Leitinger v. Dbart, Inc.

• Decision Date: 03 July 2007
• Docket Number: No. 2005AP2030.,2005AP2030.
• Citation: 2007 WI 84,736 N.W.2d 1
• Parties: Joseph LEITINGER, Bonnie Leitinger and Services Unlimited, Plaintiffs-Appellants, v. DBART, INC., d/b/a Barthenheier Construction, Inc., and Heritage Mutual Insurance Company, n/k/a Acuity, a mutual insurance company, Defendants-Respondents-Petitioners, Van Buren Management, Inc., American Economy Insurance Company and Compcare Health Services Insurance Corp., Defendants.
• Court: Wisconsin Supreme Court

736 N.W.2d 1

2007 WI 84

Joseph LEITINGER, Bonnie Leitinger and Services Unlimited, Plaintiffs-Appellants, v. DBART, INC., d/b/a Barthenheier Construction, Inc., and Heritage Mutual Insurance Company, n/k/a Acuity, a mutual insurance company, Defendants-Respondents-Petitioners Van Buren Management, Inc., American Economy Insurance Company and Compcare Health Services Insurance Corp., Defendants.

No. 2005AP2030.

Supreme Court of Wisconsin.

Argued March 2, 2007.

Decided July 3, 2007.

For the defendants-respondents-petitioners there were briefs by Arthur P. Simpson, Christine M. Rice, and Simpson & Deardorff, S.C., Milwaukee, and oral argument by Arthur P. Simpson.

For the plaintiffs-appellants there was a brief by Timothy J. Aiken, James C. Gallanis, and Aiken & Scoptur, S.C., Milwaukee, and oral argument by Timothy J. Aiken.

An amicus curiae brief was filed by Martha H. Heidt, M H Heidt Law Office, Mondovi, on behalf of the Wisconsin Academy of Trial Lawyers.

¶ 1 SHIRLEY S. ABRAHAMSON, Chief Justice

This is a review of a published decision of the court of appeals¹ reversing a judgment of the Circuit Court for Milwaukee County, Jeffrey A. Kremers, Judge.

¶ 2 Joseph Leitinger and Bonnie Leitinger, his wife, and Services Unlimited² (collectively referred to as Leitinger) sued several defendants, collectively referred to as Acuity,³ for damages from a personal injury Joseph Leitinger suffered while employed at a construction site.

¶ 3 The parties disputed the reasonable value of Joseph Leitinger's medical treatment in this personal injury action. The health care provider billed Joseph Leitinger $154,818.51 for the treatment rendered, but as a result of negotiated discounts the health care provider accepted $111,394.73 from Joseph Leitinger's health insurance company. The difference between the amount billed and the amount actually paid by Leitinger's health insurance company is $43,424.78. Leitinger's health insurance company protected its subrogation rights in the present case.

¶ 4 The issue of law presented on review is whether, in light of the collateral source rule, evidence of the amount actually paid by a plaintiff's health insurance company for the plaintiff's medical treatment is admissible in a personal injury action for the purpose of establishing the reasonable value of the medical treatment rendered.

¶ 5 Leitinger argues that the amount actually paid by his health insurance company for his medical treatment is evidence of a collateral source payment and is thus inadmissible evidence under the collateral source rule. In contrast, Acuity contends that evidence of the amount actually paid by Leitinger's insurance company for medical treatment rendered to Leitinger is admissible to prove the reasonable value of the medical treatment in this personal injury action when the value of the medical treatment is disputed.

¶ 6 The circuit court ruled that the evidence of the amount actually paid for the medical treatment rendered was relevant to the determination of the reasonable value of the medical treatment and was therefore admissible. The court of appeals reversed the judgment of the circuit court, concluding that the collateral source rule prohibits parties in a personal injury action from introducing evidence of the amount actually paid by the injured person's health insurance company, that is, a collateral source, for medical treatment to prove the reasonable value of the treatment.

¶ 7 For the reasons set forth, we affirm the decision of the court of appeals. We hold, as did the court of appeals, that the collateral source rule prohibits parties in a personal injury action from introducing evidence of the amount actually paid by the injured person's health insurance company, a collateral source, for medical treatment rendered to prove the reasonable value of the medical treatment. We therefore remand this cause to the circuit court for proceedings consistent with this decision and the parties' stipulations.

I

¶ 8 The facts in this case are not in dispute for purposes of this review. In August 2001, Joseph Leitinger was employed as a contractor by Van Buren Management. While at work on a construction site operated by DBart, Joseph Leitinger crashed through the floor, falling 30 feet, sustaining serious injuries. Leitinger incurred extensive medical expenses, which were paid primarily by his health insurance company, Compcare Health Services Insurance Corporation.

¶ 9 Leitinger's complaint alleged negligence and safe workplace violations against Van Buren Management, DBart, and their liability insurers. In a special verdict, the jury found DBart 67% causally negligent and Joseph Leitinger 33% causally negligent. Leitinger was awarded $596,881.68.⁴

¶ 10 The parties' liability is not at issue here. The sole dispute involves the appropriate amount Leitinger can recover as damages from the tortfeasor for the cost of Leintinger's medical treatment. In other words, what damages may Leitinger recover from Acuity, the tortfeasor's insurance company, which agreed to stand in the shoes of the tortfeasor and pay whatever sums for which the tortfeasor was liable?

¶ 11 Refusing to apply the collateral source rule, the circuit court denied Leitinger's motion in limine to exclude evidence of the amount actually paid by Leitinger's health insurance company for his medical treatment. The circuit court allowed the parties to proffer as evidence both the amount billed by the medical service provider and the amount paid by Leitinger's health insurance company to prove the reasonable value of the medical treatment rendered. The circuit court also allowed the parties to present expert testimony about the reasonable value of the medical services.⁵

¶ 12 The parties stipulated, for purposes of trial, (1) that the amount Leitinger's health insurance company actually paid for the medical treatment rendered to Leitinger, not the amount billed to Leitinger, was the reasonable value of the medical treatment and (2) that Leitinger reserved the right to appeal the circuit court ruling that the amount actually paid by his health insurance company for medical treatment rendered to him was admissible evidence of the reasonable value of the treatment. As a result of this stipulation, the jury was presented only with evidence of the amount actually paid for the medical treatment rendered.

¶ 13 Leitinger was awarded $111,394.73 for his medical expenses, which is the amount Leitinger's health insurance company actually paid for the medical treatment.

¶ 14 After the jury returned its verdict, Leitinger renewed his motion before the circuit court to exclude evidence of the amount actually paid for his medical treatment, relying on the collateral source rule. Specifically, Leitinger requested "an order by the [Circuit] Court to order a new trial on the issue of medical bills with the Collateral Source Rule enforced; i.e. evidence of the amount paid by the medical insurer excluded pursuant to Ellsworth⁶ and Kauffman [sic]."⁷

¶ 15 The circuit court denied Leitinger's motion for a new trial and affirmed its prior evidentiary ruling. The circuit court reasoned as follows: "So, the reasonable value of the services provided to be determined, given that the reasonable value of the services has to be determined by the jury, seems to me that one thing they can consider was in fact what was paid and accepted by the medical providers as a potential, not binding, not final, but a potential measure of the reasonable value of the services."

¶ 16 The parties then further modified their stipulation. Acuity agreed that if evidence of the amount actually paid by Leitinger's health insurance company is inadmissible, then the entire amount billed is the reasonable value of the medical treatment rendered. Thus, if Leitinger wins his appeal, he will receive $43,424.78, which is the difference between the amount billed by the medical service provider and the amount actually paid by Leitinger's health insurance company.⁸

¶ 17 Relying on this court's recent decision in Koffman v. Leichtfuss, 2001 WI 111, 246 Wis.2d 31, 630 N.W.2d 201, the court of appeals concluded that "the fact finder should not be allowed to consider `payments made by outside sources on the plaintiff's behalf, including insurance payments.'"⁹ Adhering to the parties' stipulations, the court of appeals added to Leitinger's jury award the difference between the amount the medical service provider billed and the amount paid by Leitinger's health insurance company.

II

¶ 18 We ordinarily review a circuit court's ruling on the admission of evidence to determine whether the circuit court erroneously exercised its discretion.¹⁰ A reviewing court will affirm a circuit court's exercise of discretion if the circuit court applied the proper standard of law and, using a demonstrated rational process, reached a conclusion that a reasonable court could reach.

¶ 19 If a circuit court exercises its discretion upon an error of law, the circuit court has erroneously exercised its discretion.¹¹ The question of law embedded in the circuit court's decision to admit the evidence at issue is the interpretation and application of the collateral source rule. More specifically, the circuit court was called upon to determine whether, as a matter of law, the collateral source rule operates to bar evidence of collateral source payments in a personal injury action when offered for the purpose of determining the reasonable value of the medical treatment rendered.

¶ 20 The question presented in the instant case is not whether the damages are to be limited to or reduced by the amount actually paid for medical treatment rendered but rather whether, in determining the reasonable value of the treatment, the fact-finder may consider the amount actually paid by a collateral source, which in the present case is the injured person's health insurance company. This court decides a question of law independently...