United States: Fifth Circuit Interprets Collateral Source Rule To Limit Recovery By Plaintiff To Medical Expenses Paid By LHWCA Insurer

Case:  Deperrodil v. Bozovic Marine, Inc.
United States Fifth Circuit Court of Appeals
2016 U.S. APP. Lexis 20636 (5th Cir. 11/17/16)

This maritime tort action involves a claim by plaintiff, Robert dePerrodil, a 70-year-old oil field consultant employed by Petroleum Engineers, Inc. (PEI), against a third-party tortfeasor, Bozovic Marine, for injuries he sustained while aboard the MV THUNDERSTAR, a crew boat owned and operated by Bozovic Marine, Inc. Primarily at issue was whether the maritime collateral source rule allowed dePerrodil to recover the unpaid, written off portion of his billed medical expenses.

Plaintiff's medical expenses were being covered by his employer's LHWCA insurer. The carrier had paid $57,385.50 for plaintiff's medical expenses. The amount billed by the providers, however, was $186,080.30. The District Court ruled that plaintiff was entitled to recover the full amount billed, even though the insurer was only required to pay a much smaller portion, with the balance of the full amount billed being written off by the providers.

The appellate court first noted the collateral source rule prevents a tortfeasor, such as Bozovic, from reducing its liability by the amount a plaintiff recovers from independent sources. The rule, although allowing plaintiffs to recover medical expenses they do not have to pay, prevents a windfall for the tortfeasor.

Here, as the payment source was clearly independent of the liable tortfeasor, and the tortfeasor played no role in securing that coverage, the collateral source rule was held to apply, making Bozovic Marine liable for the medical expenses paid. The remaining question on appeal was whether the plaintiff could recover the full amount billed, a much greater sum than the amount actually paid.

Noting there was no direct authority regarding the treatment of written off LHWCA medical expenses in the maritime tort context, the Fifth Circuit looked to persuasive authority, including state and analogous maritime authority, to determine the outcome. Under these circumstances, the Fifth Circuit held that medical expense payments are collateral to a third-party tortfeasor only to the extent actually paid, and plaintiff may not recover for expenses billed by the provider but ultimately written off and not paid. The court thus found the District Court erred in awarding the full amount billed rather than the far lesser amount the LHWCA insurer actually paid to cover dePerrodil's medical expenses.

Also at issue in the case was whether liability could be imposed on Bozovic Marine for the injuries dePerrodil sustained in rough seas, when dePerrodil knew the weather conditions and risks, and whether the District Court was allowed to use an above average work life expectancy to calculate future lost wages. 

The court noted that Capt. Bozovic breached his duty of reasonable care to his passenger by 1) failing to tell dePerrodil to move to the passenger area (failure to warn); 2) failing to stay apprised of the relevant weather conditions; and 3) operating the vessel erratically. Although Bozovic Marine argued it did not breach its duty of reasonable care because the risks were open and obvious to dePerrodil, the court ruled that the District Court's finding of 90% fault on Bozovic and 10% fault on plaintiff did not constitute a clear error. The court reasoned, although a vessel owner does not need to warn passengers or make special arrangements for open and obvious risks, the case before it was distinguishable because Capt. Bozovic was liable based in part on his specific operation of the vessel (accelerating to full throttle up the swell, but not decelerating after cresting the wave), rather than his failure to warn dePerrodil of the risks. The court noted the accident would have occurred regardless of whether dePerrodil knew of the risks of rough seas, pointing out that Capt. Bozovic's negligent operation of the vessel cannot be considered an 'open and obvious' risk to dePerrodil. Stated differently, inclement weather does not absolve a captain from operating his vessel in a reasonably prudent manner. The operational negligence alone was found to be sufficient to sustain Bozovic Marine's liability.

A third issue addressed by the court involved whether the District Court was correct in using an above average work life expectancy (to age 75) to calculate future lost wages. Bozovic Marine argued the district court miscalculated dePerrodil's future lost earnings because it did not use the Bureau of Labor Statistics (BLS) work life expectancy average. On this issue, the Fifth Circuit reasoned that courts generally use work life expectancy data to calculate future earnings unless there is evidence supporting a variation from the average. The court noted the BLS average is not conclusive and work life expectancy may be shown by evidence that a particular person, by virtue of his health, occupation or other factors, is likely to live and work a longer or shorter period than the average. In this case, the court found dePerrodil had fully developed an evidentiary basis for such a departure from the BLS average, stating his retirement goal was to work until age 75 and further that he and his wife had an agreement he would work until then. Additionally, the vocational counselor gave expert testimony supporting age 75 as a reasonable goal, considering dePerrodil's medical history, work history and future medical prognosis. 

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