Goble, ThyssenKrupp, and the collateral source rule: resolving the ongoing conflict.

• Author: Gordon, Robert E.

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At common law, the collateral source rule prohibited a verdict from being set off by benefits received or payments made by collateral sources of indemnity. (1) Further, the existence of such collateral sources was considered inadmissible at trial because they tended to mislead the jury. (2) The Tort Reform and Insurance Act of 1986 drastically redefined Florida's common law collateral source rule via F.S. [section] 768.76 (1986). The act allowed defending parties to reduce an "award by the total amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources; however, there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists." (3) Although verdicts may be setoff under the act, the common law collateral source rule still persists and bars the admission of the existence of collateral sources of indemnity at trial. (4)

In Gormley v. GTE Products Corp., 587 So. 2d 455 (Fla. 1991), the court denied the admission of an insurance document because the insurance document alluded to the existence of a collateral source of indemnity. (5) The court "reason[ed] that the introduction of collateral source evidence misleads the jury on the issue of liability and, thus, subverts the jury process." (6) Further, "because a jury's fair assessment of liability is fundamental to justice, its verdict on liability must be free from doubt, based on conviction, and not a function of compromise." (7) The court disagreed with respondent's claim that [section] 768.76 generally allows the introduction of collateral sources of indemnity, "subject to a probative-prejudice balancing test." (8) The court stated that [section] 768.76 does not "require[] the admission of any collateral source into evidence... rather [it] require[s] that some collateral sources shall reduce damages." (9)

Since Gormley was decided in 1991, after the Tort Reform and Insurance Act of 1986, the court's intent to maintain at least this part of the common law collateral source rule is apparent. As such, the act did not completely abrogate the common law rule. (10) Summarily, F.S. [section] 768.76 (2010), simply requires the court to reduce an award by the amount which has been paid for the benefit of the claimant from a collateral source because evidence of the collateral source is barred at trial. (11)

Although Florida's collateral source rule operates routinely and rather innocuously in Florida's courtrooms, cases still arise which afford appellate courts the opportunity to review and clarify [section] 786.76. This article will focus on two cases in particular: Goble v. Frohman, 901 So. 2d 830 (Fla. 2005), and ThyssenKrupp Elevator Corp., v. Lasky, 868 So. 2d 547 (Fla. 4th DCA 2004). In Goble, the Florida Supreme Court declared that "contractual discounts" negotiated by the injured party's HMO fall within the statutory definition of a collateral source. (12) Because "contractual discounts" are considered collateral sources, they are barred from being placed into evidence at trial and are subject to a setoff post-verdict. (13) In ThyssenKrupp Elevator Corp., the Fourth District Court of Appeal addressed the issue of how to properly handle benefits provided by Medicare. (14) The court held that when Medicare is satisfying debts incurred as a result of the defendant's negligence, the jury is permitted to know of the availability of benefits provided under Medicare on behalf of the plaintiff. (15)

Many courts presently face difficulties in applying ThyssenKrupp and Goble properly. This may be a result of the Florida Supreme Court's decision not to review ThyssenKrupp or the apparent conflict created between the two cases. Additionally, various districts have voiced discrepant opinions regarding Medicare, Medicaid, and other free or low-cost charitable governmental benefits as they apply to the collateral source rule. (16) As such, it is certainly reasonable that the rule is still being applied incorrectly, even with abundant case law on point.

In Goble, the plaintiff was injured in a car accident as a result of the defendant's negligence and incurred $574,554.31 in medical services. (17) The plaintiff paid $15,000 in co-payments for coverage through his HMO. (18) Subsequently, the plaintiff's HMO agreed to pay $145,970.76 to the medical providers in complete satisfaction of the plaintiff's debt incurred as a result of the medical treatment. (19) The difference between the amount charged by the medical providers and the amount the plaintiff's HMO paid in complete satisfaction is known as the "contractual discount." (20) In Goble, the "contractual discount" totaled $413,583.55. (21)

An agreement between the HMO and the medical providers prohibited the medical providers from seeking reimbursement or subrogation for the "contractual discount." (22) At trial, the jury awarded the plaintiff the full amount of his past medical bills. (23) The defendant moved for a setoff under F.S. [section] 786.76 (1999) to make the award parallel the amount the HMO agreed to pay in complete satisfaction of the plaintiff's medical expenses. (24) The motion was granted and promptly appealed by the plaintiff. (25)

In deciding the case, the court referred directly to the collateral source rule promulgated in F.S. [section] 786.76.26 The statute reads in pertinent part: 786.76--Collateral Sources of Indemnity

In any action to which this part applies in which liability is admitted or is determined by the trier of fact and is in which damages are awarded to compensate the claimant for losses sustained, the court shall reduce the amount of such award by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise...