In this episode of Rathbone Group’s educational series on subrogation topics and insurance law, On Subrogation: Inadmissible: Excluding Evidence under Rule 404, 408, 409, 411, Rathbone Group subrogation lawyer Jason Sullivan discusses which Federal Rules of Evidence completely exclude certain types of evidence from being admitted in civil cases, such as subrogation lawsuits. 

This episode is a follow-up to our first episode on the Federal Rules of Evidence. In the first episode, we discussed the basics about why the court may choose to exclude evidence.  For example, a court may exclude evidence if:

  • If the evidence will mislead the jury.
  • If the evidence presents undue burden to the court.
  • If presenting the evidence would confuse the issues.

These are areas where courts can use their discretion to determine exactly what is admissible in a given subrogation case. The rules we discuss in this article, however, do not allow for discretion- these are types of evidence the court, without question, will not accept.

Rule 404: Character Evidence

In the context of the courtroom, character evidence is not admissible to prove that someone acted in conformity with that character type. What does this mean? Jason offers a hypothetical:

Say you are dealing with a subrogation claim for an automobile incident. The tortfeasor is known around town to be a drunk who is almost always under the influence to the extent of losing their faculties. You, as counsel for the subrogating company, cannot use that poor reputation as evidence that the tortfeasor was inebriated at this specific time. 

Excluding character evidence is about protecting the defendant’s right to a fair trial. Making the jury aware that the defendant is an alcoholic will prejudice the jury and may cause them to apply “if-then” reasoning instead of solely weighing the matter at hand. 

Therefore, Rule 404 also extends to the admissibility of a defendant’s prior criminal record, even when that record includes crimes similar to the current civil dispute. Jason poses another hypothetical to explain: 

Say you are litigating a subrogation case where the defendant ran a red light and caused injury to the plaintiff. The defendant has more than 20 prior citations for running red lights. The court will not allow you to use this information in court, for much the same reason as you cannot call the defendant a drunk; just because they ran a red light two dozen times before does not necessarily mean they ran this red light. A jury may become prejudiced against a defendant who has that many traffic tickets.

Exceptions to Hearsay Rule 404

There are exceptions that may render character evidence admissible such that it can be utilized in subrogation lawsuits:

When You Can Address Character in the Courtroom

In subrogated matters, you may need character to be an element of the claim you are making against another party. In the example of a house fire which we know a teenager set intentionally, you may have a claim against the child, but were the parents also negligent? To answer this question, it is necessary to discuss the character of the child as well as the parents:

Has the child set fires before? If so, the parents knew about the behavior. It follows that if they knew about the behavior, the parents had a responsibility to keep things that could start fires out of the child’s possession, and they also had a responsibility to properly supervise that child. To prove the parents were negligent it would be useful to prove that the child had set fires before. 

If you want to know more about parental liability and how it applies to insurance and subrogation law, this video and accompanying article describes when and how parents can be held accountable for their minor child’s tortious actions.

Rule 408: Prior Settlement Offers

Everything associated with prior settlement offers, including correspondence and negotiations, is inadmissible. The principles behind this rule are simple: courts want parties to settle themselves, without the court’s intervention. If this part of the subrogation process were admissible, parties would be less likely to settle, because anything said during negotieions could be flipped and used against them later in court.

In a hypothetical pre-suit negotiation for a subrogation claim, Jason asks what happens if the defendant offered a 75% recoup on the loss, but negotiations failed and the case went to trial? If settlement communications were admissible, the plaintiff could claim that offering anything at all indicates the defendant is, in fact, liable. This could, in turn, prejudice and/or mislead the jury.

Rule 409: Offer to Pay Medical Expenses

Rule 409 operates under the same theory as 408; the court doesn’t want to accidentally penalize someone who offered to pay medical bills benevolently. However, there is one key difference between how settlement offers are dealt with as opposed to offers to pay medical bills:

Everything regarding settlement offers is inadmissible. Even if opposing counsel sends you an offer that states frankly that they know their client ran the red light and caused the incident, you cannot use that admission in court. Many times, in correspondence for pre-suit subrogation settlements, you’ll see a statement at the head of the document stating that is it protected under Rule 408. However, this statement is unnecessary; Rule 408 applies regardless.

In the context of offers to pay medical bills, the court separates the actual offer to pay from any surrounding statements of fact. For instance, if in the red light situation, the other driver runs over and professes to knowing they ran the red light and then offers to pay medical expenses, the admission of responsibility is admissible while the offer is not.

Rule 411: Lack of or Existence of Insurance Coverage

In all cases of loss, whether or not a party has insurance is not admissible to the court. If the jury knows the defendant does or does not have insurance, they may consider it in their decision when, in fact, insurance coverage is irrelevant to liability. 

If the defendant has insurance, the jury might assume the insurance company will pay for the loss anyway and fail to properly weigh the case. If the defendant does not have insurance the jury may not award damages because they feel sorry the defendant didn’t have insurance. It is better for the jury not to know so it doesn’t come into play and mislead the jury or confuse the issue.

Curious to learn more about evidentiary rules and other topics in law that apply to subrogation litigation? Visit our YouTube channel and listen to our podcasts. Have another subrogation topic you would like explained by an experienced attorney? Email Rathbone Group with new questions or suggestions.