Will Obamacare Usher in the Next
Era of Tort Reform?
Jacquelyn v. Clark, Texas Lawyer / July 21,
The public is largely only now beginning to notice the impact of the
Patient Protection and Affordable Care Act. One impact to keep an
eye on is whether "Obamacare" will turn out to be the first real
assault on the well-respected collateral source rule.
Many states, including Texas, have passed measures to limit an
injured person's potential recovery. Designed to prevent windfalls
to plaintiffs, Texas' Civil Practice & Remedies Code §41.0105
provides for the recovery of medical or healthcare expenses incurred
only to that amount that is "actually paid or incurred."
After years of debate as to what "actually paid or incurred" means,
the Texas Supreme Court in 2011 offered guidance in Haygood v. De
Escabedo, concluding that "actually paid or incurred" means only
those expenses that the plaintiff has paid or will pay are
While the recovery of medical expenses is designed to make the
plaintiff "whole," the common law collateral source rule is an
exception, since it historically precluded any reduction in a
tortfeasor's liability because of benefits the plaintiff may have
received from someone else—the collateral source. The theory, so
said the court, was that a wrongdoer should not have the benefit of
insurance independently procured by the injured party to which the
wrongdoer was not privy. Conversely, a tortfeasor is not liable for
medical expenses incurred that the patient was not required to pay.
So what does it mean to tort litigation when everyone is entitled to
insurance? It means that standard loss allocation principles,
including those relating to the mitigation of damages, may have made
Obamacare a game changer when future medical expenses are presented
to a jury. Is Obamacare a collateral source so as to limit its
application for jury consideration? Does Obamacare require that a
party mitigate damages by purchasing the available insurance?
Obamacare has resulted in the ability of all Americans to procure
insurance at some minimal level of coverage without consideration of
preexisting conditions. So if universal healthcare exists, it would
follow that it is no longer necessary to shield juries from the
potential financial effects of Obamacare since it applies equally to
each and every plaintiff.
Assume an injured plaintiff's damage model uses a life care plan
which projects future medical costs arising from the defendant's
negligence. The life care plan is presented in a report by a doctor
or life care planner and is supported by an economist's opinions.
Such life care plans typically maximize damage award models, as
future medical expenses are one of the largest categories of damages
claimed. These plans often assume all future medical expenses are
paid out of pocket although this is rarely the case as many
plaintiffs have access to some form of health insurance. Thus, when
universal healthcare coverage is available, why should plaintiffs
not be required to mitigate their damages and utilize the universal
healthcare which is available?
The collateral source rule fundamentally recognizes that it is an
individual's choice whether to obtain healthcare insurance—a choice
which should be protected and fostered for the benefit of all
parties involved as a matter of public policy. Obamacare, however,
makes this choice (with very few exceptions) a mandate. Arguably,
Obamacare has therefore made the public policy behind the collateral
source rule outdated. At the very least, Obamacare requires a new,
cautious examination of whether the same public policy, which
mandated exclusion of such information, should now support and
encourage compliance with Obamacare and accordingly support
disclosure of this collateral source to juries.
While Obamacare did not address such issues as varying levels of
coverage, the frequency/cap issues or permanent confinement issues,
Obamacare may have provided the ammunition for that first salvo in a
cogent argument supporting the dismantlement of the long-standing
collateral source rule.
Those courts which have examined this issue to date have so far
failed to permit juries to hear the insurance issue in its entirety
despite the existence of minimum coverage guidelines. Among other
reasons, these courts have cited the lack of reasonable certainty as
to coverages of specific future care or treatment options.
For the moment, however, each and every attorney should join the
debate in defense of their clients' position—whether plaintiff or
defendant. The construction of new damage allocations models,
encompassing both the mitigation of damages and the collateral
source rule, will continue to fuel the debate as practitioners
attempt to prosecute their claims or defend their clients.
While the defense bar has raised the issue, no available opinions
have applied Obamacare to limit or reduce an award of future
economic damages. The potential implications and unrealized
consequences of Obamacare may yet usher in new explorations of our
body of Texas case law and the continuously evolving public policy
considerations surrounding the now-mandated health insurance