Velez v. Tuma

• Decision Date: 23 July 2012
• Docket Number: Calendar No. 5.,Docket No. 138952.
• Citation: 492 Mich. 1,821 N.W.2d 432
• Parties: VELEZ v. TUMA.
• Court: Michigan Supreme Court

492 Mich. 1

821 N.W.2d 432

VELEZ

v.TUMA.

Docket No. 138952.

Calendar No. 5.

Supreme Court of Michigan.

Argued Dec. 5, 2011.

Decided July 23, 2012.

Mark Granzotto, P.C., Royal Oak (by Mark Granzotto), and The Thurswell Law Firm (by Judith A. Susskind), for Myriam Velez.

Collins, Einhorn, Farrell & Ulanoff, P.C., Southfield (by Noreen L. Slank and Geoffrey M. Brown) for Martin Tuma, M.D.

Kerr, Russell & Weber PLC, Detroit (by Daniel J. Schulte and Joanne Geha Swanson) for the Michigan State Medical Society and the American Medical Association.

MARY BETH KELLY, J.

In this joint and several liability medical malpractice case, defendant, Dr. Martin Tuma, seeks a reduction of the final judgment rendered against him by the amount of his codefendants' settlement. This case therefore concerns the interplay between the common-law setoff rule, whereby a jointly and severally liable tortfeasor is entitled to a setoff from any adverse verdict in the amount of the cotortfeasor's settlement, and the noneconomic damages cap of MCL 600.1483, which limits a medical malpractice plaintiff's recovery of noneconomic damages. Specifically, we must decide whether the Legislature intended to abrogate the common-law setoff rule and, if not, the order in which the setoff rule and the noneconomic damages cap of MCL 600.1483 apply to a jury's verdict. Both the circuit court and Court of Appeals held, pursuant to Markley v. Oak Health Care Investors of Coldwater, Inc.,¹ that the common-law setoff rule applies and that the setoff must be applied to the jury's verdict before application of the cap on noneconomic damages.

We agree that Markley was correctly decided and thus hold that the Legislature did not abolish the common-law setoff rule in the context of joint and several liability medical malpractice cases. We affirm the Court of Appeals in this regard and further clarify that where the Legislature has retained principles of joint and several liability, the common-law setoff rule applies. The lower courts' sequencing of the setoff and the noneconomic damages cap, however, results in an outcome contrary to the Legislature's requirement that medical malpractice plaintiffs “shall not” recover more noneconomic losses than the amount determined by MCL 600.1483. Rather, the Legislature has exercised its authority to limit a medical malpractice plaintiff's recovery by capping noneconomic losses and requiring the reduction of economic losses by the amounts paid by collateral sources. Because application of the setoff to the jury's verdict can result in a recovery beyond those statutorily mandated damages limitations, we further hold that a joint tortfeasor's settlement must be set off from the final judgment after application of the noneconomic damages cap of MCL 600.1483, as well as the collateral source rule. We therefore reverse that portion of the Court of Appeals' judgment affirming the circuit court's application of the common-law setoff rule.

I. FACTS AND PROCEDURAL HISTORY

In September 2001, plaintiff, Myriam Velez, filed suit against Detroit Receiving Hospital, Harper Hospital, and Drs. Lawrence Schwartz and Martin Tuma, alleging that their failure to timely operate on her leg necessitated its amputation below the knee. After plaintiff filed her notice of intent to sue, the hospitals entered into a settlement agreement with plaintiff in which those defendants paid plaintiff a total of $195,000. After the settlement, plaintiff's lawsuit was dismissed by stipulation but without prejudice with respect to Tuma, who was not a part of the settlement agreement.

Plaintiff then filed a new complaint against defendant Tuma in January 2004, raising the same allegations against defendant.² After a four-day jury trial, the jury found defendant to be professionally negligent and returned a $1,524,831.86 verdict in plaintiff's favor. As required by MCL 600.1483(2), the jury itemized the verdict, separating it into past and future economic and noneconomic damages. The jury awarded plaintiff a total of $124,831.86 in economic damages and a total of $1.4 million in noneconomic damages.³

Before the circuit court entered a final judgment in plaintiff's favor, defendant requested that the circuit court apply the noneconomic damages cap to the jury's verdict and then subtract codefendants' $195,000 settlement from the final judgment. Plaintiff objected, relying on Markley, and argued that the circuit court was required to subtract codefendants' settlement from the jury's unadjusted “verdict.” ⁴ The circuit court denied defendant's request, citing Markley for the propositionthat codefendants' settlement had to be applied to the jury's unadjusted “verdict,” as opposed to the “judgment.” The court agreed with plaintiff's interpretation of Markley:

The question to the Court is whether or not I believe that Markley ... stand [s] for the proposition that the verdict is subject to the set off. Or whether the judgment is subject to the set off.

The Court believes that Markley says verdict. I don't know what they meant, but I'll take it literally and we will apply it to the verdict. I will absolutely concur that that will result in a plaintiff receiving more money than the cap amount.

Thereafter, the circuit court entered a judgment awarding plaintiff $394,200, which is the amount of the noneconomic damages cap in this case.⁵ To calculate this amount, the circuit court first subtracted codefendants' $195,000 settlement from the jury's total unadjusted verdict of $1,524,831. Because plaintiff's economic damages had been satisfied through collateral sources, the circuit court applied the collateral source rule and reduced plaintiff's economic damages to zero.⁶ Finally, the circuit court reduced the remaining noneconomic damages to the amount of the statutory cap on noneconomic damages, $394,200. The circuit court entered a final judgment for plaintiff in this amount.⁷ Including the prior settlement amount, plaintiff's total recovery was $589,200.

In the Court of Appeals, defendant argued that the circuit court had erred by applying the setoff to the jury's unadjusted verdict rather than to the amount of the final judgment after applying the noneconomic damages cap. The Court of Appeals, however, affirmed the circuit court's decision to apply the setoff to the unadjusted verdict.⁸ The Court first reasoned that the common-law setoff rule remained applicable in medical malpractice cases involving joint and several tortfeasors and that the rule should be applied so that a plaintiff will not be overcompensated for his or her actual loss. Turning to the question whether the setoff is to be applied to a jury's verdict or the final judgment after application of the noneconomic damages cap, the appeals panel could “discern no reason why the same principles that applied to the [now repealed] statutory right to setoffs [wherein prior settlements were set off against the verdict] should not apply to the common-lawright to setoffs....” ⁹ Without addressing the language of the statute capping noneconomic damages, the Court of Appeals reasoned that “[i]n cases where joint and several liability is imposed, the trier of fact's determination of damages sets the limit regarding the amount a plaintiff can recover for his or her loss.” ¹⁰ The Court thus concluded “that the application of the setoff rule to the jury verdict [which comprises a plaintiff's actual loss], rather than the final judgment, is proper.” ¹¹

Defendant applied for leave to appeal in this Court, and plaintiff filed a cross-appeal. Initially, we denied both applications,¹² but we later granted defendant's motion for reconsideration and granted leave to appeal, limited to the issue “whether the Court of Appeals correctly held that the setoff amount in this case was properly set off against the jury verdict, before application of the noneconomic damages cap of MCL 600.1483 and calculation of the final judgment.” ¹³ After hearing oral argument on that limited issue, we sua sponte reconsidered plaintiff's cross-application and granted leave to cross-appeal to consider “whether Markley ... correctly decided that the common-law setoff rule applies in medical malpractice actions where joint and several liability is imposed.” ¹⁴

II. STANDARD OF REVIEW

The questions presented in these appeals are questions of law that we review de novo.¹⁵ To the extent we must interpret the meaning of applicable statutes, our review is also de novo.¹⁶

III. EXISTENCE OF COMMON–LAW SETOFF RULE

Plaintiff argues that the Legislature abrogated the common-law setoff rule and thus any setoff of codefendants' settlement award is not warranted. In support, plaintiff posits that in 1995 PA 161, the Legislature clearly intended to abrogate the common-law rule when it repealed former MCL 600.2925d(b), as added by 1974 PA 318, which had codified the setoff rule and provided that a settlement “reduces the claim against the other tort-feasors to the extent of any amount stipulated by the release....”

The common law remains in force until “changed, amended or repealed.” ¹⁷ Whether the Legislature has abrogated, amended, or preempted the common law is a question of legislative intent.¹⁸ We will not lightly presume that the Legislature has abrogated the common law.¹⁹ Nor will we will extend a statute by implication to abrogate established rules of common law.²⁰ “Rather, the Legislature ‘should speak in no uncertain terms' when it exercises its authority to modify the common law.” ²¹

We cannot conclude that the Legislature intended to abolish the common-law setoff rule in the context of joint and several liability medical malpractice cases. While the pertinent statutes are silent with respect to the application of the common-law setoff rule, we cannot agree with plaintiff that the repeal of the statutory setoff, former MCL 600.2925d(b), by 1995 PA 161 demonstrates a clear intent to abrogate the common-law rule. Plaintiff's argument ignores the...