Free Motion for Miscellaneous Relief - District Court of Delaware - Delaware

Case 1 :04-cv—00956-GIVIS Document 149 Filed 05/01 /2006 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
CORPORAL B. KURT PRICE, et al., :
Plaintiffs,
: C.A. No. 04-956-GMS
v. :
COLONEL L. AARON CHAFFINCH, et al.,
Defendants.
DEFENDANTS’ MEMORANDUM OF LAW CONCERNING OFFSETS TO DAMAGES
The purpose of this memorandum is to set forth defendants’ position that they are entitled
to an offset against damages for (1) payments made to plaintiffs Kurt Price and Wayne Warren
by the State of Delaware through the Workers’ Compensation system and (2) disability pension
payments made to Price and Warren through the Delaware State employee pension system.
I. FACTUAL BACKGROUND
Plaintiffs Price and Warren assert that defendants damaged them by accepting the
determinations of two physicians that they are not fit for duty, and requiring them to separate
from service with the Delaware State Police (the "DSP"). Price and Warren are not fit for duty
because they have suffered hearing loss and no longer can satisfy the job requirements of a state
trooper.
Both Price and Warren have filed claims for w0rkers’ compensation benefits. The State
of Delaware has accepted liability for the hearing loss, and both Price and Warren have entered
into settlements. The State will pay Price $506.81 per week in total partial disability benefits for
300 weeks beginning April 7, 2006, the date of his retirement from the DSP. This is a total of
$152,043 that flows directly from defendants’ decision to separate him from service. Warren’s

Case 1 :04-cv—OO956-GIVIS Document 149 Filed 05/O1/2006 Page 2 of 4
settlement has not been finalized because he has not retired, but it is expected to be a similar
amount and it is expected to begin in June 2006.
Also as a result of the loss of state police employment, Price and Warren are eligible for
disability pensions that will pay them up to 95% of their salary in addition to the workers’
compensation payments set forth above.l Defendants’ determination that Price and Warren must
separate from service makes them eligible for the additional increment available in the disability
pension.
Because the workers’ compensation payments and the disability portion of plaintiffs’
pensions are the direct result of the DSP’s decision that plaintiffs must separate because they are
not fit for duty, this amount should be offset against a lost wage award. Such an offset is
appropriate because lost wages in this case and wage loss in the workers’ compensation case and
the disability component of a disability pension come from a common source — the State of
Delaware. Because the State is the sole entity responsible for the workers’ compensation
payments and disability pension benefits, as well as any lost wages to which Price and Warren
would be entitled following trial, the collateral source rule does not apply.
II. ARGUMENT: THE COLLATERAL SOURCE RULE DOES NOT BAR AN
OFFSET BECAUSE THE FUNDS TO PAY LOST WAGES WOULD COME
FROM THE STATE, WHICH ALSO FUNDS THE WORKERS’
COMPENSATION SYSTEM AND THE DISABILITY PENSION.
But for defendant MacLeish’s decision that Price’s and Warren’s hearing loss rendered
them unfit for duty, and his consequent decision to separate them from the DSP, Price and
Warren would not be eligible for the workers’ compensation or disability pension benefits that
1 Price and Warren are also eligible for state police service pensions because both have served
more than 20 years with the DSP. Defendants do not seek an offset for the amount Price and Warren
would otherwise receive as a service pension. Plaintiffs would have been entitled to this amount even if
they had not been found unfit for duty and had simply retired.
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Case 1 :04-cv—OO956-GIVIS Document 149 Filed 05/O1/2006 Page 3 of 4
they are now eligible to receive. If plaintiffs are awarded damages at trial, absent an offset of
these amounts, the State of Delaware would be required to open its coffers three times to make
payments for a single loss and plaintiffs will be handed a windfall recovery for that single wage
loss. This result is contrary to the law.
The collateral source rule does not operate to bar a setoff here. "The collateral source
doctrine," as described by the Delaware Supreme Court,
is predicated upon the theory that a tortfeasor has no interest in,
and therefore no right to benefit from, monies received by the
injured person from sources unconnected with the defendant. The
doctrine, however, does permit the torg’easor to obtain the
advantage of payments made by himseh’ or from a fund created by
him; in such an instance the payments come, not jrom a collateral
source, but from the defendant himsehf
Yarrington v. Thornburg, 205 A.2d 1, 2 (Del. 1964) (emphasis added); see also State v. Calhoun,
634 A.2d 335, 338 (Del. 1993); Guyl Johnson Trans. Co. v. Dunkle, 541 A.2d 551, 553 (Del.
1988) (quoting Yarrington).
Federal courts have reached the same conclusion. See Feeley v. United States, 337 F.2d
924, 927 (3d Cir. 1964) (“The defendant wrongdoer should not, it is said, get the benefit of
payments that come to the plaintiff from a collateral source. However, where the defendant has
been the source of the payment, the damages, generally, cannot include the benefit conferred by
the defendant."). As the Ninth Circuit held, the collateral source rule "is inapplicable when the
defendant is the source of compensation to the plaintiff," further explaining:
The philosophy underlying the Collateral Source Rule seems to be
that either the injured party or the tort feasor is going to receive a
windfall, if a part of the pecuniary loss is paid for by an outside
source, and that it is more just that the windfall should inure to the
benefit of the injured party than that it should accrue to the tort
feasor. This conclusion seems to be based on substantial justice.
This reasoning, however does not apply in a situation where the
collateral source is the defendant himsehl Under those
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Case 1 :04-cv—OO956-GIVIS Document 149 Filed 05/O1/2006 Page 4 of 4
circumstances no one gets a windfall and U' a recovery were
allowed under those circumstances the result would be that the
" plaintw would receive a double recovery and that the defendant
would be mulcted twice for the same item of damages.
Olivas v. Aetna Lyfe & Cas. Co., 506 F.2d 1158, 1163-64 (9th Cir. 1974) (emphasis added); see
also Smith v. Ojfice ofPers. Mgmt., 778 F.2d 258, 263 (5th Cir. 1985).
Absent a setoff here, defendants will be "mulcted" three times over. Plaintiffs Price and
Warren would recover their lost wages through (1) workers’ compensation payments, (2) their
disability pension, and (3) the lost wage damages following a result in their favor in this action,
and the State of Delaware would have to pay for it all. This result would unduly punish the State
while providing plaintiffs Price and Warren with a substantial windfall. A setoff, therefore, is
appropriate.
III. CONCLUSION
For the foregoing reasons, defendants respectfully request that this Court order that any
lost wages for which defendants ultimately are found liable at trial should be offset by plaintiffs’
workers’ compensation payments and the disability portion of plaintiffs’ pensions.
"‘:‘ I- (t u rn H
Date: May 1,2006 oel urn am I :.» 17 } * ·i`
Ri ard M. Donaldson E Bar I.D. #4367)
ontgomery, McCracken, Walker & Rhoads, LLP
00 Delaware Avenue, Suite 750
\ il ¤·` gton, DE 19801
(302) 504-7840
[email protected]
Counsel for Defendants L. Aaron Chajfinch,
Thomas F. MacLeish, David B. Mitchell, and the
Division of State Police, Department of Safety and
Homeland Security, State of Delaware
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