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Hamlin v. Charter Township of Flint,
165 F. 3d 426 (6th Cir. (Mich.) Jan. 8, 1999)
The Sixth Circuit used this case to restate the collateral
source rule and to set out a test for determining what is a collateral source
payment. That test would later be used in ADEA cases with regard to whether pension
funds were collateral source payments.
The Plaintiff in this case, Hamlin, was employed by Flint as
the Assistant Fire Chief. Hamlin suffered a heart attack and was told by his doctor
that he could not engage in front-line firefighting anymore. Hamlin served as
Assistant Chief for seventeen months, until a new Fire Chief was appointed who
required Hamlin to serve as a front-line firefighter. Flint fired Hamlin when
he refused to act in that capacity. Hamlin filed suit under the ADA and the MHCRA
and was awarded a $500,000 verdict. Flint subsequently filed a motion to offset
the jury verdict by the present value of Hamlin’s pension, which was set
at $501,890.65. The district court granted the motion, which reduced the jury
verdict to zero. Hamlin appealed.
The Court of Appeals used this case to examine the situation
where a plaintiff recovers an award against a defendant but also recovers from
another source, such as a disability pension. The Sixth Circuit said that since
in discrimination cases the victim rather than the perpetrator of discrimination
should profit, collateral source benefits should not be deducted from a jury’s
award for discrimination violations.
In determining what type of payments come from a collateral
source, the Court of Appeals set forth the following test: (1) whether the employee
makes any contribution to funding the disability payment; (2) whether the benefit
plan arises as the result of a collective bargaining agreement; (3) whether the
plan and payments thereunder cover both work-related and nonwork-related injuries;
(4) whether payments from the plan are contingent upon length of service of the
employee; and (5) whether the plan contains any specific language contemplating
a set-off of benefits received under the plan against a judgment received in a
tort action.
The Court of Appeals found that each of the five factors
set out supported the non-deductibility of Hamlin’s disability pension benefits.
Hamlin had made contributions to his pension fund. The plan arose pursuant to
a Michigan statute and a collective bargaining agreement. Furthermore, a disability
pension under the plan was available to cover both work-related and nonwork-related
disabilities, payments were contingent on the length of service, and the only
language contemplating the offsetting of other payments pertained specifically
to workers’ compensation benefits stemming from the same injury. Finding
that the pension payments did come from a collateral source, the Court of Appeals
reversed the district court’s order offsetting Hamlin’s jury award by
the present value of his disability pension benefits.
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