State Farm Mut. Auto. Ins. Co. v. Joerg
| Decision Date | 21 June 2013 |
| Docket Number | Nos. 2D11–6229,2D12–1246.,s. 2D11–6229 |
| Citation | 188 So.3d 852 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, v. John JOERG, Jr., Individually, and as natural father and guardian of Luke Augustine Joerg, Appellee. |
| Court | Florida District Court of Appeals |
Mark D. Tinker and Charles W. Hall of Banker Lopez Gassler P.A., St. Petersburg, for Appellant.
Tracy Raffles Gunn of Gunn Appellate Practice, P.A., Tampa, for Appellee.
Luke Joerg was injured when his bicycle collided with a car driven by William Lazar. Joerg, a developmentally disabled adult, sued Lazar and State Farm Mutual Automobile Insurance Company, the uninsured motorist carrier. Because Lazar settled, the case proceeded to trial only against State Farm. Prior to trial, the trial court ruled that evidence of past medical expenses must reflect the lower Medicare reimbursement amounts because of Joerg's participation in that program due to his disability. See Coop. Leasing, Inc. v. Johnson, 872 So.2d 956 (Fla. 2d DCA 2004). The trial court, however, did not allow State Farm to introduce evidence that Joerg's future medical expenses could likewise be reduced under the Medicare program. State Farm appeals the judgment in favor of Joerg on a number of grounds including the award of $469,076 for future medical expenses calculated at full Medicare rates, rather than the lower reimbursement rate. It claims it was error to exclude evidence of the lower rates under the authority of Florida Physician's Insurance Reciprocal v. Stanley, 452 So.2d 514 (Fla.1984). We agree and reverse on this issue only.
The issue we address is whether the jury should have been allowed to consider Joerg's receipt of medical services under the Medicare program in determining future damages. The question is essentially whether Joerg's Medicare benefits are a collateral source that the jury may not consider in determining future damages. No precedent of this court or any other Florida appellate court directly and unequivocally answers this question. We therefore survey what statutory law and judicial precedents exist to guide us.
We begin with Florida's common law collateral source rule, which "functions as both a rule of damages and a rule of evidence." Gormley v. GTE Prods. Corp., 587 So.2d 455, 457 (Fla.1991). At common law, the collateral source rule generally (a) disallowed the reduction of damage awards because of collateral sources (rule of damages) and (b) did not permit the admission of evidence of collateral sources (rule of evidence).
The rule of damages and the rule of evidence serve different purposes. The former is designed to prevent tortfeasors from benefiting unjustly from the injured parties' receipt of collateral benefits for their injuries and it avoids penalizing parties who purchase insurance, which would create a disincentive to buy coverage in the first instance. As our supreme court stated, the rule of damages " ‘rests on a concept of justice: a tortfeasor should not benefit ... from an injured party's foresight in contracting for protection against injury....’ " Id. (). The rule also maintains a level of deterrence against tortfeasors that would be lost if awards against them were reduced by collateral sources, and the rule obviously promotes full recovery for injured parties versus some reduced or diminished level of compensation.1
In contrast, the rule of evidence is based on a different policy concern. It was designed to prevent the introduction of evidence that Id. at 458. As the supreme court in Gormley noted, "[e]vidence 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’ " when they are not "or to believe that compensation received is ‘sufficient recompense.’ " Id. (citations omitted).
In Stanley, a minor and his parents sued for medical negligence that resulted in his "retardation and cerebral palsy." 452 So.2d at 515. The trial court allowed the jury to consider evidence about the availability of free or low cost charitable and governmental programs that were available to assist in meeting the injured minor's needs for physical therapy, speech therapy, and special education. Id. The jury found no liability, and the minor and his parents appealed to the First District where they prevailed. The Florida Supreme Court reversed, however, holding that "evidence 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." Id. It concluded that "[s]uch evidence violates neither the statutory nor the common-law collateral source rule and does not, therefore, require a new trial." Id. The supreme court noted that the then-existing predecessor to section 768.76, Florida Statutes (2007), section 768.50, Florida Statutes (1981), applied only to collateral source payments already paid; it did not apply to future damages. Id. It then stated that the "admission in this case of evidence concerning future governmental and charitable services did not violate the common-law collateral source rule" because "the common-law collateral source rule should be limited to those benefits earned in some way by the plaintiff."2 Id.
It grounded its reasoning in a case from the Supreme Court of Illinois (which has since been overruled). Id. at 516 (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, 1031 (2008) ).
The legislature's enactment of the Tort Reform and Insurance Act of 1986 ("1986 Act") significantly altered Florida's law on collateral sources by, for example, modifying the rule of damages to require that certain statutorily defined collateral sources be deducted from awards for past damages.3 The state was facing a crisis due to problems with the availability and affordability of insurance, and part of the 1986 Act's emphasis was on avoiding double recovery by plaintiffs. See Coop. Leasing, 872 So.2d at 959–60 () (citing § 768.76 ); see also Goble v. Frohman, 901 So.2d 830, 832 (Fla.2005) (); Thyssenkrupp Elevator Corp. v. Lasky, 868 So.2d 547, 550 (Fla. 4th DCA 2003) (). The 1986 Act came on the heels of the Florida Supreme Court's 1984 decision in Stanley, both sharing the commonality that potentially inflated or duplicative damage awards were unjustified and counterproductive. The Act's primary focus was to modify the common law collateral source rule to allow for statutory setoffs against past damage awards that the rule previously disallowed. These statutory changes to the rule of damages, however, contrast with the decision in Stanley, which did not involve setoffs and whose primary focus was on the rule of evidence, allowing the jury to consider evidence of the plaintiff's unearned benefits from free or low cost charitable and governmental programs.
A key issue in this case is whether Florida's legislatively modified collateral source rule or any judicial decision undermines the continued viability of Stanley. State Farm argues that the policy announced in Stanley controls this case; because Joerg's benefits have not been earned or purchased, but rather are and will continue to be provided under the Medicare program due to his disability, they are admissible under the rule of evidence announced in Stanley. Joerg counters that Stanley is inapplicable because it did not involve Medicare benefits, that Stanley does not apply to Joerg's situation, that reductions of future damages are impermissible because Joerg's entitlement to "those benefits is speculative," and that Florida law does not allow reduction of future damages for Medicare benefits.
We first tackle the question of whether Stanley has been judicially modified or overruled. No case has specifically done so. We note that one Florida Supreme Court case has addressed an analogous situation, though not in the context of Medicare: Allstate Insurance Co. v. Rudnick, 761 So.2d 289 (Fla.2000). In Rudnick, the plaintiff recovered past and future damages for medical benefits. The trial court deducted certain statutorily defined collateral source payments from the past damages award, but refused Allstate's "request to set off the remaining future medical payments benefits." Id. at 290. The supreme court held that the future medical insurance payments at issue were not to be set off against a verdict for future medical damages. The court's analysis focused on the emphasized language of section 768.76(1), which states:
In any action to which this part applies in which liability is admitted or is determined by the trier of fact and in which damages are awarded to compensate the claimant for losses sustained, the court shall reduce the amount of such award by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to him, from all collateral sources; however, there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists.
Rudnick, 761 So.2d at 292 n. 4. The court...
To continue reading
Request your trial