Montgomery Ward & Co., Inc. v. Anderson, 97-1456

• Decision Date: 22 October 1998
• Docket Number: No. 97-1456,97-1456
• Citation: 334 Ark. 561,976 S.W.2d 382
• Parties: MONTGOMERY WARD & COMPANY, INC., Appellant, v. G.W. ANDERSON and Shirley Anderson, Appellees.
• Court: Arkansas Supreme Court

Page 382

976 S.W.2d 382

334 Ark. 561

MONTGOMERY WARD & COMPANY, INC., Appellant, v. G.W. ANDERSON and Shirley Anderson, Appellees.

No. 97-1456.

Supreme Court of Arkansas.

Oct. 22, 1998.

Jay Moody, Little Rock, for Appellant.

Vickie A. Warner, Batesville, for Appellee.

NEWBERN, Justice.

This is a tort case in which the issue concerns application of the collateral-source rule. The Trial Court held that the rule required exclusion of evidence of the partial forgiveness of a debt for medical services rendered to the plaintiff. The defendant moved for a new trial pursuant to Ark. R. Civ. P. 59(a)(8), arguing that the ruling was an error of law that prevented it from having a fair trial. The Trial Court denied the motion, and we affirm.

On November 14, 1994, appellee Shirley Anderson was badly injured in a fall while shopping in appellant's Montgomery Ward store in Little Rock. Montgomery Ward personnel sent her to the hospital at the University of Arkansas for Medical Sciences ("UAMS") to be treated. Ms. Anderson had surgical and other medical-services expenses at UAMS totaling $24,512.45. Montgomery Ward moved in limine to prohibit Ms. Anderson from presenting the total amount billed by UAMS as proof of her medical expenses and asked that her evidence be limited to the actual amount for which she would be responsible to pay. In response, Ms. Anderson stated that, through her attorney, she had reached an agreement with UAMS that UAMS would discount the bill by fifty per cent. Ms. Anderson asserted that the collateral-source rule would prohibit Montgomery Ward from introducing evidence of the discount.

The Trial Court denied the motion in limine, ruling that the negotiated discount with UAMS was a collateral source, and allowed evidence of the entire amount billed by UAMS. Montgomery Ward urges that the ruling and the denial of the motion for new trial made on the same basis were erroneous.

The decision to grant or deny a new trial under Rule 59(a)(8) is within the discretion of the trial court, and that decision is not reversed absent a manifest abuse of discretion, that is, discretion exercised thoughtlessly and without due consideration. Nazarenko v. CTI Trucking Co., Inc., 313 Ark. 570, 856 S.W.2d 869 (1993). See also Coca-Cola Bottling Co. v. Priddy, 328 Ark. 666, 945 S.W.2d 355 (1997); Drope v. Owens, 298 Ark. 69, 765 S.W.2d 8 (1989). Similarly, a trial court's ruling on the admission or exclusion of evidence will not be reversed absent abuse of discretion. See Ark. R. Evid. 104(a); Esry v. Carden, 328 Ark. 153, 942 S.W.2d 846 (1997).

We have held that the collateral-source rule applies unless the evidence of the benefits from the collateral source is relevant for a purpose other than the mitigation of damages. Parrish v. Newton, 298 Ark. 404, 768 S.W.2d 17 (1989). The issue, then, is whether the forgiveness of a debt for medical services is a collateral source to be sheltered by the rule. There is no Arkansas authority dealing directly with that precise issue, but our cases explaining the policy behind the rule support the Trial Court's ruling.

The Trial Court relied on Green Forest Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714 (1985), and Bell v. Estate of Bell, 318 Ark. 483, 885 S.W.2d 877 (1994), in holding that the negotiated discount was a collateral source sheltered by the rule. Additionally, the Trial Court stated that the facts of the case did not come within the four exceptions to the collateral-source rule set forth in Evans v. Wilson, 279 Ark. 224, 650 S.W.2d 569 (1983), and Nazarenko v. CTI Trucking Co., Inc., 313 Ark. 570, 856 S.W.2d 869 (1993), and that the rule therefore applied.

Although those cases do not directly answer the question in this case, they deal with analogous situations and explain the policy behind the collateral-source rule. A trial court must "exclude evidence of payments received by an injured party from sources 'collateral' to ... the wrongdoer, such as private insurance or government benefits...." Bell v. Estate of Bell, 318 Ark. 483, 490, 885 S.W.2d 877, 880 (1994). See also Green Forest Public Schools v. Herrington, 287 Ark. 43, 696 S.W.2d 714 (1985); Patton v. Williams, 284 Ark. 187, 680 S.W.2d 707 (1984); Evans v. Wilson, 279 Ark. 224, 650 S.W.2d 569 (1983). Recoveries from collateral sources "do not redound to the benefit of a tortfeasor, even though double recovery for the same damage by the injured party may result." Bell v. Estate of Bell, 318 Ark. at 490, 885 S.W.2d at 880; Green Forest v. Herrington, 287 Ark. at 49, 696 S.W.2d at 718.

In the Bell case, we recognized that commentators had criticized the rule as being "incongruous with the compensatory goal of the tort system" and that some jurisdictions had modified or abrogated the rule. Bell, 318 Ark. at 490, 885 S.W.2d at 880. To refute that criticism, we quoted in the Bell case from F. HARPER, ET AL., THE LAW OF TORTS § 25.22, at p. 651 (2d ed.1986) as follows:

But in these cases the courts measure "compensation" by the total amount of the harm done, even though some of it has been repaired by the collateral source, not by what it would take to make the plaintiff whole. It is "compensation" in a purely Pickwickian sense that only half conceals an emphasis on what defendant should pay rather than on what plaintiff should get.

We also noted that the rule had been extended to cases in other areas of the law, such as unemployment compensation received during a period later held to have resulted from a wrongful discharge under the Teacher Fair Dismissal Act. Green Forest v. Herrington, 287 Ark. at 49, 696 S.W.2d at 718. In a later case, East Texas Motor Freight Lines, Inc. v. Freeman, 289 Ark. 539, 713 S.W.2d 456 (1986), a defendant argued that the collateral-source rule was inequitable because it resulted in a windfall to the plaintiff. We disposed of the argument by explaining the policy behind the rule as follows:

Whether she received the money from her employer or from an insurance policy, she, rather than the alleged tortfeasor, is entitled to the benefit of the collateral source, even though in one sense a double recovery occurs. Vermillion v. Peterson, 275 Ark. 367, 630 S.W.2d 30 (1982). The law rationalizes that the claimant should benefit from the collateral source recovery rather than the tortfeasor, since the claimant has usually paid an insurance premium or lost sick leave, whereas to the tortfeasor it would be a total windfall.

Id. at 548, 713 S.W.2d at 462. That statement of policy and the cases cited favor including discounted and gratuitous medical services within the shelter of the collateral-source rule. There is no evidence of record showing that Montgomery Ward had anything to do with procuring the discount of Ms. Anderson's bill by UAMS. The rationale of the rule favors her, just as it would had she been compensated by insurance for which she had arranged.

Montgomery Ward cites Auto Transports, Inc. v. May, 224 Ark. 704, 275 S.W.2d 767 (1955), as authority that the collateral-source rule allows plaintiffs to introduce evidence only of bills that must actually be paid as the result of the injury inflicted by the defendant. In the Auto Transports case, the plaintiff requested damages of $200 for her medical bills. The evidence the plaintiff presented at trial indicated that she was only obligated to pay $28 in medical bills, and thus it was held that she could recover only that amount. The Auto Transportscase is not helpful here, as the issue there had to do with the failure of proof by the plaintiff and not application of the collateral-source rule.

We recognize four situations in which the rule does not apply, as explained in Evans v. Wilson, 279 Ark. 224, 650 S.W.2d 569 (1983). They are cases in which a collateral source of recovery may be introduced (1) to rebut the plaintiff's testimony that he or she was compelled by financial necessity to return to work prematurely or to forego additional medical care; (2) to show that the plaintiff had attributed his condition to some other cause, such as sickness; (3) to impeach the plaintiff's testimony that he or she had paid his medical expenses himself; (4) to show that the plaintiff had actually continued to work instead of...