Krein v. Industrial Company of Wyoming, Civil No. A1-02-56 (D. N.D. 10/21/2003)

• Decision Date: 21 October 2003
• Docket Number: Civil No. A1-02-56.
• Parties: Ron Krein and Jeanne Krein, Plaintiffs, v. The Industrial Company of Wyoming, Defendant.
• Court: U.S. District Court — District of North Dakota

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Ron Krein and Jeanne Krein, Plaintiffs, v. The Industrial Company of Wyoming, Defendant.

Civil No. A1-02-56.

United States District Court, D. North Dakota, Southwestern Division.

October 21, 2003.

MEMORANDUM AND ORDER

RODNEY S. WEBB, District Judge.

I. INTRODUCTION

Before the Court is Defendant, The Industrial Company of Wyoming's ("TIC"), motion for reduction of verdict for collateral source payments (doc. #94). TIC asserts that social security disability benefits reduce the plaintiff's award for economic loss damages by application of the collateral source rule, N.D. Cent. Code.¹ The plaintiffs, Ron and Jeanne Krein, resist the motion. For the reasons articulated below, TIC's motion is DENIED.

II. FACTS

The events relevant to this present motion occurred at Falkirk Mine near Underwood, North Dakota. The mine utilized an overland cable belt conveyor system to transport coal from the mine to various collection points. Ron Krein, an employee of the mine, was conducting a routine inspection of the conveyor when a large piece of coal fell from the conveyor injuring him. Krein sustained severe and permanent brain damage rendering him permanently disabled. As a result of his injuries, the plaintiff received workers compensation benefits and social security disability benefits. Krein and his wife also filed suit against the manufacturer of the conveyor belt system and TIC, the contractor who installed the system. Krein and the manufacturer reached a settlement agreement shortly before trial. TIC, however, maintained it was not at fault for any damage sustained by Krein. The case proceeded to trial where a jury found that TIC was 30 percent at fault for Krein's injuries. The jury determined the Kreins' total damages to be $3,292,278.62, including $301,660.62 for past economic damages and $690,618 for future economic damages. TIC filed a post-trial brief requesting an order reducing the amount of the verdict by any collateral source, namely social security disability benefits payments.

III.DISCUSSION

The question before the court is whether social security disability benefits payments are a collateral source that reduces the amount of the economic damages award the defendant is required to pay the plaintiffs.²

The Court begins with a basic common law premise, which is that "payments or benefits received from other sources do not have the effect of reducing the recovery against the defendant." See Restatement (Second) of Torts § 920A. The logic behind the common law rule was that a "benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor. If the plaintiff was himself responsible for the benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself." Id.

Many states, including North Dakota, shifted away from the common law rule as a method to reduce the size of jury verdicts and therefore control rising insurance rates. Dewitz v. Emery, 508 N.W.2d 334, 340-41 (N.D. 1993). In North Dakota, a party responsible for payment of an award of economic damages may apply to the court for a reduction to the extent the economic damages are covered by payment from a collateral source. N.D. Cent. Code § 32-03.2-06. The statute defines a "collateral source" payment as "any sum from any other party paid or to be paid to cover an economic loss which need not be repaid by the party recovering economic damages, but does not include life insurance, other death or retirement benefits, or any insurance benefit purchased by the party recovering economic damages." Id.

The North Dakota Supreme Court in dicta referred to legislative history of the statutory collateral source rule indicating that the purpose of the statute was to "encourage people to secure personal insurance and to eliminate double recovery from sources such as workers compensation and social security." Leingang v. George, 589 N.W.2d 585, 589 (N.D. 1999); Dewitz, 508 N.W.2d at 340 (citing House Judiciary Committee, Report of Tort Reform Subcommittee, HB 1571, Feb. 10, 1987, at 3).

TIC cites the Leingang and Dewitz cases and the legislative history of the statutory collateral source rule in support of its argument that the verdict must be reduced for social security disability payments. The Court has secured and examined the legislative history of the statutory collateral source rule, including the House Judiciary Subcommittee Report cited by the North Dakota Supreme Court. The Court finds compelling the context of the portion of the legislative history cited by the court in Leingang, 589 N.W.2d at 589, and Dewitz, 508 N.W.2d at 340. In context, Representative Aas was responding to a question asking whether workers compensation would be a collateral source under the statute. His answer to the question...