Florida Supreme Court Rules Evidence of Potential Future Medicare Payments Inadmissible

By: William P. Dilley, II., Esq.

In a 5-2 split decision, the Florida Supreme Court held that the evidence of “social legislation” benefits as an exception to the evidentiary collateral source rule are no longer admissible, receding from its holding in Florida Physician’s Insurance Reciprocal v. Stanley, 452 So.2d 514 (Fla. 1984).

Joerg v. State Farm Mut. Auto. Ins. Co. (October 15, 2015), is a case arising from a motor vehicle v. bicycle accident.  Petitioner, John Joerg, on behalf of himself and as the father and natural guardian of his son, Luke Joerg, brought an action against State Farm for uninsured motorist benefits as a result of Luke, a developmentally disabled adult, being struck by a motor vehicle while riding his bicycle. 

The trial court initially held that State Farm could not introduce evidence of future Medicare benefits available to Luke as a result of his disability.  The Second District Court of Appeals, reviewing the trial court’s decision, reversed the jury’s award of future damages.  The Florida Supreme Court accepted jurisdiction, as the Second District’s ruling was in direct conflict with Stanley, which held 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 …. Such evidence violates neither the statutory nor the common-law collateral source rule….”

In receding from Stanley, the Supreme Court noted that Stanley had now become the minority rule in the United States.  The Court further explained that whether or not an individual has directly paid for his or her Medicare benefits, all Medicare beneficiaries who receive an award for future medical damages will be liable to reimburse Medicare, if Medicare makes a conditional payment on their behalf.   Further, the Court stated that “it is absolutely speculative to attempt and calculate damage awards based on benefits that a Plaintiff has not yet received and may never receive, should either the Plaintiff’s eligibility or the benefits themselves become insufficient or cease to continue.”

As a policy justification for its holding, the Court stated that “to consider Medicare, Medicaid, and other similar social legislation benefits as exceptions to the general rule that precludes admission of collateral sources circumvents the purpose of the collateral source rule.  It is a basic principle of law that tortfeasers should not receive a windfall due to benefits available to the injured party, however those benefits were accrued.”

While this case will have a direct effect on how defendants and their insurers limit future damages in Florida for Medicare beneficiaries, the effect of Joerg on cases holding that evidence of past medical damages in excess of the amount paid by Medicare as inadmissible remains to be seen.  The Court in Joerg does not specifically address the line of Florida cases which state that “the appropriate measure of compensatory damages for past medical expenses when a Plaintiff has received Medicare benefits does not include the difference between the amount that Medicare providers agreed to accept and the total amount of Plaintiff’s medical bills.” See Thyssenkrupp Elevator Corp. v. Lasky 868 So.2d 547 (Fla 4th DCA 2003); Cooperative Leasing, Inc., v. Johnson, 872 So.2d 956 (Fla. 2d DCA 2004).

While the reasoning in Thyssenkrupp as in Cooperative Leasing was based largely on the holding in Stanley, the effect of the holdings in Thyssenkrupp and Cooperative Leasing seem to be the proper measure of past damages for Plaintiffs that are also Medicare recipients.  The purpose of compensatory damages is to compensate, not to punish defendants or bestow a windfall on Plaintiffs.  Yet more significantly, while clarifying its intent in one area of the law, the Florida Supreme Court has potentially muddied the waters in another.