Simms v. United States, No. 15-2161 (4th Cir. 2016)
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Plaintiff filed a wrongful birth action against the United States under the Federal Tort Claims Act (FTCA), 28 U.S.C. 2671 et seq., after her federally-supported prenatal care provider failed to timely inform her that her child would be born with severe congenital abnormalities. The district court found in favor of plaintiff and awarded her $12 million in economic and noneconomic damages. When plaintiff was eighteen months pregnant, the provider detected potential fetal abnormalities during a routine ultrasound but, due to errors on its part, the provider did not inform plaintiff of the abnormalities until three months later. Because at that point plaintiff was well into her third trimester, the laws of West Virginia and nearby states barred her from terminating her pregnancy. The court concluded that the district court properly awarded plaintiff damages attributable to her child’s past medical expenses; the district court correctly measured plaintiff's damages using the amount medical providers billed for her child’s care, rather than the amount the West Virginia Medicaid program paid those providers; but the district court erred in failing to hold a post-verdict, prejudgment collateral source hearing. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings.
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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2161 MISTY SIMMS, individually, next friend of C.J., an infant, and Plaintiffs - Appellees, v. UNITED STATES OF AMERICA, Defendant - Appellant, and RICHARD BOOTH, M.D.; VALLEY HEALTH SYSTEMS, STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, INC.; UNITED Defendants. Appeal from the United States District Court for the Southern District of West Virginia, at Huntington. Robert C. Chambers, Chief District Judge. (3:11-cv-00932) Argued: January 27, 2016 Decided: October 7, 2016 Before WYNN and HARRIS, Circuit Judges, and Loretta C. BIGGS, United States District Judge for the Middle District of North Carolina, sitting by designation. Affirmed in part, vacated in part, and remanded by published opinion. Judge Wynn wrote the opinion, in which Judge Harris and Judge Biggs joined. ARGUED: Edward Himmelfarb, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. Mark Davis Moreland, MORELAND & MORELAND, Lewisburg, West Virginia, for Appellees. ON BRIEF: Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Mark B. Stern, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; R. Booth Goodwin II, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charleston, West Virginia, for Appellant. Rachel Hanna, LAW OFFICE OF RACHEL HANNA, Lewisburg, West Virginia, for Appellees. 2 WYNN, Circuit Judge: Plaintiff Misty Simms brought this “wrongful birth” action against the United States under the Federal Tort Claims Act (“FTCA”) after her prenatal care provider--a federally-supported health center--failed to timely inform her that her child would be born with severe congenital abnormalities. Following a bench trial, the district court found in favor of Simms and awarded her over $12 million in economic and noneconomic damages. The government appeals the award of damages for past and future medical expenses and the district court’s decision not to order the creation of a reversionary trust for future medical expenses. After careful review, we conclude that the district court properly awarded Simms damages attributable to her child’s past medical expenses. We further conclude that the district court correctly measured Simms’ damages using the amount medical providers billed for her child’s care, rather than the amount the West Virginia Medicaid program paid those providers. the district court erred in failing prejudgment collateral source hearing. in part, vacate in part, and remand consistent with this opinion. 3 to hold a But post-verdict, Accordingly, we affirm for further proceedings I. A. Simms received prenatal care at Valley Health Systems, Inc. (“Valley Health”), a federally-supported located in West Virginia. health care center On February 25, 2008, when Simms was eighteen weeks pregnant, her Valley Health physician detected potential fetal abnormalities during a routine ultrasound. But due to errors on its part, Valley Health did not inform Simms of the abnormalities until May 2008, three months later. In a series of follow-up appointments, Simms learned that the fetus’s brain was extremely underdeveloped, and, if not stillborn, her child would never walk or talk and would be severely mentally disabled. Because at that point Simms was well into her third trimester, the laws of West Virginia and nearby states barred Simms from terminating her pregnancy. On June 18, 2008, Simms gave birth to her son, C.J. survived birth malformation muscular and but, as expected, multiple conditions. As other a suffered related result, C.J. physicians refer to as a “vegetative state.” severe C.J. brain developmental lives in what and his And although C.J. is able to live at home with Simms, he requires twenty-four-hour care and monitoring. To date, the extraordinary medical bills 4 resulting from the requisite care provided for C.J. have been paid by West Virginia’s Medicaid and Medicaid Waiver programs. 1 B. On November 21, 2011, Simms filed this wrongful birth action individually, and on behalf of her son, C.J., in the United States District Court for the Southern District of West Virginia. Because Valley Health is a federally-supported health center, Simms sought relief under the FTCA. See 42 U.S.C. § 233(g). Because this case arises under the FTCA, the law of West Virginia—-the state place—-governs. where Valley Health’s negligent act took See 28 U.S.C. § 1346(b)(1); Starns v. United States, 923 F.2d 34, 37 (4th Cir. 1991); see also 28 U.S.C. § 2674 (providing that “[t]he United States shall be liable . . . in the same manner and to the same extent as a private individual under like circumstances”). We therefore apply the law of West Virginia in evaluating the government’s claims. See Myrick v. United States, 723 F.2d 1158, 1159 (4th Cir. 1983). To the extent we are faced with an unsettled issue of West Virginia law, our task is “to predict how [the state’s highest] court would rule if presented with the issue.” 1 Ellis v. La.- In this opinion, we refer to West Virginia’s Medicaid and Medicaid Waiver programs collectively as the “West Virginia Medicaid program” or “Medicaid.” 5 Pac. Corp., 699 F.3d 778, 782–83 (4th Cir. 2012) (internal quotation omitted); see Midwest Knitting Mills, Inc. v. United States, 950 F.2d 1295, 1298 (7th Cir. 1991). In West Virginia, “[t]he failure of a [healthcare provider] to discover a birth defect and to advise the parents of its consequences will give rise to a cause of action” for “wrongful birth.” The James G. v. Caserta, 332 S.E.2d 872, 882 (W. Va. 1985). theory provider’s underlying failure to a wrongful advise of birth the action birth is defect that the caused the parents to lose the opportunity make an informed decision as to whether to terminate the pregnancy. Id. at 879. After a bench trial, the district court issued a memorandum opinion and order finding the government liable. Simms v. United States, 107 F. Supp. 3d 561, 563–64 (S.D.W. Va. 2015). The court held that Valley Health’s failure to provide follow-up care after the February 25, 2008, ultrasound “proximately caused [Simms] to be deprived of essential information” regarding the fetus’s condition and thereby “prevent[ed] [Simms] exercising her right to terminate [the] pregnancy.” from Id. at 567. The court entered judgment in favor of Simms individually and dismissed the claim brought by Simms on C.J.’s behalf, holding that C.J. did not have a cause of action for wrongful birth under West Virginia law. Id. at 563 n.1. 6 The district court awarded Simms a total of $12,222,743 in damages, distributed as follows: (1) $2,722,447 for past billed medical expenses, (2) $8,683,196 for future medical expenses—the present value of the projected future medical costs for C.J.’s care over a twenty-one-year life expectancy, (3) $175,526 for lost income, and (4) $641,544 in noneconomic damages. 2 The government timely appealed. II. On appeal to this Court, the government does not challenge the district government court’s disputes liability the determination. district court’s award Rather, of the damages attributable to C.J.’s past and future medical expenses. 3 We review the district court’s conclusions of law, including those regarding the availability and calculation of damages, de novo. See Rice v. Cmty. Health Ass’n, 203 F.3d 283, 287 (4th Cir. 2000). We review factual findings relating to the calculation of damages for clear error. United States ex rel. 2 The district court’s memorandum opinion and order indicates a different damages award. See Simms, 107 F. Supp. 3d at 579–80. Following initial entry of judgment, the district court entered an amended judgment order revising the damages award to account for a clerical error in the damages calculation. 3 Shortly after oral argument, in response to Simms’s unopposed motion, we entered an order partially affirming the district court’s judgment with respect to the undisputed portion of the damages award for lost income and noneconomic damages. 7 Maddux Supply Co. v. St. Paul Fire & Marine Ins. Co., 86 F.3d 332, 334 (4th Cir. 1996) (per curiam). A. In its appeal, the government challenges the district court’s award of damages for past and future medical expenses on a number of grounds, each relating to the West Virginia Medicaid program’s payment of C.J.’s medical expenses. The government first contends that Simms does not have a right to recover past medical expenses because, in light of C.J.’s Medicaid coverage, Simms has not, to date, paid out-of-pocket for C.J.’s medical care. According to the government, awarding Simms damages related to medical care costs she did not incur would contravene the basic tort principle that damages must compensate only for actual loss. We disagree. Under West Virginia law, a parent who successfully brings a wrongful birth suit against a healthcare provider is entitled to recover the “extraordinary costs for rearing a child with birth defects.” Caserta, 332 S.E.2d at 882; see id. at 878 n.12 (“[T]he rule is that the . . . costs of extraordinary child care arising from the defects are recoverable in a wrongful birth action.”). costs These damages include “the medical or educational attributable to the birth defect during the child’s minority” as well as medical and support costs “after the child reaches the age of majority if the child is unable to support 8 himself.” Id. at 882–83. The entitlement to such recovery stems from parents’ legal duty to support their children. Id.; see State ex rel. Packard v. Perry, 655 S.E.2d 548, 554 (W. Va. 2007) (“[P]arents ha[ve] a duty to support their child, and in turn [are] therefore obligated to pay for their child's medical expenses.”); see also 67A C.J.S. Parent and Child § 167 (2016) (“Each parent has a duty to support his or her minor children.”). Here, the fact that Simms has not had to pay out-of-pocket for C.J.’s past medical care does not obviate her injury. Simms has a legal obligation to support her child and the weight of that obligation negligence. And increased the as fact a that result of Medicaid Valley has, to Health’s date, paid common law C.J.’s medical costs does not change this analysis. West Virginia has long recognized the “collateral source rule,” which is “an exception to the general rule that in a tort action, the measure of damages is that that will compensate and make the plaintiff whole.” 25 C.J.S. Damages § 189 (2016); see Kenney v. Liston, 760 S.E.2d 434, 440 (W. Va. 2014). “The collateral source rule protects payments made to or benefits conferred upon an injured party from sources other than the corresponding damages.” tortfeasor offset or by denying the credit against the Kenney, 760 S.E.2d at 440. 9 tortfeasor injured any party’s The rationale underlying the collateral source rule is that “it is better for injured plaintiffs to receive the benefit of collateral sources in addition to actual damages than for defendants to be able to limit their presence of liability these for damages sources.” Id. merely at 445 by the fortuitous (citation omitted) (internal quotation marks omitted); see also Ilosky v. Michelin Tire Corp., 307 S.E.2d 603, 615 (W. Va. 1983) (“The purpose of the collateral source doctrine is to prevent reduction in the damage liability of defendants simply because the victim had the good fortune to be insured or have other means of compensation.”). The collateral source rule Kenney, 760 S.E.2d at 433–34. source rule, the government protects Medicaid payments. Accordingly, under the collateral is not entitled to a credit or offset against Simms’ damages based on Medicaid’s payment of C.J.’s medical expenses. We therefore reject the government’s argument that common law tort principles preclude Simms from recovering damages related to C.J.’s past medical expenses. B. The government further contends that, even if the collateral source rule applies and Simms is entitled to recover damages attributable to C.J.’s past medical expenses, the district court erred in calculating those damages because the 10 court used the amount C.J.’s medical providers billed for his care, rather than the amount the Medicaid program actually paid. Under West Virginia law, the “proper measure of damages [for medical expenses] is not simply the expenses or liability incurred, rather or the that which may [r]easonable be incurred value of [n]ecessary because of the injury.” in the medical future, services but made Jordan v. Bero, 210 S.E.2d 618, 637 (W. Va. 1974); see also Delong v. Kermit Lumber & Pressure Treating Co., 332 S.E.2d 256, 258 (W. Va. 1985) (“The proper measure of damages for future medical expenses is ‘the reasonable necessary value by of reason medical of the services permanent injuries.’” (citation omitted)). as will effects probably of a be party’s Thus, when a tortfeasor causes a plaintiff an injury requiring medical services, the plaintiff is entitled to recover the reasonable value of those services, regardless of the amount actually paid or whether the services were rendered gratuitously. In Kenney, addressed the the West application Kenney, 760 S.E.2d at 445-46. Virginia of the Supreme Court collateral of source Appeals rule in situations in which a healthcare provider discounts or writes off a portion of a medical bill pursuant to an agreement with a plaintiff’s health insurer. Id. at 439-40. The court held that, under the collateral source rule, a plaintiff is entitled to “the total amount billed by his medical providers absent his 11 health insurance tortfeasor is coverage,” not entitled and to therefore, receive the reduced, discounted or written-off amount.” that benefit “[t]he of the Id. at 446. The government principally attempts to distinguish Kenney on grounds private that Kenney insurer, dealt whereas the with West reimbursed C.J.’s medical costs. such distinction governmental benefits between entities. rendered by Virginia the “social obtained Medicaid by a program But the Kenney Court drew no benefits To discounts conferred contrary, by private Kenney legislation” “are subtracted from a plaintiff’s recovery.” held not [to and that be] Id. at 445–46; see also id. at 446 (“[T]he law does not differentiate between the nature of . . . Kenney identified governmental falling collateral benefits entities within the and as collateral hospitals,” “government “other benefits conferred by . . . .”). numerous programs--including collateral (identifying Security,” source source sources pension government rule. programs Id. Medicaid,” and “social services,” among others). Kenney provides no basis to distinguish at and such like specific Medicaid--as “veteran’s programs And as 628-632 military Social Medicare and Accordingly, between benefits conferred by public and private payers. The government also suggests that the difference between the amount billed by C.J.’s medical providers and the amount 12 paid by Medicaid does not constitute a “benefit” for purposes of the collateral source rule because C.J.’s providers were required by federal law to accept the amount paid by Medicaid as payment in full. But Kenney expressly refused to restrict the universe of benefits protected by the collateral source rule to “payments” made to a explaining that plaintiff “the or collateral on a source plaintiff’s rule behalf, applies to any benefit received by a plaintiff from any source in line with the plaintiff’s interests.” Id. at 445; see also id. at 440 (“The collateral source rule protects payments made to or benefits conferred upon an injured tortfeasor . . . .” party (emphasis from sources added)). And other the than Kenney the court specifically identified discounted rates negotiated by payers as one type of “benefit” subject to the collateral source rule. Id. at 445-46 (“The damage is sustained when the plaintiff incurs the liability, and the method by which that liability is later discharged has no effect (internal quotation omitted)). accepted the participation insurance discounted in plan the does on the not of damages.” That C.J.’s medical providers reimbursement Medicaid measure program change the rates rather as condition than analysis a of private because, as explained above, the West Virginia collateral source rule does not distinguish between benefits conferred by public and private entities. 13 Accordingly, we conclude that, as a matter of West Virginia law, regardless of whether a provider decides to discount a medical bill by agreement with a private health insurer or by virtue of voluntary participation in the Medicaid program, proof of the original medical bill remains “prima facie evidence the expense was necessary and reasonable.” court, award therefore, using the did not amount err in C.J.’s Id. at 438. The district calculating medical Simms’ providers damages billed the Medicaid program. C. Finally, we address the government’s argument that the district court erred in refusing to reduce the damages award under the provisions of West Virginia’s Medical Professional Liability Act (the “Professional Liability Act”). The Professional Liability Act modifies the common law collateral source rule in the context of medical professional liability actions, like the instant case. Manor Care, Inc. v. Douglas, 763 S.E.2d 73, 87 (W. Va. 2014); see W. Va. Code § 557B-9a. The statute entitles a defendant to a post-verdict, prejudgment hearing regarding payments received by the plaintiff from collateral sources. W. Va. Code § 55-7B-9a(a) (“[A] defendant who has been found liable to the plaintiff for damages for medical care, rehabilitation services, lost earnings or other economic losses may present to the court, after the trier 14 of fact has rendered a verdict, but before entry of judgment, evidence of payments the plaintiff has received for the same injury from collateral sources.”). finds that certain statutory At the hearing, if the court preconditions are met, the defendant may also “present evidence of future payments from collateral sources.” Id. § 55-7B-9a(b) (emphasis added). After making findings based on the evidence, the court then reduces the economic damages award by the “net amount of collateral source payments received or to be received by the plaintiff” before entering judgment. Id. § 55-7B-9a(f). The court may not reduce the award, however, with respect to any amounts “which the collateral source has a right to recover from the plaintiff through subrogation, 9a(g)(1). Medicaid lien, or reimbursement.” payments qualify as payments under the Professional Liability Act. Id. § 55-7B- collateral source See id. § 55-7B- 2(b) (defining the term “[c]ollateral source” to include “[a]ny federal or state act, public program or insurance which provides payments for medical expenses”). Here, the district court did not hold a collateral source hearing before it entered judgment. Instead, the district court ruled that, as a matter of law, the Professional Liability Act did not entitle the government to any damages reduction because “the West Virginia state Medicaid program has a subrogation lien against any verdict in Plaintiffs’ 15 favor.” Simms v. United States, No. CIV.A. 3:11-0932, 2015 WL 128101, at *3 (S.D.W. Va. Jan. 8, 2015). The district court did not explain its basis for concluding that the Medicaid Simms’ judgment. Medicaid program program holds a subrogation lien against And the parties disagree as to whether the holds such a lien. In particular, Simms asserts that the Medicaid program holds a subrogation lien by virtue of Section 9-5-11(b), which provides that when a Medicaid “recipient” recovers damages from a third party related to medical expenses previously paid by the Medicaid program, the state Medicaid agency holds a “priority right to be paid first” out of the recovery. W. Va. Code § 9-5-11(b)(6). To that end, the West Virginia Medicaid program “shall be legally subrogated to the rights contrast, the of the recipient.” government argues Id. that § 9-5-11(b)(5). Section 9-5-11 By does not apply because C.J.--not Simms--is the Medicaid “recipient” for purposes of the subrogation provision. (defining “[r]ecipient,” “unless See id. § 9-5-11(a)(3) the context otherwise requires,” as “a person who applies for and receives assistance under the Medicaid Program”). Because the district court did not squarely address the government’s argument that Simms 16 does not qualify as a “recipient” under W. Va. Code § 9-5-11, 4 we believe the district court should entering have held judgment warranted so the in a collateral Simms’ district favor. court source hearing Accordingly, can determine, in before remand the is first instance, whether Simms, in her individual capacity, qualifies as a “recipient” under W. Va. Code § 9-5-11. See Am. Foreign Serv. Ass’n v. Garfinkel, 490 U.S. 153, 160 (1989) (“[B]ecause appellants’ argument raises a question of statutory interpretation not touched upon by the [d]istrict [c]ourt, we leave these matters for that court to decide in the first instance.”). A collateral source additional reasons. hearing is necessary for several First, even if the state Medicaid program does not hold a subrogation lien by virtue of Section 9-5-11(b), the state of West Virginia may have “a right to recover” the amount it has paid for C.J.’s medical care by some other means that would bar the district court from reducing Simms’ award. To that end, Simms contends that 4 the Medicaid application she The district court never addressed whether Medicaid held a subrogation lien against Simms because, before trial, the court ruled that Medicaid had a subrogation lien against C.J., who was still a party to the action at that point. Simms, 2015 WL 128101, at *3. Neither party appears to have disputed that ruling. After trial, the district court dismissed C.J. as a plaintiff, see Simms, 107 F. Supp. 3d at 563 n.1, making it necessary for the court to determine whether Medicaid’s lien against any recovery by C.J. extends to recoveries by Simms. 17 completed and signed on C.J.’s behalf gives the Medicaid program a right to recovers. seek The reimbursement record, related however, does to not any damages include a she copy of Simms’ Medicaid application so we are in no position to evaluate that argument. Complicating matters further, the government asserts that there are “lien letters” demonstrating that any lien asserted by the state of West Virginia runs only against a damages award for C.J., not Simms. Reply Br. at 8. Again, we can find nothing in the record establishing the existence of such letters, let alone their contents. We believe a collateral source hearing is the proper vehicle for the parties to present such evidence for consideration by the district court in the first instance. Finally, regardless of whether West Virginia has a right to reimbursement with respect to the damages awarded for past medical expenses, such a right would not resolve whether the Professional Liability Act requires a reduction in the damages award for future medical expenses. See W. Va. Code § 9-5- 11(g)(3) (indicating that the amount the West Virginia Medicaid program may recoup shall “not exceed the amount of past medical expenses paid”). Under the statute, a liable defendant “may present evidence of future payments from collateral sources” and receive a damages reduction on account thereof, if the court finds that: 18 (1) (2) The benefits, to a reasonable degree certainty, will be paid to the plaintiff expenses the trier of fact has determined plaintiff will incur in the future; and (3) Id. There is a preexisting contractual or statutory obligation on the collateral source to pay the benefits; The amount of the future reducible to a sum certain. § 55-7B-9a(b). findings—-one way expenses The court the or district other—-as to is did these of for the readily not make any three statutory court’s judgment preconditions before it entered judgment. Accordingly, solely with we respect vacate to the damages district awarded for past and future medical expenses and remand the case to the district court so that it may hold a collateral source hearing. the court argument, should and accept decide evidence whether, from and to At the hearing, the parties, what extent, hear the Professional Liability Act entitles the government to a damages reduction. Among other issues, the court should address whether, in light of C.J.’s dismissal, West Virginia’s Medicaid program may recover from Simms “through subrogation, lien or reimbursement,” W. Va. Code § 55-7B-9a(g)(1), some or all of the damages awarded for past medical expenses. The district court also should determine whether Medicaid has any other “right to recover” against Simms. In addition, the district court should make findings relevant to the issue of future collateral source 19 payments, including whether there is a “reasonable degree of certainty” that C.J.’s medical care will continue to be covered by West Virginia’s Medicaid program. 5 Id. § 55-7B-9a(b)(2). III. For the foregoing reasons, we vacate the district court’s judgment solely with respect to damages award for past and future medical expenses and remand to the district court for further proceedings consistent with this opinion. AFFIRMED IN PART, VACATED IN PART, AND REMANDED 5 Because we remand for a collateral source hearing under the Professional Liability Act, we need not--and thus do not-address Defendant’s alternative argument that there should be a damages setoff to account for the financial contribution the federal government made to the West Virginia Medicaid program. Additionally, on remand, the district court may consider anew, if the issue arises, whether it is an appropriate exercise of its discretion to order the creation of a reversionary trust. 20
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