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PA Superior Court Grants New Trial due to Violation of “Collateral Source” Rule

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A split Pennsylvania Superior Court recently granted a new trial for a minor based on testimony elicited by defense counsel at trial regarding federal and state benefits that the minor-plaintiff received for her birth injuries.  Although plaintiff's counsel objected to such testimony at trial, the jury never received curative instructions as to how to evaluate the testimony.  The Superior Court found that this prejudiced the plaintiff and warranted a new trial.

The case stemmed from the care rendered to plaintiff's birth mother at the defendant hospital.  Her mother presented to the emergency room on January 18, 2011 with complaints of a headache, contractions, and blurry vision and she reported that she used cocaine and smoked cigarettes.  The mother had a small placenta as well as a history of sickle cell disease and physical trauma.  The emergency physicians instructed her to return in two days, which she did on the evening of January 20, 2011.  At that time, she suffered placental abruption and underwent an emergency Cesarean section delivery.  The minor-plaintiff was born with severe birth defects.  Her legal guardian then sued the hospital on her behalf for failure to diagnose her mother with preeclampsia, which led to the plaintiff's injuries.   

Before trial, the plaintiff dismissed additional defendants and the parties stipulated that those defendants were agents of the defendant hospital, leaving the hospital as the sole defendant on the verdict sheet.  Despite that agreement, two sets of defense counsel—one for the hospital and one for its parent corporation—presented closing statements and questioned the plaintiff's witnesses.  On November 12, 2013, the jury returned a verdict for the hospital.  In response, the plaintiff moved for a judgment notwithstanding the verdict or, alternatively, a new trial.  The plaintiff's motions were denied, which led to her appeal. 

The plaintiff presented three questions on appeal: First, whether counsel for the parent corporation improperly informed the jury that the plaintiff's injuries were adequately cared for through government benefits.  Second, whether the court erred by not granting plaintiff a new trial when two sets of counsel were permitted to question witnesses and present closing arguments despite a stipulation that there was only one defendant.  Finally, whether the court abused its discretion by permitting a dismissed physician defendant to testify as an expert witness when he was not identified as an expert witness and his opinions were undisclosed before trial.  The majority found that the plaintiff was indeed entitled to a new trial because she had been prejudiced both by the testimony related to the government benefits and the fact that the testimony had been elicited by counsel for the hospital's parent corporation, who was not a party.  The majority found no issue with the physician's testimony, as he did not proffer expert opinions. 

The first issue centered on Pennsylvania's "collateral source" rule.  This rule provides that evidence of payments or compensation from a collateral source, such as insurance, shall not diminish the damages from a defendant's wrongful conduct and evidence as to additional sources are generally inadmissible.  The rule intends to avoid a situation where a plaintiff is prevented from full recovery because she has coverage from other sources.  Although a plaintiff may have coverage through the government or her own insurance, the wrongdoer should not benefit from these resources by not having to compensate a harmed plaintiff.  Rather, Pennsylvania finds it preferable for a plaintiff to benefit from a windfall rather than a liable defendant avoiding full responsibility for its wrongful act.

Here, the trial court record revealed that counsel for the hospital's parent corporation questioned the plaintiff's expert life care planner on cross-examination whether she believed that Medicaid covered the cost of the minor's medications.  Counsel then questioned the expert as to the effect of the Patient Protection and Affordable Care Act ("ACA") on the minor's future care costs.  Plaintiffs' counsel objected to both lines of questioning as violating the collateral source rule.  The trial judge permitted the testimony; however, the jury later did not receive a curative instruction as to how it should evaluate the objectionable testimony.  During his closing statements, defense counsel stated that everything that the minor required in terms of medical care, schools, and communication, she already received.  In writing for the majority, Judge David N. Wecht found that the overall effect of the closing suggested that the minor's medical costs were covered by Medicaid and the ACA, and that she therefore did not require additional compensation.  The Superior Court ruled this was a "patent violation" of the collateral source rule and had improperly influenced the jury's determination.

The Superior Court's finding on the second issue hinged on the first.  The plaintiff argued that the defendant hospital's parent corporation should not have been allowed to have its own counsel question witnesses and close as it was not a party and its interests mirrored those of the hospital.  The trial court disagreed when evaluating the plaintiff's post-trial motions as plaintiff did not point out specific instances of prejudice.  The Superior Court disagreed as the "superfluous" counsel had violated the collateral source rule, which prejudiced the plaintiff.  Accordingly, there was a specific example of prejudice.  Moreover, the Superior Court noted that the Pennsylvania Rules of Civil Procedure allow trial judges to limit the number of defense counsel and closings, and not doing so here was an abuse of the court's discretion.  The Superior Court therefore found that the plaintiff was entitled to a new trial based on these two issues. 

Judge Eugene B. Strassburger, III authored a concurring and dissenting opinion.  Although he agreed that the physician's testimony did not constitute expert testimony, he disagreed that there were violations of the collateral source rule as the testimony would only affect the amount of damages awarded, and the jury never reached that determination because they ruled in favor for the defendant.  Accordingly, no prejudice resulted.  Because the second defense counsel did not prejudice the plaintiffs, Judge Strassburger also disagreed that having two defense attorneys was a reversible error.


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