Exclusion of past and future disability payments when there is subrogation
posted on June 15th, 2008 in Subrogation by clintCollateral source payments are usually admissible in a medical malpractice action. The General Assembly abrogated the collateral source rule in medical malpractice cases only to a certain extent:
In a malpractice action in which liability is admitted or established, the damages awarded may include (in addition to other elements of damages authorized by law) actual economic losses suffered by the claimant by reason of the personal injury including, but not limited to cost of reasonable and necessary medical care, rehabilitation services, and custodial care, loss of services and loss of earned income, but only to the extent that such costs are not paid or payable and such losses are not replaced, or indemnified in whole or in part, by insurance provided by an employer either governmental or private, by social security benefits, service benefit programs, unemployment benefits, or any other source except the assets of the claimants or of the members of the claimant’s immediate family and insurance purchased in whole or in part, privately and individually. TENN.CODE ANN. § 29-26-119.
Culled to its essence, the statute provides Defendants a credit for services “paid or payable…by any other source.” The statute seeks to prohibit injured parties from making a double recovery by reducing a plaintiff’s recovery by the amount of benefits paid by employer-provided insurance. Nance v. Westside Hosp., 750 S.W.2d 740, 742 (Tenn.1988).
Insurance payments are inadmissible when there is a right of subrogation. Excluded from the statute’s abrogation of the collateral source rule are payments made where the insurer has subrogation rights. Id. at 743. Where the patient must repay the insurer out of any damages recovered, the insured gets no double recovery. Hughlett v. Shelby County Health Care Corp., 940 S.W.2d 571, 574 (Tenn.Ct.App.1996). The patient’s losses have not been “replaced or indemnified” (1) where a right of subrogation exists or (2) where the patient has a legal obligation to repay the collateral source payer, Richardson v. Miller, 44 S.W.3d 1, (Tenn.Ct.App.2000). Therefore, the patient may prove her losses when the insurer asserts a right of subrogation, and the physician gets no credit for the collateral source payments. Id. at 32.
The plaintiff’s disability payments are inadmissible when there is a right of subrogation. When the policy is clear that the insurer has a right of subrogation, there is no prospect of a double recovery. The plaintiff must pay any proceeds from a recovery to the disability carrier. The repayment is co-extensive with the disability payments already made. Moreover, the proceeds from any recovery will be offset against future disability payments. Under the plain language of the statute, these losses are not “replaced or indemnified.” The Supreme Court does not allow a defendant credit in medical malpractice cases for insurance payments when there is a right of subrogation. Therefore, a Court should exclude any evidence of past and future disability payments to the plaintiff when there is a right of subrogation.