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Simms v. United States

United States District Court, S.D. West Virginia, Huntington Division

August 3, 2017

MISTY SIMMS, next friend of Caelan Jantuah, an infant, and MISTY SIMMS, individually Plaintiffs,
v.
THE UNITED STATES OF AMERICA, Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS, CHIEF JUDGE.

         On order of remand by the Fourth Circuit, the parties appeared before the Court for a collateral source hearing pursuant to West Virginia's Medical Professional Liability Act. See W.Va. Code § 55-7B-9a. Plaintiff Misty Simms brought this case under the Federal Tort Claims Act in her individual capacity and on behalf of her minor son, Caelan Jantuah. After holding a bench trial on Plaintiff's wrongful birth claim, the Court awarded damages to Plaintiff in her individual capacity and dismissed Caelan Jantuah as a party because West Virginia does not recognize a cause of action for the child. See Simms v. United States (Simms I), 107 F.Supp.3d 561 (S.D. W.Va. 2015). Defendant appealed this Court's decision regarding the damages award, claiming that Defendant should have received an immediate offset, or, in the alternative, the Court should have directed the award into a reversionary trust. The Fourth Circuit heard argument on January 27, 2016 and issued an opinion on October 7, 2016 affirming in part and vacating in part. See Simms v. United States (Simms II), 839 F.3d 364 (4th Cir. 2016). The Fourth Circuit remanded the case back to this Court to conduct a collateral source hearing pursuant to West Virginia Code § 55-7B-9a. The Court has conducted the required hearing and subsequently finds that Defendant does not meet the standard to justify an immediate offset for past or future medical expenses. The Court further rejects the request to order a reversionary trust.

         I. Background

         The Court has detailed the factual circumstances of this case extensively and will not undertake a full review here. See Simms I, 107 F.Supp.3d at 564-68 (detailing relevant background information). Plaintiff brought suit against the United States under the Federal Tort Claims Act (FTCA) for negligent acts taken by Valley Health Systems, Inc. (Valley Health) during Plaintiff's neonatal care. Although Valley Health detected potential fetal abnormalities early in Plaintiff's pregnancy, the health care provider failed to inform Plaintiff of these abnormalities until Plaintiff's third trimester. As West Virginia's, and surrounding states', laws prohibit the termination of a pregnancy during the third trimester, this delay prevented Plaintiff from making a timely and informed decision on whether to obtain an abortion. Plaintiff's son, Caelan Jantuah (Caelan), survived birth, but he suffers from severe brain malformation and lives in a vegetative state.

         Plaintiff sued Defendant for wrongful birth, which West Virginia recognizes to allow recovery for “extraordinary costs [incurred] for rearing a child with birth defects.” James G. v. Caserta, 332, S.E.2d 872, 882 ( W.Va. 1985). After a bench trial, this Court awarded Plaintiff damages for past medical expenses, future medical expenses, lost income, and noneconomic damages, in an amount of $12, 222, 743.00.[1] See Order, ECF No. 218, at 2. Defendant timely appealed, challenging the Court's decision that an offset was not warranted for the Defendant's federal contributions to West Virginia's Medicaid program. Defendant also challenged the Court's decision to not require a reversionary trust to allocate Plaintiff's award.

         After hearing oral arguments, the Fourth Circuit issued a published decision that affirmed in part, vacated in part, and remanded. See Simms II, 839 F.3d at 364. The court affirmed this Court's decision to award damages for past and future medical expenses even when West Virginia's Medicaid program issued the payments. Id. at 368-69. The court also affirmed this Court's use of medical billing statements to determine the appropriate damages award rather than using the amounts Medicaid actually paid for the medical services. Id. at 369-70. In remanding the case back to this Court, the Fourth Circuit determined that the Medical Professional Liability Act (MPLA or § 55-7B-9a) requires a district court to conduct a collateral source hearing. The remand specifically tasked this Court to determine whether West Virginia's Medicaid program had a subrogation lien against Plaintiff as a “recipient” or through another right of recovery to prevent an immediate offset to the final judgment award for past and future medical expenses. Id. at 371-72. The court also noted that issues of double recovery and a reversionary trust could be reconsidered. Id. at 373 n.5.

         Accordingly, the Court issued a briefing schedule for the parties to explain why collateral source payments from West Virginia's Medicaid program should, or should not, be factored into the final damages award as an offset. As directed by the Fourth Circuit, the Court held a collateral source hearing on July 11, 2017 pursuant to § 55-7B-9a.

         II. The MPLA

         West Virginia recognizes the common law collateral source rule in which a tortfeasor cannot receive an offset or credit against the injured party for payments received by other sources. See Kenney v. Liston, 760 S.E.2d 434, 440 ( W.Va. 2014). However, the MPLA modifies the collateral source rule for cases involving medical professional liability, permitting an offset in damages. See Manor Care, Inc. v. Douglas, 763 S.E.2d 73, 87 ( W.Va. 2014). The MPLA defines collateral sources as “[a]ny federal or state act, public program or insurance which provides payments for medical expenses.” W.Va. Code § 55-7B-2b. The parties do not dispute that Medicaid, as a state public medical assistance program, qualifies as a collateral source.

         The MPLA separates past medical payments from future medical payments when determining whether a defendant obtains an offset for collateral source payments. For past payments, the “defendant who has been found liable to the plaintiff for damages for medical care … may present to the court, after the trier of fact has rendered a verdict, but before the entry of judgment, evidence of payments the plaintiff has received for the same injury from collateral sources.” W.Va. Code § 55-7B-9a(a). Before presenting evidence on calculated future medical payments, however, the defendant must convince the court of three preconditions: (1) that the collateral source has “a preexisting contractual or statutory obligation” to pay the benefits; (2) that “[t]he benefits, to a reasonable degree of certainty, will be paid to the plaintiff for” future expenses as determined by the court; and (3) that the future medical payments are “readily reducible to a sum certain.” W.Va. Code § 55-7B-9a(b).

         After the parties present the evidence for past and future medical payments in a collateral source hearing, the court must determine the following factual findings: (1) the total damage award; (2) the total damage award in relation to “each category of economic loss”; (3) the total amount of collateral source payments, both past and future, that should be considered; and (4) the total amount of a plaintiff's contributions and premiums paid to receive the benefits. W.Va. Code § 55-7B-9a(d). From this information, the court calculates the final damage award to be issued in a judgment order.

         The final section of the MPLA contains a list of exceptions that prevent a court from issuing an offset award for collateral source payments. W.Va. Code § 55-7B-9a(g). A court cannot reduce the amount awarded in a verdict to reflect: (1) “[a]mounts paid to or on behalf of the plaintiff which the collateral source has a right to recover from the plaintiff through subrogation, lien or reimbursement”; (2) “[a]mounts in excess of benefits actually paid or to be paid” to the plaintiff by the collateral source; (3) proceeds from individual disability payments or income replacement insurance when paid entirely by the plaintiff; (4) a plaintiff's assets; or (5) settlement awards from other tortfeasors. Id. With these directives in mind, the Court turns to Plaintiff's damages award.

         III. Discussion

         The West Virginia legislature designed the MPLA to alter the traditional collateral source rule in medical liability cases. See Kenney, 760 S.E.2d at 446 n.54 (“We note that, in the limited context of medical negligence actions, the Legislature has chosen to alter this balance and to permit a careless defendant to benefit from evidence of payments the plaintiff has received for the same injury from collateral sources.” (citation omitted)). Pursuant to § 55-7B-9a and the Fourth Circuit's mandate, the Court held a collateral source hearing so the parties could present evidence of past and future payments made primarily by West Virginia's Medicaid program. Based on the information presented at the hearing and this Court's interpretation of “recipient” and “third party” under West Virginia Code § 9-5-11, the Court finds that the state Medicaid program has a subrogation lien over Plaintiff's damage award, and, thus, Defendant cannot obtain an immediate offset for past or future medical expenses.

         a. Past Medical Expenses

         In the collateral source hearing, Defendant presented evidence of payments made by the state Medicaid program that Defendant thought justified an offset from the final award. The Court first turns to the MPLA exception to determine whether such an offset is permitted. W.Va. Code § 55-7B-9a(g). Specifically, the first listed exception prevents a court from calculating an offset when the collateral source, in this case Medicaid, has a right to recover from Plaintiff directly. See W.Va. Code § 55-7B-9a(g)(1). As directed by the Fourth Circuit, the Court must explain why it previously concluded that the state Medicaid program held a subrogation lien over Plaintiff. See Mem. Op. & Order, ECF No. 183, at 4 (“Finally, the state Medicaid program has the lien against any award to ...


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