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The appeals court of Colorado, Division III, reviewed Forfar v. Wal-Mart Stores, Inc. on August 23, 2018. The case involved Robert P. Forfar III as the plaintiff and Wal-Mart Stores, Inc. as the defendant. This is a premises liability case that presents a discussion on whether the collateral source rule applies to certain Medicare benefits. The appeals court concluded that it does.

Wal-Mart Stores, Inc., appeals the judgment entered by a jury verdict that favored the plaintiff, Robert P. Forfar III. The injuries that he suffered when he slipped and fell at a Wal-Mart store resulted in a judgment of $44,000 in economic damages for the value of medical services that Forfar had received. Forfar is a Medicare beneficiary.

Before the case moved to trial, Wal-Mart attempted to exclude evidence of Forfar’s medical bills owned due to agreements he had entered into with his medical providers. Wal-Mart alleged that because those agreements were null and void under specific Medicare regulations, any evidence of the value of those medical services “should be limited to the Medicare approved charges for the services.” Forfar filed a motion in limine to not include any evidence that he had received Medicare benefits, disputing that those benefits constituted a “collateral source.”

The trial court ruled that the defendant could not “present evidence to the jury as to the amount of the Medicare limits,” and that Forfar “may not present evidence of private contracts between himself and any of the third-party medical providers.” This still permitted him to “present evidence of the reasonable value of the medical services…and such value need not be based upon the Medicare limits.” As the trial proceeded with this ruling, Forfar was to seek damages of $72,636 as the “reasonable value of the medical services.”

After trial, the defendant moved to decrease the damages amount. Wal-Mart disputed that the economic damages awarded for Forfar’s medical expenses “should be reduced to Medicare accepted rates.” The trial court decided to deny this motion. It held that the Medicare benefits were within the contract exception to the collateral source rule. Wal-Mart has decided to challenge both of these rulings on appeal, and we affirm.

In the state of Colorado, the collateral source rule has a pre-verdict and post-verdict evidentiary component. Under the general rule, “compensation or indemnity received by an injured party from a collateral source, wholly independent of the wrongdoer and to which the wrongdoer has not contributed, will not diminish the damages otherwise recoverable from the wrongdoer.”

In a pre-verdict, this applies to bar proof of collateral source benefits because such evidence could provoke the fact-finder to wrongly reduce the plaintiff’s damages award on the basis that the plaintiff already recovered his or her loss from the collateral source. After reviewing the post-verdict findings, Wal-Mart asserted that because Forfar’s medical providers, who are covered by Part B of the Medicare program, did not submit an affidavit opting out of Medicare, they cannot recover more than Medicare permits for their own services.

Forfar agrees that he was covered by Medicare through his Social Security Disability Insurance (SSDI) benefits. However, he disputes that Medicare is a collateral source, which proves an evidentiary limitation and is subject to the contract exception. We assume that Forfar’s medical providers are subject to these Medicare limitations. We also conclude that the trial court rightly applied the pre-verdict collateral source rule and the contract exception. We finally conclude that Medicare does not require application of the state law collateral source doctrine.

We also concluded that the evidentiary bar applies in regard to those benefits that constitute a collateral source. The court further explains that a “collateral source is a person or company, wholly independent of an alleged tortfeasor, that compensates an injured party for that person’s injuries.” So, the reasonable value of Forfar’s medical services was not limited to payments that Medicare paid to his medical services. This is still assuming that they could not receive any more from Forfar or a guarantor.

The appeals court also concluded that the Medicare benefits fall within the contract exception. In applying the contract exception to the Medicare benefits that Forfar had, the trial court discussed that the plaintiff was eligible for Medicare based on his SSDI benefits, not based on his age. The court also found that Forfar had “qualified for SSDI benefits after he had accumulated a sufficient work history and as a result of his contributions to Social Security.”

The appeals court, however, found no meaningful difference between SSDI benefits and Medicare benefits. So, both benefits fall within the contract exception. In the end, we concluded that the trial court had correctly applied the contract exception to Medicare benefits.

Lastly, Wal-Mart continually persisted that under the Medicare statutes, “No Person” may be held liable for payment of any amounts billed in excess of Medicare approved charges. However, it was found that even if the “no person is liable” language could apply to a tortfeasor like Wal-Mart, the section only inhibits liability “for payment of any amounts billed.” No amounts have been billed to Wal-Mart.

So, we conclude that the Medicare regulations relied on by Wal-Mart do not preempt state law, holding it legally responsible for the reasonable value of Forfar’s medical services. The judgment has been affirmed.

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