Collateral Source Rule Applies to Louisiana Workers’ Compensation Insurance Payments—or Does It?

In a personal injury case, the collateral-source rule bars a tortfeasor, a defendant, from reducing his liability by the amount the plaintiff recovers from independent sources. It is a substantive rule of law, as well as an evidentiary rule (disallowing evidence of insurance or other collateral payments that may influence a fact finder). In its simplest form, the rule asks whether the tortfeasor contributed to, or was otherwise responsible for, a particular income source. If not, the income is considered independent of (or collateral to) the tortfeasor, and the tortfeasor may not reduce its damages by that amount.

In practice, the rule allows plaintiffs to recover expenses they did not personally have to pay. Without the rule, however, a third-party income source would create a windfall for the tortfeasor.

How Louisiana Has Handled the Collateral Source Rule in Respect to Workers’ Compensation Payments

Two primary considerations guide a Louisiana court’s determination with respect to the collateral source rule: (1) whether application of the rule will further the major policy goal of tort deterrence; and (2) whether the victim, by having a collateral source available as a source of recovery, either paid for such benefit (i.e. through their medical insurance or by workers’ compensation) or suffered some diminution in his patrimony (inheritance) because of the availability of the benefit, such that no actual windfall or double recovery would result from application of the rule.

In the context of workers’ compensation payments, the Louisiana Third Circuit in 2017 upheld a trial court’s denial of the defendant’s motion in limine, which sought credit for medical bills paid by the injured plaintiff’s workers’ compensation insurer. The Third Circuit explained that the collateral source rule applies to a tortfeasor even if consideration — in the form of policy payments — is nonexistent.

Stated differently, the plaintiff was able to recover the medical payments made by the workers’ compensation insurer. See Royer v. State Dep’t of Transportation & Dev., 2016-534 (La. App. 3 Cir. 1/11/17), 210 So. 3d 910.

However, in a more recent decision the Third Circuit found no abuse of discretion in a trial court’s grant of a defendant’s motion in limine, which prohibited the introduction at trial of the actual amount of plaintiff’s medical bills and instead only allowed the presentation of total medical bills paid by the injured plaintiff’s workers’ compensation insurer. In a 2-1 decision denying the plaintiff’s supervisory review, the dissenting judge stated that the application of the collateral source rule furthers the policy goal of tort deterrence and would reverse the trial court’s ruling. See Simmons v. Cornerstone Investments, LLC, et al., 2017-1077 (La. App. 3 Cir. 4/5/18).

The Louisiana Supreme Court has now granted plaintiff’s application for supervisory review. It will be interesting to see how the Supreme Court handles the application of the collateral source rule in the context of workers’ compensation payments.

How the Collateral Source Rule Is Handled Under Federal Law

It is noted that in regard to federal law, where medical expenses are paid through workers’ compensation coverage provided by the employer pursuant to Longshore and Harbor Workers’ Compensation Act (LHWCA), an injured plaintiff may not recover from a third-party tortfeasor for the full amount of medical expenses billed but not paid. See Deperrodil v. Bozovic Marine Inc., 842 F.3d 352 (5 Cir. 2016).