Tag: Louisiana

Uninsured Motorist Coverage: Making Smart People Feel Dumb

I have met smart, sophisticated “business” people whose eyes glass over when they try to explain their understanding of “UM” coverage. The picture becomes murkier when discussing “economic-only UM,” a form of UM coverage many people purchase without even knowing it. Through many years and conversations, I have come to conclude that there is a general fogginess that obscures this entire subject with many, if not most, people. This blog is an effort to improve understanding on the subject.

What is “UM” Coverage?

“UM” signifies “uninsured motorist” insurance coverage, but is more properly described as “uninsured/underinsured” motorist coverage. A person, family, business, or group purchases UM coverage to respond to damages caused in an accident by someone who has either no insurance or not enough to cover the loss. You purchase UM insurance to protect yourself or those connected to you. Without UM, you are gambling that the person who caused the accident (the “tortfeasor”) will have insurance coverage, and enough coverage, to respond to the injuries and damages they have caused.

Why UM?

This question is simply answered in a two-part response:

#1- The roads are dangerous

Unless you are a crop duster or an undercover agent, the most dangerous thing you will likely do on any given day is to drive on a public road, even more so in the age of “smartphones” and distracted-driving.

#2- Many drivers lack sufficient liability coverage- 

An unhealthy portion of drivers have either no insurance on insufficient insurance coverage to address an accident involving severe injuries or damages. The State of Louisiana requires motorists to obtain at least the minimum insurance of $15,000 “per person,” $30,000 “per accident,” and $25,000 to address property damage. If you do not purchase UM, you are trusting that these limits will be enough, as they might be in a minor accident. But what if the injuries are severe or you have multiple passengers in your car, van, or suburban?

Often, the same people who reject UM, will buy “collision” coverage on their car to make sure they are not left paying for a car note after the car is destroyed in an accident. In this limited way, you can think of UM insurance as collision coverage on you, your family, passengers, or employees.

While perfect statistics are not available, many drivers on the road have no insurance. Frequently, drivers will obtain minimum limits insurance through a “premium finance” arrangement, but will have stopped paying the premiums (thereby losing coverage) by the time of an accident.

What is “Economic-Only” UM?

In Louisiana, UM coverage will be afforded to you unless you “waive” the coverage under La. R.S. 22:1295. Louisiana residents are presented with a form that allows them to waive or select UM coverage. They are also allowed to select “economic-only” UM. People often choose this option because it is cheaper, but economic-only UM coverage will only pay for economic damages such as lost wages, medical bills, funeral costs, and other monetary damages. Economic-only UM will not pay money to compensate for pain and suffering/mental anguish, scarring and disfigurement, or other non-economic damages.

FAQS      

  • Can UM protect me from a hit-and-run driver? Yes.
  • What if another driver’s negligence caused the accident, but there was no physical contact with that driver’s vehicle and they fled? In this scenario, UM may be available under La. R.S. 22:1295(1)(f); however, you will need to identify an “independent and disinterested witness” to establish the actions of the unidentified driver.
  • Will UM protect me if I am at fault in an accident? No. The law would consider that a “moral hazard” and invite unscrupulous individuals to cause an accident in hopes of recovering under the policy they purchased.
  • Will UM protect me if I am a pedestrian? It may, depending upon the terms of your insurance policy.
  • What if an object falls from a vehicle and causes an accident? UM may be available in this circumstance. The ultimate answer may depend upon whether the “falling object” had come to rest before the accident. Rener v. State Farm Mut. Auto. Ins. Co., 99-1703 (La.App. 3 Cir. 4/05/2000), 759 So.2d 214, 215.

CONCLUSION

Rational people may decide to reject UM to save money; and this decision may be the right one if they have health insurance, short-term disability, long-term disability, or others such protections. However, people often make such decisions with less than full information. Hopefully, you will make the smart choice.

The “Collateral Source Rule” & How it Can Cost (or Make) You Thousands – Part II

The Real-World Impact of the Collateral Source Rule

Last week, we asked what a defendant owed a plaintiff for medical treatment received as a result of an accident for which the plaintiff’s health insurer paid $50,000, even though the medical providers billed $150,000 and the plaintiff only paid a $500 deductible. This week, we narrow in on an answer.

Generally, the collateral source rule provides that a defendant may not reduce their exposure as a result of “collateral sources” available to the plaintiff, such as health insurance. So, the defendant typically owes the full $150,000; but whether a “source” is a “collateral” source can change the result dramatically. Below, we discuss circumstances where this issue can radically alter the amount owed.

Medicaid. Medicaid is a government-run, social health care program for families and individuals with limited resources. Medicaid, through its size and leverage, negotiates rates far below those charged by doctors and hospitals. So, does a defendant whose conduct caused $150,000 in medical expenses to a Medicaid beneficiary owe the whole $150,000? No, according to the Louisiana Supreme Court decision in Bozeman v. State, 879 So. 2d 692, 701 (La. 7/2/04).

The Bozeman Court found that the reduction in medical charges obtained by Medicaid was not a collateral source. The Court utilized a “benefit of the bargain” approach. Under this approach, a plaintiff is awarded the full value of their medical expenses, including the “write-off” amounts, when the plaintiff has paid some amount towards their care. Because Medicaid recipients pay no enrollment fee and provide no consideration for the benefits received under Medicaid, they may claim no more than the amounts paid by Medicaid for their care.

Medicare. Medicare is a government program of hospitalization insurance and voluntary medical insurance for persons aged 65 and over and for certain disabled persons under 65. The Bozeman Court indicated that write-offs resulting from Medicare should be subject to the collateral source rule because plaintiff has paid some consideration for the benefits. Unlike Medicaid, Medicare recipients have paid into the system and therefore are entitled to the “benefit of the bargain.” So, the defendant in our scenario likely owes the whole $150,000 in medical expenses to the Medicare plaintiff.

Attorney-Negotiated Discounts. The Louisiana Supreme Court decision in Hoffman v. 21st Century N. Am. Ins. Co., 209 So. 3d 702 (La. 10/2/15), involved whether a write-off obtained through the plaintiff attorney’s negotiations with the healthcare provider was subject to the collateral source rule. In finding that it was not, the Court emphasized that the plaintiff did not incur any additional expense in order to receive this write-off and had not suffered a diminution in his “patrimony”, i.e., the plaintiff paid no amounts to help facilitate this reduction.

Plaintiff-Negotiated Discounts. However, if a plaintiff personally negotiates a write-off with the medical provider, the write-off amount may be subject to the collateral source rule according to the decision in Lockett v. UV Ins. Risk Retention Grp., Inc., 180 So. 3d 557 (La. App. 5 Cir. 11/19/15). In that case, the Louisiana Fifth Circuit found that the payment made by the plaintiff on the portion not written-off was considered a diminution of her patrimony and “consideration” for the write-off.

Gratuitous Medical Services.  In Johnson v. Neill Corp., 2015 WL 9464625 (La. App. 1 Cir. 12/23/15), writ denied, 189 So. 3d 1068 (La. 3/14/16), and writ denied, 189 So. 3d 1070 (La. 3/14/16), the Court found that gratuitous medical services negotiated by the plaintiff were similarly subject to the collateral source rule. In Johnson, the plaintiff was a doctor at clinic whose members provided each other with medical services at no charge. The court found that allowing recovery of the costs of these medical expenses served to deter tort activity, and the plaintiff’s requirement to provide medical services to other doctors showed a diminution in her patrimony.

So, how much does our defendant owe: $150,000, $50,000, or some other amount? As with many things in law, it all depends.

The “Collateral Source Rule” & How it Can Cost (or Make) You Thousands – Part I

Imagine you are a defendant sued because you negligently injured someone in Louisiana.  In the accident, the plaintiff received extensive medical treatment. The health insurer paid $50,000 for medical costs even though the doctors billed $150,000 for the plaintiff’s care. The plaintiff was only out-of-pocket $500 for his health insurance deductible. What amount should you have to pay: $150,000, $50,000, or only $500?

The answer to this question is not so simple. You will certainly have to pay more than the plaintiff’s deductible, that much is clear. But whether you are required to pay the medical providers’ full rate of $150,000, the insurer’s discounted rate of $50,000, or some other amount for the medical services provided is a more complicated issue.

This blog is broken down in a two-part series. This installment will address the background of the collateral source rule and the public policy behind the rule.

What is the Collateral Source Rule?

The collateral source rule provides that a tortfeasor is generally not entitled to a credit for payments made to a plaintiff through “collateral sources,” i.e., sources not provided by the defendant. Under this rule, a tortfeasor’s exposure for damages should be the same regardless of whether or not the plaintiff purchased health insurance.

The collateral source rule permits the plaintiff to recover medical expenses in excess of the amounts actually paid by the plaintiff or their insurer. Critics therefore assert that the rule provides a “windfall” to the plaintiff that violates the goal of Louisiana tort law, namely to make the victim “whole.”  As applied, the rule can make the victim more than whole.

Origins of the Collateral Source Rule

To understand the collateral source rule, it helps to look at its origins. The rule in the United States at least dates back to the 1854 case The Propeller Monticello v. Mollison, 58 U.S. (17 How.) 152, 15 L.Ed. 68 (1854). In Propeller Monticello, two ships wrecked and one sank. The insurer of the ship that sank paid for the loss. The owner of the at fault ship asserted that the plaintiff had been fully compensated by the insurer’s payment and that it was therefore not obligated to pay for the damage. In rejecting this argument, the Propeller Monticello Court held the defendant was not a party to the insurance contract and could not reduce exposure by citing to the insurance available to the plaintiff.

Policies Behind the Collateral Source Rule

In Dep’t of Transp. & Dev. v. Kansas City S. Ry. Co., 846 So. 2d 734 (La. 5/20/03), the Louisiana Supreme Court detailed the public policy concerns that support the collateral source rule. According to the court, the policies in favor of the rule include:

i.  Fairness– a defendant should not gain an advantage from benefits provided to the plaintiff independent of any act of the defendant;

ii.  Deterrence– the rule provides a deterrence to negligent conduct; and,

iii.  Promotion of Insurance– victims could be dissuaded from purchasing insurance if that act could affect tort recovery.

So, how much do you owe: $50,000, $150,000, or some other amount? We’ll tell you in Part II of this blog.

Trees and Neighbors: A Growing Problem

Louisiana is a river delta state filled with fertile land and the refusal of its local fauna to stay within boundaries is a problem.  Trees create hazards. They also bring nuisance in all its forms––pine sap drizzled over a new car, an oak branch casting a sun-blocking shadow over the perfect tanning spot, and on and on. If you own the tree, the problem is easy enough to address; but what if the tree belongs to your neighbor? Can you cut your neighbor’s tree?

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