Federal District Court Grants Motion in Limine to Exclude Evidence of Workers’ Comp Benefits Received By Plaintiff

It has long been held that an injured employee should not be allowed to keep the entire amount of his or her workers’ compensation award and also the full common-law recovery he or she may enjoy against a responsible third party [see Larson’s Workers’ Compensation Law, § 110.02, et seq.] Accordingly, every state workers’ compensation law provides some form of subrogation–the right by the employer or its insurer to collect from a blameworthy third party an amount equal to the compensation that it has paid and/or will pay to an injured employee [see Larson, § 116.01, et seq.]. Where the injured employee files a civil action against a third-party defendant allegedly responsible for the employee’s injuries, may either party introduce evidence related to the nature and amount of workers’ compensation benefits paid by the employer or insurer?

A federal district court, construing Ohio law, and relying upon Rule 403 of the Federal Rules of Evidence, recently granted a Motion in Limine filed by a defendant construction company seeking to bar the introduction of any evidence related to collateral source benefits paid to the plaintiff in the form of workers’ compensation benefits [Posel v. Dayton Power & Light, 2012 U.S. Dist. LEXIS 19862 (S.D. Ohio, Feb. 16, 2012)].  

Posel sustained injuries as a result of a work-related accident. Zurich American, his employer’s workers’ compensation carrier, paid Posel workers’ compensation benefits in the form of medical and lost wage payments. Thereafter, Posel filed the instant civil action against a construction company, alleging negligence on the part of the defendant and its agents. The defendant filed a Motion in Limine to exclude from trial evidence of the collateral benefits Zurich paid as well as evidence pertaining to Zurich’s resulting subrogation lien. Defendant argued that any evidence of workers’ compensations benefits paid to or on behalf of Posel was inadmissible under Ohio’s collateral source statute, Ohio Rev. Code 2315.20, and that, alternatively, the evidence was inadmissible under Federal R. Evid. 403, since its probative value was substantially outweighed by the danger of unfair prejudice to defendant.

Posel countered that the Ohio collateral source statute did not bar him from introducing evidence of the lien because the statute was designed to protect a plaintiff’s interests and did not, by its terms, preclude a plaintiff from introducing collateral source evidence if he wished to do so. Posel also contended that he would be substantially prejudiced if he was precluded from introducing evidence of the lien, that in such case the jury would not understand the realities of his situation, which was that he must by law repay those amounts Zurich had paid to him. Citing Ross v. Nappier, 185 Ohio. App. 3d 548, 2009 Ohio 6995, 924 N.E.2d 916 (2009), Posel contended that such a result would be inconsistent with Ohio case law, which recognized that the introduction of such evidence was necessary to enable the jury to award an accurate amount of damages to a plaintiff.

The district court noted that the issue was not settled, that the terms of Ohio Rev. Code § 2315.20(A) precluded only a defendant from introducing evidence of a collateral source benefit when one of the exceptions enumerated in the statute applied, and that the statute did not address whether a plaintiff could introduce such evidence. The court acknowledged that in Ross v. Nappier, the Ohio Court of Appeals determined that § 2315.20 did not prohibit the introduction of such evidence under “the unusual circumstances” of that case [924 N.E.2d at 923]. The district court distinguished “Ross” from the instant case, observing that the decision in Ross appeared to be premised on the introduction of prohibited collateral source evidence by both parties and the trial court’s subsequent refusal to admit evidence of the bureau’s subrogation rights to offset the prejudicial effect of the collateral source evidence. The district court indicated that it felt it was unlikely that the court of appeals in Ross would have ruled the way it did in the absence of a trial court record permeated with improper collateral source evidence.

The district court went on to say that Ross did not, therefore, answer the question of whether a plaintiff may introduce evidence of a collateral source’s right of subrogation in the absence of evidence of payments by a collateral source in the first instance. The district court added, however, that it need not resolve the matter of Ohio law in connection with the motion in limine because the evidence should be excluded under Federal R. Evid. 403.

Noting that the court had broad discretion in balancing the probative value of the evidence against its potential for unfair prejudice, the court found that in this case, the probative value of the evidence concerning workers’ compensation payments and the Zurich subrogation lien was substantially outweighed by the danger of unfair prejudice and misleading the jury. If defendant was found liable, plaintiff could recover “the reasonable value of plaintiffs medical treatment.” The parties could still present evidence as to the amounts of the medical charges billed, the amounts accepted as full payment, and the amounts of the write-offs (the difference between the two amounts). The jury simply would not be permitted to learn that the amounts accepted by the providers were paid by a source other than plaintiff. The district court concluded that the balance of factors weighed in favor of excluding the evidence.