by John Darer CLU ChFC CSSC RSP
A Supplemental Needs Trust (SNT) is a specific term, often used in New York State, for a type of special needs trust (Supplemental needs trusts are compliant with provisions of U.S. state and federal law and are designed to provide benefits to, and protect the assets of, physically disabled or mentally disabled persons and still allow such persons to be qualified for and receive governmental health care benefits, especially long-term nursing care benefits, under Medicaid, a welfare program. Supplemental or Special Needs Trusts are frequently used to receive an inheritance or recovery of damages paid for personal physial injury or physical sickness on behalf of a disabled person in order to allow the person to remain qualified for Medicaid benefits.
Sometimes defendants make offers combining structured settlement and supplemental needs trust (or special needs trusts). While there is nothing inherently wrong in making an offer in this manner (the defense can make a settlement offer in whatever form it likes), and the strategy may prove beneficial on a case by case basis, the question is, can a defendant "force" a supplemental needs trust (or an HMO) on an adult plaintiff with whom the defendant is in litigation where there is good liability for the plaintiff?
Consider this New York case: GIVENTER v. REMENTERIA 184 Misc.2d 744 (2000) 705 N.Y.S.2d 863 Full caption" EVAN GIVENTER, an Infant, by His Mother and Natural Guardian, DONNA GIVENTER, et al., Plaintiffs, v. JOSE L. REMENTERIA et al., Defendants. Supreme Court, Richmond County (February 18, 2000) .
Note: While this cited case involved a minor, the concept appears to be the same
In the above medical malpractice action, the jury awarded the plaintiffs, a severely brain damaged child and his parents, a verdict of $53,735,955. The defendant doctor and hospital then petitioned the court, pursuant to New York CPLR 4545 (a), to reduce the amount of that award by applying collateral sources to pay for the future cost of medical care and therapies (rehabilitative services) to be received by the child. The defendants seek to apply the mother's employee health insurance plan and the benefits received while the child is in school pursuant to the Federal Individuals with Disabilities Education Act (IDEA) to offset the financial burden placed upon the defendants by the large jury award. They also sought to have the plaintiffs enroll in a managed health care plan (HMO) where the defendants would pay the premiums.
The Court rejected services provided under IDEA as a collateral source citing multiple precedents:
"The courts have repeatedly held that a plaintiff need not be relegated to charitable or governmental aid and assistance where he has received a jury award for specific items. This was the specific holding of the First Department in Germosen v Gupta (237 A.D.2d 121 [1st Dept 1997]). In Skinner v New York City Health & Hosps. Corp. (NYLJ, Nov. 29, 1989, at 22, col 4 [Sup Ct, NY County]), Judge Sklar in upholding a $7.39 million verdict held that services rendered by charitable organizations such as United Cerebral Palsy may not be used to reduce the jury's verdict. In other States it has also been held likewise. In Hall v Birchfield (718 S.W.2d 313, 338 [Tex 1986], revd on other grounds747 S.W.2d 361 [Tex 1987]) it was held that "[t]here is no guarantee the government will continue to provide such services, and [the infant plaintiff] is entitled to exercise her option to obtain other services than those offered by the government." In Feeley v United States (337 F.2d 924, 935 [3d Cir 1964]), the Third Circuit held that "[t]o force a plaintiff to chose between accepting public aid or bearing the expense of rehabilitation himself is an unreasonable choice." Thus, Evan cannot be relegated to relying upon school supplied therapies in order to reduce the defendants' liability".
In rejecting the HMO argument, the court reasoned that insurance which the plaintiffs do not have can never be reasonably certain to replace what the jury awarded and cannot be considered a collateral source offset.
"The defendants also suggest that the infant plaintiff can purchase his own health insurance in order to provide them with a collateral source offset. Mr. Pessalano, the defendant's rehabilitation expert who testified at the collateral source hearing, stated that Evan Giventer could purchase insurance through Blue Cross of New Jersey for $3,000 to $3,500 per year, which after a one-year waiting period would pay out literally hundreds of thousands of dollars per year for Evan's extensive nursing care. However, when cross-examined on this point, Mr. Pessalano's testimony was vague and speculative. He responded that: "[i]t would pay for a significant amount" but that he could not say how much without seeing a policy. When asked if he could provide a copy of such a plan, he responded that he did not have one.
Have healthcare insurance policies become more liberal or more restrictive?
How restrictice are they likely to be in the future?
Is it possible to predict the increase in premiums on these policies?
What will be the impact of low interest rates on health insurers?
Are more companies entering the long term care insurance market, or leaving it?