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Using the Affordable Care Act in Defense of Catastrophic Personal Injury Cases

Courts across the country are beginning to consider the argument that the Affordable Care Act (ACA) serves as a vehicle to limit a plaintiff’s claim for future medical damages. Plaintiffs often use exaggerated life care plans with significant damage calculations to support their future medical damages in catastrophic injury cases. In general, life care plans do not fairly consider a plaintiff’s entitlement to health insurance coverage, and assume that the alleged future medical care expenses are to be paid out-of-pocket by the plaintiff.

To combat these exaggerated forecasts by plaintiffs, defendants are relying on the mandates under the ACA to persuade the courts to fairly limit these inflated claims. Defendants are well served to argue that courts should not continue to force this fiction on the jury and allow a plaintiff to obtain a double recovery − from a jury’s damages award and from the plaintiff’s mandated health insurance. The purpose of tort damages is to make the claimant whole. As a result of the ACA mandates, individuals are now required to maintain insurance and insurance companies are prohibited from excluding coverage based on a preexisting condition.

The framework that may have prevented injured plaintiffs from obtaining insurance coverage for potential future damages simply does not exist in the post-ACA environment, so it follows that public policy supports limiting a plaintiff’s future medical damages. To do otherwise, arguably would provide a windfall to plaintiffs.

The Collateral Source Rule

Texas, like many states, enforces the collateral source rule, which precludes any reduction in a tortfeasor’s liability because of benefits received by the plaintiff from someone else − a collateral source. The Texas Supreme Court has held that Texas Civil Practice and Remedies Code § 41.0105 limits a plaintiff’s past medical damages to those amounts actually paid or incurred (and prevents plaintiffs from recovering amounts initially charged but subsequently written off by a health care provider, that neither the claimant nor anyone on claimant’s behalf will ultimately be liable for paying). See Haygood v. De Escabedo, 356 S.W.3d 390 (Tex. 2010) (“To impose liability for medical expenses that a health care provider is not entitled to charge does not prevent a windfall to a tortfeasor; it creates one for a claimant….”). The ACA potentially provides a basis to further limit a plaintiff’s recovery of future medical expenses, as mandatory insurance under the ACA will cover all costs except the amount of the plaintiff’s premium and annual maximum out-of-pocket cost.

In our view, insurance coverage under the ACA is not a collateral source because the premium costs would be funded by the defendant as part of the damage calculation. The “theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injury party, and to which the wrongdoer was not privy.” Haygood, 356 S.W.3d at 395. The ACA premiums are mandated and the present value of the cost of such future premiums can be funded by the defendant as part of the damage award − which means the ACA should not be viewed as a collateral source.

Furthermore, failure by a plaintiff to procure federally mandated insurance should bar a plaintiff’s recovery of his future medical bills. Mitigation of damages by a plaintiff is the law of the land. A plaintiff should not be permitted to inflate future damages by requesting the speculative award of a jury based on the plaintiff’s life care plan, when under the law, the plaintiff is required to obtain health insurance, and a defendant’s cost to fund plaintiff’s insurance (that would cover any necessary care) would be less.

Trends and Takeaways

Although there is no current Texas precedent specifically limiting future medical damages based on the mandatory insurance requirements of the ACA, courts across the country are allowing defendants to limit damages based on the mandated insurance available under the ACA. See, e.g., Jones v. MetroHealth, Case No. 102916, 2016 Ohio App. LEXIS 2638 (Ohio—Ohio Ct. App. July 7, 2016) (affirming the trial court’s use of the ACA to substantially reduce the jury’s award of future damages; and rejecting the argument that because Medicaid, Medicare and the ACA are “political targets” subject to change or repeal, they should not be used to limit an award of future medical damages); Brewington v. United States, 2015 U.S. Dist. LEXIS 97720 (California—C.D. Cal. July 24, 2015) (the court held it was appropriate to take insurance benefits available under the ACA into consideration in calculating future medical needs).

Defense attorneys and insurers may benefit from arguing the ACA limits damages for future medical care. Counsel should consider asserting the limitation of future medical damages under the ACA as an affirmative defense in responsive pleadings and disclosures and consider moving for partial summary judgment on the defense.

© 2020 Wilson ElserNational Law Review, Volume VI, Number 259



About this Author

Kent Adams, Wilson Elser Law Firm, Civil Litigation Attorney

Kent Adams is the regional managing partner for Wilson Elser’s Houston and Beaumont, Texas, offices. Kent defends clients in civil litigation in the state and federal courts of Texas and Louisiana. He has tried dozens of catastrophic personal injury, insurance coverage, claims handling, property damage, energy-related and environmental cases to jury verdicts. Kent has defended products, premises, motor vehicle, trucking, maritime, cyber and data breach, oil field, pipeline, railroad, chemical plant and refinery cases. He has defended automotive, consumer, energy, and...

Allison Edwards, Wilson Elser Law Firm, Civil and Commercial Litigation Attorney

Allison Edwards has experience in civil and commercial litigation, and routinely litigates matters in state and federal courts. She currently focuses her practice on general liability, premises liability and product liability defense, including catastrophic personal injury litigation. She has defended manufacturers, including automotive, consumer, commercial and industrial clients in occupational injury and personal injury litigation. Her practice areas also include commercial litigation, professional liability defense and defense of 42 U.S.C. §1983 claims.