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CAUSE NO. 2005-54413
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RONALD J. LAXEY IN THE DISTRICT couRror o
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PTE LTD. and PRIDE CENTRAL
AMERICA LLC 334" JUDICIAL DISTRICT
PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION FOR OFFSET
Plaintiff Ronald Laxey in the above captioned cause files this his Response to Defendants’
Motion for Offset, and respectfully shows the Court as follows:
I
INTRODUCTION
When Ronald Laxey was employed by Defendants, he received numerous benefits under
Pride’s employee compensation and benefits package. Two of those benefits were a short-term and
a long-term disability policy to pay Laxey benefits in the event that he became temporarily or
permanently disabled during his employment. That occurred in November 2004 as a result of Pride’s
negligence, as determined by the jury in the trial of this case. Following his injury, Laxey received
monthly benefits for a period of 36 months from a short-term disability policy (hereinafter “The
Policy”) purchased by Pride for the benefit of its employees as part of its benefits and compensation
package.’ Pride never paid any benefits directly to Laxey for his loss of income, but instead all
benefits were paid by the insurer, Previnter, through The Policy. Pride now asks this Court to
reduce the amount of damages awarded by the jury for the payments paid under The Policy to Laxey-
- payments made not by Pride, but by Previnter. This request flies directly in the face of the
'See Previnter policy attached as Exhibit *5" and incorporated by reference herein.
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RECORDER'S MEMORANDUM
Ths instrument is of poor quelity
at the time of imaging
collateral source doctrine. Accordingly, for the reasons set forth herein, Laxey requests that this
Court deny Pride’s request for an offset.
IL.
THE COLLATERAL SOURCE RULE PROHIBITS AN OFFSET FOR FRINGE
BENEFITS SUCH AS THOSE PAID TO LAXEY UNDER THE POLICY.
The benefits paid to Laxey under The Policy were a fringe benefit of his employment with
Pride and, therefore, a collateral source. As such, the collateral source rule bars any claim for offset
by Pride. Phillips v. Western Co. ofN. Amer., 953 F.2d 923, 931 (5" Cir. 1992). The doctrine of
collateral source applies in Jones Act and other federal maritime cases. /d. at 929. “The collateral
source rule is a substantive rule of law that bars the tortfeasor from reducing the quantum of
damages owed to a plaintiff by the amount of the recovery the plaintiff receives from other sources
of compensation that are independent of (or collateral to) the tortfeasor.” Davis v. Odeco, 18 F.3d
1237, 1243 (5" Cir. 1994). The collateral source rule has been applied to disability payments
provided to an injured employee. Jd. at 1244-45; Phillips, 953 F.2d at 932.
One underlying rationale for the collateral source rule is that the plaintiff should not be
penalized for having obtained benefits from a collateral source covering the employer's tortious
conduct. Davis, 18 F.3d at 1244 n. 21. Moreover, such fringe benefit payments “should not have
the effect of giving a windfall to tortfeasors.” /d. “The liability of tortfeasors should not be excused
or reduced simply because other sources of compensation are available.” Jd. Permitting employers
an offset may allow them to escape responsibility for their own tortious conduct, and more
importantly, it may also deprive the employee of part of his contractual compensation package. Id.
In other words, once this Court determines that the disability payments made to Laxey are a fringe
benefit, it should not deduct those payments from the damages awarded to him as a result of Pride’s
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negligence because Laxey is already contractually entitled to those benefits. See Davis, 18 F.3d at
1244.
This Court should find that Pride is not entitled to an offset and that benefits from The Policy
paid to Laxey were a fringe benefit. The direct testimony of Pride’s senior benefits specialists and
Pride’s own documents demonstrate that The Policy was a fringe benefit. Further, the factors as set
forth in Phillips vy. Western Company of North America also favor finding that the The Policy was
a fringe benefit. Finally, The Policy itself provides for a right to subrogation, therefore creating a
potential for Laxey’s damages to be reduced twice for the same payments.
A. THE DIRECT TESTIMONY OF PRIDE’S SENIOR BENEFITS SPECIALISTS AND
PRIDE’S OWN DOCUMENTS DEMONSTRATE THAT
THE POLICY WAS A FRINGE BENEFIT.
1 Pride’s senior benefits coordinator testified that The Policy is a fringe benefit
— part of the compensation package used to hire employees.
In Jones Act and unseaworthiness cases, the collateral source rule applies to fringe benefits
and deferred compensation, but not to “payments made by the employer to indemnify itself against
liability.” Phillips, 953 F.2d at 932. Thus, the primary test for collateral source is whether the
disability plan is part of the employee’s compensation package or whether it was intended “as a
prophylactic measure against [the employer’s] liability.” Davis, 18 F.3d at 1244. Here, the evidence
from Pride’s own witnesses and documents establishes that The Policy was a fringe benefit that was
part of Pride’s compensation package. During discovery, the parties conducted the deposition of
Elaina Edmonson. See Deposition of Elaina Edmonson attached as Exhibit “1.” Ms. Edmonson is
Pride’s senior benefits coordinator. See Exhibit “1,” p. 4. In her deposition, Ms. Edmonson
testified that both the short-term and long-term disability policies were fringe benefits and part of
3-
the compensation package marketed to potential employees:
Q These policies, the Previnter policy and the Unum disability policies, are
those policies marketed to perspective employees as part of the benefit
package?
For benefits?
Yes.
It’s a benefit to the employee.
Okay.
Listed as a benefit.
KK
I mean, would you agree with me that the Previnter policy and the Unum
disability policy are part of the fringe benefits that are made available or are
provided to Pride employees.
I do —I’ll just say it’s a benefit provided to the employee.
And it’s a benefit that Pride advertises and — and makes known to perspective
employees.
They know — they know what benefits are there for them, yes. What’s
offered.
eK
And that confirms what you testified to earlier, which is the Previnter policy
and the Unum disability policy are part of the benefits package, fringe
benefits package, that’s offered to Pride employees as being an employee of
the company?
I said that was part of the benefits package.
Kk
Do you disagree in any way that the Unum disability policy and the Previnter
policy are part of the fringe benefit package offered to Pride employees as a
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part of their employment?
A I stated that it’s a part of the benefits package.
See Exhibit “1,” pp. 31:10-18, 32:1-10, 36:2-8, 36:15-22.
Ms. Edmonson’s testimony establishes that The Policy was a fringe benefit offered to
employees of Pride as part of their basic compensation package.
2. Pride’s own documents demonstrate that The Policy was a fringe benefit and
part of the compensation package used to hire employees.
In addition to the unambiguous testimony of Ms. Edmonson above, Pride’s own documents
reflect that The Policy was marketed and offered to its employees as a fringe benefit. Specifically,
Pride’s own website states that “as part of our commitment to attract and retain top talent, Pride
International has developed a comprehensive and complete benefits program for all eligible
employees.” See Benefits Overview from Pride’s website attached as Exhibit “2.” Pride’s website
then goes on to list “life and disability insurance” first among a list of benefits offered to its
employees. See id. In addition, Pride’s own “Summary of Benefits” produced in this case sets forth
that both short-term disability and long-term disability are provided as part of the benefits package
to employees, along with such other items as healthcare coverage, life insurance, accidental death
coverage, investment savings plans, and stock purchase plans. See Summary of Benefits attached
as Exhibit “3.” Accordingly, these documents support the testimony of Ms. Edmonson that The
Policy is part of the fringe benefits package marketed and provided to Pride employees.
3. There is no evidence that The Policy was intended as a “prophylactic measure
against liability.”
In its Motion for Offset, Pride asserts that “[t}here is no question that the Previnter policy
provided by Defendants was established as a “prophylactic measure against liability” and thus, it not
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subject to the collateral source rule. Pride, however, fails to provide this Court with any evidence
whatsoever to support such an assertion. Don Hurst, Pride’s global compensation manager, testified
as follows:
Q Well, what legal obligations or legal liabilities do you believe that the company is
trying to — trying to satisfy or protect itself against by way of these policies? Can you
name one?
Sir, I cannot answer that question because | wasn’t part of the whole process in
putting the policies in place and I wasn’t part of — of doing negotiations on the
policies.
See Deposition of Don Hurst, attached as Exhibit “4,” pp. 33:22-34:7. In addition, Elaina Edmonson
testified that:
Q You can’t testify as to what purpose these policies had because your weren’t a
decision maker in the purpose of these?
A No, I was not a decision maker.
See Exhibit “1,” p.77:10-13. Therefore, the record before this Court contains no evidence to support
Pride’s assertion that The Policy was intended to insure against liability.
Further, in its Motion for Offset, Pride asserts that Laxey’s agreement not to submit a
question regarding past medical care to the jury is an admission that the Previnter policy was not a
collateral source but a method by which Pride could insure itself against liability. Nothing could be
further from the truth. Under maritime law and the duty of maintenance and cure, an employer such
as Pride has an absolute duty to provide and pay medical care for an injured seaman regardless of
fault. This is the cause of action for maintenance and cure. The only admission made by Laxey
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during trial was that Pride had fulfilled its obligation of maintenance to pay for Laxey’s medical care
up to the point that he reached Maximum Medical Improvement (MMI), thus eliminating the need
for the jury to determine the amount of past medical loss as part of its verdict. Therefore, Laxey’s
agreement to withdraw the cause of action for maintenance and the part of the question asking the
jury to determine past medical loss from the proposed damage question in the charge is not an
admission of anything other than that Pride had fulfilled its maintenance obligation under general
maritime law.
4. Because case law establishes that The Policy is a fringe benefit, it is improper
to offset the payments made under The Policy against Laxey’s damages.
Based on the testimony of Ms. Edmonson and Pride’s own documents, The Policy is a fringe
benefit and, thus, a collateral source and not subject to offset for Pride’s tortious conduct here. This
is consistent with analysis conducted by the Fifth Circuit:
Generally speaking, when a[n] employee has bargained for fringe benefits as an
additional compensation for employment, compensation received by the employee
under that fringe benefit should not be deducted from damages awarded to the
employee as a result of the employer’s negligence. As the employee is already
contractually entitled to that benefit, allowing the employer to deduct such
compensation would both under compensate the employee and provide the employer
with an undeserved windfall. Thus, in evaluating whether a benefit derives from a
collateral source, we ordinarily assess whether that benefit is in a nature of a fringe
benefit (or deferred compensation) or instead reflects the tortfeasor’s effort to
anticipate potential legal liability.
Davis, 18 F.3d at 1244. In addition, the Fifth Circuit has noted that a disability plan payment is a
fringe benefit when it is “part and parcel of its employees’ compensation package.” Jd. at 1245.
This analysis was also conducted by the Corpus Christi Court of Appeals in the case of Seariver
Maritime, Inc. v. Pike, 2006 WL 1553264, *7 (Tex. App--Corpus Christi 2006, pet. denied). In
Seariver, the Court held that the trial court correctly denied an offset for disability payments because
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they were fringe benefits subject to the collateral source rule when “[t]he benefits [we]re ‘sold and
marketed’ to new employees as a benefit package.” Id. In addition, the court in Seariver relied
upon the testimony of a company representative, similar to the testimony of Ms. Edmonson
discussed above, that characterized the disability benefits as a fringe benefit marketed to new
employees. /d. Likewise. this Court should find that the The Policy is a fringe benefit based on
testimony of Pride’s own employees and its own documents and, therefore, determine that any setoff
is improper.
B. THE POLICY CONSTITUTES A FRINGE BENEFIT —- A COLLATERAL SOURCE
UNDER THE FACTORS SET FORTH IN PHILLIPS V. WESTERN CO. OF N. AMERICA
In Phillips v. Western Company of North America, the Fifth Circuit developed a five-factor
test to determine whether disability benefits are fringe benefits (a collateral source) or an employer’ s
attempt to anticipate or offset potential legal liability. Phillips, 953 F.2d at 932. The five factors are:
(1) whether the employee makes any contribution to funding of 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. /d. The overall thrust of these factors is to determine whether
the disability benefits were intended to be a fringe benefit — part of the employee’s compensation
package. Davis, 18 F.3d at 1244. Therefore, regardless of these factors, the aforementioned
testimony of Ms. Edmonson and Pride’s own documents conclusively establish that The Policy was
intended to be a fringe benefit plan touted and marketed to employees as part of the compensation
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package. Nevertheless, an analysis of the Phillips factors in this case supports the determination that
The Policy was a fringe benefit and, therefore, any offset is improper.
The first factor is whether the employee contributes to the plan. The undisputed evidence
is that Laxey did not contribute to payment of the premiums for The Policy. However, this factor
cannot be given significant weight in this case since Laxey also did not contribute to the premiums
for the long-term disability plan, but Pride, in its own motion to this Court, has admitted that the
long-term disability plan is in fact a fringe benefit. See Pride’s Motion for Offset at 5. In addition,
Pride also provided at no cost to its employee life insurance and accidental death benefits which,
together with the short-term and long-term disability plans, made up the fringe benefit package that
Pride touted to its employees and prospective employees. See Exhibit “3.”
The second factor is whether the plan stems from a collective bargaining agreement. This
factor does not weigh in favor of either side, given that Laxey is not a member of a labor union and
he never performed any work for Pride under a collective bargaining agreement of any kind.
The third factor is whether the plan covers nonwork-related injuries. This factor favors
finding that the disability payments are a collateral source. Despite its assertions to the contrary in
its Motion for Offset, the testimony of Pride’s own witnesses, Pride’s own documents, and The
Policy itself indicate that the plan covers both work-related and nonwork-related injuries. Don
Hurst, Pride’s global compensation manager, testified to the following:
Q Now, does the Previnter policy have a disability component to it?
A The Previnter policy has a disability component to it that is — that is off-the-job part.
That is what?
Off the job.
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Explain that to me.
If you’re injured off— off the job, then Previnter has a disability part to that, for the
employee.
He ok
Now, the disability component, does that Previnter policy also have a disability
component to it?
Yes, it does.
Okay. Does the disability component apply to someone such as Laxey?
Yes, it does.
Does the disability policy cover on the job, off the job, or both?
A According to this document [the Previnter policy] it covers both.
See Exhibit “4,” at pp. 14:4-13, 19:25-20:8. In addition, the Summary of Benefits attached as
Exhibit “3” clearly states that The Policy covers temporary disablement for “personal & work-
related” injuries.
The Policy itself also specifies that it offers coverage for both work-related and
personal/non-work related injuries. See Previnter disability policy attached as Exhibit “5.”
Specifically, clause 1 of chapter 1 states that “the purpose of the present contract is to offer coverage
for death, work-related disability, permanent disability, work-related injury and disease, to all those
employees of the company...” /d. Clause 7 of chapter 1 specifies that “this benefit allows the
payment of daily indemnities and/or of a disability pension in case of work stoppage resulting from
sickness, a non-work related accident, or work-related injury or disease.” Clause 2-3-1 of the
Policy specifically states that “the purpose of this benefit is the payment [of] a daily indemnity in the
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event the injured is physically incapacitated as a result of a personal illness or accident” or “a
temporary pension in case ofa permanent disability, following a personal illness or accident.”
Indeed, Mr. Hurst confirmed that the definition of “accident” contained in the Previnter policy does
not limit the benefit to only work-related events. See Exhibit “4,” at p. 47:16-20.
Interestingly, in its Motion for Offset, Pride does not even offer the Court a copy of the
Previnter policy or any of the aforementioned provisions from that Policy. The only thing offered
by Pride on this element is the testimony of Ms. Elaina Edmonson. However, it should be
specifically noted that when asked about her familiarity with the terms of the Previnter policy, Ms.
Edmonson testified as follows:
Q Can you actually show me in the [Previnter] policy where it states that U.S.
employees are only covered for work-related injuries?
A No, I wouldn’t know. Because, really, actually [the Previnter policy] you
have right there, I’ve never seen it before.
See Exhibit “1,” p. 50:9-14.
Accordingly, the only credible evidence before this Court demonstrates that The Policy was
intended to cover both work related and nonwork- related injuries, thus heavily favoring a finding
by this Court that The Policy is a fringe benefit. Davis, 18 F.3d at 1245; Phillips, 953 F.2d 932: see
also Joseph v. River Parishes Co., Inc., 2000 WL 1134363 at *3 (E.D. La. August 9, 2000) (“The
fact that disability benefits will be payable in case of injury/disability which is unrelated to work
argue in favor of exempting disability benefits setoff as a fringe benefit.”). Indeed, as noted in Davis
y. Odeco, evidence that a plan covers nonwork-related injuries is strong evidence that the plan was
not intended to reduce the employer’s potential legal exposure:
As an employer, Murphy Co. would not ordinarily be liable for nonwork-related
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injuries. The plan therefore applies only under certain circumstances in which
Murphy Co. is unlikely to be found liable for the injuries or illnesses of its
employees. Thus, the plan does not appear to have been devised to reduce Murphy
Co.’s legal liability for its employees’ maladies. Rather, it is closely akin to a fringe
benefit — part and parcel of its employees’ compensation package.
Davis, 18 F.3d at 1245.
The fourth factor is whether the disability plan is correlated with length of service. On this
point, the evidence suggests that the eligibility for benefits under The Policyare not contingent upon
an employee’s length of service with Pride. This, however, is also true for the long-term disability
benefits which Pride has admitted is part of its fringe benefits package, as well as coverage under
the life insurance and accidental death benefits provided by Pride as part of its benefits package.
Therefore, The Policy has the same standing as other fringe benefits provided by Pride.
The final factor concerns whether The Policy provides for a setoff from a judgment adverse
to the tortfeasor. In this case, The Policy contains a subrogation clause which does not contemplate
an offset in favor of Pride, but instead reserves Previnter’s right of subrogation under the French
Insurance Code against any judgment rendered against “responsible third parties.” See Exhibit “5,”
clause 2-3-9. Further, there is no document establishing Pride’s right to any offset for disability
payments made to employees following a recovery against Pride for its negligence in causing the
employee’s injury. Accordingly, this factor weighs in favor of the determination that the short-term
policy is a fringe benefit because Pride has no specific right in the Policy or anywhere else to recover
benefits paid under the Policy.
Thus, an analysis of the Phillips factors demonstrates that The Policy is part of Laxey’s
benefits compensation package and is thus a fringe benefit and collateral source. Accordingly, offset
is improper.
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HL.
OFFSET IN THIS CASE IS IMPROPER BASED ON THE SOURCE OF THE
DISABILITY PAYMENTS AND THE POTENTIAL FOR DOUBLE DEDUCTION
In addition to the fact that The Policy is a fringe benefit of Laxey’s employment with Pride,
this Court should also consider the nature and source of the benefits as well as the potential danger
for a double deduction from Laxey’s damage award against Pride. First, it should be noted that the
payments paid to Laxey under The Policy for which Pride now seeks an offset were not paid by
Pride, but instead by Previnter. The only thing Pride paid was premiums to purchase The Policy.
This situation is vastly different from a scenario in which the employer has either paid benefits
directly to the employee or benefits were paid from a disability fund set up and funded entirely by
the employer but administered by a third party. In this case, Pride did nothing more than pay
premiums for the Previnter policy, and all disability benefits were actually paid by Previnter. Thus,
Pride should not be entitled to an offset for benefits that it did not directly pay Laxey.
In addition, as discussed earlier, the Previnter policy contains a specific subrogation clause
which gives it a right of subrogation to any recovery by Laxey against “any responsible third party.”
See Exhibit “5,” at clause 2-3-9. Although no specific evidence has been introduced on this issue,
if Previnter chooses to exercise its right under the subrogation clause and pursue reimbursement
from Laxey for benefits paid under The Policy, Laxey could face a double deduction if this Court
also allows Pride an offset. Further, as mentioned earlier, nothing in the Previnter policy or any
other document specifically gives Pride the right to any offset, nor does it prevent Previnter from
pursuing an offset if this Court enters a judgment against Pride in favor of Laxey.
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Iv.
IF THIS COURT DETERMINES THAT AN OFFSET IS NECESSARY OR IS
APPROPRIATE, ANY SUCH OFFSET SHOULD BE LIMITED TO
DEDUCTION OF LAXEY’S PAST WAGE LOSS.
In its Motion for Offset, Pride contends that, if the Court finds an offset is appropriate, it
should deduct the entire amount of the payments made under The Policy despite the fact that the
amount of those benefits exceeds the amount of lost wages actually awarded by the jury. This would
be improper. The only support for this proposition is the case of Castillo v. American Garment
Finishers Corp., which represents a very distinguishable situation. 965 S.W. 646 2d (Tex. App.—
El Paso 1998, no pet.). Castillo involved a situation where an employer advanced to the employee
directly out of its own funds money to cover medical expenses and Jost wages. Thereafter, when the
judgment was rendered against the employer, the Court allowed full offset for all monies previously
paid by the employer directly to the employee. This was done based on equity, which is not at issue
in this case. It is undisputed that Pride never paid any of its own funds directly to Laxey. Instead,
the benefits paid to Laxey were paid by Previnter under The Policy, which has already been
established to be a fringe benefit. In addition, the disability payments made to Laxey under The
Policy were specifically intended to cover his lost wages and provided no payments for future wage
loss or any compensatory damages, such as pain and suffering or mental anguish. Therefore, it
would be improper for the Court to reduce the amount of the jury’s award for future lost wages or
compensatory damages from an offset of money paid to Laxey for past wage loss. Indeed, Pride can
offer this Court no authority, and no such authority exists, to support this proposition. Therefore,
should this Court find an offset is appropriate, any offset should be limited to a reduction of the
jury’s award of past wage loss.
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Vv.
CONCLUSION
In conclusion, Laxey requests that the Court deny Defendant’s Motion for Offset because:
1 The Policy was a fringe benefit of Laxey’s employment with Pride, and thus a
collateral source making an offset improper;
Pride has failed to provide the Court with any evidence of any liability that the The
Policy was intended to cover; and
An offset could lead to a double deduction from the damages awarded to Laxey by
the jury.
Further, Laxey requests that the Court enter judgment against Pride for the full amount of
damages awarded by the jury and for any further relief to which he is entitled.
Respectfully submitted,
JOHNS ENSON & ASSOCIATES, P.C.
By
AN H. MADDUX
Attorney-in-Charge
State Bar No. 24004788
24 Greenway Plaza, Suite 750
Houston, Texas 77046
Telephone: 713.622.3223
Facsimile: 713.622.3224
ATTORNEYS FOR PLAINTIFF
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CERTIFICATE OF SERVICE
Ido hereby certify that a true and correct copy of the foregoing pleading has been forwarded
to the following counsel of record via hand delivery, regular mail, certified mail-return receipt
requested, and/or facsimile transmission pursuant to the TEXAS RULES OF CIVIL PROCEDURE on this
the 9" day of April, 2008.
Mr. Daniel D. Pipitone VIA FACSIMILE - 713.356.1070
Mr. William H. Stout (w/o exhibits) AND
CHAMBERLAIN, HRDLICKA, WHITE, HAND DELIVERY
WILLIAMS & MARTIN
1200 Smith Street, 14° Floor
Li
Houston, Texas 77002
CORTLAN H. MADDUX
-16-
ELAINA EDMONSON
1 (Pages 1 to 4}
Page 1 Page 3
CAUSE NO. 5441 INDEX
RONALD J. Lae! aE DIST count
PAGE,
vs
ret ABOR SERVICES 1 Appearances
PLE nd PRI
AMERICA bic 1 3aan JOLLA £8THLU
Elaina Edmonson
“ wee
RAL VIREOw! TEPOS TToN Examination by Mr, Cortlan H. Maddux 4
ELAINA con eS
” PEBRUAR
Examination by Mr. William H. Stout. 63
ORAL VIDEOTAFED TEPO: on ON, Further Examination by Mr, Cortlan Maddux . 74
produced as a witness fhe ine: 2 0. ey
and duly svorn, was tal nin the above-s 20 a Signature and Changes
sunbered jase on Fel 2007, D a.m, 81
oe a before As ee Slay hea hor tha
Reporter in and for the State of T as ner doy
compte d stenatype machine at Reporter's Certificate vee 83
hanberlain, edly a, White, ws no fan, 1260
‘th et, 14 Looe, Houston, an suant
the as sul or Proced ne. pre sions 10 EXHIBITS
sta ol the re: rc Facnes. lt NO./DESCRIPTION PAGE
12
12 No.1 33
13 Pride, Employment Overview, internet site
14 No.2 47
15 Previnter Policy
16 No. 61
1 Unum Provident Policy
18
19
20
21
22
23
24
25
Page 2 Page 4
APPEARANCES. THE VIDEOGRAPHER: 2007. The time is 9:10
a.m, We're on the record. This is the videotaped
FOR PLAINTIFF: deposition of Ms. Elaina Edmonson.
Mr. CortlanH. Maddux,
JOHN STEVENSON & ASSOCIATES, P.C. ELAINA EDMONSON.
24 Greenway Plaza having been first duly sworn, testified as follows:
Suite 750 EXAMINATION
Houston, Texas 7046 BY MR. MADDUX
FOR DEFENDANTS: Good morning
Mr. William H. Stout Good morning.
CHAMBERLAIN, HRDLICKA, WHITE, WILLIAMS & MARTIN
1200 Smith Street 10 Could you tell us your name. please.
Mth Floor 11 Elaina Edmonson.
10 Houston, Texas 77002 12 Where do you work?
1 ALSO PRESENT: 13 Pride International.
12 Ms Kelly Tompkins 14 What's your position with Pride?
13 15 Senior benefits coordinator.
14
1s 16 How long have you worked with Pride?
16 17 This is my fifth year there.
ly 18 Where do you live?
18 19 Here in Houston, Do you need a specific?
19 20 No.
20 21 Okay
24
22
22 Tell me a little bit of your educational
23 23 background.
24 24 A. Well. | have bachelor's degree in
25 on ations, radio/television, from Prairie View A&M.
EXHIBIT
Henjum Go pervices
|
ELAINA EDMONSON
2 {Pages 5 to 8)
Page 5 Page 7
University. And, of course, just high school. Q In the Pride -- Pride headquarters?
Q. That's fine. A. Yes.
When did you get that degree from Prairie Q. Tell me. as a senior benefits coordinator, what
View A&M? you do on a day-to-day basis.
5 A. I graduated from Prairie View in 2000. A. Well. basically my position, | manage our
Q. Allright. Did you go to work immediately for accounts, what I do for vendors, and manage the invoices
Pride? that come in. making sure those are paid. Also,
A. No. assist with any claims issues that might come in as
Q. Who did you go to work for -- work for? benefits as medical. dental claims that's sent up
jl0 A. Well, | worked at different temp agencies at 10 through our service center that they couldn't handle.
jl2 that time. i And any other issues that might come up in regards to
2 Q, Okay, 12 benefits.
3 A Until | started at Pride. 13 Q. When you say "vendor." what are you talking
4 Q, When did you start working with Pride? 14 about?
lS A. It was June of 2002. 15 A ‘The administrators of our plans.
6 Q. And what was your position when you started at 16 Q. What plans -- are there plans that you directly
17 Pride? 17 oversee specifically, or do you oversee all the benefit
le When I started, | was an HR assistant. 18 plans?
19 Human resources assistant? 19 A. Well, it would be all of them. as far as
20 Yes. 20 helping out with them.
21 And then you progressed up from there? 21 Q Okay.
B2 Yes. 22 A. But the main person and contact would be
B3 Your title is senior benefits coordinator? 23 Charles Graham. since he's the manager over the
24 Yes. 24 benefits.
25 Who is your direct supervisor? 2> Q. Okay. So. you -- you deal on a daily basis
Page 6 Page 8
His name is Charles Graham. with the companies that manage Pride's benefit plans?
What is Mr. Graham's position? A. Yes.
He's the manager of compensation and benefits. Q. You ~ do you see claims that come in on
Who is his supervisor? individual -- individuals. Pride employees. do you see
Kurt Johnson. all of those or some of those? Or how does that work?
And what is his title? A. No. It-- it's more of -- because the claims
He's the director of human resources. directly go to the administrators. of course. But if
What was his name again’? it's a situation where an employee doesn't like the way
Kurt Johnson. the claim is paid or doesn't understand. and if our
Lo . In the human resources department is there 10 service center can't help. I will try and get in the
id anyone higher than Mr. Johnson? il middle to kind of connect them with the administrator so
12 A. Yes. The VP of human resources. And his name 12 a better explanation can be given,
3 is Lonnie Bane. 13 Q. So. you step in when there may be either a
14 Q. Bea-i-n? 14 dispute or just a misunderstanding of -- of what
15 A. Bea-nee. 15 benefits are going to be paid. should be paid. that kind
16 Q. Beane. 16 of thing?
iL? And Mr. Bane is the VP of human resources. 17 A. Exactly,
18 Is he the head of the human resources department? 18 Q. Okay. Where is the claims service center?
19 A. Yes. 19 What is that?
20, Q. So, top person at Pride on human resource 20 A It's our benefits service center. It's like a
21 issues is Lonnie Bane? 21 co-sourcing center. And they house all of our benefits
A, Yes. 22 information,
23 Q. Okay. Where do you office? Where is your 23 Q. Okay. And who is in charge of that?
24 office? 24 A. The name of the company is Employee Benefits
25, A It's located on San Felipe. 25 Solutions.
Henjum Goucher Reporting Services
1-888-656-DEPO
ELAINA EDMONSON
3 (Pages 9 to 12)
Page 9 Page 11
Q. And that's a third party, obviously? Q. Okay.
A. Yes. A. And that's handled through Met Life currently.
Q. And what is their role in the benefit plans Q. The long-term disability today, who handles
that Pride offers? What do they do? that?
A. For EBS? A. Met Life.
Q. Yes. Q That was previously handled by what company?
A. The service center? Well, they're there to -- A. The Hartford. And then before the Hartford,
they have a system set up where they keep all the Unum,
information on the employees as far as their benefits Q. And the short-term disability program?
0 information. And they have a cal] center that's used 10 A. That's through -- that's only through Met Life.
jit where employees can call in with changes to their 11 This is the first year that that has been implemented.
2 coverage. Or for open enroliment, we utilize their 12 Q. Was -- has there been a short-term disability
3 system. Different things like that. 13 program in the past?
iL 4 Q. Now, when somebody has a claim, is it initially 14 A. No.
LS sent to this EBS, this Employee Benefits System? 15 Q. Okay. What -- what is Previnter, then?
6 A. No, no. The administrator of our medical and 16 A. Previnter is a coverage for our U.S. employees,
17 dental plan is Fiserv Health, 17 only for workers’ comp.
18 How -- how do you spell that? 18 Q. That's workers’ comp?
iL 9 F-i-s-e-r-v. 19 A. Yes.
Okay. 20 Q, I'm going to come back and ask you some more
z1 Health, 21 specific questions about that. Let me get a few more
2 Okay. 22 background -- some more background information.
3 And for our vision claims, it's Superior 23 A. Okay.
4 Vision. 24 Q. You understand that I'm here today to ask you
BS Q. Okay. 25 questions about Ronald Laxey?
Page 10:
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a7 “he, v CAUSE NO. 2005-54413 %, sv RONALD J. LAXEY IN THE DISTRICT couRror o f VS. Be HARRIS COUNTY, Tf % & DRILLING LABOR SERVICES wy oy OC, Veg PTE LTD. and PRIDE CENTRAL AMERICA LLC 334" JUDICIAL DISTRICT PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION FOR OFFSET Plaintiff Ronald Laxey in the above captioned cause files this his Response to Defendants’ Motion for Offset, and respectfully shows the Court as follows: I INTRODUCTION When Ronald Laxey was employed by Defendants, he received numerous benefits under Pride’s employee compensation and benefits package. Two of those benefits were a short-term and a long-term disability policy to pay Laxey benefits in the event that he became temporarily or permanently disabled during his employment. That occurred in November 2004 as a result of Pride’s negligence, as determined by the jury in the trial of this case. Following his injury, Laxey received monthly benefits for a period of 36 months from a short-term disability policy (hereinafter “The Policy”) purchased by Pride for the benefit of its employees as part of its benefits and compensation package.’ Pride never paid any benefits directly to Laxey for his loss of income, but instead all benefits were paid by the insurer, Previnter, through The Policy. Pride now asks this Court to reduce the amount of damages awarded by the jury for the payments paid under The Policy to Laxey- - payments made not by Pride, but by Previnter. This request flies directly in the face of the 'See Previnter policy attached as Exhibit *5" and incorporated by reference herein. -l- RECORDER'S MEMORANDUM Ths instrument is of poor quelity at the time of imaging collateral source doctrine. Accordingly, for the reasons set forth herein, Laxey requests that this Court deny Pride’s request for an offset. IL. THE COLLATERAL SOURCE RULE PROHIBITS AN OFFSET FOR FRINGE BENEFITS SUCH AS THOSE PAID TO LAXEY UNDER THE POLICY. The benefits paid to Laxey under The Policy were a fringe benefit of his employment with Pride and, therefore, a collateral source. As such, the collateral source rule bars any claim for offset by Pride. Phillips v. Western Co. ofN. Amer., 953 F.2d 923, 931 (5" Cir. 1992). The doctrine of collateral source applies in Jones Act and other federal maritime cases. /d. at 929. “The collateral source rule is a substantive rule of law that bars the tortfeasor from reducing the quantum of damages owed to a plaintiff by the amount of the recovery the plaintiff receives from other sources of compensation that are independent of (or collateral to) the tortfeasor.” Davis v. Odeco, 18 F.3d 1237, 1243 (5" Cir. 1994). The collateral source rule has been applied to disability payments provided to an injured employee. Jd. at 1244-45; Phillips, 953 F.2d at 932. One underlying rationale for the collateral source rule is that the plaintiff should not be penalized for having obtained benefits from a collateral source covering the employer's tortious conduct. Davis, 18 F.3d at 1244 n. 21. Moreover, such fringe benefit payments “should not have the effect of giving a windfall to tortfeasors.” /d. “The liability of tortfeasors should not be excused or reduced simply because other sources of compensation are available.” Jd. Permitting employers an offset may allow them to escape responsibility for their own tortious conduct, and more importantly, it may also deprive the employee of part of his contractual compensation package. Id. In other words, once this Court determines that the disability payments made to Laxey are a fringe benefit, it should not deduct those payments from the damages awarded to him as a result of Pride’s -2- negligence because Laxey is already contractually entitled to those benefits. See Davis, 18 F.3d at 1244. This Court should find that Pride is not entitled to an offset and that benefits from The Policy paid to Laxey were a fringe benefit. The direct testimony of Pride’s senior benefits specialists and Pride’s own documents demonstrate that The Policy was a fringe benefit. Further, the factors as set forth in Phillips vy. Western Company of North America also favor finding that the The Policy was a fringe benefit. Finally, The Policy itself provides for a right to subrogation, therefore creating a potential for Laxey’s damages to be reduced twice for the same payments. A. THE DIRECT TESTIMONY OF PRIDE’S SENIOR BENEFITS SPECIALISTS AND PRIDE’S OWN DOCUMENTS DEMONSTRATE THAT THE POLICY WAS A FRINGE BENEFIT. 1 Pride’s senior benefits coordinator testified that The Policy is a fringe benefit — part of the compensation package used to hire employees. In Jones Act and unseaworthiness cases, the collateral source rule applies to fringe benefits and deferred compensation, but not to “payments made by the employer to indemnify itself against liability.” Phillips, 953 F.2d at 932. Thus, the primary test for collateral source is whether the disability plan is part of the employee’s compensation package or whether it was intended “as a prophylactic measure against [the employer’s] liability.” Davis, 18 F.3d at 1244. Here, the evidence from Pride’s own witnesses and documents establishes that The Policy was a fringe benefit that was part of Pride’s compensation package. During discovery, the parties conducted the deposition of Elaina Edmonson. See Deposition of Elaina Edmonson attached as Exhibit “1.” Ms. Edmonson is Pride’s senior benefits coordinator. See Exhibit “1,” p. 4. In her deposition, Ms. Edmonson testified that both the short-term and long-term disability policies were fringe benefits and part of 3- the compensation package marketed to potential employees: Q These policies, the Previnter policy and the Unum disability policies, are those policies marketed to perspective employees as part of the benefit package? For benefits? Yes. It’s a benefit to the employee. Okay. Listed as a benefit. KK I mean, would you agree with me that the Previnter policy and the Unum disability policy are part of the fringe benefits that are made available or are provided to Pride employees. I do —I’ll just say it’s a benefit provided to the employee. And it’s a benefit that Pride advertises and — and makes known to perspective employees. They know — they know what benefits are there for them, yes. What’s offered. eK And that confirms what you testified to earlier, which is the Previnter policy and the Unum disability policy are part of the benefits package, fringe benefits package, that’s offered to Pride employees as being an employee of the company? I said that was part of the benefits package. Kk Do you disagree in any way that the Unum disability policy and the Previnter policy are part of the fringe benefit package offered to Pride employees as a -4- part of their employment? A I stated that it’s a part of the benefits package. See Exhibit “1,” pp. 31:10-18, 32:1-10, 36:2-8, 36:15-22. Ms. Edmonson’s testimony establishes that The Policy was a fringe benefit offered to employees of Pride as part of their basic compensation package. 2. Pride’s own documents demonstrate that The Policy was a fringe benefit and part of the compensation package used to hire employees. In addition to the unambiguous testimony of Ms. Edmonson above, Pride’s own documents reflect that The Policy was marketed and offered to its employees as a fringe benefit. Specifically, Pride’s own website states that “as part of our commitment to attract and retain top talent, Pride International has developed a comprehensive and complete benefits program for all eligible employees.” See Benefits Overview from Pride’s website attached as Exhibit “2.” Pride’s website then goes on to list “life and disability insurance” first among a list of benefits offered to its employees. See id. In addition, Pride’s own “Summary of Benefits” produced in this case sets forth that both short-term disability and long-term disability are provided as part of the benefits package to employees, along with such other items as healthcare coverage, life insurance, accidental death coverage, investment savings plans, and stock purchase plans. See Summary of Benefits attached as Exhibit “3.” Accordingly, these documents support the testimony of Ms. Edmonson that The Policy is part of the fringe benefits package marketed and provided to Pride employees. 3. There is no evidence that The Policy was intended as a “prophylactic measure against liability.” In its Motion for Offset, Pride asserts that “[t}here is no question that the Previnter policy provided by Defendants was established as a “prophylactic measure against liability” and thus, it not -5- subject to the collateral source rule. Pride, however, fails to provide this Court with any evidence whatsoever to support such an assertion. Don Hurst, Pride’s global compensation manager, testified as follows: Q Well, what legal obligations or legal liabilities do you believe that the company is trying to — trying to satisfy or protect itself against by way of these policies? Can you name one? Sir, I cannot answer that question because | wasn’t part of the whole process in putting the policies in place and I wasn’t part of — of doing negotiations on the policies. See Deposition of Don Hurst, attached as Exhibit “4,” pp. 33:22-34:7. In addition, Elaina Edmonson testified that: Q You can’t testify as to what purpose these policies had because your weren’t a decision maker in the purpose of these? A No, I was not a decision maker. See Exhibit “1,” p.77:10-13. Therefore, the record before this Court contains no evidence to support Pride’s assertion that The Policy was intended to insure against liability. Further, in its Motion for Offset, Pride asserts that Laxey’s agreement not to submit a question regarding past medical care to the jury is an admission that the Previnter policy was not a collateral source but a method by which Pride could insure itself against liability. Nothing could be further from the truth. Under maritime law and the duty of maintenance and cure, an employer such as Pride has an absolute duty to provide and pay medical care for an injured seaman regardless of fault. This is the cause of action for maintenance and cure. The only admission made by Laxey -6- during trial was that Pride had fulfilled its obligation of maintenance to pay for Laxey’s medical care up to the point that he reached Maximum Medical Improvement (MMI), thus eliminating the need for the jury to determine the amount of past medical loss as part of its verdict. Therefore, Laxey’s agreement to withdraw the cause of action for maintenance and the part of the question asking the jury to determine past medical loss from the proposed damage question in the charge is not an admission of anything other than that Pride had fulfilled its maintenance obligation under general maritime law. 4. Because case law establishes that The Policy is a fringe benefit, it is improper to offset the payments made under The Policy against Laxey’s damages. Based on the testimony of Ms. Edmonson and Pride’s own documents, The Policy is a fringe benefit and, thus, a collateral source and not subject to offset for Pride’s tortious conduct here. This is consistent with analysis conducted by the Fifth Circuit: Generally speaking, when a[n] employee has bargained for fringe benefits as an additional compensation for employment, compensation received by the employee under that fringe benefit should not be deducted from damages awarded to the employee as a result of the employer’s negligence. As the employee is already contractually entitled to that benefit, allowing the employer to deduct such compensation would both under compensate the employee and provide the employer with an undeserved windfall. Thus, in evaluating whether a benefit derives from a collateral source, we ordinarily assess whether that benefit is in a nature of a fringe benefit (or deferred compensation) or instead reflects the tortfeasor’s effort to anticipate potential legal liability. Davis, 18 F.3d at 1244. In addition, the Fifth Circuit has noted that a disability plan payment is a fringe benefit when it is “part and parcel of its employees’ compensation package.” Jd. at 1245. This analysis was also conducted by the Corpus Christi Court of Appeals in the case of Seariver Maritime, Inc. v. Pike, 2006 WL 1553264, *7 (Tex. App--Corpus Christi 2006, pet. denied). In Seariver, the Court held that the trial court correctly denied an offset for disability payments because -7- they were fringe benefits subject to the collateral source rule when “[t]he benefits [we]re ‘sold and marketed’ to new employees as a benefit package.” Id. In addition, the court in Seariver relied upon the testimony of a company representative, similar to the testimony of Ms. Edmonson discussed above, that characterized the disability benefits as a fringe benefit marketed to new employees. /d. Likewise. this Court should find that the The Policy is a fringe benefit based on testimony of Pride’s own employees and its own documents and, therefore, determine that any setoff is improper. B. THE POLICY CONSTITUTES A FRINGE BENEFIT —- A COLLATERAL SOURCE UNDER THE FACTORS SET FORTH IN PHILLIPS V. WESTERN CO. OF N. AMERICA In Phillips v. Western Company of North America, the Fifth Circuit developed a five-factor test to determine whether disability benefits are fringe benefits (a collateral source) or an employer’ s attempt to anticipate or offset potential legal liability. Phillips, 953 F.2d at 932. The five factors are: (1) whether the employee makes any contribution to funding of 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. /d. The overall thrust of these factors is to determine whether the disability benefits were intended to be a fringe benefit — part of the employee’s compensation package. Davis, 18 F.3d at 1244. Therefore, regardless of these factors, the aforementioned testimony of Ms. Edmonson and Pride’s own documents conclusively establish that The Policy was intended to be a fringe benefit plan touted and marketed to employees as part of the compensation -8- package. Nevertheless, an analysis of the Phillips factors in this case supports the determination that The Policy was a fringe benefit and, therefore, any offset is improper. The first factor is whether the employee contributes to the plan. The undisputed evidence is that Laxey did not contribute to payment of the premiums for The Policy. However, this factor cannot be given significant weight in this case since Laxey also did not contribute to the premiums for the long-term disability plan, but Pride, in its own motion to this Court, has admitted that the long-term disability plan is in fact a fringe benefit. See Pride’s Motion for Offset at 5. In addition, Pride also provided at no cost to its employee life insurance and accidental death benefits which, together with the short-term and long-term disability plans, made up the fringe benefit package that Pride touted to its employees and prospective employees. See Exhibit “3.” The second factor is whether the plan stems from a collective bargaining agreement. This factor does not weigh in favor of either side, given that Laxey is not a member of a labor union and he never performed any work for Pride under a collective bargaining agreement of any kind. The third factor is whether the plan covers nonwork-related injuries. This factor favors finding that the disability payments are a collateral source. Despite its assertions to the contrary in its Motion for Offset, the testimony of Pride’s own witnesses, Pride’s own documents, and The Policy itself indicate that the plan covers both work-related and nonwork-related injuries. Don Hurst, Pride’s global compensation manager, testified to the following: Q Now, does the Previnter policy have a disability component to it? A The Previnter policy has a disability component to it that is — that is off-the-job part. That is what? Off the job. -9- Explain that to me. If you’re injured off— off the job, then Previnter has a disability part to that, for the employee. He ok Now, the disability component, does that Previnter policy also have a disability component to it? Yes, it does. Okay. Does the disability component apply to someone such as Laxey? Yes, it does. Does the disability policy cover on the job, off the job, or both? A According to this document [the Previnter policy] it covers both. See Exhibit “4,” at pp. 14:4-13, 19:25-20:8. In addition, the Summary of Benefits attached as Exhibit “3” clearly states that The Policy covers temporary disablement for “personal & work- related” injuries. The Policy itself also specifies that it offers coverage for both work-related and personal/non-work related injuries. See Previnter disability policy attached as Exhibit “5.” Specifically, clause 1 of chapter 1 states that “the purpose of the present contract is to offer coverage for death, work-related disability, permanent disability, work-related injury and disease, to all those employees of the company...” /d. Clause 7 of chapter 1 specifies that “this benefit allows the payment of daily indemnities and/or of a disability pension in case of work stoppage resulting from sickness, a non-work related accident, or work-related injury or disease.” Clause 2-3-1 of the Policy specifically states that “the purpose of this benefit is the payment [of] a daily indemnity in the -10- event the injured is physically incapacitated as a result of a personal illness or accident” or “a temporary pension in case ofa permanent disability, following a personal illness or accident.” Indeed, Mr. Hurst confirmed that the definition of “accident” contained in the Previnter policy does not limit the benefit to only work-related events. See Exhibit “4,” at p. 47:16-20. Interestingly, in its Motion for Offset, Pride does not even offer the Court a copy of the Previnter policy or any of the aforementioned provisions from that Policy. The only thing offered by Pride on this element is the testimony of Ms. Elaina Edmonson. However, it should be specifically noted that when asked about her familiarity with the terms of the Previnter policy, Ms. Edmonson testified as follows: Q Can you actually show me in the [Previnter] policy where it states that U.S. employees are only covered for work-related injuries? A No, I wouldn’t know. Because, really, actually [the Previnter policy] you have right there, I’ve never seen it before. See Exhibit “1,” p. 50:9-14. Accordingly, the only credible evidence before this Court demonstrates that The Policy was intended to cover both work related and nonwork- related injuries, thus heavily favoring a finding by this Court that The Policy is a fringe benefit. Davis, 18 F.3d at 1245; Phillips, 953 F.2d 932: see also Joseph v. River Parishes Co., Inc., 2000 WL 1134363 at *3 (E.D. La. August 9, 2000) (“The fact that disability benefits will be payable in case of injury/disability which is unrelated to work argue in favor of exempting disability benefits setoff as a fringe benefit.”). Indeed, as noted in Davis y. Odeco, evidence that a plan covers nonwork-related injuries is strong evidence that the plan was not intended to reduce the employer’s potential legal exposure: As an employer, Murphy Co. would not ordinarily be liable for nonwork-related -ll- injuries. The plan therefore applies only under certain circumstances in which Murphy Co. is unlikely to be found liable for the injuries or illnesses of its employees. Thus, the plan does not appear to have been devised to reduce Murphy Co.’s legal liability for its employees’ maladies. Rather, it is closely akin to a fringe benefit — part and parcel of its employees’ compensation package. Davis, 18 F.3d at 1245. The fourth factor is whether the disability plan is correlated with length of service. On this point, the evidence suggests that the eligibility for benefits under The Policyare not contingent upon an employee’s length of service with Pride. This, however, is also true for the long-term disability benefits which Pride has admitted is part of its fringe benefits package, as well as coverage under the life insurance and accidental death benefits provided by Pride as part of its benefits package. Therefore, The Policy has the same standing as other fringe benefits provided by Pride. The final factor concerns whether The Policy provides for a setoff from a judgment adverse to the tortfeasor. In this case, The Policy contains a subrogation clause which does not contemplate an offset in favor of Pride, but instead reserves Previnter’s right of subrogation under the French Insurance Code against any judgment rendered against “responsible third parties.” See Exhibit “5,” clause 2-3-9. Further, there is no document establishing Pride’s right to any offset for disability payments made to employees following a recovery against Pride for its negligence in causing the employee’s injury. Accordingly, this factor weighs in favor of the determination that the short-term policy is a fringe benefit because Pride has no specific right in the Policy or anywhere else to recover benefits paid under the Policy. Thus, an analysis of the Phillips factors demonstrates that The Policy is part of Laxey’s benefits compensation package and is thus a fringe benefit and collateral source. Accordingly, offset is improper. -12- HL. OFFSET IN THIS CASE IS IMPROPER BASED ON THE SOURCE OF THE DISABILITY PAYMENTS AND THE POTENTIAL FOR DOUBLE DEDUCTION In addition to the fact that The Policy is a fringe benefit of Laxey’s employment with Pride, this Court should also consider the nature and source of the benefits as well as the potential danger for a double deduction from Laxey’s damage award against Pride. First, it should be noted that the payments paid to Laxey under The Policy for which Pride now seeks an offset were not paid by Pride, but instead by Previnter. The only thing Pride paid was premiums to purchase The Policy. This situation is vastly different from a scenario in which the employer has either paid benefits directly to the employee or benefits were paid from a disability fund set up and funded entirely by the employer but administered by a third party. In this case, Pride did nothing more than pay premiums for the Previnter policy, and all disability benefits were actually paid by Previnter. Thus, Pride should not be entitled to an offset for benefits that it did not directly pay Laxey. In addition, as discussed earlier, the Previnter policy contains a specific subrogation clause which gives it a right of subrogation to any recovery by Laxey against “any responsible third party.” See Exhibit “5,” at clause 2-3-9. Although no specific evidence has been introduced on this issue, if Previnter chooses to exercise its right under the subrogation clause and pursue reimbursement from Laxey for benefits paid under The Policy, Laxey could face a double deduction if this Court also allows Pride an offset. Further, as mentioned earlier, nothing in the Previnter policy or any other document specifically gives Pride the right to any offset, nor does it prevent Previnter from pursuing an offset if this Court enters a judgment against Pride in favor of Laxey. -13- Iv. IF THIS COURT DETERMINES THAT AN OFFSET IS NECESSARY OR IS APPROPRIATE, ANY SUCH OFFSET SHOULD BE LIMITED TO DEDUCTION OF LAXEY’S PAST WAGE LOSS. In its Motion for Offset, Pride contends that, if the Court finds an offset is appropriate, it should deduct the entire amount of the payments made under The Policy despite the fact that the amount of those benefits exceeds the amount of lost wages actually awarded by the jury. This would be improper. The only support for this proposition is the case of Castillo v. American Garment Finishers Corp., which represents a very distinguishable situation. 965 S.W. 646 2d (Tex. App.— El Paso 1998, no pet.). Castillo involved a situation where an employer advanced to the employee directly out of its own funds money to cover medical expenses and Jost wages. Thereafter, when the judgment was rendered against the employer, the Court allowed full offset for all monies previously paid by the employer directly to the employee. This was done based on equity, which is not at issue in this case. It is undisputed that Pride never paid any of its own funds directly to Laxey. Instead, the benefits paid to Laxey were paid by Previnter under The Policy, which has already been established to be a fringe benefit. In addition, the disability payments made to Laxey under The Policy were specifically intended to cover his lost wages and provided no payments for future wage loss or any compensatory damages, such as pain and suffering or mental anguish. Therefore, it would be improper for the Court to reduce the amount of the jury’s award for future lost wages or compensatory damages from an offset of money paid to Laxey for past wage loss. Indeed, Pride can offer this Court no authority, and no such authority exists, to support this proposition. Therefore, should this Court find an offset is appropriate, any offset should be limited to a reduction of the jury’s award of past wage loss. -14- Vv. CONCLUSION In conclusion, Laxey requests that the Court deny Defendant’s Motion for Offset because: 1 The Policy was a fringe benefit of Laxey’s employment with Pride, and thus a collateral source making an offset improper; Pride has failed to provide the Court with any evidence of any liability that the The Policy was intended to cover; and An offset could lead to a double deduction from the damages awarded to Laxey by the jury. Further, Laxey requests that the Court enter judgment against Pride for the full amount of damages awarded by the jury and for any further relief to which he is entitled. Respectfully submitted, JOHNS ENSON & ASSOCIATES, P.C. By AN H. MADDUX Attorney-in-Charge State Bar No. 24004788 24 Greenway Plaza, Suite 750 Houston, Texas 77046 Telephone: 713.622.3223 Facsimile: 713.622.3224 ATTORNEYS FOR PLAINTIFF -15- CERTIFICATE OF SERVICE Ido hereby certify that a true and correct copy of the foregoing pleading has been forwarded to the following counsel of record via hand delivery, regular mail, certified mail-return receipt requested, and/or facsimile transmission pursuant to the TEXAS RULES OF CIVIL PROCEDURE on this the 9" day of April, 2008. Mr. Daniel D. Pipitone VIA FACSIMILE - 713.356.1070 Mr. William H. Stout (w/o exhibits) AND CHAMBERLAIN, HRDLICKA, WHITE, HAND DELIVERY WILLIAMS & MARTIN 1200 Smith Street, 14° Floor Li Houston, Texas 77002 CORTLAN H. MADDUX -16- ELAINA EDMONSON 1 (Pages 1 to 4} Page 1 Page 3 CAUSE NO. 5441 INDEX RONALD J. Lae! aE DIST count PAGE, vs ret ABOR SERVICES 1 Appearances PLE nd PRI AMERICA bic 1 3aan JOLLA £8THLU Elaina Edmonson “ wee RAL VIREOw! TEPOS TToN Examination by Mr, Cortlan H. Maddux 4 ELAINA con eS ” PEBRUAR Examination by Mr. William H. Stout. 63 ORAL VIDEOTAFED TEPO: on ON, Further Examination by Mr, Cortlan Maddux . 74 produced as a witness fhe ine: 2 0. ey and duly svorn, was tal nin the above-s 20 a Signature and Changes sunbered jase on Fel 2007, D a.m, 81 oe a before As ee Slay hea hor tha Reporter in and for the State of T as ner doy compte d stenatype machine at Reporter's Certificate vee 83 hanberlain, edly a, White, ws no fan, 1260 ‘th et, 14 Looe, Houston, an suant the as sul or Proced ne. pre sions 10 EXHIBITS sta ol the re: rc Facnes. lt NO./DESCRIPTION PAGE 12 12 No.1 33 13 Pride, Employment Overview, internet site 14 No.2 47 15 Previnter Policy 16 No. 61 1 Unum Provident Policy 18 19 20 21 22 23 24 25 Page 2 Page 4 APPEARANCES. THE VIDEOGRAPHER: 2007. The time is 9:10 a.m, We're on the record. This is the videotaped FOR PLAINTIFF: deposition of Ms. Elaina Edmonson. Mr. CortlanH. Maddux, JOHN STEVENSON & ASSOCIATES, P.C. ELAINA EDMONSON. 24 Greenway Plaza having been first duly sworn, testified as follows: Suite 750 EXAMINATION Houston, Texas 7046 BY MR. MADDUX FOR DEFENDANTS: Good morning Mr. William H. Stout Good morning. CHAMBERLAIN, HRDLICKA, WHITE, WILLIAMS & MARTIN 1200 Smith Street 10 Could you tell us your name. please. Mth Floor 11 Elaina Edmonson. 10 Houston, Texas 77002 12 Where do you work? 1 ALSO PRESENT: 13 Pride International. 12 Ms Kelly Tompkins 14 What's your position with Pride? 13 15 Senior benefits coordinator. 14 1s 16 How long have you worked with Pride? 16 17 This is my fifth year there. ly 18 Where do you live? 18 19 Here in Houston, Do you need a specific? 19 20 No. 20 21 Okay 24 22 22 Tell me a little bit of your educational 23 23 background. 24 24 A. Well. | have bachelor's degree in 25 on ations, radio/television, from Prairie View A&M. EXHIBIT Henjum Go pervices | ELAINA EDMONSON 2 {Pages 5 to 8) Page 5 Page 7 University. And, of course, just high school. Q In the Pride -- Pride headquarters? Q. That's fine. A. Yes. When did you get that degree from Prairie Q. Tell me. as a senior benefits coordinator, what View A&M? you do on a day-to-day basis. 5 A. I graduated from Prairie View in 2000. A. Well. basically my position, | manage our Q. Allright. Did you go to work immediately for accounts, what I do for vendors, and manage the invoices Pride? that come in. making sure those are paid. Also, A. No. assist with any claims issues that might come in as Q. Who did you go to work for -- work for? benefits as medical. dental claims that's sent up jl0 A. Well, | worked at different temp agencies at 10 through our service center that they couldn't handle. jl2 that time. i And any other issues that might come up in regards to 2 Q, Okay, 12 benefits. 3 A Until | started at Pride. 13 Q. When you say "vendor." what are you talking 4 Q, When did you start working with Pride? 14 about? lS A. It was June of 2002. 15 A ‘The administrators of our plans. 6 Q. And what was your position when you started at 16 Q. What plans -- are there plans that you directly 17 Pride? 17 oversee specifically, or do you oversee all the benefit le When I started, | was an HR assistant. 18 plans? 19 Human resources assistant? 19 A. Well, it would be all of them. as far as 20 Yes. 20 helping out with them. 21 And then you progressed up from there? 21 Q Okay. B2 Yes. 22 A. But the main person and contact would be B3 Your title is senior benefits coordinator? 23 Charles Graham. since he's the manager over the 24 Yes. 24 benefits. 25 Who is your direct supervisor? 2> Q. Okay. So. you -- you deal on a daily basis Page 6 Page 8 His name is Charles Graham. with the companies that manage Pride's benefit plans? What is Mr. Graham's position? A. Yes. He's the manager of compensation and benefits. Q. You ~ do you see claims that come in on Who is his supervisor? individual -- individuals. Pride employees. do you see Kurt Johnson. all of those or some of those? Or how does that work? And what is his title? A. No. It-- it's more of -- because the claims He's the director of human resources. directly go to the administrators. of course. But if What was his name again’? it's a situation where an employee doesn't like the way Kurt Johnson. the claim is paid or doesn't understand. and if our Lo . In the human resources department is there 10 service center can't help. I will try and get in the id anyone higher than Mr. Johnson? il middle to kind of connect them with the administrator so 12 A. Yes. The VP of human resources. And his name 12 a better explanation can be given, 3 is Lonnie Bane. 13 Q. So. you step in when there may be either a 14 Q. Bea-i-n? 14 dispute or just a misunderstanding of -- of what 15 A. Bea-nee. 15 benefits are going to be paid. should be paid. that kind 16 Q. Beane. 16 of thing? iL? And Mr. Bane is the VP of human resources. 17 A. Exactly, 18 Is he the head of the human resources department? 18 Q. Okay. Where is the claims service center? 19 A. Yes. 19 What is that? 20, Q. So, top person at Pride on human resource 20 A It's our benefits service center. It's like a 21 issues is Lonnie Bane? 21 co-sourcing center. And they house all of our benefits A, Yes. 22 information, 23 Q. Okay. Where do you office? Where is your 23 Q. Okay. And who is in charge of that? 24 office? 24 A. The name of the company is Employee Benefits 25, A It's located on San Felipe. 25 Solutions. Henjum Goucher Reporting Services 1-888-656-DEPO ELAINA EDMONSON 3 (Pages 9 to 12) Page 9 Page 11 Q. And that's a third party, obviously? Q. Okay. A. Yes. A. And that's handled through Met Life currently. Q. And what is their role in the benefit plans Q. The long-term disability today, who handles that Pride offers? What do they do? that? A. For EBS? A. Met Life. Q. Yes. Q That was previously handled by what company? A. The service center? Well, they're there to -- A. The Hartford. And then before the Hartford, they have a system set up where they keep all the Unum, information on the employees as far as their benefits Q. And the short-term disability program? 0 information. And they have a cal] center that's used 10 A. That's through -- that's only through Met Life. jit where employees can call in with changes to their 11 This is the first year that that has been implemented. 2 coverage. Or for open enroliment, we utilize their 12 Q. Was -- has there been a short-term disability 3 system. Different things like that. 13 program in the past? iL 4 Q. Now, when somebody has a claim, is it initially 14 A. No. LS sent to this EBS, this Employee Benefits System? 15 Q. Okay. What -- what is Previnter, then? 6 A. No, no. The administrator of our medical and 16 A. Previnter is a coverage for our U.S. employees, 17 dental plan is Fiserv Health, 17 only for workers’ comp. 18 How -- how do you spell that? 18 Q. That's workers’ comp? iL 9 F-i-s-e-r-v. 19 A. Yes. Okay. 20 Q, I'm going to come back and ask you some more z1 Health, 21 specific questions about that. Let me get a few more 2 Okay. 22 background -- some more background information. 3 And for our vision claims, it's Superior 23 A. Okay. 4 Vision. 24 Q. You understand that I'm here today to ask you BS Q. Okay. 25 questions about Ronald Laxey? Page 10: