Nannette Brown, Chief Judge of the U.S. District Court for the Eastern District of Louisiana, issued an Order and Reasons affirming Magistrate Judge Michael North’s ruling on a Motion for Contempt for Failure to Adequately Respond to Subpoena Duces Tecum and to Compel Production of Documents in Collins v. Benton, No. CV 18-7465, 2019 WL 6769636 (E.D. La. Dec. 12, 2019).

Judge Brown’s decision examined the scope of discovery regarding collateral sources issues, such as medical provider and attorney agreements with third-party litigation funding companies. The Court previously examined such agreements, and whether they were subject to the collateral source rule, in Williams v. IQS Ins. Risk Retention, No. CV 18-2472, 2019 WL 937848 (E.D. La. Feb. 26, 2019).

Williams v. IQS Risk Retention

In Williams, 2019 WL 937848 (E.D. La. Feb. 26, 2019), the plaintiffs alleged personal injuries related to an automobile accident. At issue before the Court was whether the plaintiffs were entitled to the entire amount of their medical bills, or just the amounts received in full and final satisfaction by their treating physicians. The plaintiffs’ medical bills “were paid by a financing company that ha[d] contracts with medical providers who treat personal injury plaintiffs.” Id. at *3. The plaintiffs’ attorneys contracted with the financing company, who in turn, would pay forty percent (40%) of the physician’s bill which, the physicians agreed, would fully satisfy the plaintiffs’ accounts. Id.

The Court noted that “[s]ignificantly, Plaintiffs themselves were not parties to any of these agreements, and while they would have presumably agreed vis à vis their attorney that the Difference [between the amount billed and the amount actually paid] must come out of their recovery as a cost of the litigation, no suggestion has been made that Plaintiffs themselves agreed to be responsible to anyone for any medical bills or for the Difference should their recovery at trial fall short.” Id. After analyzing the law regarding the collateral source rule, the Court held that the collateral source rule did not apply: “[i]n this case, Plaintiffs cannot establish that they paid any benefit or suffered any diminution in their patrimony in order to obtain the discounted medical payments. The discounts were obtained via a series of contractual agreements that apparently triggered no obligations on Plaintiffs’ part.” Id.

Collins v. Benton

In Collins v. Benton 2019 WL 6769636 (E.D. La. Dec. 12, 2019), Judge Brown examined Judge North’s ruling which required Crescent View Surgery Center, LLC (“CVSC”), one of the plaintiffs’ medical providers, to turn over various bills, invoices, and purchase agreements regarding its agreement with Medport, a litigation financing company, relating to the plaintiffs’ medical treatment. Id. at *2. CVSC argued that Williams v. IQS Risk was not controlling, and that the documents were not discoverable, because it had not contracted with any of the attorneys involved in the litigation. Id. at *3.

In affirming Judge North’s decision, Judge Brown noted that there was a dispute as to who was actually paying for the medical services. Id. at *6. Because two of the plaintiffs testified that “their attorney was ‘taking care of’ the medical bills[,]” Judge Brown determined that the subpoenaed materials were “relevant to a determination of whether the collateral source rule applies to the difference between the amounts ‘billed’ by Plaintiffs’ medical providers and the amounts paid by Medport to those providers in satisfaction of those receivables.” Id.

Additionally, Judge Brown ruled that Judge North’s determination that the requested documents were relevant “as evidence of potential bias of those Plaintiffs’ medical providers who sold their receivables to Medport at a discount[]” was not “clearly erroneous or contrary to law.” Id.

In support of her decision, Judge Brown cited to another Eastern District case which held that financial arrangements between healthcare providers and third-party litigation funder companies were admissible for showing bias “because the plaintiff’s healthcare providers and the third-party funding companies could create an incentive for the plaintiffs’ treating physicians to want the plaintiffs to win their case, because a victory could result in more referrals from the healthcare provider and Medport.” Id. Thus, this conflict of interest “could lead a jury to question the treating physicians’ testimony regarding causation.” Id. referencing Thomas v. Chambers, No. CV 18-4373, 2019 WL 1670745, at *1 (E.D. La. Apr. 17, 2019).