by Gerard Heubel and James Kachadoorian
- Gerard Heubel
The Patient Protection and Affordable Care Act (ACA) was passed to make health care and health insurance more available and affordable to a greater number of people. The ACA also may have an unintended impact on personal injury litigation, specifically by reducing awards that juries grant plaintiffs to cover the cost of future medical care and preventing plaintiffs from obtaining double recovery.
In personal injury actions in New York, a plaintiff may recover past and future medical expenses incurred as a result of a defendant”™s negligence. However, a defendant is precluded from introducing into evidence the fact that a plaintiff has health insurance that will cover these expenses, thereby creating a scenario for double recovery in which the jury awards money to the plaintiff to pay for medical expenses that the plaintiff”™s insurance company will cover.
- James Kachadoorian
To address this windfall, New York law allows for a collateral-source hearing after a jury returns its verdict. At these hearings, the defense can present evidence of other sources the plaintiff has to cover his/her medical expenses, which can lead the trial judge to reduce the jury award. The specter of the application of the ACA also may lead to lower settlements.
Future medical expenses and the ACA
While this process has proven effective in reducing awards for past medical expenses that unquestionably have been reimbursed by insurance carriers, New York courts have been reluctant to reduce monetary awards for future medical expenses based on the existence of health insurance. Courts routinely have found that the continuation of health insurance coverage is not assured, citing for example the possible loss of coverage connected to employment, refusal of insurers to insure individuals for preexisting conditions and divorce from or death of the spouse who was the primary insured. New York courts have consistently held that it is a defendant”™s burden to prove by “clear and convincing evidence” that it is highly probable that the plaintiff”™s future medical expenses will be paid by a collateral source. Prior to the ACA, this was a difficult burden to overcome.
The ACA, which requires nearly everyone, with few exceptions, to obtain health insurance, squarely addresses most of the courts”™ concerns and establishes that it is highly probable that a plaintiff”™s future medical expenses will be covered by health insurance. Additionally, given the ACA”™s success in withstanding constitutional and other legal attacks, it is expected to continue in force and effect, further supporting the argument that defendants should be entitled to secure a collateral-source reduction in the cost of future medical care paid by health insurance companies.
While we are aware of no New York court that has used the ACA as a basis to reduce an award for future medical expenses, in a 2013 New York Court of Appeals case, “Caronia v. Philip Morris,” the dissenting opinion made reference to the possibility that under the ACA there may be the potential for a collateral-source setoff. Additionally, in a federal court case in California this year, “Brewington v. United States,” the U.S. District Court, Central District of California used the availability of health insurance under the ACA as a collateral-source setoff to reduce the defendants”™ liability for the cost of future medical care. New York courts likely will be addressing this issue in the near future.
The coverage mandate
While gaining judicial acceptance of a collateral-source reduction of future medical expenses will not be easy, the defense bar is up for the challenge. Defendants must be prepared to present experts on insurance coverage issues, especially those related to the ACA, at collateral-source hearings to establish by clear and convincing evidence that it is highly probable that the plaintiff”™s future medical expenses will continue to be paid by insurance coverage that he/she is mandated to have under the ACA. Identifying a specific insurance plan and demonstrating precisely what care the plan will cover are necessary.
One potential obstacle to “the ACA argument” is related to plaintiffs who receive Medicaid and may therefore be exempt from buying health insurance under the ACA because their income is so low. Because Medicaid has a statutory right to reimbursement, future medical expenses paid by Medicaid will not reduce a jury award for those specific costs. Under those circumstances, it may be wise for defendants to offer to pay the plaintiff”™s ACA insurance premium. Plaintiffs have always had the obligation to mitigate their damages, so once a defendant agrees to pay an insurance premium, there is no legitimate reason for the plaintiff to insist on receiving Medicaid reimbursement for future medical care. All of the plaintiff”™s care would be covered by a private insurance plan at no cost to the plaintiff, the defendant”™s expense of providing future medical care would be mitigated and the burden on the Medicaid system would be reduced.
The ACA, tort reform and personal injury litigation have reached a crossroads. With the implementation of mandatory health care coverage for all, the justification for not reducing plaintiffs”™ future medical costs by the amount covered by health insurance is without merit.
That said, we expect to see new, innovative arguments challenging “the ACA argument” in New York state courts. Stay tuned.
Gerard Heubel is a partner and trial attorney in the White Plains office of Wilson Elser Moskowitz Edelman & Dicker LLP whose practice focuses on the defense of high-exposure medical malpractice claims. He can be reached at gerard.heubel@wilsonelser.com or 914-872-7924.
James Kachadoorian is a partner in Wilson Elser”™s White Plains office whose trial practice focuses on the defense of hospitals and health care professionals in state and federal medical malpractice cases. He can be reached at james.kachadoorian@wilsonelser.com or 914-872-7159.
