White v. Jubitz Corp.

• Decision Date: 26 March 2008
• Docket Number: A128617.,040302468.
• Citation: 182 P.3d 215,219 Or. App. 62
• Parties: George WHITE, Plaintiff-Respondent, v. JUBITZ CORPORATION, an Oregon corporation, dba Ponderosa Lounge, Defendant-Appellant.
• Court: Oregon Court of Appeals

182 P.3d 215

219 Or. App. 62

George WHITE, Plaintiff-Respondent, v. JUBITZ CORPORATION, an Oregon corporation, dba Ponderosa Lounge, Defendant-Appellant.

040302468.

A128617.

Court of Appeals of Oregon.

Argued and Submitted November 8, 2007.

Decided March 26, 2008.

Michael T. Stone, Hillsboro, argued the cause and filed the briefs for appellant.

Mark McDougal argued the cause for respondent. With him on the brief was Gregory Kafoury, Portland.

Charles Robinowitz, Portland, filed the brief amicus curiae for Oregon Trial Lawyers' Association.

Before HASELTON, Presiding Judge, and BREWER, Chief Judge, and ARMSTRONG, Judge.

ARMSTRONG, J.

In this personal injury case, defendant appeals from a judgment awarding plaintiff the full value of his medical expenses, including the portion of those expenses that were "written off" by plaintiff's medical providers under an agreement with Medicare. We affirm.

The facts are undisputed. Plaintiff, a patron at defendant's establishment, sustained injuries when the bar stool on which he was sitting collapsed under him. Plaintiff received medical treatment for his injuries, for which medical providers billed him a cumulative amount of $38,977. However, because plaintiff had Medicare coverage, his medical providers subsequently "wrote off" $25,551 of those expenses as a condition of their agreement to accept Medicare payments. Medicare then paid the remaining $13,426, thus discharging plaintiff's obligation to pay his medical providers.

Plaintiff filed a negligence action against defendant that sought economic and noneconomic damages for the injuries that plaintiff had sustained. Before trial, defendant made a motion in limine asking the court either (1) to exclude evidence of the expenses that had been written off, that is, to limit plaintiff's recoverable economic damages to the $13,426 that Medicare had paid to the medical providers, or (2) to allow defendant to present evidence that portions of plaintiff's medical expenses had been written off. The court denied that motion but allowed defendant leave to submit a post-verdict motion regarding the expenses that had been written off.

After the jury returned a verdict awarding plaintiff economic damages totaling $37,600, which represented plaintiff's medical expenses without reduction for the Medicare write-offs, defendant filed a motion to reduce that amount by the portion of the expenses that the medical providers had written off. The court denied that motion, concluding that, under Oregon's collateral source statute, ORS 31.580(1)(d), Medicare write-offs are federal Social Security benefits that could not be deducted from plaintiff's economic damages.

On appeal, defendant assigns error to the trial court's denial of its motion in limine and its post-verdict motion to reduce the amount of recoverable medical expenses. In essence, defendant's assignments raise three interrelated questions: First, are billed amounts that a medical provider writes off pursuant to an arrangement with an insurer (write-offs) recoverable "economic damages," as defined by ORS 31.710(2)(a)? Second, if those write-offs are recoverable economic damages, are they also collateral benefits under ORS 31.580(1) by which a court may reduce a damage award? And, third, if ORS 31.580 applies, are Medicare write-offs nonetheless encompassed within the exceptions listed in ORS 31.580(1)(a) through (d) such that a court may not reduce a damage award by the amount of those benefits? For the reasons explained below, we conclude that (1) write-offs are recoverable economic damages as defined by ORS 31.710(2)(a); (2) those write-offs are "collateral benefits" as defined by ORS 31.580(1); but (3) write-offs resulting from Medicare coverage are "federal Social Security benefits" under ORS 31.580(1)(d), and are thus exempt from being used by a court to reduce a damage award.

All three questions involve the construction of statutes. In construing a statute, our task is to effectuate the intent of the legislature. PGE v. Bureau of Labor and Industries, 317 Or. 606, 611, 859 P.2d 1143 (1993). We look first to the text of the statute in context. If our first-level analysis indicates that the relevant statutory language is ambiguous, then we explore the legislative history, and, if necessary, canons of construction. Id. at 611-12, 859 P.2d 1143.

Thus, with regard to the first question — whether write-offs are recoverable economic damages as defined by ORS 31.710(2)(a) — we begin our inquiry with an analysis of the text of ORS 31.710(2)(a) in context. ORS 31.710, which the 1987 legislature adopted as part of an extensive tort reform package,¹ sets out the standards for economic and noneconomic damages that a plaintiff may recover in a civil action. Benjamin v. Wal-Mart Stores, Inc., 185 Or.App. 444, 472, 61 P.3d 257 (2002), rev. den., 335 Or. 479, 72 P.3d 76 (2003). As is relevant here, ORS 31.710(2)(a) defines economic damages as

"objectively verifiable monetary losses including but not limited to reasonable charges necessarily incurred for medical, hospital, nursing and rehabilitative services and other health care services, burial and memorial expenses, loss of income and past and future impairment of earning capacity, reasonable and necessary expenses incurred for substitute domestic services, recurring loss to an estate, damage to reputation that is economically verifiable, reasonable and necessarily incurred costs due to loss of use of property and reasonable costs incurred for repair or for replacement of damaged property, whichever is less."

In contrast, noneconomic damages consist of "subjective, nonmonetary losses" such as those for pain, suffering, and emotional distress, among other things. ORS 31.710(2)(b).

Our initial focus centers on whether write-offs are "objectively verifiable monetary losses" that are "reasonable charges necessarily incurred" by a plaintiff. The key term here is "incurred." Defendant urges us to define "incur" as used in ORS 31.710(2)(a) to mean "paid or remains liable to pay." By defendant's reasoning, a plaintiff's economic damages are only those charges that the plaintiff paid or remains liable to pay at the time of trial, and thus must exclude the amount that the plaintiff's medical providers wrote off. Plaintiff, in response, argues that a plaintiff incurs damages when the plaintiff becomes "liable [or] subject to" charges, that is, at the time of treatment. We agree with plaintiff.

The legislature does not explicitly define the word "incur" as used in ORS 31.710(2)(a). Absent such a definition, we presume that the legislature intends that words of common usage to be given their ordinary meaning. PGE, 317 Or. at 611, 859 P.2d 1143. The common meaning of "incur," as defined in Webster's and as we have previously recognized, is to "become liable or subject to." Webster's Third New Int'l Dictionary 1146 (unabridged ed. 2002); see PGE v. Jungwirth Logging, Inc., 151 Or.App. 789, 794, 951 P.2d 1101 (1997), rev. den., 327 Or. 432, 966 P.2d 222 (1998); King v. AFSD, 142 Or.App. 444, 448, 921 P.2d 1326 (1996).² "Necessarily," an adverb, modifies "incurred" and reflects on the necessity of the treatment that results in charges, implying that charges are incurred when a plaintiff receives necessary treatment. Thus, read together, the phrase "reasonable charges necessarily incurred" is most sensibly understood to mean charges to which an injured party becomes subject at the time that the party receives care necessary to treat the party's injuries.

The context of ORS 31.710 supports our conclusion. We find relevant statutory context in the preexisting common law and in the statutory framework within which the statute was enacted. Fresk v. Kraemer, 337 Or. 513, 520-21, 99 P.3d 282 (2004).

At common law, as under ORS 31.710, a plaintiff could recover the costs of services necessarily incurred by the plaintiff as a result of a defendant's conduct. Mathews v. City of La Grande, 136 Or. 426, 430, 299 P. 999 (1931). The principle historically applied in Oregon has been consistent with the Restatement rule that medical expenses are not penny-for-penny, unreimbursed out-of-pocket costs to the plaintiff, but rather

"the value of services reasonably made necessary by the harm. * * * The value of medical services made necessary by the tort can ordinarily be recovered although [those expenses] have created no liability or expense to the injured person, as when a physician donates his services."

Restatement (Second) of Torts § 924(c) comment f (1979) (emphasis added). For example, Oregon courts have long held that a plaintiff seeking damages for medical expenses must establish the reasonableness of those expenses and cannot simply rely on a medical bill for that purpose. See Tuohy v. Columbia Steel Co., 61 Or. 527, 532, 122 P. 36 (1912) ("The rule is that a plaintiff in a case involving personal injuries can recover, as a part of his damages, his reasonable expenses for medicines and medical treatment, but there must be some evidence that the charges are reasonable."); Mathews, 136 Or. at 430, 299 P. 999 (applying rule). In other words, Oregon courts did not impose a quantum of proof on either party to show what had actually been paid but, rather, required proof that the amount billed for services was reasonable. To do that, a plaintiff generally presented evidence of the reasonableness and necessity of medical expenses through testimony of physicians and other medical professionals familiar with the injury, treatment, and costs involved. See, e.g., id.; Valdin v. Holteen and Nordstrom, 199 Or. 134, 147-49, 260 P.2d 504 (1953).

It was in light of that underlying law that the legislature enacted ORS 31.710, which provides a statutory rule of recovery for compensatory damages for bodily injuries caused by tortious conduct. See DeVaux v. Presby, 136 Or.App. 456, 461, 902 P.2d 593 (1995). Our subsequent interpretation and application of the...