Rixmann v. Somerset Public Schools, St. Croix County

• Decision Date: 06 June 1978
• Docket Number: No. 75-515,75-515
• Citation: 266 N.W.2d 326,83 Wis.2d 571
• Parties: Ronald M. RIXMANN, Roger W. Rixmann, and Robert R. Gavic, as guardian ad litem for Ronald M. Rixmann, Appellants, v. SOMERSET PUBLIC SCHOOLS, ST. CROIX COUNTY, Wisconsin, and Mutual Service Insurance Company, and Harold Ammerman, Thomas LeMire, and Robert Kieckhoefer, Respondents.
• Court: Wisconsin Supreme Court

Page 326

266 N.W.2d 326

83 Wis.2d 571

Ronald M. RIXMANN, Roger W. Rixmann, and Robert R. Gavic, as guardian ad litem for Ronald M. Rixmann, Appellants, v. SOMERSET PUBLIC SCHOOLS, ST. CROIX COUNTY, Wisconsin, and Mutual Service Insurance Company, and Harold Ammerman, Thomas LeMire, and Robert Kieckhoefer, Respondents.

No. 75-515.

Supreme Court of Wisconsin.

Submitted on Briefs May 1, 1978.

Decided June 6, 1978.

This is an action for damages arising out of an incident which took place in a high school science class.

On October 10, 1972, the plaintiff-appellant, Ronald M. Rixmann, was injured while students were conducting a science class experiment. The class was taught by the defendant, Harold Ammerman.

Ammerman had demonstrated the experiment the previous day. The experiment involved heating a beaker of water and a beaker of alcohol on an electric plate and using these liquids to remove starch from a leaf. Because alcohol is flammable, the students were instructed to have no open flames near the experiment.

The class was divided into two groups for the purpose of conducting the experiment. Ronald, the defendants-respondents, Thomas LeMire and Robert Kieckhoefer, and three other students were in one group. During the course of the experiment, Kieckhoefer used a plastic spoon to pour a small puddle of the heated alcohol onto the table top for the purpose of lighting it with a match. LeMire then set fire to the puddle with a match furnished by Ronald. Eventually, the spoon itself caught fire. Kieckhoefer, in an attempt to extinguish the burning spoon, waved it in the air. He then proceeded to place the spoon in the beaker of water, but in so doing ignited the fumes from the beaker of heated alcohol.

Ammerman, who was at that time with the other group of students, saw the beaker on fire and attempted to extinguish it by placing a notebook over its mouth. The alcohol beaker tipped over, spilling the flaming liquid onto Ronald. He was severely burned.

On an amended complaint, this action was maintained against the school district, the district's liability insurer, LeMire, Kieckhoefer, Ammerman and his liability insurer. The case was tried to a jury and during the course of the trial the plaintiffs proffered a document under which Ronald's father's health insurer, Guardian Life Insurance Co., purported to assign to him any interest it might have by reason of payments made for medical expenses arising out of this incident. The trial court, however, ruled that Guardian Life had no interest to assign to the father, and that his recovery for medical expenses would be limited to that amount which had not been covered by the insurance.

At the close of the evidence, the trial judge granted the plaintiffs' motion for a directed verdict holding Ammerman negligent as a matter of law, but reserved ruling on the plaintiffs' motions for directed verdicts against the other defendants.

The jury returned a verdict finding only the school district and Ammerman causally negligent, and apportioned 40% of the causal negligence to the school district and 60% to Ammerman. The jury awarded the plaintiff $656.33 for past medical expenses (the amount set by the trial court to reflect the unpaid portion of those expenses); $8,400 for future medical expenses; and $25,000 for past and $30,000 for future pain, suffering and disability.

On motions after verdict of the various parties, the trial court refused to change the jury's answers to the special verdict. Moreover, the court again refused to allow Ronald's father to recover that portion of past medical expenses which had been paid by his health insurer, and on the school district's motion, limited Ronald's recovery to $25,000 on the basis of sec. 895.43, Stats. Plaintiffs appeal from the judgment.

Robert R. Gavic, Spring Valley, on brief, for appellants.

Gary L. Bakke, and Doar, Drill, Norman, Bakke, Bell & Skow, New Richmond, on brief, for respondents, Somerset Public Schools, Mutual Service Insurance Company, and Harold Ammerman.

John W. Fetzner, Charles B. Harris, and Law Offices of John W. Fetzner, S. C., Hudson, on brief, for respondent, Thomas LeMire.

James E. Garvey, and Garvey, Anderson, Kelly & Ryberg, S. C., Eau Claire, on brief, for respondent, Robert Kieckhoefer.

HANLEY, Justice.

The following issues are presented on appeal:

1. Did the trial court err in limiting the recovery of damages for past medical expenses?

2. Did the trial court err in refusing to direct the verdict to hold the defendants, LeMire and Kieckhoefer, negligent and liable as a matter of law?

3. Did the trial court err in reducing the damages awarded by the jury to the limit set by sec. 895.43, Stats.?

Limitation on Past Medical Expenses

During trial, a dispute arose as to what amount expended for medical treatment could be recovered as damages from the defendants. Ronald's father received payments from his insurer, Guardian Life, for most of the medical expenses incurred to the time of trial, and all the parties agreed that the amount spent by him which had not been reimbursed by the insurer was $656.33. However, this agreement was reached after the trial court concluded that the plaintiffs could not recover the amount which had been reimbursed by the insurance company. As a result of the court's ruling and the stipulation, evidence of the total amount expended for Ronald's pre-trial medical expenses was never offered or received into evidence.

The plaintiffs assert two grounds on which they claim to be entitled to recover those amounts paid by the insurance company. On the one hand, the plaintiffs argue that Guardian Life was subrogated by operation of law to the right to recover from the defendants that amount which it paid to Ronald's father for medical expenses, and that the assignment from Guardian operated to reinvest those rights in the plaintiffs. Thus, it is argued, the plaintiffs possessed the entire cause of action for medical expenses and could recover all sums expended for Ronald's medical treatment. Alternatively, the plaintiffs argue that Ronald's father was entitled to recover damages equalling all medical expenditures, regardless of reimbursement, under the collateral source rule.

The respondents, of course, argue that the plaintiffs cannot recover the reimbursed medical expenses under either theory. With respect to effect of the assignment, they argue first that no subrogation occurred under the father's policy so as to give any substantive effect to the assignment, and second that the assignment was not timely so as to permit the plaintiffs to enforce the rights contained therein. With respect to the collateral source rule, the respondents argue that if the court has not in fact done so already, the collateral source rule should be expressly abolished on this appeal.

There can be little doubt that confusion exists as to the operation of subrogation and the collateral source rule in personal injury cases. See, e. g., Fietzer v. Ford Motor Co., 439 F.Supp. 1346 (E.D.Wis.1977); Barron, 'Heifetz' and the Collateral Source Rule," 48 Wis.Bar Bull. 27 (June, 1975). Much of this confusion can be traced to language found in the opinion of Heifetz v. Johnson, 61 Wis.2d 111, 211 N.W.2d 834 (1973).

In Heifetz, the plaintiff was injured in an automobile accident which occurred in 1968. The plaintiff received two thousand dollars for medical expenses from his liability insurer, in return for which he executed a "subrogation receipt and assignment" to the insurer. Heifetz then commenced a personal injury action against the driver of the other vehicle shortly before the running of the statute of limitations. The plaintiff's insurer was not joined as a co-plaintiff. After the statute of limitations had run, the defendants moved for summary judgment on the grounds that an indispensable party, the insurer, was not a party to the action, and that because the statute of limitations had run on the insurer's subrogation rights, the entire cause of action was barred. This court affirmed the trial court's denial of summary judgment, reasoning that because the statute of limitations barred the insurer from enforcing its rights, it no longer had an interest in the plaintiff's cause of action and thus was no longer an indispensable party.

The court then commented on the effect of an insurer's payment of medical expenses to the injured party's cause of action against the tortfeasor:

"(A)cceptance of payment from an insurer operates as an assignment of the claim to that extent whether or not the policy contains a subrogation agreement. The plaintiff loses his right to sue for any amount received from his insurer." Heifetz v. Johnson, supra at 124, 211 N.W.2d at 841.

It has been noted that this language could, under a narrow interpretation, be taken to mean that in any case in which the injured party has been compensated for his loss by his insurer, subrogation in favor of the insurer occurs. Thus, it might be argued that the collateral source rule, which provides that a personal injury claimant's recovery is not to be reduced by the amount of compensation received from other sources such as insurance, has been eliminated in this state. Piper, "Problems in Third Party Action Procedure Under the Wisconsin Worker's Compensation Act," 60 Marq.L.Rev. 91, 97 (1976).

To support the above-quoted language in Heifetz the court cited only Patitucci v. Gerhardt, 206 Wis. 358, 240 N.W. 385 (1932). In Patitucci, this court distinguished indemnity insurance contracts and investment insurance contracts for the purpose of applying the rule of subrogation by operation of law:

"The rule governing subrogation in the case of fire insurance risks is well settled. The payment of a loss by the insurer operates as an assignment to the latter of the rights of the insured against the tortfeasor responsible for the destruction of the property. . . . This rule applies whether the contract expressly provides...