Wills v. Foster

• Decision Date: 18 April 2007
• Docket Number: No. 4-06-0674.,4-06-0674.
• Citation: 867 N.E.2d 1223,372 Ill. App.3d 670
• Parties: Sheila M. WILLS, Patrick Brooks, and June Williams, Plaintiffs-Appellants, v. Inman E. FOSTER, Jr., and Charlene R. Foster, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

867 N.E.2d 1223

372 Ill. App.3d 670

Sheila M. WILLS, Patrick Brooks, and June Williams, Plaintiffs-Appellants, v. Inman E. FOSTER, Jr., and Charlene R. Foster, Defendants-Appellees.

No. 4-06-0674.

Appellate Court of Illinois, Fourth District.

April 18, 2007.

Justice APPLETON delivered the opinion of the court:

Plaintiff, Sheila M. Wills, seeks review of the trial court's order reducing the jury's personal-injury award for compensatory damages from $80,163.47 to $19,005.50. Plaintiff claims the collateral-source rule applies and entitles her to the recovery of the amount of medical expenses billed, not the amount of medical expenses actually paid at a discounted rate. Defendant Inman E. Foster, Jr., the tortfeasor, argues the collateral-source rule does not apply to this case because the medical expenses were paid through Medicare or Medicaid, which provides health benefits to certain needy individuals. Plaintiff did not incur liability for her medical expenses, did not bargain for her coverage, and did not pay any premiums as part of a contractual relationship. Therefore, defendant claims the governmental medical benefits do not qualify as a "collateral source" under the collateral-source rule. We affirm.

I. BACKGROUND

On August 8, 2001, plaintiff and her two passengers, coplaintiffs Patrick Brooks and June Williams, were injured in an automobile accident. Defendant drove his vehicle, which was allegedly owned by co-defendant Charlene R. Foster, through a red light and struck plaintiff's vehicle. (The allegations against Charlene R. Foster were dismissed with prejudice, and Brooks and Williams settled their claims prior to trial.) As a result of the accident, plaintiff aggravated a preexisting condition, which proximately caused the need to undergo a spinal-cord fusion. Defendant's liability is not an issue on appeal.

Prior to trial, both parties filed respective motions in limine concerning the amounts of plaintiff's medical bills that would be presented to the jury. The amount of medical expenses billed was $80,163.47; however, the amount actually paid by Medicare and the medical-assistance program of the Illinois Department of Healthcare and Family Services (DHFS or Medicaid) on plaintiff's behalf was $19,005.50. Plaintiff sought to introduce the evidence of her medical bills in the amount of $80,163.47, while defendant sought to limit the evidence to the medical bills that were actually paid in the amount of $19,005.05. The trial court denied defendant's motion and granted plaintiff's, allowing the jury to consider $80,163.47 as the amount of plaintiff's medical expenses.

On March 20, 2006, the case proceeded to a jury trial with Judge Patrick E. Kelley presiding. Defendant stipulated to the admission of plaintiff's exhibit, which demonstrated medical bills totalling $80,163.47. The jury entered a verdict for plaintiff in that amount in medical expenses and $7,500 in pain and suffering. On April 17, 2006, defendant filed a posttrial motion, asking the trial court to reduce the amount of the jury's award from $80,163.77 to $19,005.50. On July 14, 2006, the court, Judge Leo Zappa presiding, allowed defendant's motion reducing the jury's award as requested. The court's order provided as follows: "In the event plaintiff's medical providers seek to recover from plaintiff the difference between the amount shown on the ledgers and the amount paid by the Illinois Department of Public Aid or Medicare, plaintiff may within one year from the date of this order petition the court for a revision of this order. The jury's award of $7,500 for pain and suffering remains in effect." On July 25, 2006, Judge Kelley entered an identical order. This appeal followed.

II. ANALYSIS

In her appeal, plaintiff claims the trial court erred in failing to apply the collateral-source rule, thereby reducing her compensatory-damages award. In support of her claim, plaintiff likens herself to the plaintiff in Arthur v. Catour, 216 Ill.2d 72, 295 Ill.Dec. 641, 833 N.E.2d 847 (2005). In response, defendant argues Arthur is distinguishable and the collateral-source rule does not apply. Because the facts are uncontroverted and the issue before this court is the trial court's application of the law to the facts, our review is de novo. Arthur, 216 Ill.2d at 78, 295 Ill.Dec. 641, 833 N.E.2d at 851.

In Arthur, our supreme court held that the injured plaintiff could present to the jury the amount she was initially billed for health-care services, rather than the amount that her private insurance company actually paid to the health-care providers. Arthur, 216 Ill.2d at 83, 295 Ill.Dec. 641, 833 N.E.2d at 854. Through her insurer's contractual agreements with the providers, many of the charges for health-care services were discounted. The health-care providers accepted the discounted amounts as payment in full. The court held that the plaintiff could present the amount billed, but she was required to establish that amount as a reasonable charge for the services rendered. In turn, the defendant could counter with any evidence that the amount was not reasonable. Arthur, 216 Ill.2d at 83, 295 Ill.Dec. 641, 833 N.E.2d at 854.

In its analysis, the supreme court described the collateral-source rule as follows: "`[B]enefits received by the injured party from a source wholly independent of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from the tortfeasor.'" Arthur, 216 Ill.2d at 78, 295 Ill.Dec. 641, 833 N.E.2d at 851, quoting Wilson v. Hoffman Group, Inc., 131 Ill.2d 308, 320, 137 Ill.Dec. 579, 546 N.E.2d 524, 530 (1989). "The collateral[-]source rule protects collateral payments made to or benefits conferred on the plaintiff by denying the defendant any corresponding offset or credit. Such collateral benefits do not reduce the defendant's tort liability, even though they reduce the plaintiff's loss." Arthur, 216 Ill.2d at 78, 295 Ill.Dec. 641, 833 N.E.2d at 851. "The rule operates to prevent the jury from learning anything about collateral income." Arthur, 216 Ill.2d at 79, 295 Ill.Dec. 641, 833 N.E.2d at 852.

"`The justification for [the collateral-source] rule is that the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons.'" Arthur, 216 Ill.2d at 79, 295 Ill. Dec. 641, 833 N.E.2d at 852, quoting Wilson, 131 Ill.2d at 320, 137 Ill.Dec. 579, 546 N.E.2d at 530. The Arthur court noted that the application of the collateral-source rule does not prevent the plaintiff from introducing as evidence the reasonable cost of health care necessitated by the defendant's conduct. Arthur, 216 Ill.2d at 80, 295 Ill.Dec. 641, 833 N.E.2d at 852. The plaintiff was liable for the resulting expenses upon receipt of those services. The fact that the insurance provider and the health-care provider agreed to satisfy plaintiff's obligation in full by paying a lesser amount than that billed is not of consequence. That payment arrangement was a result of a contractual arrangement between the insurer and the provider, a contractual arrangement to which the plaintiff was not privy. Arthur, 216 Ill.2d at 81, 295 Ill.Dec. 641, 833 N.E.2d at 853. The effect of that arrangement resulted in the "plaintiff receiv[ing] the benefit of her bargain with her insurance company—full coverage for incurred medical expenses." Arthur, 216 Ill.2d at 81, 295 Ill.Dec. 641, 833 N.E.2d at 853.

We must determine whether the court's analysis and holding in Arthur apply equally to plaintiff's case when plaintiff was not required to bargain for her benefits but received them free of charge from the government based on her status. After carefully considering the reasoning and justification behind the court's holding, we conclude that because the benefits conferred upon plaintiff did not result from a bargained-for exchange with a third party who provided the benefits, the collateral-source rule does not apply.

The collateral-source rule is an exception to the general rule of damages preventing a double recovery by an injured party. See Muranyi v. Turn Verein Frisch-Auf, 308 Ill.App.3d 213, 215, 241 Ill.Dec. 505, 719 N.E.2d 366, 369 (1999). Typically, however, the collateral source will have a lien or subrogation right that prevents a double recovery. The collateral-source rule operates as both a rule of damages and a rule of evidence. Arthur, 216 Ill.2d at 79-80, 295 Ill.Dec. 641, 833 N.E.2d at 852. As to damages, the rule prevents any reduction of a plaintiff's recovery due to amounts received from third parties, which are "collateral" from the tortfeasor. Arthur, 216 Ill.2d at 80, 295 Ill.Dec. 641, 833 N.E.2d at 852. As a rule of evidence, it prevents juries from learning anything about collateral income that could affect their assessment of damages. Arthur, 216 Ill.2d at 79, 295 Ill.Dec. 641, 833 N.E.2d at 852. The rationale for the rule is that the defendant should not be allowed to benefit from the plaintiff's foresight in acquiring insurance. Arthur, 216 Ill.2d at 79, 295 Ill.Dec. 641, 833 N.E.2d at 852.

Another purpose of the collateral-source rule is to serve as a deterrent to a tortfeasor. Restatement (Second) of Torts § 901(c) (1979). The defendant should not benefit from his wrongful act by being allowed to pay a lesser amount of damages than he has caused. Logically, if such is allowed, the deterrent effect will be diminished. In this vein, it follows that a tortfeasor should not get a break if he harms a needy person whose medical bills were paid by Medicaid.

Although the Arthur court held that a plaintiff may present evidence of prediscounted medical bills, it did so in the context of a plaintiff with a contractual arrangement with a private insurance company. The court did not reassess or even discuss its previous decision in Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill.2d 353, 363, 29 Ill.Dec. 444, 392...