Collateral Source? Not necessarily. Sometimes you CAN have your cake and eat it too.

May 5th, 2019 By Tara Mireur

The Amarillo Court of Appeals has overturned a lower court decision to grant a new trial after the lower court determined that admitted testimony concerning the Plaintiff’s “claim” violated the collateral source rule and likely caused the jury to apportion responsibility and determine damages that were inconsistent with the great weight of the evidence at trial. In re DCP Operating Company, LP f/k/a DCP Midstream, LP, 2019 WL 1908147 (Tex. App. – Amarillo April 29, 2019).

At trial, Brain Stringer claimed that DCP Operating Company (“DCP”), owner of an easement on Stringer’s farm, had failed to properly excavate an area which caused a low crop yield and financial damages.  DCP sought to question Stringer about statements made to his crop insurer concerning the cause of his low crop yield and about a loss statement created by the insurer.  Stringer’s counsel questioned him about the report without referencing his insurer or the loss statement, referring only to a “third-party” and a “report.”  On cross-examination, DCP’s counsel questioned him about “his claim” and attempted to introduce the loss statement. Stringer’s counsel objected that such evidence interjected evidence of insurance and violated the collateral source rule.   The trial court refused to allow the loss report into evidence, but overruled the objection as to term “claim.”  Following a jury verdict which apportioned 60% of the responsibility on Stringer, Stringer moved for a new trial which the Court granted for the following reasons:  1) the court erred in admitting testimony that suggested Plaintiff was covered by crop insurance, a collateral source, which likely led to the jury apportioning responsibility which was against the great weight of the evidence, and 2) the insurance loss report was not an admission against interest regarding which Stringer could properly be impeached. DCP filed a petition of mandamus to vacate the trial court’s order granting a new trial. DCP argued that the two grounds cited by the Court for the granting of the new trial was not supported by the record because: 1) Stringer failed to preserve error on the collateral source rule, 2) Stringer waived the purported error, 3) the collateral source rule did not apply, 4) the collateral source was not violated, 5) the admitted testimony did not cause an improper verdict, and 6) DCP did not use the loss statement to impeach Stringer.

After determining that Stringer’s counsel preserved the error and did not waive the objection, the Court determined that the collateral source rule applied, but that DCP did not introduce collateral source evidence. The Court reasoned that while DCP questioned Stringer about his crop loss claim, DCP did not ask whether he received any compensation for the loss and did not introduce the loss statement into evidence.  Thus, no actual testimony was elicited related to evidence of funds paid from a collateral source. The court rejected Stringer’s arguments that DCP’s use of the terms “made a claim” and “filed a claim” implied he received payment from a collateral source and was inadmissible.  The Court also noted that “even if DCP’s use of the term “claim” and the phrases “made a claim” or “filed a claim…” was evidence of a collateral source, such evidence would be admissible to rebut Stringer’s position as to the cause of the crop loss.  The court relied on two older cases to support this exception to the collateral source rule – Watkins v. Charter Oak Fire Ins. Co, 592 S.W.2d 50, 51 (Tex.Civ.App. – Texarkana 1979, no writ) and Gathard v. Marr, 581 S.W.2d 276, 281 (Tex.Civ.App. – Waco 1979, no writ)(holding that proof of loss statement admissible because it did not show sums received and to rebut plaintiff’s claims at trial).  The Court also concluded that the loss statement was properly used to impeach Stringer because it was a prior inconsistent statement allowed under Tex. R. Evid. 801(a).

TAKE AWAY:  The Amarillo court’s decision reminds litigators that the collateral source rule is not an absolute bar as to all insurance-related evidence and upholds the exception related to the use of loss statements to impeach a plaintiff.