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McMullin v. United States

September 12, 2007

BRIAN MCMULLIN AND DAWN MCMULLIN, INDIVIDUALLY; AND DAWN MCMULLIN, AS SPECIAL PERSONAL REPRESENTATIVE OF THE ESTATE OF GARRETT LEE MCMULLIN, DECEASED PLAINTIFFS
v.
UNITED STATES DEFENDANT



The opinion of the court was delivered by: Garnett Thomas Eisele United States District Judge

ORDER ON COLLATERAL SOURCE ISSUE

In Defendant's Trial Brief, the Government raises the issue of whether Plaintiffs can establish the reasonable value of the medical services provided Garrett McMullin by introducing bills submitted by medical care providers. The parties agree that Arkansas law, the law of the state where the claim accrued, governs. 28 U.S.C. § 2674.

The Government states that Garrett McMullin's medical bills were paid by Medicaid. The Government further states that the health care providers entered into agreements providing that they will not collect from the medicaid patient or any other source the difference between the charges billed and the amount paid by Medicaid, with the exception of certain co-payments and deductibles. Therefore, the amount paid pursuant to Medicaid agreements is significantly less than the amount shown on the bills. Defendant contends that the reasonable value of the medical services is the amount actually paid by Medicaid, and the collateral source rule is inapplicable. Plaintiffs contend that the application of the collateral source rule is not a developing area of the law in Arkansas, which holds firmly to the rule, and that the collateral source rule applies in this case.*fn1

The Arkansas Supreme Court has held that "the collateral-source rule applies unless the evidence of the benefits from the collateral source is relevant for a purpose other than the mitigation of damages." Montgomery Ward & Co., Inc. v. Anderson, 334 Ark. 561, 564, 976 S.W.2d 382, 383 (1998) (citing Parrish v. Newton, 298 Ark. 404, 768 S.W.2d 17 (1989)). "A trial court must 'exclude evidence of payments received by an injured party from sources 'collateral' to . . . the wrongdoer, such as private insurance or government benefits. . . .'" Id., 976 S.W.2d at 383-84 (citing Bell v. Estate of Bell, 318 Ark. 483, 490, 885 S.W.2d 877, 880 (1994); Green Forest Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714 (1985); Patton v. Williams, 284 Ark. 187, 680 S.W.2d 707 (1984); Evans v. Wilson, 279 Ark. 224, 650 S.W.2d 569 (1983)). "Recoveries from collateral sources 'do not redound to the benefit of a tortfeasor, even though double recovery for the same damage by the injured party may result.'" Id., 976 S.W.2d at 384 (citing Bell v. Estate of Bell, 318 Ark. at 490, 885 S.W.2d at 880; Green Forest v. Herrington, 287 Ark. at 49, 696 S.W.2d at 718)).*fn2

Generally, Arkansas courts have found that a plaintiff's recovery from a tortfeasor "is not limited or offset by the amounts or services, if any, the plaintiff receives from his insurance company for property damages or medical bills, from his employer for lost pay, or from his church or neighbors for meals or child care." Howard W. Brill, Arkansas Law of Damages, § 6:4 (5th ed. 2004) (citing East Texas Motor Freight Lines, Inc. v. Freeman, 289 Ark. 539, 713 S.W.2d 456 (1986) (vacation pay and sick leave)). "The recovery is undiminished by any sums received under workers' compensation or from disability payments from his employer or insurer." Id. (citing Evans v. Wilson, 279 Ark. 224, 650 S.W.2d 569 (1983); Swindle v. Thornton, 229 Ark. 437, 316 S.W.2d 202 (1958)). "Likewise, unemployment compensation and pensions are within the collateral source rule." Id. (citing Peters v. Pierce, 314 Ark. 8, 858 S.W.2d 680 (1993); Mapco, Inc. v. Payne, 306 Ark. 198, 812 S.W.2d 483 (1991); Green Forest Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714 (1985)). "The forgiveness of a debt for medical services by a collateral source comes within the scope of the rule; likewise gratuitous medical services do not reduce the amount of plaintiff's recovery." Id. (citing Anderson, 334 Ark. 561, 976 S.W.2d 382) (hospital discounted bill by 50%; no reduction in judgment against tortfeasor)).

The Arkansas Supreme Court has refuted criticism of the rule by explaining that "in these cases the courts measure 'compensation' by the total amount of the harm done, even though some of it has been repaired by the collateral source, not by what it would take to make the plaintiff whole." Anderson, 334 Ark. 565, 976 S.W.2d at 384 (quoting Bell, 318 Ark. at 490, 885 S.W.2d at 880 (quoting F. HARPER, ET AL., THE LAW OF TORTS§ 25.22, at p. 651 (2d ed.1986))). The Court also stated "that the rule had been extended to cases in other areas of the law, such as unemployment compensation received during a period later held to have resulted from a wrongful discharge under the Teacher Fair Dismissal Act." Id. (citing Green Forest v. Herrington, 287 Ark. at 49, 696 S.W.2d at 718). The Court also quoted East Texas Motor Freight Lines, Inc. v. Freeman, 289 Ark. 539, 713 S.W.2d 456 (1986), in which "a defendant argued that the collateral-source rule was inequitable because it resulted in a windfall to the plaintiff," and the Court disposed of the argument by explaining the policy behind the rule as follows: Whether she received the money from her employer or from an insurance policy, she, rather than the alleged tortfeasor, is entitled to the benefit of the collateral source, even though in one sense a double recovery occurs. Vermillion v. Peterson, 275 Ark. 367, 630 S.W.2d 30 (1982). The law rationalizes that the claimant should benefit from the collateral source recovery rather than the tortfeasor, since the claimant has usually paid an insurance premium or lost sick leave, whereas to the tortfeasor it would be a total windfall.

Id.

The Court in Anderson chose "to adopt the rule that gratuitous or discounted medical services are a collateral source not to be considered in assessing the damages due a personal-injury plaintiff." Id. at 567, 976 S.W.2d at 385. The Court held that the trial court did not err in excluding evidence of a discount as a collateral source, stating "It is the rule recommended by the Restatement (Second) of Torts, and it is consistent with our oft-stated policy of allowing the innocent plaintiff, instead of the tortfeasor defendant, to receive any windfall associated with the cause of action." Id. at 567-58, 976 S.W.2d at 385. "The rule has also been justified on the basis that it assists the plaintiff in paying attorney fees." Howard W. Brill, Arkansas Law of Damages, § 6:4 (5th ed. 2004).

The Court notes that while some courts have held that Medicaid payments are within the collateral source rule and may not be deducted from a plaintiff's recovery, there is authority to the contrary. See Natalie J. Kussart, Paid Bills v. Charged Bills: Insurance and the Collateral Source Rule Arthur v. Catour, 833 N.E.2d 847 (2005), 31 S. Ill. U. L.J. 151, 156 -158 (2006) (citing cases). For example, in Bennett v. Haley, 132 Ga. App. 512, 208 S.E.2d 302, 77 A.L.R.3d 353 (1974), the Georgia Court of Appeals upheld the trial court's refusal to admit evidence that the hospital and medical bills were paid for by Medicaid. The court noted, "The 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." Id. at 524, 208 S.E.2d at 311.

28 U.S.C. § 2674 provides, "The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances . . . ." The stated policy of the Federal Tort Claims Act is that the Government is to be held liable in the same manner and to the same extent as a private individual under like circumstances. Here, it is important to note that had Plaintiffs been able to pursue the cause of action in a state court proceeding against Dr. Buxton, rather than under the Federal Tort Claims Act, the defendant would not be in a position to argue that the source was primary, rather than collateral. Furthermore, this case is complicated by the fact that the Government wears two hats. If one accepts the analogy of Medicaid as health insurance for the needy, the Government essentially acts as Plaintiff's insurance provider. The Government also plays the role of tortfeasor by way of the Federal Tort Claims Act. In a typical insurance case, the plaintiff insured would be allowed to recover the full amount of the medical expenses billed, while the plaintiff's insurer's could only recover, though subrogation, the amount it paid.*fn3 The tortfeasor would be left paying the full amount of medical expenses billed, even though it may result in a windfall to the plaintiff. The Court sees no reason why the Plaintiffs should be treated differently than other recipients simply because the government happens to be occupying the role of tortfeasor in this case.

The Court is of the opinion that if faced with this issue, the Arkansas Supreme Court would find that the collateral source rule applies to this case, as it is primarily a rule of substantial justice. While the Court finds that the collateral source rule applies in this case, this case will be tried to the Court. Therefore, during the trial, the Government will be allowed to submit the actual amounts paid by Medicaid for the record on appeal.

The Court's opinion may appear to be inconsistent with the Eighth Circuit's ruling in Overton v. United States, 619 F.2d 1299 (8th Cir. 1980). However, the Eighth Circuit in Overton based its ruling upon Missouri's application of the collateral source rule. The Arkansas Supreme Court has applied the collateral source rule without the qualifications that the Missouri Supreme Court has imposed. See Hamilton v. Slover, 440 S.W.2d 947, 958 (Mo. 1969).*fn4

Accordingly,

IT IS HEREBY ORDERED THAT Plaintiffs can establish the reasonable value of the medical services provided Garrett McMullin by introducing bills ...


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