Title: Tri-County Equipment & Leasing v. Klinke

State: nevada

Issuer: Nevada Supreme Court

Document:

128 Nev., Advance Opinion 33
IN THE SUPREME COURT OF THE STATE OF NEVADA

    
 
  
  
   
   
  
   
  
 
   
   
   
  
  
 

TRI-COUNTY EQUIPMENT & No. 55121
LEASING, LLC,
FILED
JUN 28 2012

  

Appeal from a district court judgment entered on \& jury
verdict in a tort action. First Judicial District Court, Carson City: James
Todd Russell, Judge.

Reversed and remanded.

Burton Bartlett & Glogovac, Ltd., and Scott A. Glogovac, Gregory J.

Livingston, and Michael A. Pintar, Reno,
for Appellant.

Kilpatrick Johnston & Adler and Charles M. Kilpatrick, Carson City,
for Respondent.

BEFORE THE COURT EN BANC.

OPINION
By the Court, HARDESTY, J.
In this appeal, we consider whether proof of California

Jworkers’ compensation payments can be admitted into evidence in a

 

personal injury action in Nevada. Because Nevada, the forum state, and

 

|California, the state in which the payments were made, both have statutes

that permit proof of workers’ compensation payments to be allowed into

 

\2- 2031

  
co oe

 

evidence in personal injury actions, we conclude that Nevada law governs.
Applying Nevada law, we conclude that evidence of the actual amount of
workers’ compensation benefits paid should have been admitted and that
a clarifying jury instruction provided by statute should have been given.
We therefore reverse the judgment and remand for further proceedings.
‘ACTS AND PROCED! HISTOR’

Respondent Angela Klinke filed a complaint in a Nevada
district court for personal injury against appellant Tri-County Equipment
& Leasing, LLC, after a generator towed by a Tri-County truck in Nevada

struck Klinke’s vehicle, injuring her, At the time of the accident, Klinke

 

was a California resident acting in the course and scope of her
employment with her California employer. For her injuries, Klinke
received California workers’ compensation benefits through her employer.
Pursuant to negotiations between the workers’ compensation carrier and
Klinke’s medical providers, Klinke's medical providers allegedly accepted
as full payment for their services an amount less than the amount stated
in their bills; these types of negotiated discounts are often referred to as
“write-downs.”

Prior to trial, Klinke and Tri-County filed motions in limine
regarding the workers’ compensation payments and medical expense
write-downs. Klinke sought, in relevant part, to exclude evidence of the
workers’ compensation payments and write-downs under the collateral
source rule, which bars evidence of payments for injuries made by an
independent third party, and she argued that NRS 616C.215, the Nevada
statute governing admissibility of workers’ compensation payments, did
not apply. Conversely, Tri-County argued in its own motion that Klinke’s
[workers’ compensation payments were admissible under NRS 616C.215.
‘Tri-County also argued, in opposition to Klinke’s motion, that “evidence of

 
California workers] compensation payments and/or other benefits is
admissible under both Nevada and California law as an exception to the
collateral source rule.” Equating NRS 616C.215 to a provision in the

California Labor Code, Tri-County maintained that “just as Nevada

 

provides a mechanism for the full recovery of all monies paid on behalf of

 

an employee for a workers{]] compensation claim, so does California.” The
district court summarily concluded, without citation to legal authority,
that NRS 616C.215 did not apply because Klinke had received payments
pursuant to California's, rather than Nevada’

scheme. Inexplicably, after addressing NRS 616C.215, the district court

, workers’ compensation

 

failed to address the applicability of California law, despite Tri-County’s
argument that Klinke’s workers’ compensation payments were admissible
“under both California and Nevada law."! (Emphases added),

After the trial concluded, a jury awarded Klinke damages in
the total principal amount of $27,510. The special jury verdict form stated
that the award included $17,510 for medical expenses; however, pursuant
to the negotiated write-downs, Klinke's medical providers accepted
substantially less as full payment for their services. Tri-County
subsequently moved the district court to reduce the jury's verdict on the
medical cost damages to the amount actually paid, but the district court
denied the motion. This appeal followed.

‘Tri-County subsequently filed a motion for the district court to
reconsider its decision, which Klinke opposed. Notably, Tri-County again
argued that Klinke's arguments failed under both Nevada and California
law, but the district court summarily reiterated that NRS 616C.215 did
not apply without addressing the applicability of California law.

  

 

 
    
  
  
    
   
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 

DISCUSSION
On appeal, Tri-County repeats its view that “under both
California and Nevada law, evidence of worker[s'] compensation payments

admissible as an exception to the collateral source rule,” which

   

generally renders evidence of a collateral source of payment for an injury
inadmissible, Proctor v, Castelletti, 112 Nev. 88, 90, 911 P.2d 853, 854
(1996). Because both Nevada, the forum state, and California, the state in
which the payments were made, have an intorest in this case, and Tri-
County addresses the outcome under the law of both states, we examine
whether a conflict-of-law analysis is necessary. ‘This is
law and the district court's decision that NRS 616C.215 did not apply
must be reviewed de novo. See Stephans v, State, 127 Nev, _, __, 262
P.3d 727, 730 (2011); see also Canfora v, Coast Hotels & Casinos, Inc., 121
Nev. 771, 775, 121 P.3d 599, 602 (2005).

 

1 is a question of

When the laws of more than one state potentially apply, before
undertaking a conflict-of-law analysis, a court should determine whether a
conflict of law actually exists. 15A C.J.S. Conflict of Laws § 30 (2012).
See, e.g., Johnson v, Nextel Communications, Inc., 660 F.3d 131, 198 (24
Cir. 2011); Estate of Doe v. Islamic Republic of Iran, 808 F. Supp. 24 1, 20
(D.D.C. 2011); Edifees Ine. v. TIBCO Software Inc., 756 F. Supp. 2d 1313,
1317 (W.D. Wash. 2010). “A conflict of law exists when two or more states

 

have legitimate interests in a particular set of facts in litigation, and the
laws of those states differ or would produce different results in the case.”
AIG Premier Ins. Co. v. RLI Ins, Co,, 812 F. Supp. 24 1315, 1321 (M.D.
Fla. 2011) (internal quotations omitted). “If there is no conflict, no further
analysis is necessary, and the law of the forum state usually applies.” 154
C.J.S, Conflict of Laws § 30 (2012) (emphasis added); Edifees, 756 F. Supp.
2d at 1317. While both Nevada and California have legitimate interests in

 

4

 
this case, as Tri-County argues, evidence of Klinke's workers!
compensation payments would be admissible under the law of either state.
See NRS 616C.215(10); Cal. Lab. Code § 3855 (West 2011).2 As such,
there is no conflict, and Nevada law applies even though Klinke received
California workers’ compensation payments.?

‘The collateral source doctrine does not change this result. As
noted, this court has adopted “a per se rule barring the admission of a
collateral source of payment for an injury into evidence for any purpose.”
Proctor, 112 Nev. at 90, 911 P.2d at 854, However, Nevada recognizes a
limited exception to the collateral source rule for workers’ compensation
payments. In Cramer_v. Peavy, this court expressly held that NRS
616C.215(10) creates an exception to the collateral source rule. 116 Nev.
575, 680, 8 P.3d 665, 669 (2000). Pursuant to NRS 616C.216(10), “fiJn any
trial of an action by the injured employee... against a person other than
the employer or a person in the same employ, the jury must receive proof,

of the amount of all payments made or to be made by the insurer or the

"Tri-County argued below and on appeal that California Labor Code
section 3856 applies. However, that statute addresses liens, not the
admissibility of benefits received by an injured employee.

In its order, the district court refused to apply Nevada workers’
compensation law because the workers’ compensation payments were
made in California, However, the district court did not address the
application of California law. Even if a conflict existed, Nevada law would
apply because the statutory provision at issue, NRS 616C.215(10), is an
evidentiary rule. See Cramer v, Peavy, 116 Nev. 575, 580, 3 P.3d 665, 669
(2000) (explaining that NRS 616C.215(10) relates to what a jury can
consider); see also Restatement (Second) of Conflict of Laws § 138 (1971)
("The local law of the forum determines the admissibility of evidence.”).

   

 

 

 
oo 904

Administrator [of the Division of Industrial Relations].” (Emphases
added.) The court must then instruct the jury to follow the court’s
damages instructions without reducing any award by the amount of
workers’ compensation paid, thus leaving unaltered the general
substantive law on calculating damages. ‘The jury-instruction language

specifically suggested by the statute reads:

 

Payment of workmen's compensation

benefits by the insurer, or in the case of claims

involving the Uninsured Employers’ Claim

Account or a subsequent injury account the

Administrator, is based upon the fact that a

compensable industrial accident occurred, and

does not depend upon blame or fault. If the

plaintiff does not obtain a judgment in his or her

favor in this case, the plaintiff is not required to

repay his or her employer, the insurer or the

Administrator any amount paid to the plaintiff or

paid on behalf of the plaintiff by the plaintiffs

‘employer, the insurer or the Administrator.

If you decide that the plaintiff is entitled to

judgment against the defendant, you shall find

damages for the plaintiff in accordance with the

court's instructions on damages and return your

verdict in the plaintiff's favor in the amount so

found without deducting the amount of any

compensation benefits paid to or for the plaintiff.

The law provides a means by which any

compensation benefits will be repaid from your

award.
NRS 616C.215(10). We have previously recognized that this statute
benefits both the plaintiff and the defendant by preventing jury
speculation as to workers’ compensation benefits received. See Cramer,
116 Nev. at 581, 3 P.3d at 669.

NRS 616C.215(10)'s application to “any trial” gives the statute

universal applicability to trials involving a plaintiff receiving workers’

 
0

 

compensation payments, at least when the plaintiff is required to first use
any recovery to reimburse the insurer for amounts paid.

‘The Supreme Court of North Carolina addressed a similar
issue in Frugard v, Pritchard, 450 S.E.2d 744 (N.C. 1994). In that case,
the plaintiff was permitted to exclude from her North Carolina trial
evidence of Virginia workers’ compensation payments that she received as
a result of an accident in North Carolina, Id, at 744-45. On appeal, the
court addressed whether it “should hold that under [North Carolina

 

case
law, evidence of out-of-state worker{s'] compensation payments is not
ible."*

 

admissible when by statute evidence of i
Id, at 746. ‘The court saw “nothing in the distinction between the[] two
situations that mafde] a difference.” Id, Thus, believing that North

‘ate payments is admi

Carolina “should have a uniform rule,” the court concluded “that evidence
of out-of-state worker{s!] compensation payments [was] admissible in
actions against third parties.” Id.

In this case, because the primary purpose of the statute is to
avoid confusing the jury about the payment and nature of workers’
compensation benefits, and their relation to the damages awarded,
Cramer, 116 Nev. at 580-81, 3 P.8d at 669, the statute should not be
construed so narrowly as to apply only to Nevada workers’ compensation
benefits, thus defeating the statute's purpose in cases in which those
benefits have been paid under another state's Jaws. Nothing in NRS

‘The applicable North Carolina statute required, in relevant part,
that {t]he amount of compensation . .. paid or payable on account of such
injury or death shall be admissible in evidence in any proceeding against

the third party.” Frugard v, Pritchard, 450 S.E.2d 744, 745 (N.C. 1994)
{alterations in original) (quoting N.C. Gen. Stat. § 97-10.2(e)).

 
616C.215(10) precludes its applicability to cases in which workers’
compensation payments were made under another state’s similar system,
In a trial governed by Nevada law, the workers’ compensation payments
made to an injured employee must be admitted as evidence and the proper
instruction regarding the jury’s consideration of those payments must be
given, The benefits received by both parties in Nevada courts under
Nevada law remain the same whether the payments were made under this
state's or another state's statutes, and there is no logical reason to treat
them differently.’ Thus, pursuant to NRS 616C.215(10), the evidence of

 

the amounts actually paid should have been admitted and the clarifying
instruction given.

Because the amount of workers’ compensation payments
actually paid necessarily incorporates the written down medical expenses,
it is not necessary to resolve whether the collateral source rule applies to
medical provider discounts in other contexts.’ See Sparks v. State, 121

Indeed, Tri-County argued below that Klinke's employer “has
locations in both Nevada and California and that its workers{']
‘compensation carrier is the same for both states.”

"This court solicited briefing from the parties on the applicability of
the collateral source rule to medical provider discounts in other types of
cases, The collateral source rule applies “if an injured party received
some compensation for his injuries from a source wholly independent of
the tortfeasor ...." Proctor v. Castelletti, 112 Nev. 88, 90 n.1, 911 P.2d
853, 854 n.1 (1996) (quoting Hrnjak v. Graymar, Incorporated, 484 P.2d
599, 602 (Cal. 1971)). Several courts have addressed the applicability of
the collateral source rule to medical provider discounts in cases other than
workers’ compensation payments. Compare Aumand v. Dartmouth
Hitchcock Medical Center, 611 F. Supp. 2d 78, 91-92 (D.N.H, 2009)
(applying New Hampshire Law); Lopez v. Safeway Stores, Inc., 129 P.3d
487, 496 (Ariz. Ct. App. 2006); Montgomery Ward & Co,, Inc. v, Anderson,

continued on next page...

 

 

 
er

 

Nev. 107, 110-11, 110 P.3d 486, 488 (2005) ("Where legislative intent can
be clearly discerned from the plain language of the statute, it is the duty of
this court to give effect to that intent and to effectuate, rather than nullify,
the legislative purpose.”), We reverse the judgment of the district court
land remand for further proceedings consistent with this opinion. See
Carver v, ElSabawi, 121 Nev. 11, 14, 107 P.3d 1283, 1285 (2005)
(explaining that “a judgment will...be reversed by reason of an

continued

1976 S.W.2d 382, 385 (Ark. 1998); Mitchell v. Haldar, 883 A.2d 32, 40 (Del.
12005); Goble v. Frohman, 848 So. 24 406, 409-10 (Fla. Dist. Ct. App. 2003);
|Dyet v. McKinley, 81 P.3d 1236, 1238-39 (Idaho 2003), abrogated on other
jgrounds by Verska v. St. Alphonsus Regional Med. Ctr., 265 P.3d 502, 507°
09 (idaho 2011); Wills v, Foster, 892 N.E.2d 1018, 1032-38 (Ill. 2008);
|Haygood v. De Escabedo, 356 S.W.3d 390, 398 (Tex. 2011), with Howell v,
Hamilton Meats & Provisions, Inc,, 257 P.3d 1130, 1138 (Cal. 2011)
Stanley v, Walker, 906 N.E.2d 852, 856-57 (Ind. 2009); Martinez_v.
Milburn Enterprises. Inc,, 233 P.3d 205, 229 (Kan. 2010); Robinson v.
Bates, 857 N.E.2d 1195, 1202 (Ohio 2006); Haselden v, Davis, 579 S.E.2d
293, 294 (S.C, 2003). From these competing authorities, it is apparent
that there are numerous reasons for medical provider discounts, including
discounts that result when an injured party’s insurance company has
secured medical provider discounts as part of the health insurance plan.
[At least in those circumstances, such benefits may reside within the scope
lof the collateral source rule, although that is a legal issue we leave for a
case that requires its determination. Whether the collateral source rule
applies to other types of medical expense discounts would require evidence
lof the reason for the discount and its relationship to the third-party
payment.

 

 
erroneous [jury] instruction, [if] upon consideration of the entire case,
including the evidence, it appears that such error has resulted in a

miscarriage of justice").

phen ee, 4,
ardesty

 

 
ome a

 

GIBBONS, J., with whom CHERRY, C.J., agrees, concurring:

‘The two main issues raised by the parties in this appeal are
whether Nevada's collateral source rule applies to the payment of
California workers’ compensation benefits to Klinke and whether it
applies to medical provider discounts. I concur with the majority's
decision to reverse the district court judgment. The district court should
have addressed California workers’ compensation law since Klinke
received California workers’ compensation benefits. While I also concur
with footnote 6 in the majority opinion in that medical provider discounts

collateral source rule, I

 

Jappear to reside within the scope of Nevad
/would address this issue since the parties briefed and argued it in both the
Jdistrict court and this court. In doing so, I conclude that Nevada's
collateral source rule bars the admission of evidence showing medical
provider discounts or “write-downs.”

Nevada's collateral source rule is a per se rule that bars the
introduction of evidence that a plaintiff has received compensation for his,
lor her injuries from a third party wholly independent of the tortfeasor.
Proctor v. Castelletti, 112 Nev. 88, 90 & n.1, 911 P.2d 853, 854 & n.1
(1996); see also Winchell v. Schiff, 124 Nev. 938, 945-46, 193 P.3d 946, 951
(2008); Bass-Davis v. Davis, 122 Nev. 442, 458-54, 184 P.3d 103, 110
(2006). Proctor dealt with a personal injury lawsuit in which the district
[court permitted the defendant to admit evidence of the plaintiffs disability
insurance payments. 112 Nev. at 89, 911 P.2d at 853. In Proctor, we
ladopted “a per_se rule barring the admission of a collateral source
payment for an injury into evidence for any purpose.” Id. at 90, 911 P.2d
lat 854. In doing so, we followed the United States Supreme Court's lead,
Hichel_v. New York Central Railroad Co, 375 US. 253 (1963), in

 
concluding that “cJollateral source evidence inevitably prejudices the jury
because it greatly increases the likelihood that a jury will reduce a
plaintiff's award of damages because it knows the plaintiff is already
receiving compensation,” and therefore, “the prejudicial impact of
collateral source evidence inevitably outweighs the probative value of such
evidence.” Proctor, 112 Nev, at 90-91, 911 P.2d at 854 (further explaining
that “there is no circumstance in which a district court can properly
exercise its discretion in determining that collateral source evidence
outweighs its prejudicial effect”). Ultimately, we held that the distri

 

court erred in admitting evidence of disability insurance payments. Id, at
91, 911 P.2d at 854.

Likewise, in Bass-Davis, the district court, in an action
seeking damages for lost wages, admitted evidence that Bass-Davis
received a paycheck during her four-month leave of absence following
surgery on an injury, 122 Nev. at 447, 184 P.3d at 106. We held that the
district court erred in admitting evidence that Bass-Davis received
compensation from her employer during a leave of absence. Id. at 454, 134
P.3d at 110-11. In doing so, we determined that the evidence of
compensation damaged the jury’s determination of Bass-Davis’ credibility
and prejudiced Bass-Davis’ ability to receive fair compensation for injuries
caused by the defendant. Id, at 454, 134 P.3d at 111

“{TJhe focal point of the collateral source rule is not whether
an injured party has ‘incurred’ certain medical expenses. Rather, it is
whether a tort victim has received benefits from a collateral source that
cannot be used to reduce the amount of damages owed by a tortfeasor.”
Acuar v. Letourneau, 531 S.E.2d 316, 822 (Va. 2000). In general, the

 

‘medical provider and the third-party insurer paying the medical costs on

 

 
 

=

behalf of the insured tort victim negotiate the write-downs. The reduced
amounts are “as much of a benefit for which [a plaintiff] paid
consideration [in the form of insurance premiums] as are the actual cash
payments made by his health insurance carrier to the health care
providers. ... [The write-downs] constitute ‘compensation or indemnity
received by a tort victim from a source collateral to the tortfeasor ....”
Id, at 322-23 (quoting Schickling v. Aspinall, 369 $.E.2d 172, 174 (Va.
1988). As a result, evidence of write-downs creates the same risk of
prejudice that the collateral source rule is meant to combat. See id. at
322,

Evidence of payments showing write-downs is irrelevant to a
jury's determination of the reasonable value of the medical services and
will likely lead to jury confusion. See Leitinger v, DBart, Inc,, 736 N.W.2d
1, 18 (Wis, 2007) (noting that write-downs may “bring complex, confusing
side issues before the fact-finder that are not necessarily related to the
value of the medical sorvices rendered”). The write-downs reflect a
multitude of factors mostly relating to the relationship between the third
party and the medical provider, and not necessarily relating to the
reasonable value of the medical services. See Martinez v, Milburn
Enterprises, Inc., 233 P.3d 205, 228 (Kan. 2010). Here, the evidence of the
write-downs could have confused the jury because Tri-County itself was
unsure of the amounts. The inconsistencies in the calculations presented
to the district court, which Tri-County only clarified in its reply brief to
this court, evidence this.

My conclusion that the collateral source rule bars the
{introduction of evidence showing medical provider discounts or write~

|downs is consistent with a majority of jurisdictions that have addressed

 
this issue. All of the jurisdictions that have concluded that evidence of
[write-downs of medical expenses is inadmissible have done so pursuant to
their common law collateral source rule, except Colorado and Oregon,
which have statutory collateral source rules. See Tucker, 211 P.8d at 711°
13; White, 219 P.3d at 683, While I recognize that there are other
approaches to the admissibility of payments showing medical cost write-
downs,? I agree with the holdings of the majority of jurisdictions that
evidence of medical cost write-downs is inadmissible,

Further, when medical write-downs occur, one party is likely

to receive a windfall, If the write-downs cause one party to receive a

'See Aumand v. Dartmouth Hitchcock Medical Center, 611 F. Supp.
2d 78, 91-92 (D.N.H. 2009); Pipkins v. TA Operating Corp,, 466 F. Supp.
2d 1256, 1261-62 (D.N.M. 2006); Lopez v. Safeway Stores, Inc., 129 P.3d
487, 496 (Ariz, Ct. App. 2006); Montgomery Ward & Co., Inc. v. Anderson.
976 S.W.2d 382, 385 (Ark. 1998); Tucker v, Volunteers of America Co,
Branch, 211 P.3d 708, 71213 (Colo. App. 2008) (interpreting a statutory
lexception to Colorado's statutory collateral source rule); Mitchell _v.
Haldar, 883 A.2d 32, 40 (Del. 2005); Hardiv. Mezzanotte, 818 A.2d 974,
1984-85 (D.C. 2003); Olarin v. Marrero, 549 S.E.2d 121, 123 (Ga. Ct. App.
2001); Bynum v. Magno, 101 P.3d 1149, 1162 (Haw. 2004); Wills v. Foster.
892 N.E.2d 1018, 1032-33 (Ill. 2008); Baptist Healthcare Systems, Inc. v.
[Miller, 177 S.W.3d 676, 683-84 (Ky. 2005); Bozeman v, State, 879 So. 2d
1692, 705-06 (La. 2004); Brandon HMA. Inc. v. Bradshaw, 809 So. 2d 611,
1619-20 (Miss. 2001); Brown v, Van Noy, 879 S.W.2d 667, 676 (Mo. Ct. App.
1994); White v. Jubitz Corp., 219 P.3d 566, 583 (Or. 2009); Covington v.
|George, 597 S.E.2d 142, 144-45 (S.C. 2004); Papke v, Harbert, 738 N.W.2d
510, 536 (S.D. 2007); Radvany v. Davis, 651 S.B.2d 347, 348 (Va. 2001);
[Leitinger, 736 N.W.2d at 18.

2See, e.g., Howell v. Hamilton Meats & Provisions, Inc, 257 P.3d

 

11130 (Cal. 2011) (upholding California's common law requirement that the
{trial court adjust the amount of medical damages to ensure that a plaintiff
does not receive more than what was actually paid to medical providers).

 

 
windfall, it should be the insured plaintiff, not the tortfeasor. See Lopez,
129 P.3d at 496 (“Because the law must sanction one windfall and deny
the other, it favors the victim of the wrong rather than the wrongdoer.”
(quoting Acuar, 531 S.E.2d at 323)); see also Restatement (Second) of
Torts § 920A emt, b (1979) (“[I]t is the position of the law that a benefit
that is directed to the injured party should not be shifted so as to become a
windfall for the tortfeasor.”); 22 Am. Jur. 2d Damages § 392 (2012) (‘If
there is a windfall, it is considered more just that the injured person profit
rather than grant the wrongdoer relief from full responsibility for the
wrongdoing.”). Thus, Nevada's collateral source rule bars the introduction

of evidence of medical provider discounts or “write-downs.”