The following is the outline for the 2016 Case Law Update at the Delaware Trial Lawyers Association Annual Convention, presented by Bill Peltz and Ben Schwartz. To access the actual court opinions referenced in the outline, click on the name of the case in the outline.
Topic #1. Stayton and its progeny.
Stayton v. Delaware Health Corporation, 117 A.3d 521 (Del.2015). “[T]he collateral source rule does not apply to amounts required to be written off by Medicare”. Stayton was a 76-year-old resident of Harbor Healthcare. She was wheelchair-bound, paralyzed in one arm and one leg, and had suffered a stroke. She was left unsupervised. She tried to light a cigarette and caught her clothing on fire, burning 23% of her body. She was admitted as an inpatient to Crozer Burn Center for six months. Her past medicals were north of $3.6M. Medicare paid $262,000 in full satisfaction of the bills. The plaintiff was not permitted to seek the full amount of the bills. Under the collateral source rule, the defendant would not have been permitted the benefit of payments made by the collateral source, by the health insurer. But here, there was no consideration paid by the injury victim for those collateral payments, and so the collateral source did not apply.
Sweetman v. State Farm Mutual Automobile Ins. Co., 2015 Del. C.P. LEXIS 67, Court of Common Pleas, December 30, 2015. This was a PIP breach of contract action tried in Court of Common Pleas before Chief Judge Smalls. State Farm provided PIP to Betty Sweetman. She sustained a cervical spine injury in an auto accident. Dr. Rastogi performed the surgery. Dr. Eric Schwartz provided a DME to say that the surgery was not reasonable and necessary. After the PIP cutoff, the provider submitted the bills to Medicare. The plaintiff prevailed in proving that the treatment was reasonable and necessary, but the Court extended the Stayton rule to PIP breach of contract cases and held that instead of owing the full amount of the bills, State Farm was entitled to the Medicare reductions because Ms. Sweetman did not bargain for those Medicare reductions. “Judgment is entered for Plaintiff for medical expenses in the amount of $54,424.75, however as a result of Stayton, this amount is reduced to $25,187.61…”
Smith v. Mahoney, N12C-10-046 MMJ (November 20, 2015). This case extends the holding of the Supreme Court’s decision in Stayton to plaintiffs whose medical bills are paid by Medicaid. In addition, it addresses future medicals. Judge Johnston refused to revise an award for future medicals on the defense’s post-trial motion. It is speculative to say the Plaintiff will be a Medicaid recipient in the future. This case is currently pending in the Supreme Court on cross-appeals in Case #642, 2015. On the brief for the Plaintiff is Bob Peck from Center for Constitutional Litigation and Rob Collins from Schwartz & Schwartz. Also, DTLA – through Raeann Warner, Patrick Gallagher, and Bill Erhart – has filed an Amicus.
Russum v IPM Development Partnership, LLC, 2015 Del. Super. LEXIS 376. This is a July 15, 2015 Order granting Defendants’ Motion in Limine. This is another Medicare case. Extends the Stayton rule to future medicals. If future medicals are to be offered into evidence at trial, the cost must be reduced by the Medicare fee schedule and an expert is needed to testify as to what Medicare will pay. There was a motion for re-argument and a decision was issued on August 14, 2015.
Honey v. Bayhealth Medical Center Inc., 2015 Del. Super. LEXIS 378. Medicare Advantage Plan insurers are within the larger Medicare system and are therefore subject to Stayton. Here, Ms. Honey had a Part C Medicare Advantage Plan. A Medicare Advantage Plan is health insurance administered by a private insurer. Medicare pays the private insurer a capitated rate, and if the insurer spends less than that rate they make a profit. If they spend more than that rate, they suck it up. Judge Young essentially ruled that just because it’s a private company administering the plan doesn’t mean the collateral source rule should apply.
Topic #2. Premises liability: an erosion of the reasonableness standard?
The questions you ask when you’re evaluating a premises case in Delaware:
Is the landowner a governmental entity? If so, there may be immunity. For example, Sarko v City of Rehoboth Beach, C.A. No. S15C-11-013 RFS (Del.Super. March 22, 2016) was a trip-and-fall accident on the boardwalk in Rehoboth. The injured plaintiff brought suit against the City of Rehoboth and the City moved for dismissal. The Court held that the boardwalk is a “structure designed for use primarily by the public in connection with public outdoor recreation” pursuant to the County and Municipal Tort Claims Act, 10 Del.C. § 4012(2), which meant that the Act barred the claim. Case dismissed. Did the accident occur at someone’s home or farm? If so, and if the injured plaintiff is a guest without payment or a trespasser, then you have to show intentional action or willful and wanton behavior to recover. That’s the DE Premises Guest Statute, 25 C. § 1501. Did the injury occur at a commercial establishment? If so, you must classify the plaintiff as an invitee, licensee or trespasser. If the plaintiff is a business invitee, the standard is that the property owner is liable if he knew or should have known of a dangerous condition that was created or permitted to remain (right?). If one of the latter classifications, the plaintiff must show that the property owner acted with willful and wanton disregard of her safety. A recent case dealing with how to classify a plaintiff is Short-Karr v. RB Gym Inc. d/b/a Club Fitness, 2015 Del. Super. LEXIS 984. Non-paying guests of a gym member who is injured in the gym is a business invitee. Tracey Short-Karr’s son, Garett, was a member of Club Fitness. His membership allowed him to bring a guest to work out. While Tracey and Garett were there working out, Tracey tripped over a bow-flex machine and was injured. Once in suit, the defense filed a motion to dismiss because Tracey did not allege willful and wanton conduct. This is not a case involving the Delaware Premises Guest Statute – it’s a commercial establishment. When you have a commercial establishment, you have to determine whether the injured party is an invitee, a licensee, or a trespasser. An invitee is owed a higher duty than the others – A landowner owes a duty of reasonable care to his business invitees to maintain the premises in a reasonably safe condition, or to warn the invitees of any latent or concealed danger. The duty owed to other classes is to refrain from conduct that would be considered willful and wanton. Here, the son gave an affidavit stating that he would not have signed up for his paid membership if he couldn’t take mom to work out, and mom was paying for son’s membership. The Court concluded that Tracey was a business invitee and denied the motion to dismiss. That illustrates the reasonableness standard – if the property owner failed to take action when he knew or should have known of the dangerous condition, the plaintiff prevails.
Two business invitee cases in the last year where the Court threw that should-have-known part out the window:
Dougherty v Hibbits: The correct standard in Delaware for landlord-tenant dog bite liability is the landlord’s actual knowledge of a dog’s vicious or dangerous propensities. The landlord is only liable for injuries caused by the tenant’s dog if the landlord had “actual knowledge of [the] dog’s vicious or dangerous propensities”. The standard is not the knew-or-should-have-known standard. (This case was affirmed by the Supreme Court).
Russum v. IPM Development Partnership, LLC, May 21, 2015 Order granting Defendant Big Lots Stores, Inc’s Motion for Summary Judgment. Big Lots operated a store on leased property owned by IPM. There was a ramp leading up to the front of the store. The ramp was part of the “common area”. Big Lots’ lease said that IPM maintained responsibility for all common areas. Dorothy Russum fell on the ramp, which was alleged to be defective. The defect was not open and obvious. Rather, the defective condition was the subject of the plaintiff’s expert report. Big Lots moved for summary judgment. The Court concluded that because the defect was latent and could only be appreciated with the assistance of Plaintiff’s expert, because Big Lots did not take part in the design or construction of the ramp, and because the record did not reveal any prior falls on the ramp, Big Lots did not have knowledge of the defective condition. With no knowledge of the defective condition, there was no duty to warn Ms. Russum of the defective condition of the ramp. Summary Judgment was granted in favor of Big Lots.
Topic #3. The Simpson case.
Under Simpson v. State of Delaware, 2016 Del. Super. LEXIS 56, the plaintiff was injured in an on-the-job auto accident. She was employed by the State of Delaware, which is self-insured. “All State-owned vehicles are insured under the State’s self-administered automobile liability policy, which includes uninsured/underinsured motorist (“UM/UIM”) coverage with limits of $25,000 per accident”. She got workers’ compensation benefits. She made a bodily injury liability claim against the tortfeasor and received a fifteen thousand dollar policy limit settlement. She then made two UIM claims – one against the State of Delaware’s UIM insurance and one against her personal GEICO UIM insurance. The State moved for summary judgment, which was granted. The rationale was that 19 Del.C. § 2304 states, “Every employer and employee, adult and minor, except as expressly excluded in this chapter, shall be bound by this chapter respectively to pay and to accept compensation for personal injury or death by accident arising out of and in the course of employment, regardless of the question of negligence and to the exclusion of all other rights and remedies.” So workers’ compensation was the exclusive benefit available through the State. There was a narrower rationale available: The State’s UM/UIM policy expressly lists as an exclusion “bodily injury to any employee of the insured arising out of and in the course of his or her employment by the insured”. House Bill 308 is presently pending. It would fix this issue.