This is the question that the collateral source rule was designed to answer. The collateral source rule provides that “a tortfeasor may not benefit, and an injured plaintiff’s tort recovery may not be reduced, because of monies received by the plaintiff from sources independent of the tortfeasor’s procuration or contribution.” Bellard v. American Central Ins. Co., 07–1335, 07–1399 (La. 4/18/08), 980 So.2d 654, 664-665. Under the collateral source rule, if an injured plaintiff receives payments from an independent source, these collateral source payments are not deducted from the damages award that the plaintiff would otherwise receive from the wrongdoer.
The collateral source rule has been applied to a variety of factual circumstances, but it has been most commonly raised in the context of insurance payments. Litigants have argued that, if an injured plaintiff’s medical bills are paid by the plaintiff’s health insurance, these bills should not be included in an award of past medical expenses because this would result in a so called “windfall” or double recovery to the plaintiff. The collateral source rule rejects this argument and provides that the plaintiff reaps the benefit of his or her own insurance coverage. “As a result of the collateral source rule, the tortfeasor is not able to benefit from the victim’s foresight in purchasing insurance and other benefits.” Bozeman v. State, 2003 1016 (La. 7/2/04), 879 So. 2d 692, 698. The Louisiana Supreme Court has reasoned that the plaintiff deserves these benefits because he or she has typically paid or bargained for them in some way, whether through premium payments or some other “diminution of patrimony.” Id. at 699. (Of course, in reality, such a double-recovery almost never occurs because an insurance company or other collateral source payor will typically have the right to be repaid from the plaintiff’s award.)
In our personal injury practice, we often see collateral source issues arise when a third-party wrongdoer injures a worker performing his or her job duties, meaning that the injured worker is eligible for both workers’ compensation benefits and tort recovery from the third-party. In such cases, we have repeatedly seen defendants attempt to avoid paying the injured workers’ medical expenses by invoking Louisiana’s law regarding solidary obligations. Under Louisiana law, if two parties are each liable for the same debt, a payment of the debt by either party relieves the other of liability. La. Civ. Code Art. 1794. Defendants have used this principle of solidary obligations to argue that, where the defendant and the workers’ compensation insurer are both responsible for paying the injured workers’ medical bills, the payment by the workers’ compensation insurer should relieve the defendant of liability.
Accepting the current state of the jurisprudence, that an injured workers’ patrimony is not diminished to obtain workers’ compensation benefits, the question then becomes, who should gain the benefit of workers’ compensation payments, the injured worker or the person who hurt him?
In Royer v. State, Department of Transp. & Dev., 16 534 (La. App. 3 Cir. 1/11/17), 210 So.3d 910, 922, writ denied, 17 0288 (La. 4/24/17), 221 So.3d 69, the Third Circuit answered this question and concluded that our client, the injured worker, should receive the benefit of his workers’ compensation payments. In Royer, our client suffered a traumatic brain injury in a car crash caused by the negligence of the DOTD. Because he was working at the time of his injury, some of our client’s medical bills were paid by his employer’s workers’ compensation insurer. The DOTD argued that it was entitled to receive a credit in the amount of all medical bills paid by the workers’ compensation insurer, including any amounts written off by the health care providers. The Third Circuit rejected this argument and held that our client was entitled to recover all of his medical expenses in full from the DOTD, including those amounts paid or written off due to workers’ compensation coverage.
The Third Circuit’s holding in Royer is consistent with the Louisiana Supreme Court’s holding in Cutsinger v. Redfern, 08 2607 (La. 5/22/09), 12 So.3d 945, 951–53. In Cutsinger, the Supreme Court explained that the primary policy underlying the collateral source rule is tort deterrence. In other words, the courts should not give a windfall to the wrongdoer because our civil justice system is intended to deter people from making the negligent decisions that cause injuries in the first place. In light of this fundamental goal, the Court in Cutsinger indicated that, while it is important to consider whether the plaintiff paid for the collateral source or suffered some diminution in his patrimony due to the availability of the benefit, this consideration alone is not the determinative factor. Instead, as the Third Circuit found in Royer, “the overriding policy of tort deterrence outweighs the concern of double recovery.” Royer, 210 So. 3d at 922.
Since the Third Circuit issued this ruling in 2017, multiple appellate courts have relied upon the Royer opinion to uphold the rights of injured plaintiffs. The Second Circuit relied upon Royer in Patterson v. State Farm Mut. Auto. Ins. Co., 51,620 (La. App. 2 Cir. 11/15/17), 244 So. 3d 800, 805. More recently, the First Circuit followed Royer to “conclude, as did the Royer court, that it is the injured victim, and not the tortfeasor, who should benefit from the collateral source where it was obtained neither by the tortfeasor’s procuration nor by a diminution of the injured victim’s patrimony.” Howard v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 2017 1221 (La. App. 1 Cir. 2/16/18), 243 So. 3d 4, 10, writ denied, 2018 0435 (La. 5/11/18), 241 So. 3d 1017.
The Third Circuit’s ruling in Royer shows us that when we are in doubt about the proper interpretation of the law, our ultimate consideration should be the purpose of the civil justice system — to promote public safety by deterring wrongdoers and taking away incentives for negligent behavior.
Jury verdict in oilfield personal injury
Jury verdict in wrongful death of a pedestrian
Settlement of wrongful death automobile collision
Bench trial verdict in motorcycle collision
Jury verdict in action regarding falling luggage from overhead airplane compartment
Jury verdict in single car hydroplaning crash
Settlement of oilfield personal injury
Jury verdict in automobile collision personal injury