Lagerstrom v. Myrtle Werth Hosp.-Mayo Health Sys., No. 2003AP2027.

• Court: United States State Supreme Court of Wisconsin
• Citation: 2005 WI 124,700 N.W.2d 201,285 Wis.2d 1
• Decision Date: 14 July 2005
• Parties: Klover E. LAGERSTROM, as surviving spouse of, and as Special Administrator of the Estate of Vance H. Lagerstrom, Plaintiff-Appellant, v. MYRTLE WERTH HOSPITAL-MAYO HEALTH SYSTEM, ABC Insurance Company, its insurer, Red Cedar Clinic-Mayo Health System, and DEF Insurance Company, its insurer, Defendants-Respondents.
• Docket Number: No. 2003AP2027.

285 Wis.2d 1
2005 WI 124
700 N.W.2d 201

Klover E. LAGERSTROM, as surviving spouse of, and as Special Administrator of the Estate of Vance H. Lagerstrom, Plaintiff-Appellant,
v.
MYRTLE WERTH HOSPITAL-MAYO HEALTH SYSTEM, ABC Insurance Company, its insurer, Red Cedar Clinic-Mayo Health System, and DEF Insurance Company, its insurer, Defendants-Respondents

No. 2003AP2027.

Supreme Court of Wisconsin.

Oral argument December 14, 2004.

Decided July 14, 2005.

For the plaintiff-appellant there were briefs by Charles B. Harris, Martha H. Heidt and Doar, Drill & Skow, S.C., Baldwin, and oral argument by Charles B. Harris.

For the defendants-respondents there was a brief by Guy DuBeau and Axley Brynelson, LLP, Madison, and oral argument by Guy DuBeau.

An amicus curiae brief was filed by Laura J. Leitch, Madison, on behalf of the Wisconsin Hospital Association, Inc; and Mark L. Adams, Madison, on behalf of the Wisconsin Medical Society.

An amicus curiae brief was filed by Lynn R. Laufenberg and Laufenberg & Hoefle, S.C., Milwaukee; Bruce R. Bachhuber and Hanaway, Weidner, Bachhuber, Woodward & Maloney, S.C., Green Bay; William C. Gleisner, III, and Law Offices of William C. Gleisner, III, Milwaukee, on behalf of the Wisconsin Academy of Trial Lawyers.

285 Wis.2d 7

¶ 1. SHIRLEY S. ABRAHAMSON, C.J

This is an appeal from a judgment and order of the Circuit Court for Dunn County, William C. Stewart, Jr., Judge. This wrongful death medical malpractice case comes before this court on certification¹ from the court of appeals pursuant to Wis. Stat. § 809.61 (2001-02).²

¶ 2. Following a jury's verdict, the circuit court entered judgment in the amount of $55,755 plus costs in favor of Klover Lagerstrom, individually as surviving

285 Wis.2d 8

spouse of Vance H. Lagerstrom and as Special Administrator of the Estate of Vance H. Lagerstrom, deceased, referred to collectively as the estate, against Myrtle Werth Hospital-Mayo Health System, ABC Insurance Company, its insurer, Red Cedar Clinic-Mayo System, and DEF Insurance Company, its insurer, referred to collectively as the defendants. The circuit court's order denied a post-verdict motion under Wis. Stat. § 805.14(5)(c)³ to change the answers on the special verdict; the estate appealed

¶ 3. The primary issue presented is whether the circuit court erred under Wis. Stat. § 893.55(7) in admitting evidence of collateral source payments in this medical malpractice action, in refusing to admit evidence of the estate's potential obligation to reimburse Medicare, and in instructing the jury that it may, but need not, consider the collateral source payments in determining the reasonable value of the medical services rendered. A second issue is whether the circuit court erred in not awarding the estate $7,610.10 for funeral expenses.

¶ 4. Wisconsin Stat. § 893.55(7) reads:

Evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant for the injury is admissible in an action to recover damages for medical malpractice. This section does not limit the substantive or procedural rights of persons who have claims based upon subrogation.

285 Wis.2d 9

¶ 5. We conclude that the text of § 893.55(7) explicitly allows evidence of collateral source payments to be introduced in medical malpractice actions but fails to state the purpose for which the evidence is admitted. We further conclude that if evidence of collateral source payments from sources including Medicare, other state or federal government programs, medical insurance or write-offs, and discounted or free medical services is presented to the fact-finder, then the parties must be allowed to furnish the jury with evidence of any obligations of subrogation or reimbursement. Because the statutory text does not inform a fact-finder what to do with the evidence, in interpreting the statute and determining what a fact-finder must do with the evidence we consider the text of the statute, the legislative history, the legislative goal, and three common-law concepts encompassed in medical malpractice actions and Wis. Stat. § 893.55(7), namely the reasonable value of medical services, the collateral source rule, and subrogation. We conclude that the circuit court must instruct the fact-finder that it must not reduce the reasonable value of medical services on the basis of the collateral source payments. Although the jury is instructed not to use the evidence of collateral source payments to reduce the award for medical services, evidence of collateral source payments may be used by the jury to determine the reasonable value of medical services

¶ 6. We further conclude that regardless of the interpretation of Wis. Stat. § 893.55(7) adopted, because the jury in the present case was advised of the collateral source payments and the net amount the estate paid for medical services, but was not advised of the estate's potential obligation to reimburse Medicare for medical services, the jury was not able to assess the

285 Wis.2d 10

reasonable value of medical services fully and fairly. This error in refusing to admit evidence of or argument about the estate's potential obligation to reimburse Medicare is reversible error.

¶ 7. Accordingly, under our interpretation of Wis. Stat. § 893.55(7), and indeed under any interpretation of § 893.55(7), we must reverse the judgment and order of the circuit court and remand the cause to the circuit court for a new trial on the issue of hospital and medical expenses.

¶ 8. On the issue of funeral expenses, the defendants argue that according to Wis. Stat. § 895.04(5),⁴ the award of funeral expenses is permissive, not mandatory, and therefore a fact-finder has discretion whether to award these expenses. In the instant case the jury awarded no sum of money to reimburse the estate for funeral and burial expenses even though the jury found that the defendants' negligence was a cause of the decedent's death and even though no evidence controverted the sum of $7,610.10 as a reasonable expense. We hold that under these circumstances the circuit court erred in not granting the estate's motion to change the special verdict answer relating to funeral and burial expenses to reflect the undisputed amount of $7,610.10 for these expenses. On remand, we therefore instruct the circuit court to enter $7,610.10 on the

285 Wis.2d 11

special verdict form as the amount required to fairly and reasonably compensate the estate for funeral and burial expenses.

I

¶ 9. For purposes of this appeal the facts are undisputed. The defendants conceded that they were negligent in their care and treatment of the decedent and committed malpractice by inserting a feeding tube into the passageway of the decedent's lung rather than into the stomach and inserting fluids.

¶ 10. The defendants asserted that their negligence caused injury but was not a cause of death. They argued that the decedent's age and medical history, combined with the severe trauma associated with breaking his hip and the ensuing surgery, caused the death some two months after the negligent placement of the feeding tube. The jury found that the defendants' negligence was a cause of the decedent's death. The issue of causation is not before the court in this appeal. The issues before the court involve the jury award of damages for medical services and funeral expenses.

¶ 11. Vance H. Lagerstrom, the decedent, was 87 years old when he fell and broke his hip on November 24, 2000. He was admitted to Myrtle Werth Hospital, and within two days following hip replacement surgery, the family doctor noted some congestion in the decedent's lungs and a fever. A chest x-ray showed no acute damage to the lungs.

¶ 12. On December 2 the duty doctor decided to insert a feeding tube to ensure that the decedent was getting the proper nutrients. The feeding tube was misplaced, reaching into the passageway of the decedent's lung rather than into his stomach. In the

285 Wis.2d 12

afternoon of December 2, 8 ounces of a nutrient-laden drink, Ensure, was pumped through the feeding tube directly into the decedent's left lung.

¶ 13. The decedent was transferred to the critical care unit, then to Luther Hospital, and then to Lakeside Nursing Home. The decedent remained on a ventilator and on Christmas Day, 2000, was re-admitted to Luther Hospital with a fever, despite treatments with antibiotics. After his fever was controlled, the decedent was returned to Lakeside Nursing Home, where he remained from December 29, 2000 until January 14, 2001, when the fever recurred and he was returned to Luther Hospital.

¶ 14. By February 14, the decedent had been off the ventilator a week, but the following day he was taken to the emergency room of St. Joseph's with joint pain. The decedent then returned to Lakeside Nursing Home. By February 22, the decedent was having problems, including hallucinations. He died on February 24, 2001. The death certificate listed the cause of death as pneumonia.

¶ 15. The decedent's wife initiated a wrongful death medical malpractice action under ch. 655 as the surviving spouse and as the special administrator of the decedent's estate.

¶ 16. Counsel for the estate communicated with Medicare in regard to various medical expenses that Medicare paid. Communications from Medicare indicate that Medicare would rely on its statutory right to reimbursement. Medicare was therefore not joined in the action.

¶ 17. The estate introduced evidence about the reasonable value of the medical services rendered to the decedent. The amount was approximately $89,000. The defendants, over the estate's objections, presented evidence

285 Wis.2d 13

and argued to the jury that the out-of-pocket charges incurred by the estate were only $755, with the remaining medical expenses paid through collateral sources, such as Medicare, medical provider write-offs pursuant to Medicare regulations, and private insurance. The circuit court instructed...