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What the Second District Giveth, The Supreme Court Taketh Away

November 2, 2015

Florida Supreme Court rules that evidence of future Medicare or Medicaid benefits is not admissible as an exception to the Collateral Source Rule 


On October 15, 2015, the Supreme Court of Florida quashed a Second District decision that ruled evidence of Medicare benefits was admissible under an exception to the collateral source rule, created in a prior decision. Joerg v. State Farm Mut. Auto. Ins. Co., 2015 WL 5995754.


Under Florida law, the collateral source rule requires trial courts to reduce the jury award “by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources. . .” §768.76(1) Fla. Stat. (2014). The court is tasked with reducing the award since, as an evidentiary rule, evidence of collateral source benefits is not admissible at trial.

As an exception to the collateral source rule, there are no reductions “for collateral sources for which a subrogation or reimbursement right exists.” §768.76(1) Fla. Stat. Moreover, the statute also provides that proceeds from social legislation benefits, such as Medicare, Worker’s Compensation, Medicaid, and Social Security, shall not be considered a collateral source. §768.76(2)(b) Fla. Stat.

In 1984, the Supreme Court of Florida created another exception to the collateral source rule when it held, “[E]vidence of free or low-cost services from governmental or charitable agencies available to anyone with specific disabilities is admissible on the issue of future damages. . . ” Florida Physician’s Insurance Reciprocal v. Stanley, 452 So.2d 514 (Fla. 1984).

The plaintiffs in Stanley alleged that their son sustained an intellectual disability and cerebral palsy as a result of the defendants’ medical negligence. At trial, the plaintiff presented evidence that their son would require special therapy for the remainder of his life. The defendants were permitted to introduce evidence of “free or low-cost” charitable and governmental programs to meet the plaintiff’s future needs. The First District reversed the trial court’s ruling, holding that it violated the collateral source rule. However, the Supreme Court of Florida quashed the First District’s decision thereby creating the “Stanley Exception.”

Although Stanley created a new exception to the collateral source rule, it did not directly specify whether it applied to programs such as Medicare, Medicaid, or Social Security. Over the next thirty years, the courts struggled with how and when to apply the Stanley exception. Remarkably, it was not until the Second District’s decision in the underlying appeal in 2013 that a court definitively ruled that evidence of future benefits under Medicare (and presumably other social legislation such as Medicaid, Workers Compensation, Social Security, etc.) was admissible under the Stanley exception. State Farm Mut. Auto. Ins. Co. v. Joerg, 2013 WL 3107207.

The plaintiffs in Joerg alleged that their son sustained intellectual disabilities as a result of being struck by a car while riding his bike. He was a disabled adult living with his parents and was never employed in his life. As a result of his disabilities, he was entitled to future Medicare benefits. The trial court precluded the defendant from introducing evidence of future Medicare or Medicaid benefits as it would violate the collateral source rule. However, the Second District reversed the trial court’s ruling based on the Stanley exception. In short, the Second District deemed the future Medicare benefits were “free or low-cost” to the plaintiffs’ son since he had never worked or contributed to the Medicare program, and therefore the benefits to him were “unearned.” Joerg, 38 Fla. L. Weekly at D1379.

On appeal, the Supreme Court of Florida has now quashed the Second District’s decision and clarified that Stanley was never intended to permit evidence of future benefits from social legislation such as Medicare or Medicaid to be admissible. The court noted that the admissibility of evidence of social legislation benefits has long been considered highly prejudicial. The court held that the benefits at issue in Stanley were “free or low-cost” because they were community-based special needs education and therapy that would not leave the plaintiff liable for reimbursement, as occurs with Medicare and Medicaid. Joerg, 2015 WL 5995754 at 8.


Clearly, the ruling in Joerg is a blow to parties defending against factually similar claims. However, this ruling should not be lamented as a landmark reversal of longstanding Florida law. More accurately, it simply quashes a two-year-old decision that was narrowly applicable to plaintiffs entitled to future Medicare benefits despite never having contributed to the Medicare program. The Second District’s ruling never stood to apply to cases involving plaintiffs who had earned the benefits by contributing to the Medicare program through employment.

Moreover, although the Supreme Court’s ruling in Joerg is favorable to plaintiffs, the decision itself does not overturn the exception to the collateral source rule created in Stanley, which is still valid law in Florida. While benefits such and Medicare and Medicaid no longer fall within the exception, there is still room for defense practitioners to argue that collateral sources from other charitable or governmental programs do fall within the exception.