• Admissibility of Social Security and Workers' Compensation Payments Associated with Prior Accidents
  • July 2, 2003 | Author: Russell A. Klingaman
  • Law Firms: Hinshaw & Culbertson LLP - Milwaukee Office; Hinshaw & Culbertson LLP - Chicago Office
  • Introduction

    You are defending a typical automobile accident case. The plaintiff claims to have sustained injuries to his neck, upper back, lower back, and leg. The injuries are primarily soft tissue. Through discovery or investigation, you learn that the plaintiff sustained a back injury in a workplace accident several years before the auto accident. You also learn that, as a result of the prior accident, the plaintiff has received social security or workers' compensation benefits. In fact, the plaintiff was still receiving such benefits at the time of the automobile accident. The plaintiff claims that the workplace injuries and the injuries suffered in the automobile accident are unrelated or, alternatively, that the automobile accident aggravated a pre-existing condition. The plaintiff was not employed at the time of the automobile accident. He was, however, going to school to earn a degree which would qualify him for a sedentary job. He claims that, as a result of the automobile accident, he could not return to school or work. He has a made a claim for loss of earning capacity as a result of the automobile accident.

    At the pretrial conference, you tell the court that you plan to introduce trial evidence of "collateral payments," i.e., social security and workers' compensation benefits. The trial court reminds you that your jurisdiction strictly enforces the collateral source rule. Despite strict enforcement of the collateral source rule, is evidence of the plaintiff's receipt of social security and workers' compensation benefits associated with the prior accident admissible?

    II. Collateral Source Rule Should Not Prohibit Evidence of Social Security and Workers' Compensation from Prior Accident

    Generally, a defendant in a personal injury lawsuit has the right to present evidence concerning plaintiff's pre-existing injuries. In the preceding hypothetical, the court should have no reason to prevent introduction of evidence concerning the prior accident and injuries, as long as plaintiff's complaints are similar. Defense counsel should not stop there, however. Counsel wants to show the jury that the plaintiff has received over $100,000 in the form of governmental benefits. Counsel believes this evidence is relevant to the plaintiff's desire to return to work or school following the automobile accident.

    Under the collateral source rule' damages awarded to an injured person should not be affected by the fact that the plaintiff received compensation for that accident from other sources. Will the collateral source rule prohibit defense counsel from presenting evidence of social security and workers' compensation benefits received by the plaintiff due to the prior accident? The proper answer is "No;" the collateral source rule does not prohibit a defendant from presenting evidence of plaintiffs compensation related to an earlier accident.

    The collateral source rule prevents a tortfeasor from reducing his or her liability for personal injury by the amount of benefits that the injured person received "from one acting on the tortfeasor's behalf." Government benefits received by a plaintiff as a result of a prior accident, however, are not received by anyone acting on behalf of the defendant in connection with the second accident. Therefore, the collateral source rule is inapplicable.

    Several jurisdictions have addressed this particular issue. In Aldridge v. Abram & Hawkins Excavating Co., the plaintiff brought an action for personal injuries suffered in a work-related accident. The accident occurred on December 12, 1978. At trial, the defendant presented evidence that the plaintiff injured his back two years earlier. The prior accident resulted in an injury very similar to the injury in the subject accident. Over plaintiff's objection, the defendant

    sought to introduce evidence of the total amount [the plaintiff] received as workmen's compensation for the previous injury as evidence of the extent of that injury. After a hearing outside the presence of the jury, the trial judge admitted evidence of the amount paid [to the plaintiff] as workmen's compensation benefits for the previous injury.

    On appeal, the plaintiff argued that the trial court erred by allowing the defendant to introduce evidence of workers' compensation benefits received by the plaintiff for injuries suffered in the previous accident. The plaintiff reasoned that admitting evidence of workers' compensation benefits paid for the prior accident violated the collateral source rule. The Indiana Court of Appeals disagreed, however, and concluded that the introduction of the amount of workers' compensation benefits paid for the prior injury was not erroneous.

    Similarly, in Gigliotti v. Machuca, the plaintiff brought suit following an automobile accident. The plaintiff claimed that she suffered neck and back injuries as a result of the rear-end collision. At trial, the defendant introduced evidence that the plaintiff had a pre-existing neck and back condition resulting from an injury she sustained while working. The work-related injury occurred approximately fifteen months before the automobile accident. The prior accident involved a severe cervical strain and the plaintiff was still receiving treatment for the prior injury at the time of the subject accident. Before trial, the plaintiff filed a motion in limine to preclude the defendant from introducing any evidence to the jury about the existence or receipt of workers' compensation benefits as a result of the prior work-related incident. The trial court denied the motion and the Pennsylvania Superior Court affirmed.

    On appeal, the plaintiff argued that the trial court's denial of the motion in limine violated the collateral source rule. The appellate court rejected this argument, however, on grounds that the evidence was admissible to safeguard against an undue windfall for the plaintiff. The court explained:

    [W]e conclude that the trial court's charge to the jury was not violative of the collateral source rule. As appellee notes, this situation is distinguishable from the normal scenario in which collateral source issues arise. All of the cases cited by appellant involve situations wherein a plaintiff is injured in an accident, receives medical and/or wage loss benefits for the injuries sustained as a result of that accident, and during the subsequent suit against the tortfeasor to recover for those same injuries, the tortfeasor attempts to introduce evidence of the payments from the collateral source. In those situations the rationale behind the application of the collateral source rule is that it would be unfair for the wrongdoer to receive the benefit of payments made by the collateral source.... In the present situation, appellant had suffered a prior accident and was already receiving worker's compensation benefits for those injuries when the accident giving rise to this litigation occurred. Thus, this was not a situation where appellee was attempting to receive the benefit of the compensation payments for injuries he may have caused to appellant. The payment of the compensation pre-dated the happening of the accident in this instance.... By all accounts, it does not seem as though appellant was planning to return to work at any time in the near future when the automobile accident occurred.... Therefore, we conclude that the trial court's charge to the jury was not violative of the collateral source rule.

    These cases viably demonstrate that evidence of benefits received for a prior accident does not violate the collateral source rule.

    Public policy also supports the admission of evidence of social security and workers' compensation payments in the hypothetical case outlined earlier. Plaintiffs are entitled to be compensated fairly and reasonably for any losses actually sustained as the result of a particular accident. However, courts should not blindly adhere to the collateral source rule to avoid evidence of government payments received for a prior accident, irrespective of the purpose of the rule. Blind adherence to the collateral source rule is bad policy and can be extremely unjust.

    We refuse to join those courts which, without consideration of the facts of each case, blindly adhere to "the collateral source rule, permitting the plaintiff to exceed compensatory limits in the interest of insuring an impact upon the defendant." The purpose of compensatory tort damages is to compensate; it is not the purpose of such damages to punish defendants or bestow a windfall upon plaintiffs. The view that a wind-fall, if any is to be enjoyed, should go to the plaintiff borders too closely on approval of unwarranted punitive damages, and it is a view not espoused by our cases.

    Thus, in the existing hypothetical, the trial court should not use the collateral source rule to prevent defense counsel from presenting evidence of social security and workers' compensation payments associated with a prior accident.

    III. Evidence Admissible to Show Lack of Motivation or to Impeach Plaintiff

    If the plaintiff's case is reviewed by the Social Security Administration (SSA)after the automobile accident, and the SSA determines that the plaintiff is disabled and entitled to compensation, the plaintiff may argue that his or her social security payments are actually related to the second accident as well as the first accident; therefore, they are truly collateral source payments. Thus, to get this evidence admitted during trial, defense counsel must convince the court that the evidence is governed by one or more of the exceptions to the collateral source rule. Many jurisdictions have recognized that proof of payment from collateral sources may be received for relevant evidentiary purposes, even in jurisdictions where the collateral source rule is strictly enforced.

    One exception deals with cases where evidence of collateral payments is used to show that a plaintiff lacked or lacks motivation to return to work. Generally, evidence of collateral payments is admissible when a plaintiff stays out or work beyond the period which is related solely to the particular injury or physical disability in the subject accidental.

    In Blancha v. Gagnon, " the plaintiff was injured in an automobile accident on January 4, 1968. lIe claimed that he was unable to work from January 15, 1968 until April 18, 1968 as a result of the injuries suffered in the accident. He also complained that his once active life had been sharply curtailed as a result of the accident. Evidence was introduced at trial showing that the plaintiff received wage continuation benefits from his employer following the accident. Medical testimony was also introduced showing that the plaintiff exhibited no objective symptoms of injury one year after the accident. On appeal, the plaintiffs argued that the collateral source rule prohibited using evidence of the collateral payments. Nevertheless, the court held that the evidence of collateral sources of compensation was admissible because it had a bearing on the plaintiff's incentive to return to work. The court did not propose to contravene the collateral source rule. It simply determined that there are some circumstances where evidence may be introduced to show a motive for failure to resume regular employment.

    Using a similar rationale, the court in Kobelinski v. Milwaukee & Suburban Transport Corp., allowed evidence of the plaintiff's eligibility for social security benefits to demonstrate the likelihood that the plaintiff would have retired soon after the injury, even if the injury had not occurred. Analyzing the evidence, the court stated:

    Although at the time of the accident she was in good health it is reasonable to assume that she would not have been regularly and steadily employed for the entire period of her normal life expectancy, which is fifteen years from the date of the trial. It is unlikely that she would have worked many more years, even though she had not been injured as she was on January 20, 1969. Eligibility for social security payments would probably tempt her to discontinue working, especially at full time, many years before she would live for the normal period of life expectancy.

    A number of other courts similarly follow this rule.

    Evidence of collateral source payments may also be admitted for the purpose of impeaching a plaintiff. In Hack v. State Farm Mutual Automobile lnsurance Co., the plaintiff argued that the trial court abused its discretion by not excluding evidence of employer-paid benefits for the period during which the plaintiff was absent from work. In particular, the plaintiff contended on appeal that the trial court abused its discretion by not excluding evidence of the receipt of employer paid benefits for the two and one-half weeks that he was absent from work, The plaintiff had testified during the trial that he had re-turned to work because he needed the money to support his family. Defense counsel then inquired whether his place of employment carried a compensation program. The Wisconsin Supreme Court held that this evidence was admissible. The court reasoned that evidence of collateral sources of income is admissible for purposes of impeachment, notwithstanding the collateral source ruled.

    Cases from other jurisdictions follow the Hack rule. In Cowens v. Siemens-Elema AB, the plaintiff, on direct examination by his attorney, testified at several points about the financial stress he had experienced following the accident. In addition, the plaintiff's treating physician testified that financial stress had contributed to the plaintiff's psychological deterioration. Responding to this testimony, the defendant was allowed to introduce evidence of plaintiff's workers' compensation benefits. The court of appeals concluded that there was no abuse of discretion and affirmed the judgment of the lower court. The appellate court reasoned that the plaintiff's testimony on direct examination made evidence of payments from collateral sources relevant and necessary for purposes of rebuttal.

    In Jackson v. Beard, the court likewise held that there was no error when the trial court permitted defense counsel to introduce evidence of social security payments received by the plaintiff. The court reasoned that:

    It is our opinion that if the "collateral source" rule did apply in the case before us it was waived by appellee by his attorney's interrogating him as to the lessened income he received from farming the years after he was involved in the collision. The appellee having opened the gate on the matter of reduced income as a result of the collision complained of, the appellant has the right to drive through and to cross examine on the issues raised by appellee.

    Other cases have since followed the "impeachment rule" as an exception to the collateral source ruled.

    Evidence of collateral payments may also be admissible where a defendant wishes to establish that the plaintiff is motivated to exaggerate or feign his or her injuries. In Wentworth v. Butler, the defendant introduced expert medical testimony indicating that the plaintiff was exaggerating his injuries. The trial court did not allow introduction of collateral disability payments. On appeal, the Minnesota Supreme Court acknowledged that such evidence could be introduced if the receipt of collateral payments were relevant to the question of whether the plaintiff was feigning injury. The court reasoned that collateral source evidence could be used to support a defendant's contention that the plaintiff was motivated to feign injuries so as to receive greater sums of collateral payments.

    As demonstrated, evidence of collateral payments may be admissible for many purposes, i.e., showing lack of motivation, exaggeration and/or to impeach testimony of financial stress. In Corsetti v. Stone Co., the court held that a new trial was necessary on the question of plaintiff's damages because the trial court erred in refusing to allow evidence of collateral payments to the plaintiff from various sources.28 The court reasoned that the evidence should have been admitted to support the defendant's contention that the plaintiff had a motive other than physical disability to remain out of work. The court noted that plaintiff's treating physician testified that the results of a physical examination did not support the plaintiff's most recent complaints. The physician also believed that those complaints might have been related to the plaintiff's desire to present a better case.29 The appellate court observed, however, that the proffered evidence did not bear solely on the question of malingering. It concluded that the evidence of collateral payments should have been admitted as well to contradict the plaintiff's testimony regarding his financial stress.

    In support of its conclusion, the court noted that on direct examination the plaintiff testified that because of his injuries his wife was required to work full-time which aggravated him. He also testified that he and his wife fought about money, and that he did not attend movies because he could not afford to do so. The court reasoned that elementary principles of fairness dictated that a plaintiff who pleads poverty should not be shielded from cross-examination tending to impeach such testimony, demonstrating its falsehoods.

    IV. Plaintiff's Duty to Mitigate

    Apart from the above, the plaintiff has a duty to mitigate damages. Accordingly, evidence may be offered to show plaintiff's lack of effort to mitigate his damages by seeking gainful employment. Such evidence may take the form of receipt of unemployment or workers' compensation benefits, attempts to obtain social security disability benefits during the time the plaintiff was medically qualified to work, and the plaintiff's lack of incentive or motivation to work, whether based on receipt of collateral sources of income or not.

    V. Challenging Plaintiff's Argument That Evidence Is Prejudicial

    Virtually every jurisdiction in the United States has a rule of evidence similar to FRE 403 which requires a balancing test to determine whether "relevant" evidence is admissible. Relevant evidence may be deemed inadmissible under Rule 403 on the grounds it is "unduly prejudicial." Evidence labeled unduly prejudicial describes a situation where the probative value of the proffered evidence is substantially outweighed by considerations such as prejudice, wasted time, or confusion of the issues. One way to insure the probative value of otherwise relevant evidence is to hire a vocational expert to challenge plaintiff's loss of earning capacity claim and familiarize that expert with evidence of the collateral payments. While the judge may be willing to restrict or limit cross-examination of the plaintiff concerning receipt of government benefits, the court will be less likely to manipulate the testimony of the defense expert.

    VI. Conclusion

    Many jurisdictions enforce the collateral source rule. Occasionally, the defense will encounter a plaintiff who has received social security or workers' compensation benefits due to a prior accident. Plaintiff's counsel may seek to have this evidence declared inadmissible under the collateral source rule and/ or FRE 403 or its state equivalent. Defense counsel should anticipate plaintiff's challenge and be prepared to convince the trial court that such evidence is: ( 1) highly relevant to plaintiff's alleged loss of earning capacity and/or failure to mitigate, (2) not governed by the collateral source rule, (3) admissible to show exaggeration, malingering, or lack of motivation to return to work or school, and (4) admissible to impeach the plaintiff.