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Media Alerts - Simms v. United States - Fourth Circuit
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November 8, 2016
  Simms v. United States - Fourth Circuit
Collateral Source Rule Permits Plaintiff's Recovery Despite Medicaid Payments

Areas of Law: Medical Malpractice, Federal Tort Claims Act

Issues Presented: 1) Whether the district court erred in calculating damages awarded to plaintiff for her son's past and future medical expenses; 2) whether the district court erred in measuring plaintiff's damages using the amount medical providers billed, rather than the amount the Medicaid program paid to providers; and 3) whether the district court erred in failing to hold a post-verdict prejudgment collateral source hearing.

Brief Summary: The United States Court of Appeals for the Fourth Circuit held that the district court 1) properly awarded plaintiff damages attributable to her child's past medical expenses pursuant to West Virginia's "collateral source rule"; 2) correctly measured plaintiff's damages using the amount medical providers billed for her son's care, rather than the amount the West Virginia Medicaid program paid to providers; and 3) erred in failing to hold a post-verdict prejudgment collateral source hearing. However, the court vacated the district court's judgment with respect to damages awarded for past and future medical expenses and remanded the case to the district court for failure to hold a collateral source hearing.

Extended Summary: Misty Simms received prenatal care at a federally-supported health care center in West Virginia. In February 2008, Simms' physician detected potential fetal abnormalities during a routine ultrasound while Simms was eighteen weeks pregnant. The physician did not inform Simms of the concerns. Three months later, after a series of follow-up appointments, Simms learned that her fetus' brain was extremely underdeveloped, her child would never walk or talk, and would be severely mentally disabled. By then, Simms was in her third trimester and West Virginia law prohibited her from terminating her pregnancy. Simms gave birth to a son who was severely disabled and in an ongoing "vegetative state." He is now eight-years-old and has required twenty-four-hour care and monitoring throughout his life. To date, his care has cost over two million dollars in medical expenses. In 2011, Ms. Simms brought a wrongful birth action against the federal government under the Federal Tort Claims Act (FTCA). The district court found the government liable and awarded her over twelve million dollars in damages, including past billed medical expenses and future medical expenses for her son's care over a twenty-one-year life expectancy. The government appealed, challenging only the court's award of damages for past and future medical expenses.

First, the government argued that Simms did not have a right to recover past medical expenses because Medicaid paid those expenses. Under West Virginia law, a parent who brings a wrongful birth suit is entitled to recover the costs of raising a child with birth defects. The Fourth Circuit determined that such damages include medical costs attributable to the birth defects before and after the child reaches age 18. Further, parents are entitled to such recovery because of their legal obligation to support their child. The court found that Simms was entitled to recovery because she had a legal obligation to support her child and the health care center's negligence increased the weight of that obligation. Moreover, citing Kenney v. Liston, 760 S.E.2d 434, 440 (W. Va. 2014), the court reasoned that the collateral source rule protects payments made to or on behalf of an injured party from a third party such as insurance including Medicaid. Thus, the court held, the collateral source rule protected Simms' Medicaid payments and prohibited the government from offsetting Simms' damages based on Medicaid payment of her son's medical expenses.

Second, the government argued that even if the collateral source rule applied, the district court erred by calculating Simms' damages based on the amount her son's medical providers billed, rather than the amount the Medicaid program actually paid. The Fourth Circuit rejected this argument as well, noting that under West Virginia law, the proper measure of damages for medical expenses is the reasonable value of necessary medical services regardless of the amount actually paid. Citing Kenney, the court determined that benefits conferred by public payers, such as the West Virginia Medicaid program, do not alter the collateral source rule analysis. Thus, the court concluded, proof of the original medical bill is prima facie evidence that the expense was necessary and reasonable regardless of the amount paid and held that the district court did not err in calculating Simms' damages.

Finally, the government argued that the district court erred in refusing to reduce the damages award pursuant to West Virginia's Medical Professional Liability Act. That statute entitles a defendant to a post-verdict prejudgment hearing regarding a plaintiff's payments received from collateral sources. The court noted that the district court did not hold a collateral source hearing pursuant to the Act before it entered judgment. The court reasoned that a hearing was necessary for the district court to determine whether the statute entitled the government to a damages reduction and whether the Medicaid program may recover from Simms by subrogation, lien or reimbursement. Accordingly, the court vacated the district court's judgment with respect to damages awarded for past and future medical expenses and remanded the case to the district court to hold the requisite collateral source hearing.

To read the full opinion, click here.

Panel: Wynn and Harris, Circuit Judges, and Biggs, District Judge

Argument Date: 01/27/2016

Date of Issued Opinion: 10/07/2016

Docket Number: No. 15-2161

Decided: Affirmed in part, vacated in part, and remanded by published opinion

Case Alert Author: Yvette Pappoe, Univ. of Md. Carey School of Law

Counsel: Edward Himmelfarb, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. Mark Davis Moreland, MORELAND & MORELAND, Lewisburg, West Virginia, for Appellees. ON BRIEF: Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Mark B. Stern, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; R. Booth Goodwin II, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charleston, West Virginia, for Appellant. Rachel Hanna, LAW OFFICE OF RACHEL HANNA, Lewisburg, West Virginia, for Appellees.

Author of Opinion: Judge Wynn

Case Alert Supervisor: Professor Renée Hutchins

Edited: 11/10/2016 at 12:11 PM by Renee Hutchins

    Posted By: Renee Hutchins @ 11/08/2016 11:57 AM     4th Circuit  

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