Life Care Planners are often asked why they do not consider collateral sources when addressing the Third Basic Question of Life Care Planning: How much will the medically related goods and services cost over time? There are several answers to this recurring question; but many life care planners—even highly experienced ones— fail to address it effectively.
Life Care Planning Fundamentals
According to the American Academy of Physician Life Care Planners, the primary objectives of a life care planner are to:
- Accomplish the clinical objectives of life care planning, by
- Answering the Basic Questions of Life Care planning
The Basic Questions of Life Care Planning are:
- What are a subject’s diagnostic conditions?
- What medically related goods and services do a subject’s diagnostic conditions require?
- How much will the medically related goods and services cost over time?
The 3rd Basic Question of Life Care Planning requires life care planners to quantify a life care plan’s future medical requirements in monetary terms. To do this, the life care planner must obtain unit costs, which are used in the formulation of the life care plan’s cost analysis.
What is a Collateral Source, and What is the Collateral Source Doctrine?
In torts, a collateral source is a source of compensation—other than the defendant—that is available to an injured party. Examples of collateral sources include: a plaintiff’s private insurance, Social Security, worker’s compensation, employee benefits (e.g., PTO) Medicare or Medicaid, the Affordable Care Act, etc.
In general, collateral source rules, or the collateral source doctrine, prevent an injured person’s damages from being reduced by payments from collateral sources. The collateral source doctrine maintains that any compensation an injured person has received from a source other than the party who is legally responsible for the injuries (the defendant) will not reduce the amount of damages recoverable from the defendant. The collateral source doctrine ensures that the at-fault party is held responsible for the full range of an injured person’s harm.
In essence, collateral source rules prohibit a tortfeasor from transferring the financial liability resulting from an injury from themselves to a non-culpable third party, e.g., to an insurance company, or to a government subsidized program, i.e. to tax paying members of the general public.
Life Care Planners are often asked why they do not consider collateral sources when addressing the Third Basic Question of Life Care Planning: How much will the medically related goods and services cost over time?
Answers to this question lie primarily in rules which govern the admissibility of expert testimony, as well as state-specific collateral source rules.
The primary reason life care planner’s do not quantify life care plans using collateral sources is, life care planners, like all experts who offer opinion testimony in the United States, are required to formulate opinions using relevant, reliable, and regularly employed peer-reviewed methods within their discipline.
In brief, there is no relevant, reliable, or regularly employed peer reviewed methodology within the discipline of life care planning that advocates the use of (or even the consideration of) collateral sources when formulating a life care plan. All accepted methodologies and standards of practice within the discipline of life care planning involve quantifying a life care plan using usual, customary, and reasonable market rates.
As an example, the tenents, methods and best practices advocated by the American Academy of Physician Life Care Planner’s exercise the application of usual customary and reasonable market rates.
According to the Journal of Life Care Planning, Volume 13, Number 3, 2015 (Author: Cloie B. Johnson, M.Ed.), published by the International Association of Rehabilitation Professionals’ Consensus and Majority Statements derived from Life Care Planning Summits in 2000, 2002, 2004, 2006, 2008, 2010, 2012 and 2015:
“Best practices for identifying costs in Life Care Plans:
- a) Employ verifiable data from appropriately referenced sources
- b) Costs identified are geographically specific when appropriate and available
- c) Non-discounted/market rate prices
- d) More than one cost estimate, when appropriate”
The American Medical Association’s Policy H-385.923 (Definition of Usual, Customary and Reasonable) states:
- a) “usual; fee means that fee usually charged, for a given service, by an individual physician [provider] to his private patient (i.e., his own usual fee);
- b) a fee is ‘customary’ when it is within the range of usual fees currently charged by physicians of similar training and experience, for the same service within the same specific and limited geographical area; and
- c) a fee is ‘reasonable’ when it meets the above two criteria and is justifiable, considering the special circumstances of the particular case in question, without regard to payments that have been discounted under governmental or private plans.
Further, the American Medical Association maintains “there is no relationship between the Medicare fee schedule and Usual, Customary and Reasonable fees.” Beyond the fact Medicare is a collateral source, the preceding definition alone makes the application of Medicare rates in a life care plan highly problematic.
Whether intentional or not, when a party asserts a life care planner should formulate a life care plan using collateral sources, in effect, they assert the life care planner should formulate a life care plan without conforming to regular, reliable, or regularly employed peer reviewed methods within their discipline—something that would fail to meet requisite admissibility standards within the United States.
Admissibility standards in the United States require experts to formulate and offer opinions using a reasonable degree of probability/certainty. Simply stated, the court is not interested in what is possible; the court is only interested in what is probable.
Life care planners are routinely asked whether they consider the Affordable Care Act when formulating a life care plan. Beyond the fact the Affordable Care Act is a collateral source, with the elimination of the Affordable Care Act’s individual mandate in 2017, the sustainability of the Act in its current form is speculative, as the individual mandate was and is essential to the Affordable Care Act’s ability to remain financially solvent. Therefore, the formulation of a life care plan’s cost analysis using the Affordable Care Act is speculative, which, does not meet requisite admissibility standards within the United States.
Collateral Source Rules
Collateral source rules govern the use of collateral sources, and these rules vary by state. In Texas for example, the collateral source rule “precludes any reduction in a tortfeasor’s liability because of benefits received by the plaintiff from someone else – a collateral source.” In New York, however, “The court can consider evidence that tends to establish that any past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source.”
Some states even disallow the introduction of collateral sources into evidence. Therefore, any life care plan formulated using collateral sources within such a jurisdiction may be deemed inadmissible.
Life Care Planning and a Summary of Collateral Source Rules by State.
Life Care Plans which quantify costs using collateral source data do not conform to relevant, reliable, or regularly employed peer reviewed methods within the discipline of life care planning. Further, plans which consider collateral cost data are inconsistent with the collateral source rules of most states.