Case Title: Michael J. Koffman v. Jeremy J. Leichtfuss

Citation: 2001 WI 111

Docket Number: 1999AP000380

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2001-07-12T00:00:00Z

Document:
2001 WI 111 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
99-0380 
 
 
Complete Title 
of Case: 
 
Michael J. Koffman,  
 
Plaintiff-Appellant, 
 
v. 
Jeremy J. Leichtfuss and State Farm Mutual 
Automobile Insurance Company,  
 
Defendants-Respondents, 
Farmers Automobile Insurance Association and 
Wisconsin Central Transportation Corporation,  
 
Defendants.  
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
Opinion Filed: 
July 12, 2001 
Submitted on Briefs: 
      
Oral Argument: 
March 6, 2001 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Fond du Lac 
 
JUDGE: 
Henry B. Buslee 
 
 
JUSTICES: 
 
Concurred: 
ABRAHAMSON, C.J., concurs (opinion filed). 
 
 
WILCOX, J., concurs (opinion filed). 
 
Dissented: 
CROOKS, J., dissents (opinion filed). 
 
 
SYKES, J., dissents (opinion filed). 
 
 
CROOKS, J., joins dissent. 
 
Not Participating:       
 
 
ATTORNEYS: 
For the plaintiff-appellant there were briefs by 
Linda S. Isnard, Gilbert J. Berthelsen and von Briesen, Purtell & 
Roper, S.C., Racine, and oral argument by Linda S. Isnard. 
 
 
For the defendants-respondents there was a brief 
by James C. Herrick, Jr., John W. Herrick and Herrick Law 
 
2 
Offices, S.C., Fond du Lac, and oral argument by James C. 
Herrick, Jr. 
 
 
An amicus curiae brief was filed by Edward E. 
Robinson and Cannon & Dunphy, S.C., Brookfield, and Brian H. 
Sande and Doar, Drill & Skow, S.C., New Richmond, on behalf of 
the Wisconsin Academy of Trial Lawyers. 
 
 
2001 WI 111 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear 
in the bound volume of the official reports. 
 
 
No. 99-0380 
 
STATE OF WISCONSIN                    :  
  IN SUPREME COURT 
 
 
Michael J. Koffman,  
 
          Plaintiff-Appellant, 
 
     v. 
 
Jeremy J. Leichtfuss and State Farm  
Mutual Automobile Insurance Company,  
 
          Defendants-Respondents, 
 
Farmers Automobile Insurance Association  
and Wisconsin Central Transportation  
Corporation,  
 
          Defendants. 
 
 
APPEAL from a judgment of the Circuit Court for Fond du Lac 
County, Henry B. Buslee, Circuit Court Judge. Reversed and cause 
remanded. 
 
¶1 
ANN 
WALSH 
BRADLEY, 
J.   In 
this 
personal 
injury 
action, the plaintiff, Michael Koffman, appeals the judgment of 
the circuit court limiting his recovery of medical expense 
FILED 
 
JUL 12, 2001 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
99-0380 
 
 
2 
damages to the amount he and his insurers paid.1  He contends 
that he is entitled to recover the reasonable value of the 
medical services rendered regardless of amounts paid by himself 
or his insurers.  The circuit court, consistent with the 
argument of the defendants, Jeremy Leichtfuss (Leichtfuss) and 
his insurer, held that the plaintiff's insurers' subrogation 
rights operate to limit the medical expense damages to the 
amounts actually paid.   
¶2 
We conclude that the plaintiff is entitled to seek 
recovery of the reasonable value of the medical services, 
without 
limitation 
to 
the 
amounts 
paid. 
 
Limiting 
the 
plaintiff's potential recovery to the amounts paid is contrary 
to the Wisconsin rule of valuation of medical expense damages, 
the collateral source rule, and principles of subrogation.  
Because we also conclude that the presentation of inadmissible 
evidence of payments made by the plaintiff's insurers was 
prejudicial, we reverse the judgment of the circuit court and 
remand the cause for a new trial on the issue of medical expense 
damages.   
I 
                     
1  The plaintiff appeals a judgment entered in the Circuit 
Court for Fond du Lac County, Judge Henry B. Buslee presiding.  
This case is before us upon certification of the court of 
appeals pursuant Wis. Stat. § 809.61 (1997-98). 
No. 
99-0380 
 
 
3 
¶3 
This case arises from a 1994 automobile collision 
between the plaintiff and Leichtfuss.  Following the accident, 
the plaintiff received treatment from numerous physicians and 
specialists for an injury to his spine that he claims resulted 
from the accident.  The total amount billed by the plaintiff's 
health care providers was $187,931.78.  In 1997, the plaintiff 
brought this negligence action, seeking recovery of the medical 
expenses amassed in treating the injuries suffered as a result 
of the accident.2   
¶4 
The cost of the plaintiff's treatment was primarily 
paid by his insurers.3  As part of his employee-benefits plan at 
Wisconsin 
Central 
Transportation 
Corporation 
(Wisconsin 
Central), 
the 
plaintiff 
received 
health 
care 
coverage.  
Wisconsin Central provided this coverage though its self-funded 
plan.  Through certain contractual relationships with the 
plaintiff's health care providers, Wisconsin Central received 
the benefit of reduced "contracted rates" and was able to 
satisfy its liability for the amounts billed by the providers 
with total payments of $62,324.00.   
                     
2 The plaintiff also sought and received damages other than 
the medical expense damages.  However, the award of those 
damages is not relevant to our discussion.   
3 For simplicity's sake, throughout this decision we refer 
to Wisconsin Central, which provided plaintiff's health care 
coverage through its self-funded plan, and Farmers, which 
provided medical payments coverage through plaintiff's auto 
insurance, as plaintiff's "insurers."  We also use the phrases 
"insurer" and "insured" to generally describe the relationship 
in any of a broad array of health care finance arrangements.  
No. 
99-0380 
 
 
4 
¶5 
In addition to the coverage provided by Wisconsin 
Central, the plaintiff's automobile insurance carrier, Farmers 
Automobile Insurance Association (Farmers), provided medical 
payments coverage to the plaintiff.  Under this coverage, 
Farmers paid $1,869.15 in medical expenses for accident-related 
treatment. 
 
The 
plaintiff 
personally 
paid 
$1,869.43 
in 
deductibles, co-payments, and out-of-pocket expenses.   
¶6 
Wisconsin Central and Farmers were named in the 
plaintiff's complaint as parties with a subrogated interest in 
the claim for medical expenses.  In answering the complaint, 
Wisconsin 
Central 
and 
Farmers 
asserted 
their 
subrogation 
interests in the amounts they had paid on the plaintiff's 
behalf.4   
¶7 
Early in this litigation the parties winnowed the 
disputed issues by resolving several matters.  First, Leichtfuss 
admitted negligence in causing the 1994 accident.  Second, in a 
pre-trial stipulation, the defendants agreed that the amounts 
billed by plaintiff's health care providers were reasonable.  
The remaining disputed issues with respect to the medical 
expenses were (1) whether as a factual matter the medical 
                     
4 Wisconsin Central's subrogation interest derived from a 
clause in its policy.  That policy was made part of the record. 
 The record provided to this court contains no copy of the 
Farmers auto policy; however, in its answer, Farmers asserted 
that its subrogation rights arise "by the terms of its policy." 
There has never been a dispute between the plaintiff and 
defendants regarding the existence of Wisconsin Central's and 
Farmers' subrogation interests. 
No. 
99-0380 
 
 
5 
treatment for which the plaintiff was billed was caused by the 
accident; and (2) whether the plaintiff was legally entitled to 
seek recovery of the reasonable value of the medical services 
rendered or whether the medical expense damages were limited to 
the amounts paid by himself and his insurers.   
¶8 
The scope of the allowable recovery of medical 
expenses first arose as an issue when the defendants pursued a 
motion in limine seeking exclusion of all evidence of amounts 
billed to the plaintiff by his medical providers.  The 
defendants insisted that under this court's decision in Lambert 
v. Wrensch, 135 Wis. 2d 105, 399 N.W.2d 369 (1987), evidence of 
medical expenses in this case must be limited to that actually 
paid by the subrogated insurers.  The defendants thus sought to 
limit the evidence regarding medical expenses to the amounts 
paid.  The legal justification for their motion to limit such 
evidence was that "the collateral source rule does not apply 
where subrogated carriers have made payments upon medical 
expenses."   
¶9 
The plaintiff asserted that the collateral source rule 
applied, rendering evidence of payments made by his insurers 
irrelevant and inadmissible.  He argued that he was entitled to 
recover the reasonable value of the medical services resulting 
from the accident, regardless of the amounts paid by Wisconsin 
Central and Farmers or any subrogation interests they may have. 
¶10 The circuit court granted the defendant's motion.  
Concluding that the collateral source rule did not apply, the 
circuit court limited the evidence of medical expenses to the 
No. 
99-0380 
 
 
6 
amount actually paid by the subrogated insurers.  Additionally, 
the court specifically excluded a portion of a videotaped 
deposition of Dr. Dennis Maiman, plaintiff's treating physician 
and expert witness.  In the excluded portion, Dr. Maiman 
examined an exhibit itemizing the $187,931.78 in charges billed 
by the health care providers.  He testified that it was his 
opinion to a reasonable degree of medical probability that the 
amounts charged were "reasonable and within the expected and 
accepted ranges" and that the treatment represented by the bills 
was "necessitated by the accident."   
¶11 The case then proceeded to a trial on the issue of 
damages.  During the parties' presentation of evidence, the 
defendants offered evidence of the amount paid by Wisconsin 
Central.  The plaintiff, however, was prevented by the circuit 
court's ruling from offering his own evidence regarding the 
amounts billed by the health care providers.   
¶12 The parties also brought forth competing evidence 
relating to the causal link between the accident and the 
treatment at issue.  The plaintiff presented Dr. Maiman's video 
deposition 
explaining 
the 
plaintiff's 
treatment 
history.  
However, consistent with the pretrial order, the jury was not 
shown his conclusion that the treatment and medical bills were 
caused by the accident.  The defendants offered the testimony of 
an 
independent 
medical 
examiner, 
who 
concluded 
that 
the 
treatment at issue was for preexisting conditions unrelated to 
the 1994 accident.  
No. 
99-0380 
 
 
7 
¶13 After the close of evidence, the circuit court 
reconsidered its decision to exclude evidence relating to the 
amounts billed by the health care providers.  During the jury 
instruction conference, the court ruled that the plaintiff would 
be allowed to argue to the jury that he was entitled to the full 
$187,931.78 in medical expenses.  The defendants were allowed to 
argue that the plaintiff was entitled to recover only the amount 
actually paid.  Additionally, the court reversed its earlier 
decision to exclude Dr. Maiman's opinion that the medical bills 
were reasonable and caused by the accident.  The court decided 
that prior to instructing the jury it would read the previously 
excluded portion of Dr. Maiman's deposition.5  
¶14 In their closing arguments, the parties asked the jury 
to award medical expenses consistent with their respective 
theories of valuation.  The plaintiff asked the jury to return a 
medical expense award in the amount of $187,931.78, directing 
the jury's attention to the itemization of medical expenses 
relied upon by Dr. Maiman.  The defendants argued that while the 
plaintiff's 
health 
care 
providers 
did 
charge 
the 
amount 
requested by the plaintiff, "those charges weren't paid."  
Defendants' counsel then recited the dollar amounts actually 
                     
5 Also during the instruction conference, the status of the 
subrogated carriers' interests was clarified.  Wisconsin Central 
assigned the entirety of its rights to the plaintiff.  Further, 
while Farmers did not assign its rights to the plaintiff, the 
defendants agreed that the amount Farmers paid was reasonable 
and that the underlying treatment for which Farmers paid was as 
a result of the accident. 
No. 
99-0380 
 
 
8 
paid by the plaintiff and his insurers.  The defendants also 
argued that not all of the treatment was caused by the accident. 
¶15 During their deliberations, the jurors returned a 
question 
to 
the 
circuit 
court 
specifically 
requesting 
information regarding the amounts paid for medical expenses: 
 
We would like amount that was actually paid out for 
Medical Expenses to date. 
 
In response, the circuit court informed the jury that Wisconsin 
Central paid $62,324.54, Farmers paid $1,869.15, and the 
plaintiff paid $1,869.43.   
¶16 The jury returned a verdict awarding the plaintiff 
medical expenses in the amount of $98,664.18.  In a post-verdict 
motion, the defendant sought a reduction of the jury's medical 
expense award to $66,062.58, the amount paid by the plaintiff 
and his insurers.  Again relying upon Lambert v. Wrensch, the 
defendants argued that the plaintiff was limited in recovery to 
the amounts paid.  The plaintiff responded with his own motion 
seeking to amend the jury's award to $187,931.78 on the grounds 
that no credible evidence existed to support a jury verdict of 
less than that amount.   
¶17 The circuit court agreed with the defendants and 
concluded that under Lambert the collateral source rule was 
inapplicable.  The circuit court thus reduced the medical 
expense damage award to $66,062.58.  After the plaintiff 
No. 
99-0380 
 
 
9 
unsuccessfully pursued a motion for reconsideration, the circuit 
court entered a judgment reflecting the reduced amount of 
medical expense damages.   
¶18 The plaintiff appealed and the court of appeals 
certified this case for our review.  In doing so, the court of 
appeals noted a tension between the circuit court's reliance on 
this court's decision in Lambert and our recent decision in 
Ellsworth v. Schelbrock, 2000 WI 63, 235 Wis. 2d 678, 611 N.W.2d 
764.  Specifically, the court of appeals expressed difficulty in 
reconciling language in Lambert that suggests the collateral 
source rule is inapplicable where subrogation exists with our 
application of the collateral source rule to Medical Assistance 
benefits in Ellsworth and statements in that opinion regarding 
the applicability of the collateral source rule to insurance 
payments.   
¶19 Our review of this case requires us to answer two 
questions.  First, we must determine whether the plaintiff is 
entitled to seek recovery of the reasonable value of the medical 
services rendered, without limitation to the amounts paid.  
Second, we must determine whether the jury's award of medical 
expense damages may be sustained. 
II 
¶20 The determination of whether the plaintiff is entitled 
to seek recovery for the reasonable value of the medical 
No. 
99-0380 
 
 
10
services rendered or whether his insurers' subrogation rights 
limit the plaintiff's recovery to the amount actually paid by 
himself and his insurers presents a question of law.  See 
Ellsworth, 2000 WI 63 at ¶6.  We review such a question of law 
independently of the determination of the circuit court.  Miller 
v. Thomack, 210 Wis. 2d 650, 658, 563 N.W.2d 891 (1997).  In 
answering this question we are called upon to clarify and 
resolve issues involving the recovery of medical expenses that 
frequently arise under the modern system of health care 
provision and financing.   
¶21 The modern health care system employs a myriad of 
health care finance arrangements.  As part of the system, 
negotiated 
and 
contracted 
discounts 
between 
health 
care 
providers and insurers are increasingly prevalent.  Pursuant to 
these agreements, an insurer's liability for the medical 
expenses billed to its insured is often satisfied at discounted 
rates, with the remainder being "written-off" by the health care 
provider.   
¶22 The 
case 
at 
hand 
requires 
us 
to 
examine 
the 
implications of such arrangements on medical expense damages in 
a personal injury action in Wisconsin.  Here, Wisconsin Central 
received the benefit of reduced contracted rates.  The plaintiff 
contends that he is nonetheless entitled to seek the reasonable 
value of medical services rendered.  He maintains that the 
No. 
99-0380 
 
 
11
collateral source rule renders irrelevant any payments made by 
his insurers.  The defendants seek to limit the medical expenses 
to those amounts paid, and thus prevent the plaintiff from 
recovering any amount written off by the health care providers. 
 The defendants base their argument on the plaintiff's insurers' 
subrogation rights. 
¶23 As the parties' 
positions 
illustrate, 
this 
case 
presents us with the intersection of three concepts central to 
the law of damages: the Wisconsin rule of valuation of medical 
expense damages, the collateral source rule, and subrogation.  
Last term in Ellsworth v. Schelbrock, 2000 WI 63, we addressed 
the interrelation of these three concepts in a related context. 
 The court of appeals correctly noted that our discussion in 
Ellsworth bears on our resolution of this case.  
¶24 In Ellsworth, the injured plaintiff was the recipient 
of medical treatment, the cost of which was paid by Medical 
Assistance.  Id. at ¶4.  The medical services were valued at 
almost $600,000; however, Medical Assistance was only required 
to pay approximately $350,000 to satisfy the plaintiff's 
liability.  Id.  The defendant argued that the plaintiff's 
medical expense damages must be limited to the amounts paid by 
the Medical Assistance program.  Id.  
¶25 Applying long-standing principles of Wisconsin law, we 
concluded that the plaintiff was entitled to the reasonable 
No. 
99-0380 
 
 
12
value of the medical services rendered, without limitation to 
the amounts paid by Medical Assistance.  In reaching this 
conclusion the court emphasized that the standard for valuation 
of medical expenses is the reasonable value of medical services 
rendered.  Id. at ¶¶14-15.  The court also determined that the 
collateral source rule applied and prevented the plaintiff's 
recovery from being reduced by the payments made by Medical 
Assistance.  Id. at ¶17.  Finally, we rejected the defendant's 
arguments that the state's statutorily mandated subrogation 
interest operated to limit the defendant's potential liability 
to the amounts paid by the Medical Assistance program.  Id. at 
¶21. 
¶26 The same established rules of the law of damages that 
dictated the result in Ellsworth also direct the result in 
today's case.  The rule of valuation of medical expense damages, 
the collateral source rule, and the principles of subrogation 
lead us to the conclusion that the plaintiff may seek recovery 
of the reasonable value of medical services rendered, without 
limitation to the amounts actually paid by the plaintiff's 
insurers.  We explain this result by examining these three legal 
principles and their interaction and application to the facts at 
hand.   
¶27 We first address valuation of medical expense damages. 
 In Wisconsin, a plaintiff who has been injured by the tortious 
No. 
99-0380 
 
 
13
conduct of another may recover the reasonable value of medical 
services rendered.  Thoreson v. Milwaukee & Suburban Trans. 
Corp., 56 Wis. 2d 231, 243, 201 N.W.2d 745 (1972); McLaughlin v. 
Chicago, Milwaukee, St. Paul & Pacific Ry. Co., 31 Wis. 2d 378, 
395, 143 N.W.2d 32 (1966) (quoting 22 Am. Jur. 2d Damages § 207 
(1965)).  In Thoreson, 56 Wis. 2d at 243, and again in 
Ellsworth, 2000 WI 63, ¶15, we explained that while the actual 
amount paid for medical services may reflect the reasonable 
value of the treatment rendered, the focus is on the reasonable 
value, not the actual charge.  In other words "'[t]his is a 
recovery for their value and not for the expenditures actually 
made or obligations incurred.'" McLaughlin, 31 Wis. 2d at 395 
(quoting 22 Am. Jur. 2d Damages, § 207).6 
¶28 In the instant case, the parties stipulated that the 
amounts charged by plaintiff's health care providers were 
reasonable.  Thus, assuming that all the medical expenses for 
which the plaintiff claims recovery resulted from the 1994 
accident, the plaintiff would be entitled to an award of 
$187,931.78 in medical expense damages.   
¶29 The second, related principle implicated by today's 
decision is the collateral source rule.  Under the collateral 
                     
6 See also Restatement (Second) of Torts § 924 cmt. f ("The 
value of medical services made necessary by the tort can 
ordinarily be recovered although they have created no liability 
or expense to the injured person . . . ."). 
No. 
99-0380 
 
 
14
source rule a plaintiff's recovery cannot be reduced by payments 
or benefits from other sources.  The collateral source rule 
prevents any payments made on the plaintiff's behalf or 
gratuitous benefits received by the plaintiff from inuring to 
the benefit of a defendant-tortfeasor. Payne v. Bilco, 54 
Wis. 2d 424, 433, 195 N.W.2d 641 (1972).  The rule is grounded 
in the long-standing policy decision that should a windfall 
arise as a consequence of an outside payment, the party to 
profit from that collateral source is "the person who has been 
injured, not the one whose wrongful acts caused the injury."  
Campbell v. Sutliff, 193 Wis. 370, 374, 214 N.W. 374 (1927), 
overruled on other grounds Powers v. Allstate Ins. Co., 10 
Wis. 2d 78, 92, 102 N.W.2d 393 (1960).  In Ellsworth, we further 
explained the policy basis for the collateral source rule: 
The tortfeasor who is legally responsible for causing 
injury is not relieved of his obligation to the victim 
simply because the victim had the foresight to 
arrange, or good fortune to receive, benefits from a 
collateral source for injuries and expenses.   
 
2000 WI 63, ¶7.7   
¶30 In the context of medical expense damages, the 
collateral source rule allows the plaintiff to seek recovery of 
                     
7  We note that the court of appeals has limited the 
collateral source rule where the "plaintiff creates the windfall 
by his own act."  Oliver v. Heritage Mut. Ins. Co., 179 Wis. 2d 
1, 23, 505 N.W.2d 452 (Ct. App. 1993) (holding that plaintiff 
whose medical bills were discharged in bankruptcy could not 
recover those medical expense damages).   
No. 
99-0380 
 
 
15
the reasonable value of medical services without consideration 
of gratuitous medical services rendered or payments made by 
outside sources on the plaintiff's behalf, including insurance 
payments.  Ellsworth, 2000 WI 63, ¶10; Thoreson, 56 Wis. 2d at 
243-45; Restatement (Second) of Torts § 920A cmt. c.8  Where the 
plaintiff's health care providers settle the plaintiff's medical 
bills with the plaintiff's insurers at reduced rates, the 
collateral source rule dictates that the defendant-tortfeasor 
not receive the benefit of the written-off amounts.9  The benefit 
of the reduced payments inures solely to the plaintiff.   
¶31 Applying the collateral source rule to payments that 
have been reduced by contractual arrangements between insurers 
and health care providers assures that the liability of 
                     
8  We have cited Restatement (Second) of Torts § 920A with 
approval. See Ellsworth v. Schelbrock, 2000 WI 63, ¶8, 235 
Wis. 2d 678, 611 N.W.2d 764.  That provision reads, in pertinent 
part: 
§ 920A.  Effect of Payments Made to Injured Party 
 
 . . .  
 
(2)  Payments made to or benefits conferred on the 
injured party from other sources are not credited 
against the tortfeasor's liability, although they 
cover all or a part of the harm for which the 
tortfeasor is liable.   
 
9 See Acuar v. Letourneau, 531 S.E.2d 316, 322-23 (Va. 2000) 
("The portions of medical expenses that health care providers 
write off constitute 'compensation or indemnity received by a 
tort victim from a source collateral to the tortfeasor . . . ." 
(quoted source omitted)).   
No. 
99-0380 
 
 
16
similarly situated defendants is not dependent on the relative 
fortuity of the manner in which each plaintiff's medical 
expenses are financed.  One plaintiff may be uninsured and 
receive the benefit of Medical Assistance, another's insurer may 
have paid full value for the treatment, and yet another's 
insurer may have received the benefit of reduced contractual 
rates.  Despite the various insurance arrangements that exist in 
each case, the factor controlling a defendant's liability for 
medical expenses is the reasonable value of the treatment 
rendered.   
¶32 In the case before us, as in Ellsworth, the collateral 
source rule is fully operational.  It prevents the discounted 
rates 
paid 
on 
the 
insurer's 
behalf 
from 
affecting 
the 
plaintiff's recovery of the reasonable value of medical services 
rendered.  The rule renders irrelevant the amounts of the 
collateral source payments, i.e., the $62,324.00 paid by 
Wisconsin Central and the $1,869.43 paid by Farmers, and 
precludes a reduction in medical expense damages based on those 
payments.   
¶33 The interaction of the collateral source rule with the 
third 
legal 
principle 
implicated 
today, 
subrogation, 
has 
engendered the confusion that has arisen in the case at hand.  
By virtue and to the extent of payments made on behalf of 
another, a subrogated party obtains a right of recovery in an 
No. 
99-0380 
 
 
17
action against a third-party tortfeasor and is a necessary party 
in an action against such a tortfeasor.  Beacon Bowl, Inc. v. 
Wisconsin Elec. Power Co., 176 Wis. 2d 740, 775, 501 N.W.2d 788 
(1993); Patitucci v. Gerhardt, 206 Wis. 358, 362, 240 N.W. 385 
(1932).  Subrogation exists to ensure that the loss is 
ultimately placed upon the wrongdoer and to prevent the subrogor 
from being unjustly enriched through a double recovery, i.e., a 
recovery from the subrogated party and the liable third party. 
Cunningham v. Metropolitan Life Ins. Co., 121 Wis. 2d 437, 444, 
360 N.W.2d 33 (1985). 
¶34 It is undisputed that the plaintiff's insurers have 
valid subrogation interests that they have asserted and pursued 
in this action.  However, the consequence of those subrogation 
rights is in dispute.  The defendants assert that the insurers' 
subrogation rights limit the recoverable medical expense damages 
to the amounts actually paid.  We do not find the insurers' 
subrogation interests to have such an effect.   
¶35 The defendants offer two theories as to how the 
insurers' subrogation rights operate to limit the recoverable 
medical expenses.  One line of argument requires us to examine 
the effect, if any, of the insurers' subrogation rights on the 
collateral source rule.  With their second line of argument, the 
defendants advance that the mechanics of subrogation limit the 
medical expense damages to the amounts paid.   
No. 
99-0380 
 
 
18
¶36 We begin with the argument that under Lambert v. 
Wrensch, 135 Wis. 2d 105, the collateral source rule is 
inapplicable in this case.  In Lambert, we explained that an 
insurer's subrogation rights may trump the collateral source 
rule and prevent a plaintiff from recovering from a defendant-
tortfeasor the amounts paid by the subrogated party.  The 
subrogated insurer in that case had paid the entirety of the 
medical expenses that the plaintiff sought from the defendant.  
Because the statute of limitations had expired, however, the 
insurer was unable to exercise its subrogation rights.  Id. at 
118-19.   
¶37 Relying upon Heifetz v. Johnson, 61 Wis. 2d 111, 124-
25, 211 N.W.2d 834 (1973), where a similar problem arose, the 
Lambert court concluded that the subrogated insurer's inability 
to recoup the amounts paid presented the potential for double 
recovery. 
 
Lambert, 
135 
Wis. 2d 
at 
118-19. 
Because 
the 
subrogation rights could not be exercised by operation of law, 
the insured "had to recognize the payments received from the 
insurer."  Id.  In other words, the risk of double recovery 
defeated the collateral source rule. 
¶38 The Lambert decision also contains language that might 
suggest that the collateral source rule is wholly inapplicable 
where an insurer has a subrogated interest.  Id. at 121.  
Indeed, such a characterization of the Lambert decision was 
No. 
99-0380 
 
 
19
repeated in Ellsworth.  2000 WI 63 at ¶18.  Focusing upon this 
language in Lambert, the defendant argues that the circuit court 
correctly determined that the insurers' subrogation rights 
rendered the collateral source rule inapplicable in the case at 
hand.   
¶39 Lambert should not be read so broadly.  The language 
of Lambert suggests that the holding is limited to its facts.  
Lambert, 135 Wis. 2d at 121 ("[W]here subrogation is present, as 
here, the collateral source rule is inapplicable." (emphasis 
added)).  In Voge v. Anderson, we properly characterized Lambert 
as holding that "where the insurer is barred from pursuing a 
claim [of subrogation], the tortfeasor is entitled to a 
reduction in judgment for the amount of that claim."  181 
Wis. 2d 726, 732, 512 N.W.2d 749 (1994); see also Jindra v. 
Diederich Flooring, 181 Wis. 2d 579, 596, 511 N.W.2d 855 (1994) 
(describing "narrow situation" of Heifetz and Lambert); Petry v. 
St. Paul Fire & Marine Ins., 151 Wis. 2d 343, 346, 444 N.W.2d 
428 (Ct. App. 1989).   
¶40 Consistent with this narrow reading of Lambert, we now 
clarify that where, as here, the risk for double recovery on the 
part of the plaintiff-insured does not exist because the insurer 
is not barred from pursuing its subrogation rights, there is no 
justification for nullifying the collateral source rule.  In the 
ordinary case, the collateral source rule and the principles of 
No. 
99-0380 
 
 
20
subrogation work in tandem to further the goals of both rules.  
The collateral source rule prevents payments made by the insured 
from inuring to the benefit of the defendant, and the insurer's 
subrogation rights prevent a double recovery on the part of the 
plaintiff.   
¶41 Moreover, we note that even if this case did present 
us with a Lambert situation (where the insurer is barred from 
pursuing its subrogation rights), reliance on Lambert to limit 
the defendants' liability to the amount paid would be misplaced. 
 If the rule of Lambert were applicable in this case, the effect 
would not be to limit the medical expense damages to the amounts 
paid.  Rather, if the insurer is barred from exercising its 
subrogation rights, the plaintiff's recovery of the reasonable 
value of medical expenses would simply be reduced by the amounts 
paid on his behalf in order to prevent a double recovery.   
¶42 The second theory posited by the defendants is an 
extensive argument that the medical expense damages must be 
limited to the amounts actually paid as a consequence of the 
mechanics of subrogation.  The defendants argue that when the 
insurers made payments on behalf of the plaintiff, they 
extinguished the plaintiff's liability for the medical expenses 
and the entirety of the plaintiff's claim for medical expenses 
became vested in the subrogated insurers.  Their argument 
follows that because a subrogated carrier has a claim only to 
No. 
99-0380 
 
 
21
the extent it made payments, the entire medical expense claim is 
limited to the amounts actually paid.   
¶43 The defendants' argument rests on a misconception of 
subrogation principles.  The creation of a subrogation interest 
in the insurer does not vest the entirety of the medical expense 
claim in the insurer.  Nor does it extinguish the insured's 
right to recover amounts above and beyond those paid by the 
insurer.   
¶44 Where an insured receives payments from an insurer for 
medical expenses incurred as a result of an injury, the insurer 
obtains a subrogation right to part of the medical expense claim 
only to the extent that it has made payments.  Beacon Bowl, 
Inc., 176 Wis. 2d at 775.  The claim to any additional medical 
expense damages remains with the insured, who may seek recovery 
for those amounts.  This court clearly explained in Heifetz v. 
Johnson that: 
[t]he insurer has a claim only for the money he paid 
to his insured . . . .  The insured can claim all 
other damages over and above that amount and the 
insurer has no claim to those damages.   
 
61 Wis. 2d at 120.   
¶45 Contrary to the defendant's assertions, the payments 
made 
on 
the 
insured's 
behalf 
define 
only 
the 
insurers' 
subrogation interest in the medical expense claim.  The claim of 
medical expense damages as a whole is defined by the reasonable 
No. 
99-0380 
 
 
22
value of the services rendered as a result of the tortfeasor's 
negligent conduct.  The creation of a subrogation interest in an 
insurer does not change the nature of the entire claim for 
medical expense damages.  See Wilmot v. Racine County, 136 
Wis. 2d 57, 63, 400 N.W.2d 917 (1987).  Thus, recoverable 
medical expense damages may exist beyond that of the amount paid 
by the insurer, and the insured is entitled to pursue those 
amounts.  
¶46 We 
conclude 
our 
discussion 
by 
reiterating 
the 
interaction of the three legal principles determinative of our 
decision.  In this case, as in the ordinary personal injury case 
where the costs of plaintiff's medical treatment have been paid 
by a health care insurer, the three principles co-exist and 
operate in the following fashion:  (1) the plaintiff is entitled 
to seek recovery for the reasonable value of medical services 
rendered in treating the claimed injury; (2) the collateral 
source rule allows the plaintiff to seek recovery for the 
reasonable value of medical services without consideration of 
payments made by the plaintiff's insurer; and (3) the insurer's 
subrogation rights entitle it to recoup the amounts it paid on 
the plaintiff's behalf.   
¶47 There is no justification in the operation of any of 
these rules to limit medical expense damages to the amounts 
actually paid by the plaintiff and his insurers.  Because such a 
No. 
99-0380 
 
 
23
limitation is contrary to the rule of valuation of medical 
expense damages, the collateral source rule, and principles of 
subrogation, we conclude that the circuit court erred in reducing 
the plaintiff's medical expense award to the amount actually paid 
by himself and his insurers.   
III 
¶48 Having concluded that the circuit court incorrectly 
reduced the plaintiff's medical expense award, we must determine 
the correct course of action with respect to the jury's verdict. 
 The jury awarded $98,664.18 in medical expense damages, an 
award between the amount paid by the plaintiff and his insurers 
and the stipulated reasonable value of the entirety of the 
plaintiff's claimed medical expenses.  Ordinarily, we will 
sustain a jury's verdict if there is any credible evidence to 
support it.  Morden v. Contintental AG, 2000 WI 51, ¶38, 235 
Wis. 2d 325, 611 N.W.2d 659.   
¶49 The plaintiff argues that there is no credible 
evidence 
in 
the 
record 
to 
support 
an 
award 
less 
than 
$187,931.78.  In the alternative, the plaintiff requests a new 
trial on the issue of medical expense damages, based on the 
prejudicial effect of the evidence of the payments made on the 
plaintiff's behalf.  The defendants argue that in the event we 
reverse the circuit court's reduction of damages to $66,062.58 
we should reinstate the jury's original award of $98,664.18.  
No. 
99-0380 
 
 
24
They contend there is credible evidence in the record to support 
the award. 
¶50 We agree with the defendants that there is credible 
evidence to support a reduced amount of medical expense damages. 
 For example, Dr. Maiman testified that the plaintiff suffered 
from preexisting degenerative conditions that contributed to his 
spine problems.  Accordingly, we cannot award the plaintiff, as 
a matter of law, the full $187,931.78.   
¶51 However, we also cannot allow the jury's award of 
$98,664.18 to stand.  At trial, inadmissible evidence of the 
amounts paid by the plaintiff's insurers became central to the 
issue of medical expense damages and was focused upon by the 
jury during deliberations.  A new trial may be granted on the 
grounds of improper admission of evidence when the error has 
affected the substantive rights (i.e., when the error is 
prejudicial) of the party seeking relief on appeal.  Wis. Stat. 
§ 805.18(2) (1997-98).  In applying Wis. Stat. § 805.18(2), we 
use a harmless error test.  This test is whether there is a 
reasonable possibility that the error contributed to the outcome 
of the action or proceeding at issue.  State v. Dyess, 124 
Wis. 2d 525, 543, 370 N.W.2d 222 (1985); Nischke v. Farmers & 
Merchants Bank & Trust, 187 Wis. 2d 96, 108, 522 N.W.2d 542 (Ct. 
App. 1994).  A reasonable possibility of a different outcome is 
No. 
99-0380 
 
 
25
a possibility sufficient to "undermine confidence in the 
outcome."  Dyess, 124 Wis. 2d at 545.   
¶52 Here, the evidence of the amounts paid by the 
plaintiff's insurers was inadmissible.  As a consequence of the 
parties' stipulation to the reasonableness of amounts billed by 
the health care providers, the sole issue for the jury to 
determine was the amount of medical expense damages caused by 
the defendants' negligence.  The amounts paid by the plaintiff 
and his insurers were irrelevant to the determination of the 
causal link between the treatment and the injury.  In the 
absence of a separate basis for the relevance of this collateral 
source evidence,10 evidence of such payments should have been 
deemed inadmissible.  See Estate of Holt v. State Farm Fire & 
Cas. Co., 151 Wis. 2d 455, 461, 444 N.W.2d 453 (Ct. App. 1989); 
22 Am. Jur. 2d Damages § 966 (1988). 
¶53 The admission of this irrelevant evidence of payments 
made was prejudicial.  The sole purpose of the defendants' 
presentation of that evidence was to reduce the medical expense 
                     
10 See, e.g., Hack v. State Farm Mut. Ins. Co., 37 Wis. 2d 
1, 10, 154 N.W.2d 320 (1967) (collateral source evidence 
admissible for impeachment purposes). 
Because the reasonableness of the amounts billed by the 
plaintiff's health care providers was the subject of the 
parties' stipulation, it cannot be said that the defendant's 
presentation of this evidence was material to the valuation of 
those expenses in this case.   
No. 
99-0380 
 
 
26
award by the simple fact of those payments.  This is exactly 
what the collateral source rule is designed to combat.  In 
describing the general rule that evidence of payments of 
collateral sources is inadmissible, other courts have explained: 
"'[U]nless 
the 
prejudicial 
effect 
has 
been 
cured 
by 
an 
admonition or instruction to the jury to disregard it, it has 
been almost universally held that the receipt of such evidence 
constitutes prejudicial error sufficient to require reversal.'" 
 Lawson v. Trowbridge, 153 F.3d 368, 379 (7th Cir. 1998) 
(quoting Halladay v. Verschoor, 381 F.2d 100, 112 (8th Cir. 
1967)). 
¶54 The pernicious effect of the presentation of this 
evidence where it lacks any basis in relevancy is exemplified by 
the question asked of the circuit court by the jury during its 
deliberations.  In awarding the plaintiff's medical expenses, 
the question to be answered was what amount of the $187,931.78 
in claimed medical expenses resulted from accident-related 
injuries.  The relevant evidence in answering this question was 
the competing testimony of the medical experts as to cause.  
Yet, during deliberations the jury not only inquired as to 
amounts actually paid, but received a response from the circuit 
court itemizing the specific amounts paid.  
¶55 In the case at hand, inadmissible evidence was 
presented to the jury, made central to the dispute over medical 
No. 
99-0380 
 
 
27
expenses, and focused upon by the jury during deliberations.  As 
a result, we conclude that it is reasonably possible that the 
erroneously admitted evidence of the payments made on the 
plaintiff's behalf contributed to the jury's verdict, and thus, 
we cannot reinstate the jury award of medical expenses.    
Accordingly, we remand the cause for a new trial on the issue of 
medical expense damages.   
IV 
 
¶56 In conclusion, we have determined that the plaintiff 
was entitled to seek recovery of the reasonable value of the 
medical expenses rendered without limitation to the amounts paid 
by the plaintiff and his insurers.  We therefore reverse the 
circuit court's determination that the medical expense damages 
are limited to the amounts paid by the plaintiff and his 
insurers.  Such a limitation is contrary to the Wisconsin rule 
of valuation of medical expense damages, the collateral source 
rule, and principles of subrogation.  Because we also conclude 
that the presentation of inadmissible evidence of payments made 
by plaintiff's insurers was prejudicial, we remand the cause for 
a new trial on the issue of medical expense damages.   
By the Court.—The judgment of the circuit court is reversed 
and the cause is remanded. 
 
No. 
99-0380 
 
 
28
 
No. 99-0380.ssa 
 
1 
¶57 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (concurring).  I 
join the majority opinion.  I wrote a concurrence on the issue 
of harmless error in In re the Termination of Parental Rights to 
Jayton S.: Evelyn C.R. v. Tykila S., 2001 WI 110 ¶¶37-42, ___ 
Wis. 2d ___, ___ N.W.2d ___ (Abrahamson, C.J. concurring).  My 
views on harmless error expressed in that concurrence apply to 
the present case as well.  Rather than repeat the concurrence 
verbatim in the present case, I refer the reader to the Evelyn 
C.R. case. 
 
 
No. 99-0380.jpw 
 
1 
¶58 JON P. WILCOX, J. (concurring).   I agree with the 
majority's analysis and disposition of the present case.  I 
write separately, however, to address this court's recent 
reformulation of the harmless error test.  See majority op. at 
¶51.   
¶59 For the reasons stated in Justice Crooks' concurring 
opinion in Green v. Smith & Nephew AHP, Inc., 2001 WI 109, ___ 
Wis. 2d ___, ___ N.W.2d ___, which I joined in full, I am 
confident that the harmless error test with which this court 
long has grappled should be understood in terms of "probability" 
rather than "possibility":   
 
An error will not provide grounds for reversal or a 
new trial unless the error is significant enough to 
undermine confidence in the outcome of the proceeding 
at issue.  An error is significant enough to undermine 
confidence in the outcome if there is a reasonable 
probability that without the error, the outcome would 
have been different.   
¶60 Although this formulation of the harmless error test 
is more stringent than the majority's "reasonable possibility" 
test, I nonetheless agree with the majority that the error in 
this case requires us to remand this case for a new trial on the 
issue of damages.  As the majority indicates, although the 
evidence regarding the amounts paid by the plaintiff's insurers 
was inadmissible and prejudicial, it became central in the 
dispute over the appropriate amount of medical expenses that the 
jury should award.  See majority op. at ¶¶51-55.  As such, I 
conclude that without the erroneous admission of this evidence, 
there is a reasonable probability that the damages awarded by 
No. 99-0380.jpw 
 
2 
the jury would have been different.  The error in this case was 
significant enough to undermine confidence in the outcome below. 
 
 
 
 
No. 99-0380.npc 
 
1 
¶61 N. PATRICK CROOKS, J.    (dissenting).  While I join 
Justice Diane S. Sykes' dissent, I write separately to express 
my concerns about the majority's standard for harmless error.  
See majority op. at ¶51.  The majority's standard is "whether 
there is a reasonable possibility that the error contributed to 
the outcome," and that a "reasonable possibility" is one 
"sufficient to 'undermine confidence in the outcome.'"  Id. 
(quoting State v. Dyess, 124 Wis. 2d 525, 545, 370 N.W.2d 222 
(1985)).  Since the standard for harmless error is the same for 
civil, as well as criminal, cases (Town of Geneva v. Tills, 129 
Wis. 2d 167, 184-85, 384 N.W.2d 701 (1986)), it is imperative 
that the standard be accurately conveyed.  
¶62 For at least the past 35 years, this court has 
wrestled with formulating a standard for harmless error.  See, 
e.g., Pulaski v. State, 24 Wis. 2d 450, 456-57, 129 N.W.2d 204 
(1964); State v. Spring, 48 Wis. 2d 333, 339-40, 179 N.W.2d 841 
(1970); Wold v. State, 57 Wis. 2d 344, 356-57, 204 N.W.2d 482 
(1973); State v. Grant, 139 Wis. 2d 45, 406 N.W.2d 744 (1987).  
In an attempt to formulate a single, uniform test for harmless 
error, Dyess "conclude[d] that the test of prejudice as 
formulated in Strickland subsumes the various statements of the 
harmless error test that this court has used over the years."  
No. 99-0380.npc 
 
2 
Dyess, 124 Wis. 2d at 545.11  The Strickland case referred to is 
Strickland v. Washington, 466 U.S. 668, 693 (1984), and the test 
is whether "there is a reasonable probability" that "but for" 
the error, "the result of the proceeding would have been 
different.  A reasonable probability is a probability sufficient 
to undermine confidence in the outcome."  466 U.S. at 694 
(emphasis added).   Dyess obviously adopted that test, but 
incorrectly assumed that there was no real difference between 
using 
"reasonable 
possibility" 
instead 
of 
"reasonable 
probability." 124 Wis. 2d at 544.  Granted, Dyess applied its 
test by stating that "[i]n the present case, the probability to 
be weighed is whether the defendant would have been acquitted." 
 Id. at 546 (emphasis added).  However, as evident in the 
majority's opinion here today,12 Wisconsin courts have frequently 
                     
11 Dyess' single test for harmless error standard has not 
been without controversy.  State v. Dyess, 124 Wis. 2d 525, 370 
N.W.2d 222 (1985).  In addition to the majority opinion's 
discussion of Dyess' harmless error standard, authored by 
Justice Day, in State v. Grant, 139 Wis. 2d 45, 406 N.W.2d 744 
(1987), 
Chief 
Justice 
Heffernan, 
Justice 
Day, 
Justice 
Abrahamson, and Justice Callow separately concurred on the Dyess 
issue.  The controversy has continued.  See State v. Dodson, 219 
Wis. 2d 
65, 
92-98, 
580 
N.W.2d 
181 
(1998) 
(Crooks, 
J., 
concurring, joined by Justice Steinmetz and Justice Wilcox).    
12 See also Green v. Smith & Nephew AHP, Inc., 2001 WI 109, 
 ___ Wis. 2d ___, ___ N.W.2d ___; Martindale v. Ripp, 2001 WI 
113, ___ Wis. 2d ___, ___ N.W.2d ___; Evelyn C.R. v. Tykila S., 
2001 WI 110, ___ Wis. 2d ___, ___ N.W.2d ___; and Nommensen v. 
American Cont’l Ins. Co., 2001 WI 112, ___ Wis. 2d ___, ___ 
N.W.2d ___. (I have written dissents or concurrences in these 
cases.)  But see State v. Lindell, 2001 WI 81, ___ Wis. 2d ___, 
___ N.W.2d ___ (Strickland's probability sufficient to undermine 
the confidence in the outcome test used to determine ineffective 
assistance of counsel claim). 
No. 99-0380.npc 
 
3 
used the term "reasonable possibility," and have not indicated 
that, in the context of a harmless error standard, possibility 
means probability.13   
¶63 There can be no doubt that there is a significant 
difference between what is reasonably probable and what is 
reasonably possible.  "A possibility test is the next thing to 
automatic reversal."  Wold, 57 Wis. 2d at 356-57.14  While I 
agree 
that 
the 
focus 
should 
be 
"on 
whether 
the 
error 
'undermine[s] confidence in the outcome,'" (Dyess, 124 Wis. 2d 
at 545 (quoting Strickland, 466 U.S. at 694)), if that error 
need only possibly undermine the confidence in the outcome, 
rather than probably, appellate courts, and circuit courts 
considering motions after verdict and post-convictions motions, 
will find themselves invading the purview of the jury.  A 
cornerstone of the common law is deference to the jury, which is 
diluted by determining whether the alleged error possibly, and 
only possibly, may have affected the jury's decision.  
                     
13 According to my research, on few occasions since Dyess 
has this court, in a majority opinion, noted that reasonable 
possibility 
means 
reasonable 
probability. 
 
See 
State 
v. 
Armstrong, 223 Wis. 2d 331, 372 n.40, 588 N.W.2d 606 (1999); see 
also State v. Huntington, 216 Wis. 2d 671, 695-96, 575 N.W.2d 
268 (1998).  However, several court of appeals opinions have 
applied the Dyess harmless error test using the correct 
"reasonable probability" standard.  See, e.g., State v. A.H., 
211 Wis. 2d 561, 569, 566 N.W.2d 858 (Ct. App. 1997); State v. 
Joseph P., 200 Wis. 2d 227, 237, 546 N.W.2d 494 (Ct. App. 1996). 
14 Wold's "reasonable probability" test for harmless error 
was replaced by Dyess' "reasonable possibility" test.  
No. 99-0380.npc 
 
4 
¶64 I do not take issue with the term "reasonable 
possibility," so long as it is made clear that this term means 
reasonable probability, and probability is the standard to be 
applied.  Accordingly, I offer the following test for harmless 
error, which makes clear that Dyess' use of the term "reasonable 
possibility" is intended to require "reasonable probability": 
 
Wisconsin Stat. § 805.18(2) provides that an error 
requires reversal only where it has "affected the 
substantial rights of the party" claiming error.  We 
have long recognized that the focus of a court's 
analysis under this statute is whether, in light of 
the 
applicable 
burden 
of 
proof, 
the 
error 
is 
significant enough to "undermine confidence in the 
outcome" of the trial.  Dyess, 124 Wis. 2d at 544-45. 
 An 
error 
is 
significant 
enough 
to 
undermine 
confidence in the outcome if there is a reasonable 
probability of a different outcome without the error. 
 Dyess 
made 
it 
clear 
that 
"probability" 
is 
substantially 
the 
same 
as 
"possibility" 
under 
Wisconsin law.  Id. at 544. 
¶65 That Wisconsin courts have often used "reasonable 
possibility" rather than "reasonable probability" should not 
dissuade the court from correcting such missteps today.  See, 
e.g., State v. Sullivan 216 Wis. 2d 768, 792, 576 N.W.2d 30 
(1998); State v. Alexander, 214 Wis. 2d 628, 653, 571 N.W.2d 662 
(1997).  There is no time like the present——dum fervet opus15——
when the court has before it five cases wherein it discusses the 
harmless error standard, to clarify Dyess.   
¶66 For the reasons stated herein, I respectfully dissent. 
 
                     
15 "While the action is fresh; in the heat of action."  
Black's Law Dictionary 518 (7th ed. 1999).  
No. 99-0380.npc 
 
5 
 
99-0380.dss 
 
1 
¶67 DIANE S. SYKES, J. (dissenting).  I respectfully 
dissent, for the reasons stated in my dissent in Ellsworth v. 
Shelbrock, 2000 WI 63, 235 Wis. 2d 678, 611 N.W.2d 76 (Sykes, 
J., dissenting). 
¶68 As in Ellsworth, I agree with the majority here that 
the collateral source rule applies.  The main focus of the 
analysis is the proper measure of damages for past medical 
expenses in a personal injury case, and also the influence of 
the law of subrogation. 
¶69 I conclude, as I did in Ellsworth, that the proper 
measure of medical damages is the amount reasonably and 
necessarily 
incurred 
for 
the 
care 
and 
treatment 
of 
the 
plaintiff's injuries, not an artificial, higher amount based 
upon what the plaintiff might have incurred if he or she had a 
different sort of health plan or no health plan at all.  See 
Ellsworth, 2000 WI 63, ¶¶27, 31 (Sykes, J., dissenting).  It is 
inconsistent with the "make whole" function of compensatory 
damages to enrich a plaintiff by measuring medical expense 
damages by reference to their highest retail value rather than 
what was actually incurred.  Id. at ¶¶23, 31. 
¶70 The purpose of the collateral source rule is to 
prevent payments made on behalf of the plaintiff from inuring to 
the benefit of the defendant.  Majority op. at ¶29; see also 
Ellsworth, 2000 WI 63, ¶7.  That purpose is not served by 
completely disengaging the measure of medical damages from the 
facts and requiring the defendant to pay an amount in excess of 
what was actually incurred by the plaintiff or absorbed by 
99-0380.dss 
 
2 
someone else (employer, insurer, government or charity) on the 
plaintiff's behalf. 
¶71 The purpose of subrogation is to prevent double 
recovery.  Majority op. at ¶33; see also Ellsworth, 2000 WI 63, 
¶18.  I see little difference between double recovery and the 
inflated recovery that results in the circumstances of this 
case.  Where subrogation is present and the application of the 
collateral source rule would defeat its purposes, subrogation 
trumps the collateral source rule.  See id. at ¶25 n.1 (Sykes, 
J., dissenting) (citing Jindra v. Diederich Flooring, 181 Wis. 
2d 579, 511 N.W.2d 855 (1994); Voge v. Anderson, 181 Wis. 2d 
726, 512 N.W.2d 749 (1994); Rixmann v. Somerset Pub. Sch., 83 
Wis. 2d 571, 266 N.W.2d 326 (1978); and Lambert v. Wrensch, 135 
Wis. 2d 105, 399 N.W.2d 369 (1987), relying on Heifetz v. 
Johnson, 61 Wis. 2d 111, 211 N.W.2d 834 (1973)).  
¶72 The majority cites Thoreson v. Milwaukee & Suburban 
Transport Corp., 56 Wis. 2d 231, 243, 201 N.W.2d 745 (1972) and 
McLaughlin v. Chicago, Milwaukee, St. Paul & Pacific Railroad 
Co., 31 Wis. 2d 378, 395, 143 N.W.2d 32 (1966) for the 
proposition 
that 
the 
measure 
of 
medical 
damages 
is 
the 
"reasonable value" of the medical services rendered, regardless 
of whether the plaintiff incurred, was charged or paid for those 
services.   This may make sense as a measure of damages in 
cases——like Thoreson and McLaughlin——where there is no actual 
charge by which to measure damages because the plaintiff's 
medical costs were gratuitously absorbed by another (the welfare 
99-0380.dss 
 
3 
department in Thoreson and the plaintiff's religious order in 
McLaughlin). 
¶73 But Thoreson acknowledged that in most cases the 
measure of damages is the actual expense incurred or charged.  
Thoreson, 56 Wis. 2d at 243-44; see also Ellsworth, 2000 WI 63, 
¶15.  And here, as in most cases, there was an actual amount 
incurred (a small amount by the plaintiff and a larger amount by 
his insurers), and that amount came to a total of $66,062.58.  I 
see no justification, either in the collateral source rule or 
the law of subrogation, for simply disregarding that actual 
amount and instead allowing recovery of an artificial, higher 
amount——$187,931.78——that no one ever has or ever will incur. 
¶74 As I said in Ellsworth, "the measure of damages is not 
what the highest payor would have paid for the same medical 
services but what was actually incurred in the care and 
treatment of the plaintiff's injuries. . . . By this measure, 
the defendant is not relieved of responsibility for his tortious 
conduct, and the plaintiff is made whole."  Id. at ¶31 (Sykes, 
J., dissenting).  I reach the same conclusion here, and would 
affirm the circuit court.   
¶75 I am authorized to state that Justice N. PATRICK 
CROOKS joins this dissenting opinion.   
 
99-0380.dss 
 
1