Collateral Source Rule Research Articles

The Differential Effects of Malpractice Reform: Defensive Medicine in Obstetrics

Abstract Recent studies argue that different types of patients are affected differently by changes in malpractice pressure. We argue that defensive medicine causes these differential effects. Our theoretical model predicts that reduced malpractice pressure decreases health care spending among patients with good access to care, but increases spending among those with poor access. We test this theory by estimating the effects of tort reforms on birth by cesarean section. Reduced malpractice pressure through collateral source rule reform decreases C-section rates by 4.75% for mothers with timely initiation of prenatal care. On the other hand, reduced pressure through noneconomic damages caps increase C-section rates by 7.59% for mothers without timely initiation. These findings are consistent with defensive medicine. Further investigation suggests that reduced pressure improves access to care for vulnerable populations and reduces utilization among well-served consumers. These findings explain the literature’s conflicting assessments of defensive medicine, despite its practice being widespread.

The Value of an Attorney: Collateral Source Rule Changes as an Invalid Instrument

The Value of an Attorney: Collateral Source Rule Changes as an Invalid Instrument

The Offset of the Profit and the Collateral Source Rule

The Offset of the Profit and the Collateral Source Rule

Distinguishing Between Private Law and Social-Security Law in Deducting Social Grants from Claims for Loss of Support

This article attempts to highlight the potential danger in applying private-law principles to social-security law in deciding whether or not social grants should be deducted from awards for damages. Typically, this issue comes to the fore where a damage-causing event, such as death, sets into motion a system that provides for the payment of social benefits, damages or both. In social-security law, the receipt of more than one social benefit is called "double dipping", whereas in private law the problem of double compensation is addressed by applying the collateral-source rule. In some instances the applicable legislation clearly prescribes the deduction or not of the social benefit, but unfortunately our legislation is not always clear on this issue and this can best be illustrated by two recent conflicting decisions in Makhuvela (SGHC) and Timis (SCA). In Makhuvela the court held that a foster-care grant should be disregarded in calculating the award for damages, inter alia because the child will never have a claim to the grant. In Timis the SCA distinguished the facts from Makhuvela and held that the child-support grants received by the mother after the father's death are directly linked to the death of the father and should therefore be deducted from her claim for loss of support. It is submitted that although the outcome of the Timis decision is correct, the court should have incorporated the means test into the process of deciding if the grant should be deducted from the compensation. A two-phase approach is suggested: first determine if the receipt of the grant is directly linked to the death of the breadwinner, and secondly determine how the grant and the subsequent settlement paid by a wrongdoer will affect the circumstances of a particular individual or family. The objectives in social-security law differ from the objectives in the law of damages and therefore the principles applied in cases of double dipping cannot be equated with those applied in cases of collateral benefits.
 

Social security 'benefits' and the collateral source rule - an analysis of the three Coughlan decisions

The law of damages abounds with cases dealing with the collateral source rule. This rule is applicable to instances where the victim of a damagecausing event, despite suing the wrongdoer or his or her insurer for damages, receives a benefit from a third party (Mukheibir ‘Road Accident Fund v Timis – child support grants is not res inter alios acta’ 2011 SALJ 246; see in general Potgieter, Steynberg & Floyd Visser & Potgieter’s Law of Damages (2012) 229-273). However, despite the various case law and commentary in literature on the subject, this concept remains unburdened by clarity. This is particularly true as far as the interpretation and intersection between the application of the rule and social security benefits.

Tort reform and the theory of coordinating tort and insurance

An important ingredient of tort reform is the substitution of the traditional – in Common Law – Collateral Source Rule for a system of deducting insurance payments from the tort award. In the paper we offer a comprehensive analysis of the effects of the mechanisms to coordinate tort and insurance payments on the three essential decisions involved, namely precaution, risk coverage and litigation. We undertake the analysis for the Collateral Source Rule (cumulation), benefits offset (deduction), and subrogation of insurer. In the presence of a liability system, the problem of coordination makes sense only in a world in which liability rules do not operate perfectly. Under an imperfect strict liability regime, we show that solely subrogation can induce optimal incentives for risk coverage. In addition, collateral offset dilutes injurer's incentives to take care as compared to the other two regimes. Under an imperfect negligence regime, incentives to buy coverage under the collateral source rule are lower. Under collateral benefits offset, the victim may prefer to ignore tort payments entirely, buying full insurance and leaving the injurer with no incentives for precaution. The paper also discusses the litigation decision and the apparently strong advantage in terms of administrative costs of the collateral offset rule over subrogation, and points out several factors that might undermine this presumed advantage.

The Vital Role of the Collateral Source Rule in United States Healthcare Financing

The collateral source rule plays a vital role in both the healthcare financing and legal systems in the United States. While for many years the rule has been under fire from various tort reform advocates, and has taken some severe hits over that time, it remains as important today as it was when first developed over one-hundred and fifty years ago. Long understood as a rule of evidentiary consequence, modern legal scholars seem to have lost track of both the origins and of the real value of the rule and, as such, application has been constricted unnecessarily. While the costs of both the American tort and healthcare structures are undeniably high, abrogating the collateral source rule is neither the best nor the most plausible way to lower those costs.Made necessary by the unique multi-payer cost sharing nature of healthcare financing in the United States, the collateral source rule serves a number of vital roles in supporting the way in which medical providers spread the costs of caring for the uninsured and underinsured. As such, the rule remains vital to balancing medical costs and to ensuring a viable healthcare provider market. Furthermore, in individual cases, the equities of most situations depend on application of the collateral source rule to properly balance competing interests.Warnings about the evils of double recovery from the defendant’s bar are overdramatic and grossly misrepresent the actual facts as viewed from the broader vantage point of sound public policy. In Part I of this paper I review the origin and application of the collateral source rule in California including a brief discussion of the impact of the Howell case. In Part II I discuss the nature of the fragmented healthcare financing system in the United States today. In Part III I argue for a continued application of the collateral source rule, including to the negotiated rate differential, in personal injury cases in California.

The Collateral Source Rule And Medical Expenses: Anticipated Effects Of The Affordable Care Act And Recent State Case Law On Damages In Personal Injury Lawsuits

THE UNITED STATES Supreme Court's 5-4 decision in National Federation of Independent Business v. Sebelius (1) was one of the most anticipated Supreme Court decisions in recent years. The primary issues--the breadth of the commerce clause, the necessary and proper clause, Congress's taxing power, and the expansion of Medicaid--involve significant constitutional questions and consequences for the health care industry in the United States. But the effective result of universal may, and should, have significant consequences for another industry--personal injury lawsuits--where a significant driver of verdicts and settlements is the amount of medical expenses that are legally recoverable and admissible as evidence. The most recent study by the U.S. Department of Justice, Bureau of Justice Statistics reported that personal injury plaintiffs filed approximately 15,624 personal injury lawsuits in the state courts of the 75 most populous counties in the country in 2005, (2) with a median recovery of about $33,000. (3) The most recent study of federal courts reports that 1,464 personal injury lawsuits were tried before a judge or jury in federal courts in the 2002-2003 fiscal year (4) with an estimated median recovery of $150,000-200,000. (5) As 96% of personal injury suits never reach trial, (6) it is immediately apparent that a tremendous amount of money is paid for medical expenses in personal injury verdicts and settlements. With President Barack Obama's reelection, the future of the Patient Protection and Affordable Care Act, the centerpiece legislation of his first term, now appears secure. The Act, signed into law in March 2010, includes a number of provisions intended to make insurance more accessible to currently uninsured Americans. Provisions including the individual mandate (the legal requirement that an individual purchase health insurance or be taxed for the failure to do so), and the requirement for insurers to offer the same premiums and coverage to all similarly-situated applicants despite preexisting conditions, as well as the establishment of health insurance exchanges and federal subsidies, are aimed at reducing the number of uninsured residents by as much as 30 million by 2019. (7) If these estimates prove accurate, the total percentage of American residents who use health insurance to pay their medical expenses will increase to 93%. (8) As the number of uninsured residents in the United States declines, and as payment for health care services becomes almost exclusively the territory of health insurers, and not patients, a number of traditional and more recent tort rules are likely to be, and should be, impacted. More specifically, the collateral source rule, which disallows a tortfeasor from reducing his damages liability when the injured party's medical expenses are covered by insurance or another collateral source, may become almost a mere truism because virtually everyone will be covered. Even when the collateral source rule is not directly implicated, the presentation of evidence and award of damages in personal injury suits are likely to be impacted. As health insurance becomes not just common, but the exclusive method of transacting for health care services, the relevance of the list price of health care services could dwindle to almost nothing. This is especially true in the world of personal injury lawsuits and medical expenses, which constitute a large percentage of the damages for those suits and serve as gauges for settlements of these claims. As health insurance becomes almost universal, the so-called list price of health care services should not be the gauge of damages awarded for past or future medical expenses for much longer. I. Health Care Insurance and the Collateral Source Rule A. Historical Evolution of Health Care Insurance Before 1920, health insurance as we would recognize it today did not really exist in the United States. In 1929, the precursor to Blue Cross was founded in Dallas, Texas, when a group of teachers contracted with Baylor University Hospital to pre-pay for hospital services. …

Does Higher Malpractice Pressure Deter Medical Errors?

Abstract An important objective of medical liability law is to deter medical errors by punishing negligent mistakes. However, relatively little evidence exists on the deterrence effect. Using newly constructed measures of preventable medical complications and state tort reforms in the United States between 1994 and 2007, I find evidence that higher liability pressure deters preventable medical complications associated with four specific obstetric and gynecologic procedures. The results also show that the effects of tort reforms vary according to the specific reform in question. While joint and several liability reform (which increases doctor accountability) appears to decrease preventable medical complications, collateral source rule reform and caps on punitive damages appear to increase these complications. Opponents of tort reform often argue that tort reforms may adversely affect patient safety, and the results of this paper suggest that such a concern is legitimate.

Valuation of Spouse and Survivor Benefits In a Defined Benefit Retirement Plan

Abstract A search of the forensic economic literature fails to disclose any discussion of the proper methodology for valuing the loss of survivor benefits in a defined benefit retirement plan when a wrongful death event occurs. A first approximation, which might be used to calculate a widow's loss of retirement benefits resulting from the wrongful death of her spouse, is the retiree's benefit payments minus his personal consumption (or maintenance allowance) minus the widow's survivor benefit, if there is one. Economic analysis reveals that while the actual payment to the retiree includes the spouse's benefit if the retiree does survive, it fails to include the spouse's expected survivor benefit in the event that the retiree does not survive. This omitted benefit is significant and should be included in valuing the spouse's expected benefit from the total retirement plan and the widow's loss. Legal analysis reveals that the widow's benefit is essentially the same as proceeds from privately purchased life insurance, which in common law would be considered a collateral source and protected from disclosure at trial or offset against an award. However, tort reform efforts over the past 30 years have led many states to modify or even repeal the traditional collateral source rules. Therefore, the widow's benefit may or may not be considered in valuing the loss of retirement, depending on the jurisdiction, the cause of death (e.g., medical malpractice), and even the interpretation of the collateral source rules by the trial judge. If it is determined that the collateral source rule excludes introduction of the survivor benefit, a reasonable alternative for the plaintiff would be to claim the loss as the retiree's gross benefit minus his personal consumption weighted by the joint probability of survival.

Knowledge, Attitudes Toward Corporations, and Belief in a Just World as Correlates of Tort Reform Attitudes

Recent legislation in tort law has resulted in such changes as states capping punitive and non-economic damages as well as abolishing the collateral source rule and joint and several liability. The purpose of the present research is to examine attitudes toward changes in tort law. We asked American adults about their attitudes toward the civil justice system and its players, experiences in the civil justice system, and belief in a just world. We found that a more negative attitude toward litigation and juries, higher belief in a just world, and a more positive attitude toward corporations and doctors predicted a more positive view of recent changes in tort legislation.

Revisiting the Government as Plaintiff

This is a symposium essay dedicated to the late Richard Nagareda and written in response to Adam S. Zimmerman's piece, The Corrective Justice State.As Professor Zimmerman recognizes, the debate over governments acting as plaintiffs and “regulating by deal” has shifted from initial questions over whether litigation produces the best public policy and whether executive officials are acting within the scope of their authority to how government actors should pursue and allocate settlements. Yet, as this first wave of controversy suggests, the slate upon which executive officials currently write is neither clean nor uncontroversial. Instead, this new debate is playing out in an unsettled landscape where those first-order questions about legitimacy remain unresolved.When layered atop the existing controversy over the intermingling of government functions, executive officials’ relatively new allocative role may put their actions even further at odds with their traditional regulatory and proprietary functions, particularly when the action yielding the compensation is a public substitute for a private right of action. What principles should guide officials in this new role: traditional tort law, social welfare, or political equality principles such as one person one vote? More specifically, should executive officials look to tort law precepts to govern the allocation and retain concepts such as economic loss and the collateral source rule, or employ a governmental aid aspect, which would suggest a principal of equality that would not vary based on one’s income but would consider collateral sources of compensation?Zimmerman suggests that officials have attempted to justify both their regulatory and allocative decisions with ill-suited corrective justice principles that translate poorly from the private to the public sphere. Despite reservations about whether regulation through litigation results in the best policies or offers democratic checks, he seems more willing to accept executive officials’ increased litigation role in the wake of Congressional failings and the difficulty of certifying a private class action. He thus tailors his reform proposals to target the government’s allocative function, suggesting ways to improve legitimacy and transparency in distributing recoveries, whatever the guiding principle might be. Still, certain concerns and questions linger. First, Zimmerman narrows his focus to the second generation question of allocation, even though he raises and dismisses first-generation concerns over whether executive officials are properly acting within the scope of their authority and whether the regulatory solutions they generate through litigation are legitimate and optimal. Shoring up back-end allocation procedures, however, does not alleviate first-generation legitimacy questions or regulatory concerns. Second, Zimmerman opts not to iron out overarching systemic problems like legislative stalemates or mounting difficulty in certifying class actions, preferring instead (or perhaps more realistically) to work within the circumstances that prompt executive action. Yet, truly legitimizing process and adhering to corrective justice principles would require resolving systemic concerns about who should litigate and who should regulate. Finally, given concerns that judges already “rubber stamp” class-action settlements and that parties tend to find innovative ways to gerrymander votes and stakeholder input in areas like bankruptcy, one might question the effectiveness of Zimmerman’s proposals for enhancing due process when allocating state recovery to affected citizens.

Parens Patriae Litigation to Redress Societal Damages from the BP Oil Spill: The Latest Stage in the Evolution of Crimtorts

ABSTRACT * The BP oil spill has led to some of the most complex legal dilemmas in Anglo-American history. This Article explores four mechanisms that claimants are using to seek compensation for damages caused by this unprecedented environmental disaster: (1) Torts; (2) Class Actions; (3) the Gulf Coast Claims Facility; and (4) Environmental Patens Patriae Actions. We argue that the government-initiated parens patriae actions are necessary to supplement, but not to supplant, the other three mechanisms in order to vindicate the larger societal injury. The patens patriae litigation may enable the Gulf States to recoup larger societal losses to their habitat, ecosystems, tax revenues, and tourism. This mechanism can potentially resolve the problem of aggregating valid claims by plaintiffs who cannot be certified as classes or who do not qualify under the Gulf Coast Claims Tribunal Guidelines. We classify environmental patens patriae as public crimtorts because government attorneys deploy private tort law to redress societal injuries. By contrast, in private crimtorts, trial lawyers receive punitive damages as a bounty for uncovering and prosecuting dangerous conditions and practices. Both public and private crimtorts require intermediate procedural protections to ensure that corporate defendants are treated fairly. Courts or legislatures will need to determine which intermediate protections best balance defendants' rights versus society's interests. I. INTRODUCTION: THE BP OIL CATASTROPHE II. PART I: CIVIL JUSTICE ALTERNATIVES FOR COMPENSATING THE BP OIL SPILL VICTIMS A. One-on-One Torts 1. The Case for Individualized Environmental Justice 2. Difficulties in Proving Causation in Environmental Torts 3. David v. Goliath Imbalance in Legal Resources a. The BP Corporate Family b. The Transocean Corporate Family c. The Halliburton Corporate Family d. The Andarko Corporate Family e. The Moex Offshore Corporate Family f. Cameron International Corporation g. Miscellaneous Additional Defendants 4. Environmental Torts Will Overwhelm the Civil Justice System B. The Gulf Coast Claims Facility (GCCF) 1. The Formation of the Gulf Coast Claims Facility 2. Advantages of the Gulf Coast Claims Facility 3. Concerns About the Gulf Coast Claims Facility a. Kenneth Feinberg: The $20 Billion Dollar Man b. The GCCF's Legitimacy and Transparency Limitations c. Controversial GCCF Proximate Cause Delimiters d. Exclusion of Noneconomic Damages as Tort Reform in Disguise e. The Abolition of the Collateral Source Rule f. The GCCF Does Not Compensate Societal Damages C. Class Actions Against Oil Industry Defendants 1. Advantages of Class Actions III. PART II: THE RESURRECTION OF PARENS PATRIAE FOR COLLECTIVE INJURIES A. The Gulf States' Parens Patriae Environmental Actions B. History of Parens Patriae 1. The Equitable Roots of Parens Patriae 2. Parens Patriae Exported to America 3. Injunctive Relief in Early Parens Patriae Environmental Cases C. The Modern Expansion of Parens Patriae D. The Metamorphosis of Public Nuisance 1. Public Nuisance in Tobacco Parens Patriae Actions 2. Public Nuisance in Environmental Parens Patriae Actions a. Show Me the Money: Parens Patriae Actions b. The Rise of Public Crimtorts 3. Alabama's Pioneering Environmental Parens Patriae Action 4. Louisiana's Declaratory Judgment Action 5. …

Demonstrations Sub for Medical Liability Reform

Demonstrations Sub for Medical Liability Reform

Collateral Source and Tort's Soul

Tort reformers have had a modicum of success in their efforts to eliminate or restrict the Common law's Collateral Source Rule. Interestingly, this rule has been largely neglected by tort theorists. The authors present a coherent and complete theory of collateral source, and develop twenty-three original thought experiments to operationalize this theory. They argue that, though other areas may merit tort reform, the collateral source rule is not among them. Modification of the collateral source rule endangers Tort's soul, that is, imperils the integrity of tort law.

Medical Malpractice Reform and Insurer Claims Defense: Unintended Effects?

In response to recent and past medical malpractice insurance crises, most states have implemented reforms meant to stabilize premiums and coverage availability. The importance of understanding whether these reforms implicitly affect the behavior and incentives of plaintiffs, attorneys, medical providers, and malpractice insurers in the intended way is crucial to policy makers, if they are to achieve their goal. This study specifically examines the effect of reforms on the claims defense efforts of insurers, given that defense expenses account for approximately 30 percent of malpractice premiums. Using state data for the period 1998-2002, we regress claims defense expenses against a variety of reform variables. These include seven tort reforms (noneconomic damage caps, punitive damage limits, attorney fee limits, modified collateral source rule, modified joint and several liability doctrine, mandatory pretrial screening, and statute of limitations) and two government-sponsored insurance mechanisms (joint underwriting associations and patient compensation funds). Claims defense expenses are found to be higher in the presence of noneconomic damage caps, punitive damage limits, and attorney fee limits--an unintended and counterproductive effect of reform--but are lower with mandatory pretrial screening and patient compensation funds.

Does Higher Malpractice Pressure Deter Medical Errors?

An important objective of medical liability law is to deter medical errors by punishing negligent mistakes. However, relatively little evidence exists on the deterrence effect. Using newly constructed measures of preventable medical complications and state tort reforms in the United States between 1994 and 2007, I found evidence that higher liability pressure deters preventable medical complications related to four specific obstetrics/gynecology procedures. The results also showed that the effects of tort reforms vary by the specific reform in question: while joint and several liability reform (which increases doctor accountability) appear to decrease preventable medical complications, collateral source rule reform and caps on punitive damages appear to increase these complications. Opponents of tort reform often argue that tort reforms may adversely affect patient safety, and the results of this paper suggest that such a concern is legitimate.

The Collateral Source Rule and Medicaid Plaintiffs: Eliminating Windfalls and Double Recovery

This Note examines damages awards for past medical expenses of Medicaid plaintiffs and the collateral source rule's role in determining those damages. The traditional collateral source rule's substantive component prohibits any reduction in the plaintiff's recovery for benefits or payments the plaintiff receives from collateral sources, i.e. any source other than the defendant. The rules evidentiary component excludes admission of any evidence of collateral sources. Two primary criticisms of the rule are: (1) windfalls to Medicaid plaintiffs when they recover more than Medicaid paid on their behalf, and (2) double recovery by Medicaid plaintiffs if Medicaid does not seek reimbursement. States have taken many different approaches, from maintenance of the traditional rule to complete statutory elimination. Flaws in existing approaches necessitate a new approach for Medicaid plaintiffs. Resolving the difficulties of the rule requires a two-step solution. First, states should adopt a real reasonable value approach to the collateral source rule by allowing the parties to introduce evidence of the amounts billed for the services, amounts paid by Medicaid to satisfy the obligation, and evidence of automatic reimbursement to Medicaid. With these pieces of information juries can make a factual determination of the real reasonable value of the service received and award it to the plaintiff. Secondly, states should adopt two requirements in the handling of medical expenses for Medicaid plaintiffs. First, the Medicaid plaintiff should be required to notify the state Medicaid agency when the plaintiff files suit against a defendant involving medical expenses paid by Medicaid. Second, if the plaintiff recovers for medical expenses, the state Medicaid agency should automatically be reimbursed the amount they paid on plaintiff's behalf after a pro rata reduction for their share of legal costs. This eliminates the double recovery problem because plaintiff has no way to keep Medicaid's share. These two steps ensure an opportunity for Medicaid in any legal action against a third party and reimbursement of Medicaid for their payments on the Medicaid plaintiff's behalf. This new combination of a real reasonable value and changes in the relationship between the state Medicaid agency, its recipients, and defendants eliminates some of the major problems in application of the collateral source rule without eliminating the rule and provides Medicaid their fair reimbursement.

Improperly Divorced from Its Roots: The Rationales of the Collateral Source Rule and Their Implications for Medicare and Medicaid Write-Offs

Improperly Divorced from Its Roots: The Rationales of the Collateral Source Rule and Their Implications for Medicare and Medicaid Write-Offs

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State Of Tennessee

Abstract No abstract available.