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Fourth Circuit Rejects Challenges to Damages Calculation $12M Wrongful Birth Award; Remands for Collateral Source Hearing

Misty Simms v. United States of America and Richard Booth, M.D.
15-2161, (United States Court of Appeals for the Fourth Circuit, October 7, 2016)

by Caroline E. Willsey, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ca4.uscourts.gov/Opinions/Published/152161.P.pdf

In Simms v. United States, Plaintiff Misty Simms brought a “wrongful birth” action against the United States under the Federal Tort Claims Act (“FTCA”). Simms alleged that her prenatal care provider – a federally-funded health care center – failed to timely inform her that her child would be born with severe congenital abnormalities. Simms was awarded $12 million in economic and noneconomic damages in a bench trial in the United States District Court for the Southern District of West Virginia. The government appealed the award of damages for past and future medical expenses and the district court’s decision not to order the creation of a revisionary trust for future medical expenses.

Simms received prenatal care at Valley Health Systems, Inc. (“Valley Health”), a federally-funded health care center in West Virginia. Richard Booth, M.D., Simms’ physician at Valley Health System detected fetal abnormalities when Simms was eighteen (18) weeks pregnant, but for reasons that are unclear, Valley Health System did not inform Simms of the abnormalities until three (3) months later, when she was nearly thirty (30) weeks pregnant. At that point in Simms’ pregnancy, West Virginia law prohibited her from terminating her pregnancy. Simms’ son was born in 2008 with a severe brain malformation and other related developmental conditions. Her son lives in a “vegetative state” and requires twenty-four-hour at-home care and monitoring.

On November 21, 2011, Simms filed a wrongful birth action individually and on behalf of her minor son. Because Valley Health is a federally-supported health care center, Simms sought relief under the FTCA. Because the claims were brought under the FTCA the law of the state where the allegedly negligent act occurred – West Virginia – governs. West Virginia recognizes a cause of action for “wrongful birth.” The theory underlying this cause of action is that the health care provider’s failure to advise of the birth defect cause the parents to lose the opportunity to make an informed decision as to whether to terminate the pregnancy.

At a bench trial, the district court issued a memorandum opinion and order finding the government liable because its failure to provide follow-up care after the initial ultrasound revealed abnormalities proximately caused Simms to be deprived of information that would allow her to make an informed decision about her pregnancy. The district court entered judgment in favor of Simms and dismissed the claim brought on behalf of her minor son, holding that he did not have a cause of action for wrongful birth under West Virginia law. Simms was awarded $2.72 million for past medical expenses; $8.68 million for future medical expenses; $175,526 for lost income and $641,544 in noneconomic damages.

On appeal, the government challenged the district court’s award of damages, choosing to let the district court’s liability determination stand. The government based its appeal on a number of grounds. First, the government argued that Simms did not have the right to recover past medical expenses because, in light of her son’s Medicaid coverage, Simms had not had to pay out-of-pocket for her son’s medical expenses. The Court of Appeals rejected this argument. Under West Virginia law, a parent who successfully brings a wrongful birth suit is entitled to recover medical or educational costs attributable to the birth defect during the child’s minority as well as medical and support costs after the child reaches the age of majority if the child is unable to support himself. According to the Fourth Circuit, the fact that Simms had not paid out-of-pocket for her son’s past medical care did not obviate her injury. West Virginia recognizes the collateral source rule, which denies the tortfeasor an offset or credit for payments made to the injured party by someone other than the tortfeasor. The collateral source rule applies to Medicaid payments, even where the tortfeasor is the government.

Second, the government contended that even if the collateral source rule applied and Simms was entitled to recover damages attributable to her son’s past medical expenses, the district court erred in calculating Simms’ damages based on the amount medical providers billed, rather than for the amount actually paid. The Fourth Circuit again disagreed with the government’s position. Under West Virginia law, the proper measure of damages for medical expenses is the reasonable value of the medical services made necessary because of the injury. Thus, where a plaintiff requires medical services, the plaintiff is entitled to recover the reasonable value of those services, regardless of the amount actually paid. In reaching this conclusion, the Fourth Circuit relied on Kenney v. Liston, 760 S.E.2d 434 (W. Va. 2014), in which the West Virginia Supreme Court of Appeals held that a plaintiff could still recover for portions of a medical bill which were discounted or written off by a healthcare provider, pursuant to an agreement with the plaintiff’s health insurer. The Fourth Circuit was not persuaded by the government’s attempts to distinguish Kenney on the grounds that it involved a private insurer, while the case at hand involved the West Virginia Medicaid program. The Fourth Circuit held, as a matter of law, that the original medical bill is prima facie evidence that the expense claimed by the plaintiff was reasonable and necessary.

Finally, the government argued that the district court erred in refusing to reduce the damages award under the provisions of West Virginia’s Medical Professional Liability Act (the “Professional Liability Act”). The Act modified the common law collateral source rule in the context of medical professional liability actions. Under the Professional Liability Act, a defendant is entitled to a post-verdict, prejudgment hearing regarding payments received by plaintiff from collateral sources. A defendant may also present evidence of future payments from collateral sources. The court may then reduce the award by the amount of any collateral payments proved by the defendant. Medicaid payments qualify as collateral source payments under the Professional Liability Act. Here, the district court did not hold a collateral source hearing before it entered judgment. Instead, the district court held, as a matter of law, that the Professional Liability Act did not entitle the government to a reduction of damages because Medicaid held a subrogation lien against any verdict in Simms’ favor. The district court did not explain its reasoning, and in fact, the parties disputed whether Medicaid actually held such a subrogation lien. The Fourth Circuit remanded the case to the district court for a determination of whether such a lien exists.

The Fourth Circuit also ordered the district court to conduct a collateral source hearing on remand. First, even if Medicaid did not hold a subrogation lien, the state of West Virginia may have a right to recover the amount it paid for medical care, thereby reducing Simms’ award. Regardless of whether West Virginia has a right to reimbursement with respect to the damages award, the defendants are still entitled to a collateral source hearing. Accordingly the Fourth Circuit vacated the district court’s judgment solely with respect to damages awarded for past and future medical expenses and remanded the case to the district court so that it could hold a collateral source hearing.


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