Sudden Shifts - Burden Shifting under Louisiana Law

The Louisiana Supreme Court recently issued a ruling on the application of the "open and obvious" doctrine in slip and fall cases. The facts of Broussard v. State of Louisiana, 2012-1238 (La. 4/5/13), presented problems for both sides. A UPS driver tripped and fell over an offset between the floor and an elevator. The elevator in a State building had problems for years. One problem was that the elevator would not align properly between floors causing an offset between the floor and the elevator. However, the UPS driver delivered products to this particular State building daily and was well aware of the problem. At the time of the incident, he noticed that the elevator was not properly aligned but nevertheless attempted to pull a dolly with approximately 300 pounds of computer paper over the offset. The inertia created caused the plaintiff to lose control. Plaintiff sued the State, the owner of the building, for injury to his back.

To recover damages from an owner of a building for a slip and fall, a plaintiff must prove: 1) ownership of the building; 2) owner's knowledge of the defect; 3) that damage could have been prevented by reasonable care; 4) that the owner failed to exercise reasonable care; 5) causation of damages; and 6) that the defect in the building created an unreasonable risk of harm. La. C.C. art. 2322; Entrevia v. Hood, 427 So. 2d 1146 (La. 1983). It was the "unreasonable risk of harm" element that was at issue before the Broussard Court.

Louisiana jurisprudence has created a risk-utility balancing test to determine if a defect in a building poses an unreasonable risk of harm. The risk-utility balance test consists of four factors: 1) the utility of the complained-of condition; (2) the likelihood and magnitude of harm, including the obviousness and apparentness of the condition; (3) the cost of preventing the harm; and (4) the nature of the plaintiff's activities in terms of its social utility or whether it is dangerous by nature. Dauzet v. Curnest Guillot Logging, Inc., 08-0528 (La. 12/2/08), 995 So. 2d 1184.

In applying this balancing test, the jury found the State 62% liable and Plaintiff 38% liable for Plaintiff's damage. The court of appeal reversed that decision. It found that, where the Plaintiff knew of the defect, the defect was "open and obvious" such that the State had no duty to protect against the condition.

The Louisiana Supreme Court disagreed. Under the specific facts of the case, the Court found that Plaintiff's knowledge of the defect was insufficient to meet the open and obvious test. According to the Court, for a defect to be considered open and obvious it must be open and obvious to all. "Thus, in order to be open and obvious, the risk of harm should be apparent to all who encounter the dangerous condition." Broussard, p. 17.

The Supreme Court reasoned that the open and obvious question is not based upon the plaintiff's particular state of mind. Such an analysis is akin to assumption of the risk - a theory of law that was omitted when Louisiana enacted its comparative fault regime. Instead, the open and obvious to all standard is, according to Broussard, "sensible . . . and does not undermine the comparative fault regime by allowing a plaintiff's negligence to operate as a bar to recovery in a case where the defendant's conduct poses a risk of harm to the hypothetical blameless plaintiff." Id. p. 18.

The true impact of the Broussard decision remains to be seen. Under one reading, the opinion's impact should be limited to its specific facts. Under any interpretation, Broussard preserves the rule that an allegedly defective condition which is obvious to all will bar recovery to the plaintiff.

Imagine you are a defendant sued because you negligently injured someone in Louisiana. In the accident, the plaintiff received extensive medical treatment. The health insurer paid $50,000 for medical costs even though the doctors billed $150,000 for the plaintiff’s care. The plaintiff was only out-of-pocket $500 for his health insurance deductible. What amount should you have to pay: $150,000, $50,000, or only $500?

The answer to this question is not so simple. You will certainly have to pay more than the plaintiff’s deductible, that much is clear. But whether you are required to pay the medical providers’ full rate of $150,000, the insurer’s discounted rate of $50,000, or some other amount for the medical services provided is a more complicated issue.

This blog is broken down in a two-part series. This installment will address the background of the collateral source rule and the public policy behind the rule.

What is the Collateral Source Rule?

The collateral source rule provides that a tortfeasor is generally not entitled to a credit for payments made to a plaintiff through “collateral sources,” i.e., sources not provided by the defendant. Under this rule, a tortfeasor’s exposure for damages should be the same regardless of whether or not the plaintiff purchased health insurance.

The collateral source rule permits the plaintiff to recover medical expenses in excess of the amounts actually paid by the plaintiff or their insurer. Critics therefore assert that the rule provides a “windfall” to the plaintiff that violates the goal of Louisiana tort law, namely to make the victim “whole.” As applied, the rule can make the victim more than whole.

Origins of the Collateral Source Rule

To understand the collateral source rule, it helps to look at its origins. The rule in the United States at least dates back to the 1854 case The Propeller Monticello v. Mollison, 58 U.S. (17 How.) 152, 15 L.Ed. 68 (1854). In Propeller Monticello, two ships wrecked and one sank. The insurer of the ship that sank paid for the loss. The owner of the at fault ship asserted that the plaintiff had been fully compensated by the insurer’s payment and that it was therefore not obligated to pay for the damage. In rejecting this argument, the Propeller Monticello Court held the defendant was not a party to the insurance contract and could not reduce exposure by citing to the insurance available to the plaintiff.

Policies Behind the Collateral Source Rule

In Dep't of Transp. & Dev. v. Kansas City S. Ry. Co., 846 So. 2d 734 (La. 5/20/03), the Louisiana Supreme Court detailed the public policy concerns that support the collateral source rule. According to the court, the policies in favor of the rule include:

i. Fairness- a defendant should not gain an advantage from benefits provided to the plaintiff independent of any act of the defendant;

ii. Deterrence- the rule provides a deterrence to negligent conduct; and,

iii. Promotion of Insurance- victims could be dissuaded from purchasing insurance if that act could affect tort recovery.

So, how much do you owe: $50,000, $150,000, or some other amount? We’ll tell you in Part II of this blog.

In cases that involve physical injury, defendants often request an “Additional Medical Opinion [AMO]” from a physician of their choice as part of the defense of the case. Louisiana Code of Civil Procedure article 1464 allows a defendant to select a physician to perform a physical and/or mental examination of a plaintiff to challenge the plaintiff’s claimed physical and mental injuries. At times, a plaintiff may voluntarily agree to the examination. However, if an objection is lodged to the requested examination, a defendant must proceed with a Motion to Compel the Additional Medical Opinion. In the context of the motion, the defendant must establish the following for the AMO to be ordered pursuant to article 1464:

1. The mental or physical condition of a party is in controversy; and
2. “Good cause” exists for the AMO.

Because Louisiana courts routinely hold that a plaintiff puts his or her physical and mental condition in “controversy” by filing suit and requesting damages for physical and mental pain and suffering, the focus of a motion for an AMO is often on the “good cause” requirement. “Good cause” is not defined in La. CCP article 1464, and its meaning is not clear. Recently, however, the Louisiana Supreme Court provided guidance on the issue in the case of Hicks v USAA General Indemnity Company, et al., holding that a showing of “good cause” requires that a moving party establish a reasonable nexus between the requested examination and the condition in controversy.

In Hicks, the defendant moved for an AMO with an orthopedic surgeon after plaintiff filed suit, alleging personal injuries to his neck, back, and arm as a result of an accident. In the context of the Motion to Compel, it was argued the plaintiff put his physical condition in controversy by alleging injury. The defendant noted plaintiff treated with two physicians, one of whom did not believe plaintiff was a surgical candidate. The defendant also maintained “good cause” existed because a plaintiff “who asserts mental or physical injury… places that mental or physical injury clearly in controversy and provides the defendant with good cause for an examination to determine the existence and extent of such asserted injury.” In support of this argument, the defendant also highlighted inconsistent medical testimony concerning plaintiff’s physical conditions and treatment in support of “good cause.”

In opposing the motion, the plaintiff argued “good cause” was absent because two physicians already had offered opinions on plaintiff’s condition and treatment.

The trial court denied defendant’s Motion to Compel AMO on grounds that “good cause” did not exist. The trial court noted that two physicians already had been deposed and that a physician selected by the defendant could review plaintiff’s medical records and the depositions of the other doctors to offer an additional medical opinion at trial. The case proceeded to trial, where the defendant introduced testimony from a physician who relied upon the materials referenced in the court’s ruling to support his medical opinion. Not surprisingly, the plaintiff argued the opinion of the defendant-selected physician should be discredited because he never examined plaintiff.

After a trial judgment in favor of plaintiff, the defendant appealed. The appeal court also concluded “good cause” did not exist for the AMO, noting the absence of “definitive guidelines as to what constitutes good cause.” The appeal court also noted the fact that defendant had the ability to obtain the desired information by other means was relevant in deciding whether good cause was shown.

The Louisiana Supreme Court reversed the lower courts’ decisions. It started its analysis by noting the basic premise of our system of justice: that both sides to a dispute stand on equal footing in gathering evidence and preparing for trial. It noted the AMO allowed under La. CCP article 1464 actually limits the extensive discovery permitted under Louisiana law, as it balances considerations of “sanctity of the body and the right to privacy with considerations of fairness in the judicial quest for truth.” Article 1464 seeks to achieve balance by requiring more than “relevance” for an AMO, granting the right to courts to order an AMO only when a plaintiff’s condition is “in controversy” and “good cause” supports allowing the examination. The Supreme Court also noted that an AMO may be one party’s only opportunity to independently ascertain the existence and extent of the other party’s claimed injuries.

After balancing these competing interests, the Louisiana Supreme Court found “good cause” under article 1464 requires the moving party to establish a reasonable nexus between the requested examination and the condition in controversy. The decision as to whether the moving party has demonstrated both the “in controversy” and “good cause” requirements lies in the sound discretion of the trial court. At times, the pleadings alone may contain sufficient information to establish a reasonable nexus.

As part of its decision, the Louisiana Supreme Court noted that although meeting the statute’s requirements may entitle a defendant to an examination, a defendant is not entitled to any AMO it request; reasonable limitations may still be applied. It remains the trial court’s role to balance the competing interests and rights of the parties, considering both “sanctity of the body” and the implication of one party’s privacy rights against considerations of fairness for the moving party.

After employing its analysis, the Louisiana Supreme Court concluded the defendant in Hicks demonstrated “good cause” because plaintiff alleged severe injuries as a result of the accident, claimed damages, and inconsistent medical testimony concerning plaintiff’s physical condition existed. It remanded the case for a new trial.