award of future damages.

Id.at 516.

In support of this holding, the Court relied at that time exclusively upon the only available authority, a decision of the Illinois Supreme Court, which was subsequently quashed:

[T]he policy behind the collateral-source rule simply is not applicable if the plaintiff has incurred no expense, obligation, or liability in obtaining the services for which he seeks compensation.... It is a well-settled rule of damages that the amount recoverable for tortious personal injuries is not decreased by the fact that the injured party has been wholly or partly indemnified for the loss by proceeds from accident insurance where the tortfeasor did not contribute to the payment of the premiums of such insurance. This rule is usually justified on the basis that the wrongdoer should not benefit from the expenditures made by the injured party in procuring the insurance coverage.... In a situation in which the injured party incurs no expense, obligation, or liability, we see no justification for applying the rule.

Id.at 515–16 (citing Peterson v. Lou Bachrodt Chevrolet Co.,76 Ill.2d 353, 29 Ill.Dec. 444, 392 N.E.2d 1, 5 (1979), overruled by Wills v. Foster,229 Ill.2d 393, 323 Ill.Dec. 26, 892 N.E.2d 1018 (2008)) (internal citations, quotations, and emphasis omitted). In a dissenting opinion, Justice Shaw, joined by Justices Adkins and Boyd, contended that the Court's reliance on Petersonwas misplaced. According to Justice Shaw, the Petersoncourt considered only past damages, not the future damages that were at issue in Stanley. Id.at 517 (Shaw, J., dissenting). He also disagreed with the policy position articulated in Petersonand adopted by the majority of the Court:

There is simply no assurance that public assistance will continue, that the injured victim will continue to be eligible for such assistance if it continues, or that the assistance, if it continues, will continue at the same level. By denying the victim full compensation for the cost of future care, the majority opinion transfers the responsibility for the tort from the tortfeasor, where it legally and morally belongs, to the victim and the community. I cannot agree that an injured victim should be required to seek charity or public aid, or that the compassion of charitable contributors and taxpayers should become a device for reducing the legal liability of a tortfeasor.

Id.

The courts of this state have struggled to apply Stanley.Rather, courts have frequently limited Stanleyto its facts and usually concluded that Stanleydoes not apply. See Gormley,587 So.2d at 458(homeowner's insurance benefits not admissible under Stanleybecause plaintiffs had paid for them); Nationwide Mut. Fire Ins. Co. v. Harrell,53 So.3d 1084, 1087 (...