Court Opinion

ID: 9466683
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:23:13.161063+00
Date Added: 2024-06-11T17:39:52.723477
License: Public Domain

LAY, Chief Judge,
concurring and dissenting.
I respectfully dissent from that portion of the majority opinion which finds that plaintiff’s Medicare benefits should have been deducted from her damage award. I would affirm the district court’s judgment.
When an outside source pays part of a compensable loss, the question is whether the injured party or the tortfeasor should receive the windfall. Hamilton v. Slover, 440 S.W.2d 947, 958 (Mo.1969). The answer under Missouri law is based on substantial justice. Id. The more equitable practice, when the source is collateral to the defendant, is to allow the victim double recovery rather than benefit the wrongdoer. In tacitly approving Smith v. United States, 587 *1310F.2d 1013 (3rd Cir. 1978), we have endorsed the rule of substantial justice when a government social insurance benefit program is the source, even though it is not a collateral source in a federal tort claim case. We have decided, incorrectly I believe, not to follow this rule where a recipient receives insurance benefits, but has not contributed to the program through social security taxes.
The rationale adopted by the majority is that Medicare payments create a situation analogous to that in cases involving private insurance coverage.1 When a private insurance company makes a payment pursuant to a contract with the plaintiff, a tortfeasor cannot deduct it from its damage payment. In the context of government benefits, this can never strictly be the case, because benefits are granted on the basis of statutory eligibility requirements, not by contract. Generally, if one is 65 and is entitled to monthly cash benefits under section 202 of the Social Security Act, (i. e., the requisite quarters of coverage are present), one is automatically entitled to Medicare Part A hospital insurance benefits. 42 C.F.R. § 405.102(a)(1). An individual does not pay premiums for Part A hospital insurance, or pay social security taxes in any special manner or sum or in proportion to the extent of coverage received. No direct payment is made to the Federal Hospital Insurance Trust Fund. There is an element of contribution, however, because social security tax revenues determine the level of appropriations from the treasury to the trust fund in any given year. Nevertheless, a person’s right to receive Medicare Part A is in the nature of statutory entitlement, not contract. Thus, in the area of governmental social benefit programs, the underlying rationale for the collateral source rule must be application of simple rules of equity. When the government in one role pays benefits to all citizens who meet statutory conditions, it is inequitable for it to set off such payments in mitigation as a tortfeasor, even though the payments are not from a collateral source.
Mrs. Overton was 65 years old or older in 1968. Apparently, she was not entitled to monthly cash benefits under section 202 of the Social Security Act when the Medicare legislation was passed and could not at that point accumulate the requisite quarters of coverage. Therefore, she did not meet the general eligibility criterion for Medicare hospital insurance. However, the government enacted a special transitional entitlement provision under which individuals such as Mrs. Overton would also be entitled to hospital insurance. 42 C.F.R. §§ 405.-103(a)(l)(i), 405.102(a)(3); see note 6 supra. This illustrates how inexact is the analogy between private insurance contracts and the Medicare program. Congress’ purpose, to help older citizens on fixed incomes avoid the high cost of hospital care, overrode any quid pro quo contractual characteristics of its program. If one is constrained to follow the comparison to private insurance plans, one could say Mrs. Overton was unable to perform the “consideration” for coverage, and Congress chose to waive it. Whether Mrs. Overton’s coverage therefore has less resemblance to a contractual benefit than that of other Medicare recipients, is less significant in balancing of the equities than the government’s decision to treat her equally.
Under these circumstances, Mrs. Overton should not be treated differently than other recipients vis a vis the government in its present role as tortfeasor. Because the collateral source rule, particularly when applied in this context, is primarily a rule of substantial justice, I would not follow the analogy to private insurance so completely as to allow the government to use Mrs. Overton’s benefits to mitigate its damage payment. Since Congress has given her the same status as any other Medicare recipient, we should not judicially change it.

. This is also the basis on which the majority explains the holding in Smith v. United States, 587 F.2d 1013 (3rd Cir. 1978). The district court reasoned under Smith that deduction of Medicare benefits was precluded when applicable state law recognizes the collateral source doctrine. Smith does not mention any individual contribution made by the plaintiff, but characterizes social security as similar to insurance.