January 19, 2013

162017_132140396847214_292624_nOn January 8, 2013, the Tenth District Court of Appeals of Ohio issued its written decision in which it held that a settlement a plaintiff received from a non-state defendant in a medical malpractice case was not a “benefit” that must be offset from the amount of damages the plaintiff may recover from the state based on the liability of a state university employee for the plaintiff’s injuries. In the case it was deciding, the medical malpractice plaintiffs had filed a medical malpractice case against a hospital and several of the resident physicians employed in the hospital’s family practice residency program. The medical malpractice plaintiffs also filed a separate case against the University of Cincinnati for the alleged medical malpractice committed by its employee.

The first case was settled when the hospital and its insurer agreed to pay the plaintiffs $2 million. The second case subsequently went to trial that resulted in the judge determining that the University of Cincinnati was liable for the care rendered by its physician and that its physician’s negligence was the sole proximate cause of the plaintiffs’ damages. The court entered judgment in favor of the medical malpractice plaintiffs in the amount of $3,311,761.84. Even though the parties contemplated that any award of damages would be reduced by the amount of the settlement reached with the hospital and its insurer, the judge held that recent authority from the Court of Appeals of Ohio precluded a set-off of the settlement amount.

R.C. 3345.40(B)(2) limits tort damages recoverable against a state university or college and provides, in part, “(B) …. in an action against a state university or college to recover damages for injury, death, or loss to persons or property caused by an act or omission of the state university or college itself, by an act or omission of any trustee, officer, or employee of the state university or college while acting within the scope of his employment or official responsibilities …. , the following rules shall apply: …. (2) If a plaintiff receives or is entitled to receive benefits for injuries or loss allegedly incurred from a policy or policies of insurance or any other source, the benefits shall be disclosed to the court, and the amount of the benefits shall be deducted from any award against the state university or college recovered by the plaintiff ….”

The Court of Appeals of Ohio stated, “There is no dispute that this action falls within the parameters of R.C. 3345.40(B), as an action against a state university to recover damages for injury or loss caused by an act of a university employee, within the scope of her employment. Rather, the parties’ dispute centers around the applicability of the set-off rule in R.C. 3345.40(B)(2). The trial court concluded that the settlement proceeds from [the hospital] and its insurer did not constitute “benefits” and that [the University of Cincinnati] was, therefore, not entitled to a set-off under R.C. 3345.40(B)(2). [The University of Cincinnati] now argues that the trial court erred by concluding that the settlement proceeds are not “benefits.””

The Court of Appeals of Ohio went on to state that, in general, the appropriate measure of damages in a tort action is that which will make the plaintiff whole. As a corollary, the state has a legitimate interest in preventing double recoveries by tort victims. Under the common-law collateral-source rule, evidence of compensation a plaintiff received from collateral sources was not admissible to diminish the damages a tortfeasor was required to pay for his negligent act. Accordingly, under the collateral-source rule, a plaintiff who has, for example, had his medical expenses paid by another may still recover full damages for those expenses from a defendant who is liable for the plaintiff’s injury. To this extent, the plaintiff may get double payment on account of the same items. In this way, the collateral-source rule operated as an exception to the traditional measure of damages and prevented the jury from learning about a plaintiff’s income from a source other than the tortfeasor so that a tortfeasor would not be given an advantage from third-party payments to the plaintiff.

The Court of Appeals of Ohio stated that the primary question before it in this case was whether the proceeds from the medical malpractice plaintiffs’ settlement with the hospital and its insurer constitute “benefits” under R.C. 3345.40(B)(2). The Supreme Court of Ohio has adopted the definition of “benefits” as “[f]inancial assistance received in time of sickness, disability, unemployment, etc. either from insurance or public programs such as social security.”

As to the University of Cincinnati’s argument that without a set-off, the medical malpractice plaintiffs would receive a double recovery, the Court of Appeals noted that it is the defendant’s burden to prove the extent to which it is entitled to a set-off and that the record before it contained no evidence from which it could determine, without speculation, what portion of the settlement proceeds duplicated amounts included in the court’s judgment. The settlement agreement includes no admission of liability by the hospital and no allocation of the settlement funds to specific damages. Furthermore, because the trial court found the University of Cincinnati solely responsible for the medical malpractice plaintiffs’ damages, a finding that the University of Cincinnati did not appeal, the University of Cincinnati is responsible only for damages that the court found stemmed from the negligence of its employee.

Adae v. State,  2013-Ohio-23.

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