LEIGHTON (JEFF) VS. CSX TRANSPORTATION, INC.
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RENDERED: MARCH 11, 2011; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001158-MR
JEFF LEIGHTON
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE FREDERIC COWAN, JUDGE
ACTION NO. 04-CI-000513
CSX TRANSPORTATION, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, COMBS, AND WINE, JUDGES.
ACREE, JUDGE: Jeff Leighton appeals the Jefferson Circuit Court’s denial of his
motion for a new trial of his tort claim against his employer, CSX Transportation,
Inc., on the ground that the jury was allowed to speculate about collateral source
payments for medical expenses. The Jefferson Circuit Court denied the motion
because the fund from which those medical expenses were paid was not a collateral
source. We agree with the circuit court and affirm.
Leighton filed suit against CSX pursuant to the Federal Employers’ Liability
Act, 45 U.S.C. § 51 et seq. (FELA, or “the Act”), for injuries he suffered in the
course of his employment. In most cases, the employer that funds a disability
benefit program such as workers’ compensation cannot also be the tortfeasor
because of statutory immunities. Liability under FELA, however, is one context in
which the employer is allowed both to fund a workers’ compensation benefit
program and also be liable under a tort theory. In fact, § 5 of FELA voids “[a]ny
contract, rule, regulation, or device whatsoever, [intended] to enable any common
carrier [such as CSX] to exempt itself from any liability created” by the Act. 45
United States Code (U.S.C.) § 55 (1908 & 2011 Supp.).
However, the same § 5 of the Act states
That in any action brought against any such common
carrier under or by virtue of any of the provisions of this
chapter, such common carrier may set off therein any
sum it has contributed or paid to any insurance, relief
benefit, or indemnity that may have been paid to the
injured employee or the person entitled thereto on
account of the injury or death for which said action was
brought.
Id. Not surprisingly, this language yielded varied results among the federal courts
interpreting the statute in the context of the collateral source rule. It is an issue of
first impression for this Court.
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Kentucky’s Supreme Court recently explained the collateral source rule as
follows.
It is improper to reduce a plaintiff's damages by
payments for medical treatment under a health insurance
policy if the premiums were paid by the plaintiff or a
third party other than the tortfeasor. The collateral
source rule, as this rule is commonly known, allows the
plaintiff to (1) seek recovery for the reasonable value of
medical services for an injury, and (2) seek recovery for
the reasonable value of medical services without
consideration of insurance payments made to the injured
party. The collateral source rule has long been followed
in Kentucky.
Baptist Healthcare Systems, Inc. v. Miller, 177 S.W.3d 676, 682-83 (Ky. 2005)
(emphasis supplied)(footnotes omitted). By this definition, if the premiums were
paid by the tortfeasor-employer in this case, the collateral source rule would not
apply. Although Baptist Healthcare was not a FELA case, it is consistent with § 5
of the Act. But federal courts interpreting FELA do not end the analysis there.
Instead, “[a]pplication of the collateral source rule depends more upon the
character of the benefits than upon the source of the funds.” Patterson v. Norfolk
and Western Ry. Co., 489 F.2d 303, 308 (6th Cir. 1973) (FELA case).
Leighton’s medical bills were paid, in part, on behalf of CSX under The
Railroad Employees National Health and Welfare Plan (the Plan). Placing the
issue of the collateral source rule under FELA squarely before the trial court, both
Leighton and CSX filed motions in limine regarding those payments. Leighton
wanted the trial court to prohibit any evidence that he “received payments from
medical insurers or other collateral sources, or that his medical bills were paid by
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insurance.” CSX wanted the trial court to limit evidence of Leighton’s medical
expenses to those which he paid out-of-pocket. Before the court ruled, the issue
arose again when the parties submitted proposed jury instructions.
The trial court carefully considered the arguments of counsel and struck a
balance. Leighton would be allowed to present evidence that his total medical
expenses were $11,030.57. However, the jury instruction would include a
limitation on the award of damages allowing Leighton to recover no more than
$3,198.65, the amount of medical expenses not paid by the Plan.
The jury found CSX liable, awarding Leighton $3,198.65 for medical
expenses, $5,280.00 for lost employment benefits and nothing for pain and
suffering. The jury further found Leighton partially at fault and apportioned the
damages equally between him and CSX for a total award of $4,293.33.
Leighton filed a motion for new trial arguing that any implication to the jury
regarding payments from collateral sources is improper, including the limitation in
the instruction on his recovery of medical expenses.
The trial court denied his motion, citing the reasoning of Lyons v. Southern
Pacific Transp. Co., 684 F. Supp. 909, 911 (W.D. La. 1988), and Gonzalez v.
Indiana Harbor Belt R.R. Co., 638 F. Supp. 308 (N.D. Ind. 1986). Both of these
cases acknowledge that federal courts have divided on whether payments under the
Plan are subject to the collateral source rule in FELA actions. Lyons, 684 F. Supp.
at 910; Gonzalez, 638 F. Supp. at 309-10; see also Blake v. Delaware & Hudson
Ry. Co., 484 F.2d 204, 207 n.1 (2nd Cir. 1973). Both then note the recent tendency
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of courts to conclude that, under § 5 of the Act, such payments are not from a
collateral source, thereby allowing set-off, “when the payments were voluntarily
undertaken by the employer to indemnify itself against possible FELA liability as
opposed to payments classified as a fringe benefit.” Lyons, 684 F. Supp. at 911;
see also Gonzalez, 638 F. Supp. at 309-10. The question became how to
distinguish between the two. The answer appears to have been provided by Judge
Friendly in his oft-cited concurrence in Blake v. Delaware & Hudson Ry. Co.,
supra.
In Blake, the railroad was made to pay for its employee’s medical treatment
a second time when it was unable to establish that its insurance plan was not
simply an employee fringe benefit. Judge Friendly said, “If the railroads wish to
avoid the harsh result reached by the district court, they can accomplish this by
specific provision in the collective bargaining agreement.” Blake, 484 F.2d at 207
(Friendly, J., concurring). The railroads seem to have responded quickly.
Two years after Judge Friendly’s suggestion, the collective bargaining
agreement between the various railroad workers’ unions and the railroads included
the following language.
In case of an injury or a sickness for which an Employee
who is eligible for Employee benefits and may have a
right of recovery against the employing railroad, benefits
will be provided under the Policy Contract, subject to the
provisions hereinafter set forth. The parties hereto do not
intend that benefits provided under the Policy Contract
will duplicate, in whole or in part, any amount recovered
from the employing railroad for hospital, surgical,
medical or related expenses of any kind specified in the
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Policy Contract, and they intend that benefits provided
under the Policy Contract will satisfy any right of
recovery against the employing railroad for such benefits
to the extent of the benefits so provided. Accordingly,
benefits provided under the Policy Contract will be
offset against any right of recovery the Employee may
have against the employing railroad for hospital,
surgical, medical or related expenses of any kind
specified in the Policy Contract. [Emphasis in original]
National Health and Welfare Agreement, Art. III, § A (October 22, 1975) (as
excerpted in the Plan, p. 127). CSX directed the trial court’s attention to this
specific language in the Plan.
The courts in Gonzalez and Lyons, both quoting and attributing the same
offset provision to the parties’ collective bargaining agreement, considered this
language “the kind of ‘specific provision’ referred to by Judge Friendly that would
prevent the application of the seemingly harsh collateral source rule.” Gonzalez,
638 F. Supp. at 310 (footnote omitted); see also Lyons, 684 F. Supp. at 911. The
courts in both cases also relied on Clark v. Burlington Northern, Inc., 726 F.2d 448
(8th Cir. 1984), wherein that court said “the employer’s manifest intent to avoid
double liability in offering disability plans must be respected if the collateral
source rule is not to swallow up 45 U.S.C. § 55 at the ultimate expense of
employees.” 726 F.2d at 451.
We agree with the trial court. The Plan is not a collateral source.
Furthermore, in Gonzalez and Lyons, the respective courts prohibited the
introduction of any evidence of medical expenses because each of the plaintiffs
had “already been compensated for his medical expenses[.]” Lyons, 684 F. Supp.
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at 911; see also Gonzalez, 638 F. Supp. at 310. Unlike these cases, the trial court
sub judice allowed Leighton to present evidence of all $11,030.57 in medical
expenses while no evidence was presented explaining that CSX had already
provided payment for all but $3,198.65 of the expenses. The propriety of allowing
proof of medical expenses that the tortfeasor has already paid is not before us. We
consider only whether the jury instruction limiting Leighton’s recovery to his outof-pocket expenses was improper.
Alleged errors regarding jury instructions are questions of law that we
examine de novo. Reece v. Dixie Warehouse & Cartage Co., 188 S.W.3d 440, 449
(Ky. App. 2006).
The purpose of an instruction is to furnish guidance to
the jury in their deliberations and to aid them in arriving
at a correct verdict. If the statements of law contained in
the instructions are substantially correct, they will not be
condemned as prejudicial unless they are calculated to
mislead the jury.
Ballback’s Adm’r v. Boland-Maloney Lumber Co., 306 Ky. 647, 652-53, 208
S.W.2d 940, 943 (1948).
Leighton’s argument that the jury instruction was improper is premised
entirely on the pre-supposition that the Plan was a collateral source. Since we
conclude it was not, Leighton’s argument cannot be sustained.
Furthermore, the cases Leighton cites do not otherwise support his
argument. Thomas v. Greenview Hospital, Inc. and Beckner v. Palmore do not
address jury instructions, but stand for the rule that a plaintiff must be permitted to
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present evidence of the entirety of his medical expenses, even those paid by a
collateral source. Thomas, 127 S.W.3d 663 (Ky. App. 2004), overruled on other
grounds by Lanham v. Commonwealth, 171 S.W.3d 14 (Ky. 2005); Beckner, 719
S.W.2d 288 (Ky. App. 1986). Leighton was allowed to present evidence of
expenses that were paid by a non-collateral source – the tortfeasor. If the jury was
confused about the disparity between the evidence of medical expenses
($11,030.57) and the total the jury was permitted to award ($3,198.65), it was
because Leighton presented proof of unrecoverable medical expenses.
Because collateral source payments were not an issue in this case,
Leighton’s reliance on Drury v. Spalding, 812 S.W.2d 713 (Ky. 1991), is also
misplaced. Leighton quotes Drury for the proposition that “[t]here was no valid
reason for the jury to be told [he] was not entitled to recover a portion of h[is]
medical expenses.” Drury, 812 S.W.2d at 717. In the case before us, there was a
valid reason – the collateral source exception did not affect the “strong public
policy in this Commonwealth against double recovery for the same elements of
loss.” Hardaway Management Co. v. Southerland, 977 S.W.2d 910, 918 (Ky.
1998).
We conclude that the trial court was correct to rely on Lyons and Gonzalez
in its order denying Leighton’s motion for new trial. Given that the Plan was not a
collateral source of payment for Leighton’s medical expenses, there was no error in
the jury instruction that limited Leighton to recovery of his out-of-pocket expenses
only. Therefore, the judgment of the Jefferson Circuit Court is affirmed.
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ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Derek D. Humfleet
Lexington, Kentucky
Edward H. Stopher
Darryl S. Lavery
Thomas G. Goodwin
Louisville, Kentucky
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