Koffman v. Leichtfuss, 99-0380.

• Court: United States State Supreme Court of Wisconsin
• Citation: 2001 WI 111,630 N.W.2d 201,246 Wis.2d 31
• Docket Number: No. 99-0380.,99-0380.
• Parties: Michael J. KOFFMAN, Plaintiff-Appellant, v. Jeremy J. LEICHTFUSS and State Farm Mutual Automobile Insurance Company, Defendants-Respondents, FARMERS AUTOMOBILE INSURANCE ASSOCIATION and Wisconsin Central Transportation Corporation, Defendants.
• Decision Date: 12 July 2001

246 Wis.2d 31
2001 WI 111
630 N.W.2d 201

Michael J. KOFFMAN, Plaintiff-Appellant,
v.
Jeremy J. LEICHTFUSS and State Farm Mutual Automobile Insurance Company, Defendants-Respondents,
FARMERS AUTOMOBILE INSURANCE ASSOCIATION and Wisconsin Central Transportation Corporation, Defendants

No. 99-0380.

Supreme Court of Wisconsin.

Oral argument March 6, 2001.

Decided July 12, 2001.

246 Wis.2d 37

For the plaintiff-appellant there were briefs by Linda S. Isnard, Gilbert J. Berthelsen and von Briesen, Purtell & Roper, S.C., Racine, and oral argument by Linda S. Isnard.

For the defendants-respondents there was a brief by James C. Herrick, Jr., John W. Herrick and Herrick Law Offices, S.C., Fond du Lac, and oral argument by James C. Herrick, Jr.

An amicus curiae brief was filed by Edward E. Robinson and Cannon & Dunphy, S.C., Brookfield, and Brian H. Sande and Doar, Drill & Skow, S.C., New Richmond, on behalf of the Wisconsin Academy of Trial Lawyers.

¶ 1. ANN WALSH BRADLEY, J.

In this personal injury action, the plaintiff, Michael Koffman, appeals the judgment of the circuit court limiting his recovery of medical expense damages to the amount he and his insurers paid.¹ He contends that he is entitled to recover the reasonable value of the medical services rendered regardless of amounts paid by himself or his insurers. The circuit court, consistent with the argument of the defendants, Jeremy Leichtfuss (Leichtfuss) and his insurer, held that the plaintiff's insurers' subrogation rights operate to limit the medical expense damages to the amounts actually paid.

¶ 2. We conclude that the plaintiff is entitled to seek recovery of the reasonable value of the medical services, without limitation to the amounts paid. Limiting the plaintiff's potential recovery to the amounts

246 Wis.2d 38

paid is contrary to the Wisconsin rule of valuation of medical expense damages, the collateral source rule, and principles of subrogation. Because we also conclude that the presentation of inadmissible evidence of payments made by the plaintiff's insurers was prejudicial, we reverse the judgment of the circuit court and remand the cause for a new trial on the issue of medical expense damages

I

¶ 3. This case arises from a 1994 automobile collision between the plaintiff and Leichtfuss. Following the accident, the plaintiff received treatment from numerous physicians and specialists for an injury to his spine that he claims resulted from the accident. The total amount billed by the plaintiff's health care providers was $187,931.78. In 1997, the plaintiff brought this negligence action, seeking recovery of the medical expenses amassed in treating the injuries suffered as a result of the accident.²

¶ 4. The cost of the plaintiff's treatment was primarily paid by his insurers.³ As part of his employee-benefits plan at Wisconsin Central Transportation Corporation (Wisconsin Central), the plaintiff received health care coverage. Wisconsin Central provided this

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coverage though its self-funded plan. Through certain contractual relationships with the plaintiff's health care providers, Wisconsin Central received the benefit of reduced "contracted rates" and was able to satisfy its liability for the amounts billed by the providers with total payments of $62,324.00

¶ 5. In addition to the coverage provided by Wisconsin Central, the plaintiff's automobile insurance carrier, Farmers Automobile Insurance Association (Farmers), provided medical payments coverage to the plaintiff. Under this coverage, Farmers paid $1,869.15 in medical expenses for accident-related treatment. The plaintiff personally paid $1,869.43 in deductibles, co-payments, and out-of-pocket expenses.

¶ 6. Wisconsin Central and Farmers were named in the plaintiffs complaint as parties with a subrogated interest in the claim for medical expenses. In answering the complaint, Wisconsin Central and Farmers asserted their subrogation interests in the amounts they had paid on the plaintiff's behalf.⁴

¶ 7. Early in this litigation the parties winnowed the disputed issues by resolving several matters. First, Leichtfuss admitted negligence in causing the 1994 accident. Second, in a pre-trial stipulation, the defendants agreed that the amounts billed by plaintiff's health care providers were reasonable. The remaining disputed issues with respect to the medical expenses

246 Wis.2d 40

were (1) whether as a factual matter the medical treatment for which the plaintiff was billed was caused by the accident; and (2) whether the plaintiff was legally entitled to seek recovery of the reasonable value of the medical services rendered or whether the medical expense damages were limited to the amounts paid by himself and his insurers

¶ 8. The scope of the allowable recovery of medical expenses first arose as an issue when the defendants pursued a motion in limine seeking exclusion of all evidence of amounts billed to the plaintiff by his medical providers. The defendants insisted that under this court's decision in Lambert v. Wrensch, 135 Wis. 2d 105, 399 N.W.2d 369 (1987), evidence of medical expenses in this case must be limited to that actually paid by the subrogated insurers. The defendants thus sought to limit the evidence regarding medical expenses to the amounts paid. The legal justification for their motion to limit such evidence was that "the collateral source rule does not apply where subrogated carriers have made payments upon medical expenses."

¶ 9. The plaintiff asserted that the collateral source rule applied, rendering evidence of payments made by his insurers irrelevant and inadmissible. He argued that he was entitled to recover the reasonable value of the medical services resulting from the accident, regardless of the amounts paid by Wisconsin Central and Farmers or any subrogation interests they may have.

¶ 10. The circuit court granted the defendant's motion. Concluding that the collateral source rule did not apply, the circuit court limited the evidence of medical expenses to the amount actually paid by the subrogated insurers. Additionally, the court specifically

246 Wis.2d 41

excluded a portion of a videotaped deposition of Dr. Dennis Maiman, plaintiff's treating physician and expert witness. In the excluded portion, Dr. Maiman examined an exhibit itemizing the $187,931.78 in charges billed by the health care providers. He testified that it was his opinion to a reasonable degree of medical probability that the amounts charged were "reasonable and within the expected and accepted ranges" and that the treatment represented by the bills was "necessitated by the accident."

¶ 11. The case then proceeded to a trial on the issue of damages. During the parties' presentation of evidence, the defendants offered evidence of the amount paid by Wisconsin Central. The plaintiff, however, was prevented by the circuit court's ruling from offering his own evidence regarding the amounts billed by the health care providers.

¶ 12. The parties also brought forth competing evidence relating to the causal link between the accident and the treatment at issue. The plaintiff presented Dr. Maiman's video deposition explaining the plaintiff's treatment history. However, consistent with the pretrial order, the jury was not shown his conclusion that the treatment and medical bills were caused by the accident. The defendants offered the testimony of an independent medical examiner, who concluded that the treatment at issue was for preexisting conditions unrelated to the 1994 accident.

¶ 13. After the close of evidence, the circuit court reconsidered its decision to exclude evidence relating to the amounts billed by the health care providers. During the jury instruction conference, the court ruled that the plaintiff would be allowed to argue to the jury that he was entitled to the full $187,931.78 in medical expenses. The defendants were allowed to argue that

246 Wis.2d 42

the plaintiff was entitled to recover only the amount actually paid. Additionally, the court reversed its earlier decision to exclude Dr. Maiman's opinion that the medical bills were reasonable and caused by the accident. The court decided that prior to instructing the jury it would read the previously excluded portion of Dr. Maiman's deposition.⁵

¶ 14. In their closing arguments, the parties asked the jury to award medical expenses consistent with their respective theories of valuation. The plaintiff asked the jury to return a medical expense award in the amount of $187,931.78, directing the jury's attention to the itemization of medical expenses relied upon by Dr. Maiman. The defendants argued that while the plaintiff's health care providers did charge the amount requested by the plaintiff, "those charges weren't paid." Defendants' counsel then recited the dollar amounts actually paid by the plaintiff and his insurers. The defendants also argued that not all of the treatment was caused by the accident.

¶ 15. During their deliberations, the jurors returned a question to the circuit court specifically requesting information regarding the amounts paid for medical expenses:

We would like amount that was actually paid out for Medical Expenses to date.

246 Wis.2d 43

In response, the circuit court informed the jury that Wisconsin Central paid $62,324.54, Farmers paid $1,869.15, and the plaintiff paid $1,869.43.

¶ 16. The jury returned a verdict awarding the plaintiff medical expenses in the amount of $98,664.18. In a post-verdict motion, the defendant sought a reduction of the jury's medical expense award to $66,062.58, the amount paid by the plaintiff and his insurers. Again relying upon Lambert v. Wrensch, the defendants argued that the plaintiff was limited in recovery to the amounts paid. The plaintiff responded with his own motion seeking to amend the jury's award to $187,931.78 on the grounds that no credible evidence existed to support a jury verdict of less than that amount.

¶ 17. The circuit court...