Title: BLYTHE v. UNIVERSITY OF OKLAHOMA

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

BLYTHE v. UNIVERSITY OF OKLAHOMA  BLYTHE v. UNIVERSITY OF OKLAHOMA 2003 OK 115 82 P.3d 1021 Case Number: 98371 Decided: 12/23/2003 THE SUPREME COURT OF THE STATE OF OKLAHOMA VICKIE BLYTHE, Petitioner, v. THE UNIVERSITY OF OKLAHOMA, COMPSOURCE OKLAHOMA, and THE WORKERS' COMPENSATION COURT, Respondents. CERTIORARI TO THE COURT OF CIVIL APPEALS, DIVISION II APPEAL FROM THE WORKERS' COMPENSATION COURT HONORABLE SUSAN WITT CONYERS, TRIAL JUDGE ¶0 This workers' compensation case arises out of Petitioner Vickie Blythe's (hereinafter "Claimant") quest for reimbursement of prescription medication expenses actually incurred by her health insurance carrier on her behalf in addition to her personal out-of-pocket prescription expenses. Claimant filed a Form 3 on July 18, 1994, alleging work-related injury to her neck with alleged consequential psychological overlay. On June 1, 1999, The Workers' Compensation Court (hereinafter "WCC") ordered Respondents University of Oklahoma and its workers' compensation carrier Compsource Oklahoma (hereinafter collectively referred to as "Employer") to pay permanent total disability (hereinafter "PTD") benefits and additionally ordered Employer to provide reasonable and necessary medications needed to maintain Claimant's physical and psychological state. This order was affirmed by a three-judge-panel of the WCC. Employer appealed, and the Court of Civil Appeals (hereinafter "COCA") affirmed the PTD award, but reversed the WCC's determination as to Claimant's alleged psychological injury. Thus, the COCA modified the WCC's order by denying continuing medical prescriptions for Claimant's psychological conditions. Claimant thereafter filed with the Workers' Compensation Court a Form 19 request for reimbursement from Employer for the cost of prescriptions, which she had initially filled via partial personal payments in addition to payments made by her health insurance carrier. Claimant claimed entitlement to full reimbursement from Employer for the total cost of prescriptions including amounts not personally paid by Claimant, but actually paid on her behalf by her health insurance carrier pursuant to THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE WORKERS' COMPENSATION COURT'S ORDER IS VACATED IN PART; AND THE CAUSE IS REMANDED FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH TODAY'S PRONOUNCEMENT. Jack F. Tracy of Purcell, Oklahoma, for Petitioner/Claimant. M. Thad Groom and Tava S. Jones of Groom & Hammond, P.C., of Oklahoma City, Oklahoma, for Respondent/Employer. Lavender, J. ¶1 The issue in the present cause is whether the collateral source rule applies in the context of a workers' compensation claim for prescription expense reimbursement. If applicable, the collateral source rule ensures that the injured employee's recovery is not diminished by benefits, saving or insurance of the injured employee. We hold that the collateral source rule, to the extent it is codified in the Workers' Compensation Act at I FACTS AND PROCEDURAL HISTORY¶2 Claimant initiated her workers' compensation action in July, 1994 alleging she suffered a work-related injury during her employment with the University of Oklahoma. Claimant alleged primarily neck injury and consequential psychological overlay injury arising from lifting, bending and straining. In June, 1999, the WCC awarded PTD benefits and further ordered Employer to provide Claimant with reasonable and necessary continuing medical maintenance "limited to medications needed to maintain the [C]laimant's physical and psychological state, to be provided under the care of Dr. Ed Ellis (including examinations to provide same)." This order was affirmed by a three-judge panel of the WCC. Employer appealed and the COCA affirmed the PTD award and order regarding continuing medical maintenance limited to medications necessary to maintain Claimant's physical injury, but reversed the trial court's determination regarding Claimant's alleged psychological injury. In accordance with its determination that competent medical evidence did not support a finding that Claimant suffered a psychological injury, the COCA modified the trial court's order by eliminating Claimant's award for continuing medical maintenance related to her psychological conditions.2 ¶3 In January, 2000, Claimant filed her Form 19 in the Workers' Compensation Court, seeking reimbursement for the cost of prescription medications. Employer challenged Claimant's recovery of the cost of prescriptions on three bases: (1) Claimant sought reimbursement for cost of prescriptions unrelated to her work-related injury; (2) the reasonableness and necessity for the numerous quantities of prescription medications being obtained by Claimant; and (3) Claimant sought reimbursement for cost of prescriptions not personally paid out of her own pocket, but actually paid on Claimant's behalf by her health insurance carrier. Pursuant to Employer's objections, the WCC entered an Order for an Independent Medical Opinion on reasonable and necessary prescriptions. The record reflects that ultimately, the parties stipulated to a detailed itemization of related, reasonable and necessary prescription medications, which included stipulated amounts of Claimant's out-of-pocket expenses in the amount of $19,882.42 as well as the total amount of prescription medication expenses (Claimant's actual out-of-pocket cost plus the cost actually paid by Claimant's health insurance carrier) in the amount of $46,344.24. ¶4 The record illuminates little detail regarding Claimant's health care coverage other than the fact that the third-party payor, Blue Cross and Blue Shield health insurance carrier, was a "group health policy" provided to Claimant by Employer as a part of a disability/compensation package as an employee at the University of Oklahoma. Claimant alleges (and Employer does not dispute) that she personally paid at least a portion of premiums3 for her own health insurance with Blue Cross. Unfortunately, we are prevented from verifying specifics concerning the subject insurance coverage because neither the policy, nor the terms thereof were included in the record. ¶5 Claimant argued her entitlement to reimbursement for the total amount of $46,344.24 for prescription expenses pursuant to application of the collateral source rule and 85 O.S. § 454, which provides in pertinent part as follows: A. No benefits, saving or insurance of the injured employee, independent of the provisions of this act shall be considered in determining the compensation or benefit to be paid under this act. Id. ¶6 The WCC entered a "Miscellaneous Order" on September 25, 2002, wherein the WCC specifically rejected Claimant's demand for application of the collateral source rule to this case and limited reimbursement to $19,882.42 for Claimant's actual out-of-pocket prescription expenses and denied recovery for the additional amount expended for prescriptions on her behalf by her health insurance carrier. Claimant appealed and the COCA sustained. II THE COLLATERAL SOURCE RULE, AS CODIFIED IN A. The collateral source rule and ¶7 The collateral source rule traditionally applies in the context of common law tort actions to determine the amount of compensatory damages "which will compensate [the injured party] for all detriment proximately caused." See 23 O.S. 2001 § 616; Denco Bus Lines, Inc. v. Hargis, 1951 OK 11, 229 P.2d 560 , 564. The general rule applied to determine the proper amount which will compensate for the injured party's "whole loss" in a common law tort action is as follows: "total or partial compensation for an injury received by the injured party from a collateral source wholly independent of the wrongdoer will not operate to lessen the damages recoverable from the person causing the injury." Id. at 564 (quoting 15 AM. JUR. Damages § 198). Further, [i]t is well settled that damages recoverable for a wrong are not diminished by the fact that the party injured has been wholly or partly idemnified [sic] for his loss by insurance effected by him and to the procurement of which the wrongdoer did not contribute. . . . The same has been held true of compensation received by an employee from a benefit fund maintained by the employer. Id. ¶8 B. Extant Oklahoma workers' compensation case law foreshadows today's pronouncement. ¶9 While the parties characterize this matter as a case of first impression, Oklahoma workers' compensation jurisprudence has foreshadowed the result in this case. In the workers' compensation case of Tidewater Associated Oil Co. v. Ale, ¶10 More recently, this Court approved for publication the COCA opinion of Bill Hodges Truck Co. v. Humphrey, [The compensation carrier] has no right to expect an employee to supplement his common law remedies and the compensation carrier's statutory lien, by purchasing his own insurance. If the employee does choose to expend his own funds to provide additional protection for himself . . . by paying for an accident and health policy . . . the compensation carrier does not thereby acquire additional rights. It does not become a third-party beneficiary of the employee's insurance contract. Humphrey ¶11 It follows from the plain meaning of C. Extension of Handy v. City of Lawton fringe benefit analysis in the context of workers' compensation. ¶12 Claimant asserts she personally paid a portion of premiums for her health insurance coverage, which was provided as a part of Claimant's benefits package with Employer University of Oklahoma.14 In our view, Claimant is entitled to reimbursement for the amount paid on her behalf by her insurance carrier regardless of Claimant's payment of premiums for such coverage because such coverage was a fringe benefit of her employment for which Employer has no right to set-off. Generally, this Court has held in a tort action that an employer is not entitled to a set-off for an amount attributable to a fringe benefit received by the employee. Handy v. City of Lawton, 1992 OK 111, 835 P.2d 870; Folkestad v. Burlington Northern, Inc., 813 F.2d 1377 (9th Cir. 1987). Although these cases are not workers' compensation cases, they are common law tort actions brought by employees against their employers and they address the issue of whether the employer is entitled to offset liability for health insurance benefits recovered by the employee. Handy provides "that the courts were unanimous that the determining factor was the purpose and nature of the fund, and not merely the source." Handy, 835 P.2d at 874. These cases further provide "[i]f the fund is for general hospital and medical coverage upon which the insured may make a claim without regard to liability on the part of the employer, the policy is a fringe benefit, and is part of the employee's income. The collateral source rule prohibits a set-off of benefits received thereunder by the employee." Handy, 835 P.2d at 874-75 (citing Folkestad, 813 F.2d at 1381). ¶13 The rule enunciated in Handy and Folkestad falls squarely in line with the older workers' compensation case of Tidewater Associated Oil Co. v. Ale, 1942 OK 373, 130 P.2d 991 , which likewise prohibited the employer's set-off of the employee's insurance benefit in the context of determination of a workers' compensation award. Further, pursuant to the test set forth in Handy and Folkestad, the nature and purpose of the fund at issue in this case, Claimant's health insurance benefit, was in the nature and purpose of health insurance coverage, which employees such as Claimant are entitled to make claims thereto without regard to Employer's liability. Clearly, Claimant's health insurance constitutes a fringe benefit of Claimant's employment to which Employer is not entitled to a set-off. Claimant is therefore entitled to recovery of $26,461.82, which represents the amount Claimant's health insurance carrier paid on Claimant's behalf for prescriptions,15 in addition to $19,882.42, which is the amount the WCC previously ordered to be reimbursed for Claimant's personal prescription expenses. III SUMMARY ¶14 In sum, we hold that the collateral source rule, as codified in the Workers' Compensation Act at 85 O.S. § 45(A.), applies in this case and the COCA erred in sustaining the WCC's refusal to apply the rule and/or terms of § 45(A.) in this case. Claimant is entitled to recover her related, reasonable and necessary personal out-of-pocket expenses for prescriptions in the amount of $19,882.42, as was awarded by the WCC below. Further, Claimant is also entitled to recover related, reasonable and necessary prescription expenses in the amount of $26,461.82, which was the amount expended on Claimant's behalf by her health insurance carrier. Both the WCC and the COCA erred in allowing Employer a credit or set-off in this workers' compensation action for the amount expended by Claimant's health insurance carrier for the cost of related, reasonable and necessary prescription medications. Pursuant to 85 O.S. 2001 § 45(A.), Claimant is entitled to total reimbursement for prescription expenses in the amount of $46,344.24. ¶15 Upon certiorari previously granted, THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE WORKERS' COMPENSATION COURT ORDER IS VACATED IN PART; AND THE CAUSE IS REMANDED FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH TODAY'S PRONOUNCEMENT. ¶16 OPALA, V.C.J., HODGES, LAVENDER, KAUGER and BOUDREAU, JJ., concur. ¶17 SUMMMERS, J., concurs in part; dissents in part. ¶18 WATT, C.J., HARGRAVE and WINCHESTER, JJ., dissent. FOOT