The Patient Protection and Affordable Care Act (ACA), a/k/a Obamacare, was drafted to make health care and health insurance more affordable and more available to more Americans as well as to relieve some of the burden on Medicaid. However, the ACA also may have an impact on personal injury litigation. In particular, this legislation may serve to reduce awards for the cost of future medical care, while preventing plaintiffs from obtaining a double recovery as they do often today, consisting of an award of the predicted costs of future care and the benefits of ongoing health insurance that is often available for that care.
A plaintiff in a personal injury action may recover the cost of past medical expenses incurred and future medical expenses to be incurred as a result of a defendant’s negligence. However, in New York State, a jury may not be presented with evidence that a plaintiff has health insurance that will cover these expenses. Obviously, if a plaintiff has health insurance covering those expenses and is compensated by a jury for the same expenses, the plaintiff gets a double recovery.
The Law and the ACA
To avoid this windfall, New York law provides for a “collateral source hearing” after the verdict, where evidence of other sources paying the plaintiff’s medical expenses is presented, allowing the trial judge to reduce the jury award. This works well for past expenses because there is usually no question that the expenses have already been paid by the other source. However, New York courts have been reluctant to reduce an award of future medical expenses based on the existence of health insurance. The courts have routinely found that the continuation of health insurance coverage is not guaranteed, citing for example the possible loss of coverage connected to employment, the refusal of insurers to insure individuals for preexisting conditions, and divorce or death of a spouse through whom insurance coverage is obtained. The courts have consistently held that it is a defendant’s burden to prove that it is highly probable that the plaintiff’s future medical expenses will be paid by a collateral source by clear and convincing evidence. Prior to the ACA, this was a difficult burden to overcome.
The ACA, which requires that everyone, with very limited exceptions, obtain health insurance, appears to squarely address most of these concerns and goes a long way toward establishing that it is highly probable that a plaintiff’s future medical expenses will be covered by insurance. The ACA “ensures” that coverage will be affordable and precludes insurers from (1) denying coverage based on preexisting medical conditions or (2) charging a higher premium based on the extent of medical care required. The defendant’s burden of proof should be met since every plaintiff is required to purchase health insurance, and that insurance covers the majority of care needed as the result of injuries claimed.
To date, we are aware of no New York court that has used the ACA as a basis to reduce an award for future medical expenses. However, in a New York Court of Appeals case, Caronia v. Philip Morris, 22 N.Y.3d 439, 5 N.E.3d 40 (2013), the dissenting opinion made reference to the possibility that under the ACA there may be a potential for a collateral source setoff. In a 2015 California case [Brewington v. United States, CV 13-07672-DMG (CWx) (C.D. Cal. Jul 24, 2015)], the United States District Court for the Central District of California used the availability of health insurance under the ACA as a collateral source setoff to reduce defendants’ liability for the cost of future medical care.
Gaining judicial acceptance of this collateral source reduction of future medical expenses will not be easy, and creative resistance from plaintiffs should be expected. Defendants must be prepared with experts in insurance coverage issues, and the ACA in particular, so that it can be established at a collateral source hearing by clear and convincing evidence that it is highly probable that the plaintiff’s future medical expenses will continue to be paid by insurance available, indeed mandated, under the ACA. This will require identifying a specific insurance plan and demonstrating precisely what care the plan will cover. In the proper circumstances, it may be wise for the defendant to offer to pay the plan premium. Although collateral source hearings apply to verdicts only, the specter of the application of the ACA in such hearings should result in lower settlements as well.
ACA, tort reform and personal injury litigation stand at a crossroads. With the implementation of mandatory health care coverage for all, the intellectual justification for not reducing plaintiffs’ future medical costs by the amount covered by health insurance is without merit. Of course, if efforts to repeal or substantially change the ACA are successful, double recoveries will continue.