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Article: US Court of Appeals holds the reasonable value determined by the jury as the appropriate measure of medical damages for a maritime tort
News & Insights 17 November 2020
Joyce Higgs, aboard a cruise ship during a family vacation through the Caribbean, tripped over a cleaning bucket in the dining area of M/V Costa Crociere and suffered a fractured humorous together with other serious injuries to her left shoulder. In February 2015 she sued the cruise line.
Higgs v. Costa Crociere, No. 19-10371 (11th Cir., August 14, 2020)
The US Court of Appeals for the Eleventh Circuit held that the correct measure of medical damages is the reasonable value determined by the jury upon consideration of all the relevant evidence, such as the amount billed and paid, third parties’ testimony, or other relevant proof that the parties can offer.
On 24 December 2014 Joyce Higgs, aboard a cruise ship during a family vacation through the Caribbean, tripped over a cleaning bucket in the dining area of M/V Costa Crociere and suffered a fractured humorous together with other serious injuries to her left shoulder. She received medical treatment and physical therapy.
In February 2015 she sued the cruise line, Costa, alleging negligence under federal maritime law for placing a bucket behind a corner in a highly trafficked area.
In March 2016, the case proceeded to trial and the jury awarded Higgs approximately $1.1 million after reducing the total amount by her 15% comparative fault. The verdict was appealed by Costa who alleged that the court erred by excluding evidence of Higgs’ propensity to fall, and the case was remanded for a new trial.
A second verdict was returned in September 2018 in which the jury awarded Higgs $650,000 in past general damages, $500,000 in future general damages and $61,000 in past medical expenses. This time they decided that Higgs was 10% at fault.
However, the district court reduced the award for past medical expenses from $61,000 to $16,326.01, the amount it determined was actually paid by Higgs and her insurer. Her insurer had an agreement in place with the healthcare provider to only pay a discounted portion of all the incurred costs.
Costa appealed the verdict and argued that they were entitled to a new trial. Higgs cross-appealed alleging the court erred in reducing the jury’s award for past medical expenses.
The court was not persuaded by Costa’s allegations and dismissed their appeal.
More interesting and consequential to insurers and shipowners is the court’s decision regarding Higgs’ cross-appeal. They reversed the district court’s decision to reduce the past medical damages and held that the appropriate measure of medical damages is determined by the jury upon considering all relevant evidence that would help determine the reasonable value of such.
This decision relies on the collateral source rule, which is an exception to the basic tort principle that damages are designed to make the plaintiff whole. In substance, the collateral source rule entitles a plaintiff to recover the full value of the damage caused by the tortfeasor without offset for compensation received from a third party such as an insurer. As an evidentiary rule, the collateral source rule bars evidence of amounts received from a third party that would show she has already been compensated for her injuries.
Thus, the court of appeals confirmed that Higgs was entitled to recover the reasonable value of the treatments that she received due to her injuries regardless of the actual amount of the payments that have been made either by her or by her insurer.
Also, the reasonable value is not always what a healthcare provider’s bills establish. Many US courts have noticed that medical bills often overestimate the reasonable value of medical treatments. Neither is the reasonable value what an insurer finally pays to a healthcare provider for treatment as this varies depending on negotiated agreements between all the concerned parties, normally subjected to discounted rates and arbitrary factors. Therefore , the court of appeals established that the reasonable value of the medical expenses is the amount determined by the jury upon consideration of all relevant evidence, such as the amount billed and finally paid, third parties’ testimony, or other relevant evidence that the parties could present.
It should be mentioned that unlike the typical evidentiary role of the collateral source rule generally barring evidence of payments by third parties, in this decision the court found that evidence of the amount paid is probative and considered to be evidence that is relevant to determining the reasonable value of medical services. These types of evidence should be admitted and be considered by a jury because in the convoluted domain of medical billing “the jury needs all the help it can get”.
The Higgs v. Costa Crociere decision is controversial, and without the certainty of a bright-line rule it opens the door to further discussions on how to determine the medical damages recoverable in personal injury claims.
As stated by the court of appeals, establishing the value of the incurred medical expenses can be very difficult in the US where medical bills are expected to be higher to compensate for the many discounts normally agreed by contracts between healthcare providers and insurance companies.
Applying the collateral source rule to determine the value of medical expenses could be controversial but would not serve as a deterrent from prudently obtaining and paying for medical insurance. Indeed, the assured benefits from the agreements and discounts that their insurer has in place with third parties, and also, following this rule, the plaintiff-assured is entitled to receive the reasonable value, which may be determined by a jury to be greater than the value paid after applying the pertinent discounts agreed by the insurer.
Courts' applying the collateral source rule presents challenges to medical insurers attempting to avoid double compensation for the same insured risk. In the above-mentioned case, Higgs is entitled to receive the whole billed medical expenses even though the insurer had an agreement with the healthcare provider to pay less than half of the total incurred expenses.
If our members face a personal injury claim in the USA it could be beneficial to get an independent medical case manager involved to determine whether the incurred medical costs are reasonable. Please direct these concerns to our office in New York or get in touch with your usual contact person within the club.
Category: Loss Prevention