99-0380 Koffman v. Leichtfuss

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“The plaintiff contends that he is nonetheless entitled to seek the reasonable value of medical services rendered. He maintains that the collateral source rule renders irrelevant any payments made by his insurers. The defendants seek to limit the medical expenses to those amounts paid, and thus prevent the plaintiff from recovering any amount written off by the health care providers. The defendants base their argument on the plaintiff’s insurers’ subrogation rights. …

“The same established rules of the law of damages that dictated the result in Ellsworth [v. Schelbrock, 2000 Wi 63] also direct the result in today’s case. The rule of valuation of medical expense damages, the collateral source rule, and the principles of subrogation lead us to the conclusion that the plaintiff may seek recovery of the reasonable value of medical services rendered, without limitation to the amounts actually paid by the plaintiff’s insurers. …

“In the instant case, the parties stipulated that the amounts charged by plaintiff’s health care providers were reasonable. Thus, assuming that all the medical expenses for which the plaintiff claims recovery resulted from the 1994 accident, the plaintiff would be entitled to an award of $187,931.78 in medical expense damages.

“The second, related principle implicated by today’s decision is the collateral source rule. Under the collateral source rule a plaintiff’s recovery cannot be reduced by payments or benefits from other sources. The collateral source rule prevents any payments made on the plaintiff’s behalf or gratuitous benefits received by the plaintiff from inuring to the benefit of a defendant-tortfeasor. …

“In the context of medical expense damages, the collateral source rule allows the plaintiff to seek recovery of the reasonable value of medical services without consideration of gratuitous medical services rendered or payments made by outside sources on the plaintiff’s behalf, including insurance payments. …

“In the case before us, as in Ellsworth, the collateral source rule is fully operational. It prevents the discounted rates paid on the insurer’s behalf from affecting the plaintiff’s recovery of the reasonable value of medical services rendered. The rule renders irrelevant the amounts of the collateral source payments, i.e., the $62,324.00 paid by Wisconsin Central and the $1,869.43 paid by Farmers, and precludes a reduction in medical expense damages based on those payments. …

“Contrary to the defendant’s assertions, the payments made on the insured’s behalf define only the insurers’ subrogation interest in the medical expense claim. The claim of medical expense damages as a whole is defined by the reasonable value of the services rendered as a result of the tortfeasor’s negligent conduct. The creation of a subrogation interest in an insurer does not change the nature of the entire claim for medical expense damages. … Thus, recoverable medical expense damages may exist beyond that of the amount paid by the insurer, and the insured is entitled to pursue those amounts.

“We conclude our discussion by reiterating the interaction of the three legal principles determinative of our decision. In this case, as in the ordinary personal injury case where the costs of plaintiff’s medical treatment have been paid by a health care insurer, the three principles co-exist and operate in the following fashion: (1) the plaintiff is entitled to seek recovery for the reasonable value of medical services rendered in treating the claimed injury; (2) the collateral source rule allows the plaintiff to seek recovery for the reasonable value of medical services without consideration of payments made by the plaintiff’s insurer; and (3) the insurer’s subrogation rights entitle it to recoup the amounts it paid on the plaintiff’s behalf.”

Reversed and remanded for a new trial on the issue of medical expenses damages.

CONCURRING OPINION: Abrahamson, Ch. J. “I join the majority opinion. I wrote a concurrence on the issue of harmless error in In re the Termination of Parental Rights to Jayton S.: Evelyn C.R. v. Tykila S., 2001 WI 110 **37-42, ___ Wis.2d ___, ___ N.W.2d ___ (Abrahamson, C.J. concurring). My views on harmless error expressed in that concurrence apply to the present case as well. Rather than repeat the concurrence verbatim in the present case, I refer the reader to the Evelyn C.R. case.”

CONCURRING OPINION: Wilcox, J. “I agree with the majority’s analysis and disposition of the present case. I write separately, however, to address this court’s recent reformulation of the harmless error test.

“For the reasons stated in Justice Crooks’ concurring opinion in Green v. Smith & Nephew AHP, Inc., 2001 WI 109, ___ Wis.2d ___, ___ N.W.2d ___, which I joined in full, I am confident that the harmless error test with which this court long has grappled should be understood in terms of ‘probability’ rather than ‘possibility'”

DISSENTING OPINION: Crooks, J.. “While I join Justice Diane S. Sykes’ dissent, I write separately to express my concerns about the majority’s standard for harmless error.”

DISSENTING OPINION: Sykes, J., with whom Crooks, J., joins. “I respectfully dissent, for the reasons stated in my dissent in Ellsworth v. Shelbrock, 2000 WI 63, 235 Wis.2d 678, 611 N.W.2d 76 (Sykes, J., dissenting).”

Fond du Lac County, Buslee, J., Bradley, J.

Attorneys:

For Appellant: Linda S. Isnard, Gilbert J. Berthelsen, Racine

For Respondent: James C. Herrick Jr., Fond du Lac