United States District Court, E.D. Louisiana
JUDY WILLIAMS, ET AL.
IQS INSURANCE RISK RETENTION, ET AL.
ORDER AND REASONS REF: ALL ACTIONS
ZAINEY, UNITED STATES DISTRICT JUDGE.
following motion is before the Court: Motion in
Limine (Rec. Doc. 86) filed by Plaintiffs, Judy
Williams, Mary Wade, and Lucinda Thomas. Defendants Southern
Refrigerated Transport, Inc., IQS Insurance Risk Retention
Group, Inc., Eric Darnell Martin, and Zurich American
Insurance Co., oppose the motion. The motion, noticed for
submission on February 20, 2019, is before the Court on the
briefs without oral argument.
suit arises out of personal injuries that Plaintiffs
allegedly sustained in a car accident on June 6, 2017.
Defendant Eric Martin was driving the other vehicle. On March
6, 2018, and June 5, 2018, Plaintiffs filed two petitions
against Defendants in state court. Defendants removed both
actions to this Court. All three plaintiffs underwent surgery
before suit was filed.
A jury trial is scheduled to commence on June 3, 2019. (Rec.
Plaintiffs now move in limine to exclude certain evidence at
on the questions asked by Defendants at the depositions of
Plaintiffs' physicians, and based on the list of
additional witnesses that Defendants seek to depose,
Plaintiffs have concluded that Defendants may try introduce
evidence at trial as to the external source that has funded
Plaintiffs' medical treatment. Specifically,
Plaintiffs' counsel contracted with a litigation funding
company that engages medical providers to render services at
pre-negotiated discount rates to litigants in personal injury
lawsuits. Plaintiffs do not dispute that Defendants have the
right to question whether the medical treatments were
causally related to the accident at issue, or even medically
necessary, but they contend that Defendants should not be
able to reference the guarantee of the medical, how the
medical has been or will be paid, or that any medical charges
are not owed and due. Plaintiffs argue that the collateral
source rule applies to preclude Defendants from making such
arguments and introducing evidence related to these issues.
agree that under Louisiana law Plaintiffs are entitled to
recover medical expenses paid or guaranteed by collateral
sources. (Rec. Doc. 99 at 1). Defendants argue, however, that
the collateral source rule does not apply in this case
because Plaintiffs have testified in their depositions that
they do not know how their medical bills are being paid or
funded and that they have not signed any guarantees in that
regard. (Id. at 2). Defendants argue that
Plaintiffs' counsel's payment or guarantee of payment
to a third party for medical payments is not recoverable.
Defendants analogize this case to Hoffman v.
21st Century North American Insurance Co.,
209 So.3d 702 (La. 2015). Alternatively, Defendants argue
that Plaintiffs' motion is premature because discovery is
diversity case state law governs whether and to what extent
the collateral source rule applies. See Kadlec Med. Ctr.
v. Lakeview Anesth. Assocs., 527 F.3d 412, 425-26
(5th Cir. 2008); Parker v. NGM Ins. Co.,
No. 15-2123, 2016 WL 2625875, at *1 (May 9, 2016) (Morgan,
J). Under Erie Railroad Co. v. Tompkins, 304 U.S. 64
(1938), this Court first looks to the final decisions of the
Louisiana Supreme Court in order to determine Louisiana law.
Howe v. Scottsdale Ins. Co., 204 F.2d 624, 627
(5th Cir. 2000) (citing Labiche v. Legal Sec.
Life Ins. Co., 31 F.3d 350, 351 (5th Cir.
1994)). If the Louisiana Supreme Court has not ruled on an
issue then a federal court must make an “Erie
guess” to determine “as best it can” what
the Louisiana Supreme Court would decide. Id.
(quoting Krieser v. Hobbs, 166 F.3d 736, 738
(5th Cir. 1999)). In making an Erie guess in the
absence of a ruling from the state's highest court, a
federal court may look to the decisions of intermediate
appellate state courts for guidance. Id. (citing
Matheny v. Glen Falls Ins. Co., 152 F.3d 348, 354
collateral source rule is a rule of evidence and damages.
Bozeman v. State of La., 879 So.2d 692, 697 (La.
2004). Although in their motion Plaintiffs frame the issue as
one of evidence alone, i.e., that Defendants should
not be allowed to admit evidence of the funding arrangement
that paid for their medicals, Defendants' opposition (and
Plaintiffs' reply memorandum) makes clear that the
parties are also disputing the quantum of special damages
that will be recoverable in light of the third party funding
arrangement used in this case.
Court begins with the damages aspect of the collateral source
issue raised in this case. All three Plaintiffs underwent
surgery. It is the Court's understanding that the
physicians' bills have been satisfied so that the
treating doctors are owed no additional money from
Plaintiffs, their attorney, or any other source. It is also
the Court's understanding that the medical bills were not
paid by Defendants. Assuming that Defendants are at fault for
causing the accident, and that Plaintiffs establish that the
medical treatment was necessary and causally related to the
accident for which Defendants' are at fault, the
collateral source rule prohibits Defendants from reducing
their liability based on the medical funding that Plaintiffs
obtained independently of and without contribution from
Defendants. See La. Dept. Transp. & Dev. V. Kan. City
So. Ry., 846 So.2d 734, 739 (La. 2003) (citing
Bryant v. New Orleans Pub. Serv., Inc., 406 So.2d
767, 768 (La.App. 4thCir. 1981)). In other words,
if found legally responsible for Plaintiffs' injuries,
Defendants cannot be “exonerated from paying the full
consequences of [their] act” simply because
Plaintiffs' hired an attorney who contracted with an
entity for provision of medical services. Id. at
740. The major policy reason for applying the collateral
source rule to damages has been and continues to be tort
deterrence. Bozeman, 879 So.2d at 700. Allowing
Defendants to avoid paying for medical treatment necessitated
by their fault based on the funding scheme employed would
render the goal of tort deterrence nugatory. Pretermitting
for the moment consideration of any discounts, at least
as to the amounts that were actually paid to the physicians
for treatment, the collateral source rule applies will
full force to those amounts regardless of the funding
structure employed. Therefore, Plaintiffs may recover those
amounts as special damages in this lawsuit even if they never
agreed to be personally liable for the charges. Furthermore,
evidence as to the collateral source that paid the charges is
inadmissible because from an evidentiary standpoint, the
collateral source rule bars the introduction of evidence that
a plaintiff has received benefits or payments from a
collateral source independent of the tortfeasor's
procuration or contribution. Patterson v. State Farm Mut.
Auto. Ins. Co., 244 So.3d 800 (La.App. 2nd
Cir. 2017) (citing Bozeman, 879 So.2d at 700).
real point of contention insofar as the damages aspect of the
collateral source rule is concerned is whether Plaintiffs can
recover the difference between what the treating physicians
billed for their services and the amounts that the physicians
accepted as full payment for their services to Plaintiffs.
Plaintiffs' medical bills were paid by a financing
company that has contracts with medical providers who treat
personal injury plaintiffs. Plaintiffs' counsel
contracted with the financing company, which has been
promised payment of the provider's “full billed
rate.” (Rec. Doc. 99-5, Exhibit E). The provider, on
the other hand, is paid 40 percent of the “full billed
charges.” (Rec. Doc. 99-6, Exhibit F). So for example,
if the physician's full billed rate for treatment was
$100, 000, he received at most $40, 000 in full satisfaction
of his bill, and the remaining $60, 000 (hereinafter referred
to as “the Difference”) is owed by
Plaintiffs' counsel to the finance company.
Significantly, Plaintiffs themselves were not parties to any
of these agreements,  and while they would have presumably
agreed vis à vis their attorney that the Difference
must come out of their recovery as a cost of the litigation,
no suggestion has been made that Plaintiffs themselves agreed
to be responsible to anyone for any medical bills or for the
Difference should their recovery at trial fall short.
Court has reviewed the gamut of collateral source decisions
from the Louisiana Supreme Court and from the courts of
appeal in this state, and this Court's Erie determination
is that under Louisiana law Plaintiffs cannot recover the
Difference as an element of special damages. To be sure, in
Louisiana write-offs and discounts that are akin to the
Difference in this case may be recoverable and subject to the
collateral source rule even if they constitute a
“windfall” to the plaintiff. See, e.g.,
Patterson v. State Farm Mut. Auto. Ins. Co., 244 So.3d
800 (La.App. 2nd Cir. 2017) (holding that the
collateral source rule applies to write-offs that medical
providers negotiated with the plaintiff's health
insurer); Lockett v. UV Ins. Risk Retention Grp.,
Inc., 180 So.3d 557 (La.App. 5th Cir. 2015)
(holding that the collateral source rule applies to the
write-off where the plaintiff herself negotiated the medical
discount with the provider); Johnson v. Neill Corp.,
No. 15-430, 2015 WL 9464625 (La.App. 1st Cir.
2015) (unpublished) (holding that the collateral source rule
applies in cases where medical discounts are granted as a
professional courtesy). But the common thread that runs
through all of these decisions is that in order to recover
the undiscounted or full billed ...