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In complex cases involving catastrophically injured plaintiffs, damages have been, and remain, a favored element by the plaintiffs’ side during trial and the one most dreaded by the defense. In this modern day of managed care entities and large health care conglomerate defendants, and with the continued explosion of extremely large plaintiffs’ verdicts in virtually every state, every defense counsel has an obligation to his or her clients to fully evaluate the damages element. In each case, defense counsel must explore the possibility of addressing damages more directly and more forcefully at trial. Defense attorneys must walk a thin line between drawing too much attention to damages at trial and ignoring them altogether, thereby opening the door to an excessive verdict against their clients. Building an appropriate damages defense and presenting damages evidence at trial can be a difficult decision and one that must be considered carefully and cautiously by both counsel and clients. In many medical malpractice cases, for example, the defense is faced with a neurologically impaired plaintiff, most often an infant or young child, with significant medical, therapeutic and day-to-day needs and expenses. Consequently, plaintiffs typically produce a life care plan with all the conceivable bells and whistles, a life care plan expert to justify the myriad services and costs included in the plan and an economist to “run the numbers” and put a present value on the plan. How can the defense handle such testimony without seeming cold, calculating and uncaring? One common method is to take a positive rather than a negative approach when cross-examining such witnesses, as well as with the plaintiff’s parents, other relatives and even some of the treating physicians and therapists. The strategy is not to attack or criticize, but rather to help the jury understand that all the therapy, education, and equipment to which the plaintiff is entitled as a matter of law through the age of 21 is more than sufficient to meet the plaintiff’s needs and is “top-notch.” With adult plaintiffs, the same strategy can be used with respect to any services and equipment provided by the government as well. This article explores the application of the collateral source rule to evidence of federal and state-sponsored special education and therapy and illustrates the recent trend in several states toward limiting the applicability of the collateral source doctrine when such benefits are involved. APPLICATION OF THE COLLATERAL SOURCE RULE The collateral source rule prevents defendants from introducing evidence of payments or benefits the plaintiff has received from sources other than the defendant that serve to mitigate or reduce the plaintiff’s actual damages. For example, it is undisputed that evidence of insurance proceeds from a contract between a plaintiff and his or her insurer is inadmissible in a case between the plaintiff and an alleged tortfeasor. See, e.g., McGlohon v. Ogden, 308 S.E.2d 541, 542-43 (Ga. 1983); Long v. Landy, 171 A.2d 1, 7-8 (N.J. 1961). Fueling this exclusionary rule is the recognition that the plaintiff is entitled to the “benefit of his bargain” because he or she has committed resources for the purchase of a contract of insurance or other benefit, when such resources otherwise could have been put to a different use. See Suhor v. Lagasse, 770 So. 2d 422, 423-24 (La. Ct. App. 2000) (providing a detailed explanation of the various policy considerations underlying specific applications of the collateral source rule). Courts and commentators alike have recognized that “contract and insurance benefits, being products of plaintiff’s own thrift, foresight, and sacrifice, would clearly seem immune from mitigation.” Thomas F. Lambert Jr., “The Case for the Collateral Source Rule,” 524 Ins. L. J. 531, 544 (1966); see also Denton v. Con-Way S. Express Inc., 402 S.E.2d 269, 270 (Ga. 1991) (noting that “if [the plaintiff's] recovery could thus be reduced, …the company could claim a balance against the family of the deceased, on the idea that the killing of the husband and father was a positive pecuniary benefit to them.”) Applying this “benefit of the bargain” rationale, courts have also excluded evidence of other collateral sources. For example, in Bennett v. Haley, 208 S.E.2d 302, 311 (Ga. Ct. App. 1974), the Georgia Court of Appeals recognized that “[t]he Medicaid program is social legislation; it is the equivalent of health insurance for the needy, and just as any other insurance form, it is an acceptable collateral source” (emphasis added); see also In re Adventure Bound Sports Inc., 858 F. Supp. 1192, 1208-09 (S.D.Ga. 1994) (holding that Social Security and Veterans Administration benefits are within the scope of the collateral source rule). Retirement and disability benefits obtained as a result of employment are also viewed as “contracted-for” benefits for which the plaintiff should not be denied the “benefit of the bargain.” See Southern Ry. Co. v. Cabe, 136 S.E.2d 438, 444-45 (Ga. Ct. App. 1970) (holding that a railroad worker’s receipt of a disability pension under the Railroad Retirement Act was subject to the collateral source rule); Pryor v. Webber, 263 N.E.2d 235, 239-241 (Ohio 1970) (applying the collateral source rule when an employer continued to pay reduced wages to a disabled employee); see also Werner v. Lane, 393 A.2d 1329, 1335-36 (Maine 1978) (containing an exhaustive list of cases in which the collateral source rule has been applied). STATES ARE DIVIDED Based on the above case law, a traditional application of the collateral source rule would allow plaintiffs to recover damages for state-sponsored special education and therapy — despite laws such as the Education for All Handicapped Children Act of 1975, which provides, as a matter of right, state-sponsored special education and therapy for all disabled children. See 20 U.S.C. �� 1400-1485. Plaintiffs would therefore be entitled to recover the costs and expenses of providing special education and therapy even if they intended to take advantage of the state-sponsored programs. In recent years, several state courts have decided to lessen the harsh impact of the collateral source rule as applied to state-sponsored special education and therapy. See Florida Physician’s Ins. Reciprocal v. Stanley, 452 So. 2d 514 (Fla. 1984); Washington v. Barnes Hosp., 897 S.W.2d 611 (Mo. 1995). Other states, however, continue to strictly enforce the rule, and exclude any evidence of state-sponsored special education or therapy. See, e.g., Williston v. Ard, 611 So. 2d 274, 278-79 (Ala. 1992); Cates v. Wilson, 361 S.E.2d 734, 736-40 (N.C. 1987). In Washington, 897 S.W.2d at 619-622, the Supreme Court of Missouri struck down a $5.5 million verdict in favor of a brain-damaged minor child and granted a new trial on the issue of damages. The plaintiff had alleged in the trial court that the defendants failed to timely diagnose a placental abruption and perform a Cesarean section, resulting in permanent brain damage to her newborn child. The trial court refused to allow evidence of the availability of free educational services and therapies through the public special education program in mitigation of damages. The Missouri Supreme Court held that the trial court committed reversible error by excluding evidence of the free public school programming that would be available to plaintiff, reasoning that:
Here, plaintiffs need not purchase the public school benefits, nor work for them as an employment benefit, nor contract for them. Hence, the “benefit of the bargain” rationale does not apply. Nor are these benefits provided as a gift by a friend or family member to assist plaintiffs specifically, such that it would be inequitable to transfer the value of the benefit from plaintiffs to defendants. Nor is this a benefit that is dependent upon plaintiff’s indigence or other special status. Instead, public school programming is available to all by law.

Id.at 621. In Stanley, 452 So. 2d at 515-516, a minor child and his parents sought to recover damages for the retardation and cerebral palsy the minor had suffered since birth. The trial court permitted the defendants to cross-examine the plaintiffs’ expert witnesses regarding the availability and effectiveness of free or low-cost government programs available in the community to meet the child’s needs. In upholding the trial court’s ruling allowing such cross-examination, the Florida Supreme Court held that the collateral source rule was inapplicable, stating that:

the 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. This is further made apparent upon comparison of the present case with a situation in which the collateral-source rule is frequently applied, that of the defendant who seeks a reduction in damages because the plaintiff has received insurance benefits.

Id.at 515-16. The above cases should be distinguished from cases involving benefits provided by nongovernmental entities or individuals, such as charities, employers or family members. State courts take a variety of different positions on whether the collateral source rule applies to these types of “gratuitous” services. See, e.g., Aaron v. Johnston, 794 S.W.2d 724, 726-27 (Mo. Ct. App. 1990) (holding that gratuitous continuation of wages by the plaintiff’s employer would be a collateral source); Johnston v. Aiken Auto Parts, 428 S.E.2d 737, 738-39 (S.C. Ct. App. 1993) (noting that, under state law, all benefits, whether gratuitous or not, are subject to the collateral source rule). There is a clear difference, however, between benefits provided by charities or family members, where it would appear inequitable to transfer the value to the defendant, and public school programming, which is available to all by law. In the latter situation, “no windfall results to either party by recognition of [the] public resource.” Washington, 897 S.W.2d at 621. In many states, the law concerning the definition and treatment of “gratuitous” benefits is murky at best. Georgia case law provides an excellent example. In Whitaker v. Talbot, 177 S.E.2d 381 (Ga. Ct. App. 1970), the Georgia Court of Appeals went to great lengths to clarify that medical care and treatment provided to the plaintiff by the armed services was not furnished gratuitously. The court noted that “[m]edical service which is furnished by the Army to the soldier and his dependents ‘whenever practicable’ serves as a compelling influence when a prospective soldier weighs the advantages of enlistment…. No one who receives treatment at an Army Station Hospital, therefore, is the recipient of charity.” Id. Thus, according to the Whitakercourt, the medical care and treatment provided to the plaintiff was part of the “benefit of the bargain” of a soldier’s enlistment and was within the scope of the collateral source rule. In contrast, Georgia trial courts have allowed evidence of the nursing care and room and board provided by family members as a potential element of recovery, indicating that free medical care and treatment provided by family members is not necessarily “gratuitous.” See Howard v. Hall, 145 S.E.2d 70, 76 (Ga. Ct. App. 1965) (noting that “[t]he evidence authorized but did not demand the finding that the father was entitled to recover the value of nursing care furnished by the child’s mother and grandmother.”); see also Southeastern Greyhound Lines Inc. v. Fisher, 34 S.E.2d 906, 911 (Ga. Ct. App. 1945) (stating that “we [cannot] say that merely because of the mother and daughter relation the latter would not be entitled to be paid for the reasonable value of the room and board occasioned by defendant’s conduct”). RULE SHOULD NOT BE USED PUNITIVELY Regardless of whether state-sponsored special education and therapy are considered “gratuitous benefits,” a more relaxed application of the collateral source rule to such benefits seems warranted, especially when one contemplates the jury’s enduring role of awarding only those damages supported by adequate evidence, rather than by conjecture or speculation. An award of future medical costs must be supported by competent evidence to allow the jury to make a reasonable assessment of the plaintiff’s damages. Because the purpose of compensatory damages is merely to compensate, not to punish, the defendant, the collateral source rule should not be interpreted to allow juries to thwart legislative policy by granting unwarranted “punitive” damage awards in negligence cases. See David Fellman, “Unreason in the Law of Damages: The Collateral Source Rule,” 77 Harv. L. Rev. 741, 748-750 (1964). In sum, there is no controlling or persuasive authority for a broad-brush application of the collateral source rule to state-sponsored special education and therapy. Several trial courts have allowed defense counsel to cross-examine plaintiffs’ witnesses, including life care planners, parents of a neurologically impaired child and treating physicians and therapists, on the subject of available benefits that, under a traditional analysis, would have been excluded from evidence. As more courts begin to address this issue, it is reasonable to expect that many of them will refuse to strictly apply the collateral source rule. Therefore, a thoughtful and sensitive presentation of the special education, therapy and other benefits available to the plaintiff as a matter of right may become a powerful tool for defense counsel in the attempt to reduce the amount of liability faced by a medical malpractice defendant. The development and presentation of damages evidence and testimony at trial requires a great deal of caution, ingenuity and creativity on the part of defense counsel. It is always wise to have the appropriate witnesses and evidence on the back burner before trial, including having a consulting life care planner and economist available to advise you behind the scenes if necessary. An effective defense counsel must be prepared to go to battle on all fronts in order to fully protect the client. The attorney should warn the jury right from the start, in opening statement, that he or she plans to do just that throughout the trial. Lori G. Baer is a partner in the Atlanta office of Alston & Bird, L.L.P., and has successfully defended numerous medical malpractice actions, drug and medical device product liability cases and other complex litigation. Her focus has been on complex medical trials and use of creative approaches to these difficult cases in the courtroom setting. David M. Menichetti is an associate with the firm who focuses his practice on medical malpractice and product liability litigation. Telephone: (404) 881-7000.

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