The public is largely only now beginning to notice the impact of the Patient Protection and Affordable Care Act. One impact to keep an eye on is whether “Obamacare” will turn out to be the first real assault on the well-respected collateral source rule.
Many states, including Texas, have passed measures to limit an injured person’s potential recovery. Designed to prevent windfalls to plaintiffs, Texas’ Civil Practice & Remedies Code §41.0105 provides for the recovery of medical or healthcare expenses incurred only to that amount that is “actually paid or incurred.”
After years of debate as to what “actually paid or incurred” means, the Texas Supreme Court in 2011 offered guidance in Haygood v. De Escabedo, concluding that “actually paid or incurred” means only those expenses that the plaintiff has paid or will pay are recoverable.
While the recovery of medical expenses is designed to make the plaintiff “whole,” the common law collateral source rule is an exception, since it historically precluded any reduction in a tortfeasor’s liability because of benefits the plaintiff may have received from someone else—the collateral source. The theory, so said the court, was that a wrongdoer should not have the benefit of insurance independently procured by the injured party to which the wrongdoer was not privy. Conversely, a tortfeasor is not liable for medical expenses incurred that the patient was not required to pay.
So what does it mean to tort litigation when everyone is entitled to insurance? It means that standard loss allocation principles, including those relating to the mitigation of damages, may have made Obamacare a game changer when future medical expenses are presented to a jury. Is Obamacare a collateral source so as to limit its application for jury consideration? Does Obamacare require that a party mitigate damages by purchasing the available insurance?
Obamacare has resulted in the ability of all Americans to procure insurance at some minimal level of coverage without consideration of preexisting conditions. So if universal healthcare exists, it would follow that it is no longer necessary to shield juries from the potential financial effects of Obamacare since it applies equally to each and every plaintiff.
Assume an injured plaintiff’s damage model uses a life care plan which projects future medical costs arising from the defendant’s negligence. The life care plan is presented in a report by a doctor or life care planner and is supported by an economist’s opinions.
Such life care plans typically maximize damage award models, as future medical expenses are one of the largest categories of damages claimed. These plans often assume all future medical expenses are paid out of pocket although this is rarely the case as many plaintiffs have access to some form of health insurance. Thus, when universal healthcare coverage is available, why should plaintiffs not be required to mitigate their damages and utilize the universal healthcare which is available?
The collateral source rule fundamentally recognizes that it is an individual’s choice whether to obtain healthcare insurance—a choice which should be protected and fostered for the benefit of all parties involved as a matter of public policy. Obamacare, however, makes this choice (with very few exceptions) a mandate. Arguably, Obamacare has therefore made the public policy behind the collateral source rule outdated. At the very least, Obamacare requires a new, cautious examination of whether the same public policy, which mandated exclusion of such information, should now support and encourage compliance with Obamacare and accordingly support disclosure of this collateral source to juries.
While Obamacare did not address such issues as varying levels of coverage, the frequency/cap issues or permanent confinement issues, Obamacare may have provided the ammunition for that first salvo in a cogent argument supporting the dismantlement of the long-standing collateral source rule.
Those courts which have examined this issue to date have so far failed to permit juries to hear the insurance issue in its entirety despite the existence of minimum coverage guidelines. Among other reasons, these courts have cited the lack of reasonable certainty as to coverages of specific future care or treatment options.
For the moment, however, each and every attorney should join the debate in defense of their clients’ position—whether plaintiff or defendant. The construction of new damage allocations models, encompassing both the mitigation of damages and the collateral source rule, will continue to fuel the debate as practitioners attempt to prosecute their claims or defend their clients.
While the defense bar has raised the issue, no available opinions have applied Obamacare to limit or reduce an award of future economic damages. The potential implications and unrealized consequences of Obamacare may yet usher in new explorations of our body of Texas case law and the continuously evolving public policy considerations surrounding the now-mandated health insurance coverage.