Presented at ACI's 13th Annual Advanced Forum on Obstetric Malpractice Claims by Caryn L. Lilling Mauro Lilling Naparty LLP and Thomas R. Shimmel Kitch Drutchas Wagner Valitutti & Sherbrook.

1. The Affordable Care Act:
Taking a New Approach to Damages
Caryn L. Lilling
Mauro Lilling Naparty LLP
130 Crossways Park Drive, Suite 100
Woodbury, New York 11797
T 516.487.5800
F 516.487.5811
Thomas R. Shimmel
Kitch Drutchas Wagner Valitutti & Sherbrook
One Woodward Ave, Ste 2400
Detroit, Michigan 48226
T 313.965.6954
F 131.965.7403

2. What is the ACA?
• The Patient Protection and Affordable Care Act (“Affordable Care Act” or
“ACA”) was adopted by Congress on March 23, 2010 and deemed
Constitutional by the United States Supreme Court in National Federation of
Independent Business v. Sebelius, 132 S. Ct. 2566 (2012)
• In its simplest terms, the ACA provides that all persons in the United States
be afforded health insurance, regardless of their health or financial situation
• The Act contains 5 essential components designed to improve access to
health care and health care insurance markets:
1) The individual mandate
2) Minimum essential benefits
3) Guaranteed issue requirement
4) The employer mandate
5) Tax credits and subsidies
2

3. Individual Mandate
• Took effect January 1, 2014
• Requires every “applicable individual” to obtain “minimum
essential coverage or pay a penalty
– Limited exceptions exist under 26 U.S.C. § 5000A(d)-(e)
3

4. Essential Health Benefits
• All qualified plans are required to provide “minimum essential coverage.” The
minimum essential coverage required must include:
4
For these minimum coverage plans,
the ACA limits the annual amount of
out-of-pocket medical expenses to
the Health Savings Account limits:
– $6,350 for individuals in 2014
– Limits do not include premiums

5. Guaranteed Issue Requirement
• The “guaranteed issue requirement” bars insurance companies from denying
coverage to individuals with pre-existing conditions.
• It works in conjunction with the “community rating requirement,” which
prohibits insurance companies from charging higher rates to individuals based
on their medical history.
• Insurers are also prohibited from placing lifetime and annual spending limits
on the “minimum essential benefits.”
5

6. Common Law Collateral Source Rule
• Prohibits a defendant from reducing damages the plaintiff receives in a tort
action by third-party payments received by the plaintiff
– 13 states and the District of Columbia adhere to the common law rule
– Other states have modified the rule to varying degrees
• To date, this rule has been the biggest obstacle to reducing damages for future
medical expenses for private health insurance
6

7. Main Justifications to Date for No Offset
• Common Law
– Promotes deterrence
– Enforces fundamental principle of tort law that tortfeasors pay for the
consequences of their actions
– Defendants should not receive a windfall of lesser or no damages based on
benefits paid by a third-party
– Encourages individuals to purchase insurance
– Avoids prejudice to the plaintiff because juries can look unfavorably on a plaintiff
suing for costs already paid by a collateral source
• Modified Rules
– Burden of proof
› Will private insurance be available for duration of award?
› What level of care will be available under such a plan?
7

8. Collateral Source Rule and the ACA
• Common Law
– The ACA undermines the evidentiary purpose of the rule, now most people will
assume a plaintiff has insurance
– The Collateral Source Rule is no longer required to encourage individuals to
purchase and maintain insurance because the ACA creates that incentive
– In the past, courts were reluctant to “reward” defendants because of plaintiff’s
foresight to purchase insurance; foresight has been replaced with legal obligation
– The common law collateral source rule was intended to prevent a windfall to the
defendant; defendant still pays the amount plaintiff actually incurs due to the
injury
• Modified Rules
– Plaintiff can now get insurance
– Insurance must cover minimum essential benefits and could cover more
8

9. Mitigation of Damages
• The Doctrine:
– A plaintiff is not entitled to recover damages for any harm that he could have
avoided by the use of reasonable effort or expenditure after the commission of a
tort.1
– Doctrine precludes recovery of unreasonably excessive expenses incurred in
response to the tort
– Every plaintiff must take reasonable measures to minimize their damages
9
1Jones v. Malinowski, 299 Md. 257, 473 A.2d 429 (Md. 1984)

10. Mitigation of Damages
• Burden is on the defendant
– Plead as an affirmative defense
• Requires expert testimony1
– Which items in Life Care Plan covered by insurance
– The cost of premiums
– Projected increases in premiums
– The availability of policy throughout duration of plaintiff’s medical needs
10
1Leung v. Verdugo Hills Hosp., 2013 WL 221654 (Cal. App. 2d Dist. Jan, 22, 2013)
Lopez v. Sunrise One, LLC, 40 Misc. 3d 1238[A] (N.Y. Sup. Ct. Kings County 2013)

11. Compensatory Damages
• Plaintiff’s Burden of Proof:
– Purpose is to compensate the plaintiffs or make them whole, rather than punish
the defendant
– In context of future medical expenses, it is the cost of treatment and care that
otherwise would not have been incurred
– Future damages are reasonably certain to be sustained or to occur or to be
incurred in the future
– Future medical costs meet the medically reasonable and necessary test
11

12. Billed v. Negotiated Rates
• Large disparities between what is billed by the medical provider
compared with what insurance carriers actually pay
• Negotiated rates
– Agreements between carriers and providers allow for discounts
– Uninsured billed higher rates - not afforded bargained-for discounts
– Historically, discrepancy between billed or standard rates and negotiated
rates could be as much as eight times higher
• “Written off” amount not considered as damages1
12
1 Howell v. Hamilton Meats & Provisions, Inc., 52 Cal. 4th 541, 562 (2011)
Kastick v. U-Haul Co. of W. Mich., 740 N.Y.S.2d 167 (4th Dept. 2002)

13. Examples of Billed/Negotiated Differences
Nishihama v. City and County
of San Francisco1
• Jury Award: $17, 168 for hospital
expenses
• Paid to hospital by Blue Cross: $3,600
as payment in full
• Court held that only the amount paid
or incurred is recoverable as
compensatory damages
• 80% reduction on amount sought by
Plaintiff
Pexa v. Auto Owners Ins. Co.2
• Total medical bills: $41,544.00
• Amount paid by insurer & Medicare:
$15,950.29
• Collateral source rule not implicated
because no third party paid difference in
billed rates and Medicare rates
• 62% reduction on amount sought by
Plaintiff
13
1 93 Cal. App. 4th 298, 306 (Cal. App. 1st Dist. 2001)
2 686 N.W.2d 150, 156 (Iowa 2004)

14. Billed / Negotiated Differences
Service Date Billed Amount Paid Amount Difference Savings
9/2013 $314.00 $72.07 $241.93 77.05%
8/2013 $120.00 $93.01 $26.99 22.49%
8/2013 $142.52 $71.26 $71.26 50.00%
8/2013 $935.00 $470.71 $464.29 49.66%
7/2013 $1,050.00 $696.00 $354.00 33.71%
7/2013 $358.00 $28.32 $329.68 92.09%
7/2013 $1,455.00 $546.34 $908.66 62.45%
6/2013 $87.00 $19.93 $67.07 77.09%
6/2013 $1,822.00 $557.90 $1264.10 69.38%
6/2013 $85.00 $32.59 $52.41 61.66%
6/2013 $1,350.00 $864.00 $486.00 36.00%
6/2013 $1,245.00 $468.34 $776.66 62.38%
TOTAL: $8,963.52 $3,920.47 $5,043.05 56.26%
14

15. Billed v. Negotiated Rates
• Prior to the ACA, less than 5% of patients, nationally, paid a provider’s billed
rates
• Now under the ACA, that number will go down even further
• Therefore, defendants can argue that courts should find:
– the collateral source rule does not apply because the difference between the billed
and negotiated rates does not reflect an amount paid on the plaintiff’s behalf
– when awarding compensatory damages, the plaintiff should only be able to
recover for amounts paid or that could be owed
– even if the collateral source rule applies, the amount of the offset should include
the amounts actually paid by a third party on the plaintiff’s behalf
15

16. Tell a Different Story
16

17. • Common Wisdom
– If you discuss damages or put up numbers you condemn
your chance of success on the case
– Spending time on damages undermines the standard of care
or causation defenses
Addressing Damages
17

18. • Before damages can be properly defended, they must
be accurately defined
• Assessment of future medical damages is key to
understanding case exposure
• Underestimating future damages can lead to harmful
exposure in personal injury litigation
• The proper strategy and implementation of available
tools can help define damages so that they may be
defended efficiently and effectively
Defining Damages
18

19. • By law the burden of proof is on the plaintiffs
• Defendants must ensure Plaintiffs are held to this
burden by showing:
– Future damages are reasonably certain to be sustained or
occur in the future
– Plaintiffs meet their burden of establishing that future
medical costs meet the “medically reasonable and necessary”
test
– Damages are only sufficient to compensate the patient or
make them whole – not punish the defendant.
Proving Damages
19

20. • A properly presented damages defense enhances the
standard of care and causation defenses, which makes it
easier to prevail on key defenses.
• A properly presented damages defense will also help
prevent an aberration verdict.
Defending Damages
20

21. • In catastrophic litigation there are often numerous
categories of economic damages.
• Importance is to show what is already being provided to
the plaintiff.
• This points out the overreaching of Plaintiff’s counsel.
• Shows the jury a lower cost, or amount the Plaintiff
actually has to give up, to acquire something.
Defending Damages
21

22. • Provide a realistic view of life expectancy
• Effective cross-examination of Plaintiff’s life care planner
• Obtain the right experts
– Life expectancy specialist
– Economist
– Trust officers
– Individual medical specialties by condition
– Insurance coverage and rates
How do we defend damages?
22

23. • Necessary to obtain experts who understand and can articulate the
implications of the ACA
– Costs of future medical care
– Costs of premiums
– Future medical needs in consideration of what is provided for under the Act
Damages Experts
23

24. The Life Expectancy Expert and
the Plioplys Paper
24

25. Most standard jury instructions allow for the use of
standard tables unless it is shown that the claimants
health is not average.
It therefore becomes the defendants’ burden to establish
the effect of morbidities upon mortality unless the
plaintiff admits that the plaintiff-minor does not have
the average life expectancy or plaintiff’s experts are
forced to admit such.
Whose burden is it to establish life expectancy?
25

26. Do you have an opinion within a reasonable degree of
medical certainty when the survival curve for infants
similarly situated to plaintiff in this case falls to less
than 50%? (At what age are more than 50% of the
persons similarly situated to the plaintiff already dead?)
All experts should therefore be asked the following question:
26

27. Actual Economic Damages
Actual Economic Damages
27

28. What is the actual cost of
care to date?
28

29. 29

30. 30

31. Cross Exam Themes
• Plaintiff is receiving optimal care
(through treaters and parents)
• Plaintiff is not receiving optimal care through plaintiff’s
life care planner
31

32. • Occupational therapists, physical therapists,
rehabilitation counselors, case managers, social workers,
psychologists, medical doctors, chiropractors, nurse
practitioners, special education professionals, licensed
speech pathologists, professional counselors and a
lawyer.
II. Life Care Planners – Who are they?
32

33. • “Profession” sponsored by Plaintiff’s bar
• There is no government licensure or government
endorsed certification for life care planners in most
states.
• Private certifications exist for completion of courses in
hotels
• No “Board certification”
33

34. • Pediatricians do not consult life care planners routinely
and do not report to them
• Children’s doctors do not use life care planners in
normal course of business
• Life care planner’s business is testifying in court
• Their “expert testimony” is raw hearsay
34

35. • Business record?
• Routinely, healthcare providers do not exchange
records with life care planners
• Life care planners get records routinely from lawyers
• Life care planners do not treat patients and patients do
not see life care planners in routine healthcare business
35

36. The Life Care Plan Is Not Ordered By Actual
Physicians Responsible For Care
• Not to reasonable degree of medical certainty.
• Are not differential.
• Not based on real economic or medical data.
36

37. Purposely ignore past actual:
• Medical expenses
• Attendant care and service costs
• Average lifetime costs for CP, MR and other
developmental disabilities
• Individualized Educational Plans specific to the plaintiff
minor in your case - IEPC
Life Care Planners
37

38. • Healthcare
• Education
• Shelter
• Transportation equipment
• Dental care
• Long-term and elder care
For normal children, adolescents and adults
Life Care Planners Do Not Know the Average
Lifetime Costs of:
38

39. Is Unfairly Prejudicial And
Likely To Mislead The Jury
• No basis in fact
• Not substantiated by national statistics
• Not supported by past cost
• Are designed to create the largest possible award rather
recognized actual cost
39

40. • Based upon out of court statements not customarily
relied upon by real treaters in non-litigation settings.
• Are immaterial to issue of “actual”, “reasonably likely
to be incurred,” “certainty of occurrences,” “ballooned
beyond all rational experience,” “computerized
projections,” “conjectured,” unsubstantiated by prior
experience,” “have no basis in past experience,” and
“have not been pursued by plaintiff.”
Sources of Information Relied Upon
40

41. Attacking the Life Care Planner
• Life care plans are largely fictions
– Sometimes life care planner is
not a physician
› Merely a conduit or mouthpiece
for someone else’s opinions
– The planner is often not
responsible for implementing or
overseeing the plan
– No/questionable statistics to
show reliability
– Standard of care is to obtain
insurance or create a special
needs trust to preserve eligibility
for Medicaid and Medicare
– Insurance would cover many
portions of the life care plan
41
“A scientist, however well credentialed
he may be, is not permitted to be the
mouthpiece of a scientists in a different
specialty. That would not be responsible
science.”
Dura Auto. Sys. of Ind., Inc. v. CTS Corp.,
283 F.3d 609, 614 [7th Cir. 2002)
“The problem, then, is that the expert is
vouching for the truth of what another expert
told him—he is merely that expert’s
spokesman”
Sommerfield v. City of Chicago,
254 F.R.D. 317, 325 [N.D. Il. 2008)
[T]he court does not believe [the life
care planner] has the education,
training or experience needed to
predict the care and treatment
[plaintiff] needs today, or will need in
the future.”
Norwest Bank, N.A. v. Kmart Corp.,
1997 WL 33479072 [N.D. Ind. 1997])

42. 42

43. 43

44. • Ideally all of these strategies are combined to maximize the
chances of success
• To maximize chances of success, these issues must also be
raised:
– In the right forum
– At the right time
– In the right way
Putting It All Together
44

45. Analyzing a Case
1. Look at the legal landscape
2. Understand the scope of coverage
3. Determine the role of the ACA for settlement
45

46. • Review the legal landscape
Strategic Considerations: Know the Forum State
Collateral
source rule
or statute
Allows
evidence of
collateral
sources at
trial
Allows evidence
of negotiated
rates
Allows
depositions of
medical
experts
Availability of
exceptions to
collateral
source rule
• Opening the door
• Duplication
• Impeachment
• Offers of Settlement
• Common law or
modified?
• Types of actions
• How are collateral
sources defined
• State Farm Mutual
Auto. Ins. Co. v.
Joerg, 2013 WL
3107207
• Yarrington v.
Thornburg, 205 A.2d
1 (Del. 1964)
• Subrogation
46

47. • ACA sets a floor but allows the states to set additional
minimum benefits that must be covered
• Each State has designated a “benchmark plan”
• To illustrate, Maryland’s benchmark plan includes:
– Home Health Care Services
– Outpatient Rehabilitation Benefits
– Durable Medical Equipment Benefits
– Skilled Nursing Facility
Other Strategic Considerations: Scope of Coverage
47

48. Maryland Benchmark Plan
48

49. Matching a Policy to a Plan: Maryland Example
• Plaintiff injured after birth and suffers cognitive and
neurological defects
• Plaintiff’s economist projects Life Care Plan between
$51,489,580 and $63,148,256
49

50. Case Example: Coverage Identified
• Identified Blue Preferred Platinum $0 plan
• Premium $2,280 annually
• Maximum out-of-pocket cost: $1,800
50

51. Case Example: Life Care Plan v. Insurance
51
Life Care Plan Future Value
Complications / Hospitalizations $1,486,712
Drugs and Supplies $1,226,486.10
Wheelchair $151,101.85
Home Accessories and Equipment $267,613.96
Health Evaluations $25,644
Case Management $244,296
Medical Routine Coverage $72,618
Medical Services $13,677.80
Orthotics/Prosthetics $76,590
Therapies $1,042,496
Insurance Plan
Covered
98.4% covered
99.7% covered
97.5% covered
Covered
Covered
Covered
Covered
Covered
35.1% covered

52. Matching a Life Care Plan with a Policy
• Often not covered are:
– Home services intended primarily for:
› Activities of daily living
› Food preparation
› Homemaking
› Relief for a primary caretaker
– private duty nursing
• Look to how a state defines home care coverage
• Look to how policies describe covered benefits
• Determine the frequency or amount of available benefits
52

53. Another Example
• Chipping away at the life care plan:
– Plaintiff’s life care plan: $5.4 million - $28.7 million
› Annuity cost: $3.5 million
– Defendant’s life care plan: $2.7 million - $14.35 million
› Annuity cost: $1.5 million
– Defendant’s life care plan with insurance:
› Annuity cost: $900,000
53

54. • Cases recently commenced:
– Pleadings
› Mitigation
› Collateral sources
› Discovery of collateral sources and cost of care to date
Other Strategic Considerations: Timing
54

55. • Obtain experts early to determine potential savings
• Experts needed because mitigation is an affirmative
defense (see Leung)
Cases Recently Commenced and Pre-Deposition
55

56. The ACA is an Evidentiary Defense
• Simply pointing to the ACA
has been rejected:
• Evidence should show future
insurance coverage is
reasonably certain:
– Link covered services and
amounts to the items plaintiff
puts in a life care plan
– Present a reasonable basis on
which to believe that the
plaintiff is reasonably certain
to have the coverage, and
– Give the grounds to show
with reasonable certainty the
time period such coverage
will exist
“But the mere possibility that
private insurance coverage will
continue, and the availability of
government programs for the
purchase of insurance, do not, in
themselves, constitute relevant,
admissible evidence of the future
insurance benefits that a plaintiff is
reasonably certain to receive.”
Leung v. Verdugo Hills Hosp.,
2013 WL 221654, at *11
56

57. • Some defenses are more limited
• Regardless, still challenge the reliability and foundation
– Look for duplication
• What does the state allow as the measure of damages?
– Billed v. negotiated rates / “reasonable value”
– Subrogation rules
• How does the state define collateral sources?
Cases Post-Deposition but Pre-Trial
57

58. Trial Imminent
• Options
– Duplication
– Voir Dire
– Cross-Examination on growth rate projections
– Motions to preclude
58

59. • All damages arguments should be raised
– Ideally done with expert support and analysis
– Ideally a cost analysis is done early
– Can also be roughly done by looking at policies on state
exchanges and projecting costs
• Can demonstrate that needs can be taken care of by
purchasing a policy
– With additional amount for out-of-pocket expenses not
covered
– Periodic lump sums
Settlement Discussions
59

60. Settlement Case Examples
• Case #1
– 49-year-old female plaintiff
– Acute renal failure leading to right transmetatarsal amputation
and limp
– Alleged cognitive issues, depression, anxiety, pain disorder
– Plaintiff’s Life Care Plan: $1.2 million
– Plaintiff’s Initial demand at mediation: $1.9 million
– Defendant’s proposed Life Care Plan with insurance: $400,000
– Case settled: $1.2 million
› $650,000 for pain and suffering
› $550,000 for pecuniary expenses
– Total reduction of medical expenses 54%
60

61. Settlement Case Examples
• Case #2
– Brain damaged infant living in Maine
– Maine’s benchmark plan provided for unlimited home health care
– Plaintiff’s initial demand: $20 million
– Case settled: $7 million
61

62. • Begin early in the process
• Depositions are critical where available
• Consider what role, if any, the ACA should play in
attempting to settle or mediate a case
Where We Go from Here
62

63. Caryn L. Lilling
clilling@mlnappeals.com
Mauro Lilling Naparty LLP
130 Crossways Park Drive
Suite 100
Woodbury, New York 11797
T 516.487.5800
F 516.487.5811
Kitch Drutchas Wagner
Valitutti & Sherbrook
One Woodward Ave, Ste 2400
Detroit, Michigan 48226
T 313.965.6954
F 131.965.7403
Thomas R. Shimmel
thomas.shimmel@kitch.com