Evidence of Litigation Funding Permissible, According to Eleventh Circuit Court of Appeals

Evidence of Litigation Funding Permissible, According to Eleventh Circuit Court of Appeals

The Eleventh Circuit Court of Appeals held in Houston v. Publix Super Markets, Inc., 2018 U.S. App. LEXIS 2935 (11th Cir. Feb. 7, 2018), that the district court did not err when it admitted evidence at trial regarding payments made by a litigation funding company to the plaintiff’s treating doctors. The lower court admitted the evidence of payments because it found it was relevant in showing bias on the part of the doctors who testified in the matter.

The Case

After slipping and falling in one of its grocery stores, Robin Houston filed suit against Publix Super Markets. Houston underwent treatment for her injuries resulting from the fall from a number of healthcare providers. A majority of the treatment was underwritten by ML Healthcare, a litigation investment company that hires physicians to provide medical care for the injured who have viable tort claims and do not have medical insurance.

During the course of the lawsuit, Publix conducted discovery regarding the relationship between Houston, her treating physicians, and ML Healthcare. The discovery revealed that ML Healthcare’s contracts grant it the right to later recover the full cost of care provided out of a later tort settlement or judgment received by the person treated. It also revealed that ML Healthcare buys the treated person’s medical debt at a discount from the medical providers. Publix sought to introduce the evidence of these contractual relationships at trial to show bias on the part of the treating physicians and that Houston’s claims for medical expenses were unreasonable. Houston’s lawyers sought to exclude the evidence, arguing in part that it was barred by Georgia’s collateral source rule. This rule usually serves to render evidence of litigation funding inadmissible when it is offered to reduce damages. The court found that establishing bias was distinctly non-substantive in nature and Georgia’s collateral rule would not exclude the evidence at trial.

Collateral Source Rule

The Houston decision is not the first time a court has limited a plaintiff’s use of the collateral source rule to preclude the relationship of non-parties’ financial stakes in tort litigation. A recent state court decision in WellStar Kennestone Hospital v. Roman, 2018 Ga. App. LEXIS 34 (Ga. App. Jan. 30, 2018), made this evidence discoverable. But the 11th Circuit took it a step further, making this evidence possibly admissible at trial. Needless to say, the Houston decision is significant. The Eleventh Circuit did not consider whether evidence of ML Healthcare’s discounted rates in their contracts could be used to attack the reasonableness of Houston’s claimed damages. Notably, the Houston decision briefly discusses Alabama’s comparable collateral source rule that was recently changed to allow introduction of evidence that a plaintiff’s medical bills have, or will be, paid.

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