Weston v. AKHappytime, LLC, Supreme Court No. S-16529

CourtSupreme Court of Alaska (US)
Writing for the CourtMAASSEN, Justice.
Citation445 P.3d 1015
Parties Lorena WESTON, Petitioner, v. AKHAPPYTIME, LLC, d/b/a Alex Hotel & Suites, Respondent.
Docket NumberSupreme Court No. S-16529
Decision Date02 August 2019

445 P.3d 1015

Lorena WESTON, Petitioner,
v.
AKHAPPYTIME, LLC, d/b/a Alex Hotel & Suites, Respondent.

Supreme Court No. S-16529

Supreme Court of Alaska.

August 2, 2019


OPINION

MAASSEN, Justice.

I. INTRODUCTION

A woman was seriously injured when she slipped and fell on ice in a hotel parking lot. Medicare covered her medical expenses, settling the providers' bills by paying less than one-fifth of the amounts billed. When the woman later sued the hotel for negligence, the hotel sought to bar her from introducing her original medical bills as evidence of her damages, arguing that only the amount Medicare actually paid was relevant and admissible. The superior court agreed and excluded the evidence.

We granted the woman's petition for review, which asked us to decide the following questions: (1) whether evidence of medical expenses is properly limited to the amounts actually paid, or whether the amounts billed by the providers—even if later discounted—are relevant evidence of damages; and (2) whether the difference between the amounts billed by the providers and the amounts actually paid is a benefit from a collateral source, subject to the collateral source rule.

We conclude that the amounts billed by the providers are relevant evidence of the medical services' reasonable value. We further conclude that the difference between the amounts billed and the amounts paid is a benefit to the injured party that is subject to the collateral source rule; as such, evidence of the amounts paid is excluded from the jury's consideration but is subject to post-trial proceedings under AS 09.17.070 for possible reduction of the damages award. We therefore reverse the superior court's decision to exclude evidence of the undiscounted medical bills.

II. FACTS AND PROCEEDINGS

Lorena Weston was injured when she slipped and fell on ice in the parking lot of a hotel owned by AKHappytime, LLC. She fractured her right wrist and her right leg and was taken to the Alaska Native Medical Center, where she underwent a complicated surgery. The hospital billed her over $135,000, but Medicare settled the bills in full by the payment of $24,247.45.

Weston later sued AKHappytime for negligence. AKHappytime moved for a pretrial ruling excluding evidence of Weston's medical bills other than "the adjusted, preferred rates accepted by her providers as full and final payment for medical services rendered." AKHappytime argued that the medical bills should be excluded from evidence because they were "inflated" and did "not reflect the ‘reasonable value’ of the services rendered, nor was this amount ever incurred or owed by [Weston]." The superior court granted the motion, ruling that Weston could "only recover the adjusted medical rates accepted by her providers as full and final payment for medical services rendered, and only such adjusted medical rates may be admitted at trial."

445 P.3d 1020

Weston filed a petition for review, which we granted.

III. STANDARD OF REVIEW

We review the superior court's conclusions of law de novo.1 We "will adopt the rule of law that is most persuasive in light of precedent, reason, and policy."2

IV. DISCUSSION

Weston's petition for review presents essentially two issues. First, was it error to exclude evidence of her full, undiscounted medical bills after her medical care providers accepted less from Medicare as payment in full? Second, if Weston's medical bills are admissible, should the difference between those bills and what Medicare paid be viewed as a benefit to Weston from a collateral source—meaning that evidence of it should be kept from the jury and presented only after trial, when the court determines pursuant to AS 09.17.070 whether some or all of the collateral source benefits should reduce the damages award? Our superior courts have reached conflicting decisions on these questions,3 as have the courts of other jurisdictions.4

A. Background: Tort Damages, The Collateral Source Rule, And Alaska Case Law

1. Tort damages

The general rule in tort cases is that "the injured party is entitled to be placed as nearly as possible in the position he [or she] would have occupied had it not been for the tortious conduct."5 The injured party may recover both economic and non-economic damages. "Economic damages include past medical expenses, future medical expenses, lost wages, and lost earning potential."6 Non-economic damages provide compensation for "pain, suffering, inconvenience, physical impairment, disfigurement, loss of enjoyment of life, loss of consortium, and other nonpecuniary damage."7

Weston's damages claims included a claim for her past medical expenses. To

445 P.3d 1021

recover on this claim she had to show that the medical care was reasonably necessary8 and that it was necessary because of AKHappytime's negligence.9 She also had "the burden of providing ‘some reasonable basis upon which a jury [could] estimate with a fair degree of certainty the probable loss which [she sustained] in order to enable it to make an intelligent determination of the extent of this loss.’ "10

2. The collateral source rule

Damages for personal injury are subject to the collateral source rule, "which provides that damages may not be diminished or mitigated on account of payments received by plaintiff from a source other than the defendant."11 The rule "is based on the principle that a tort-feasor is not entitled to have his [or her] liability reduced merely because plaintiff was fortunate enough to have received compensation for his [or her] injuries or expenses from a collateral source."12 Evidence of payments from collateral sources is thus generally excluded at trial as more prejudicial than probative;13 exclusion is based on the assumption that if the jury knows that the plaintiff has been or will be compensated for the injuries by someone other than the defendant, this information "will more likely than not influence the jury against the plaintiff on the issues of liability and damages."14

Alaska Statute 09.17.070 modifies the common-law collateral source rule.15 It creates a post-verdict procedure for reducing a damage award if the plaintiff has received amounts "as compensation for the same injury from collateral sources that do not have a right of subrogation by law or contract."16 "After the fact finder has rendered an award," the defendant is allowed to introduce evidence of collateral source benefits;17 the plaintiff may respond with "evidence of (1) the amount that the actual attorney fees incurred ... in obtaining the award exceed the amount of attorney fees awarded ... by the court; and (2) the amount that the claimant has paid or contributed to secure the right to an insurance benefit introduced by the defendant as evidence."18 "If the total amount of collateral benefits introduced as evidence [by the defendant] exceeds the total amount that the [plaintiff] introduced as evidence" of the attorney's fees and the costs of securing the benefits, the court is required to deduct the difference from the damages award.19 This process "limits the circumstances in which a victim can receive double

445 P.3d 1022

recovery, while enhancing the chances that a tortfeasor may not be held fully accountable."20

In Loncar v. Gray we recognized that the collateral source rule applied to evidence of the plaintiff's Medicaid coverage, which "the superior court appropriately excluded ... at the beginning of the trial."21 After one of the plaintiff's doctors mentioned Medicaid on cross-examination, the superior court gave a curative instruction: it advised the jury to "award the full amount of necessary medical expenses ... regardless of whether they have been paid or who actually paid the bill. Following the trial, the law provides procedures to ensure that this issue is properly addressed."22 We saw "no abuse of discretion in the superior court's treatment of the Medicaid evidence."23

3. Luther v. Lander and the dissent in Lucier v. Steiner Corporation

Weston relies on our recent decision in Luther v. Lander24 to argue that we have already decided the issue of whether her "full medical billings are admissible at trial." Luther was injured in a car accident and sued Lander for negligence.25 At trial Luther sought to introduce evidence of the medical expenses paid by her insurer, GEICO, as proof of her damages, but the superior court granted Lander's request that the evidence be excluded.26 Although the superior court did not explain its ruling, we presumed that it was based on the rule that a plaintiff cannot present a subrogated claim for medical expenses if the insurer has asserted its right to pursue the claim itself.27 We reversed the superior court's ruling, holding that the medical expenses paid by GEICO were relevant to the severity of Luther's injury even if she could not recover them as economic damages.28 We reasoned that "[j]ust as photographic evidence and testimony about the lack of serious damage to Luther's and Lander's vehicles [were] relevant as potentially...

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5 practice notes
  • Andrew v. Depani-Sparkes, Case No. 117,798 (
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • March 31, 2021
    ...to admit the full amount of medical expenses when the bills have been satisfied for lesser amounts. See Weston v. AKHappytime, LLC , 445 P.3d 1015, 1023-26 (Alaska 2019) (discussing various state court approaches to the admission of written-off or discounted medical bills). However, the Okl......
  • Andrew v. Depani-Sparkes, 117798
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • March 31, 2021
    ...to admit the full amount of medical expenses when the bills have been satisfied for lesser amounts. See Weston v. AKHappytime, LLC, 445 P.3d 1015, 1023-26. (Alaska 2019) (discussing various state court approaches to the admission of written-off or discounted medical bills). However, the Okl......
  • Higgs v. Costa Crociere S.P.A. Co., No. 19-10371
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • August 14, 2020
    ...to the close of business on September 30, 1981. 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).6 See, e.g., Weston v. AKHappytime, LLC, 445 P.3d 1015, 1030–31 (Alaska 2019) (Stowers, C.J., dissenting) ("[T]here is nothing reasonable about the intentionally inflated and knowingly fictitious ......
  • Verci v. High, Appeal No. 3-19-0106
    • United States
    • United States Appellate Court of Illinois
    • December 18, 2019
    ...2011). Such evidence includes "testimony about the range of charges the provider has for the same services." Weston v. AKHappytime, LLC , 445 P.3d 1015, 1028 (Alaska 2019) ; see also Melo , 800 F. Supp. 2d at 602 (relevant evidence of the reasonable value of medical services includes "evide......
  • Request a trial to view additional results
5 cases
  • Andrew v. Depani-Sparkes, Case No. 117,798 (
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • March 31, 2021
    ...to admit the full amount of medical expenses when the bills have been satisfied for lesser amounts. See Weston v. AKHappytime, LLC , 445 P.3d 1015, 1023-26 (Alaska 2019) (discussing various state court approaches to the admission of written-off or discounted medical bills). However, the Okl......
  • Andrew v. Depani-Sparkes, 117798
    • United States
    • United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
    • March 31, 2021
    ...to admit the full amount of medical expenses when the bills have been satisfied for lesser amounts. See Weston v. AKHappytime, LLC, 445 P.3d 1015, 1023-26. (Alaska 2019) (discussing various state court approaches to the admission of written-off or discounted medical bills). However, the Okl......
  • Higgs v. Costa Crociere S.P.A. Co., No. 19-10371
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • August 14, 2020
    ...to the close of business on September 30, 1981. 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).6 See, e.g., Weston v. AKHappytime, LLC, 445 P.3d 1015, 1030–31 (Alaska 2019) (Stowers, C.J., dissenting) ("[T]here is nothing reasonable about the intentionally inflated and knowingly fictitious ......
  • Verci v. High, Appeal No. 3-19-0106
    • United States
    • United States Appellate Court of Illinois
    • December 18, 2019
    ...2011). Such evidence includes "testimony about the range of charges the provider has for the same services." Weston v. AKHappytime, LLC , 445 P.3d 1015, 1028 (Alaska 2019) ; see also Melo , 800 F. Supp. 2d at 602 (relevant evidence of the reasonable value of medical services includes "evide......
  • Request a trial to view additional results

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