FILED JULY 23, 2012 

S T A T E O F M I C H I G A N 

SUPREME COURT 

MYRIAM VELEZ, 

 Plaintiff-Appellee/CrossAppellant, 

v No. 138952 

MARTIN TUMA, M.D., 

 Defendant-Appellant/CrossAppellee. 

BEFORE THE ENTIRE BENCH 

MARY BETH KELLY, J. 

In this joint and several liability medical malpractice case, defendant, Dr. Martin 

Tuma, seeks a reduction of the final judgment rendered against him by the amount of his 

codefendants’ settlement. This case therefore concerns the interplay between the 

common-law setoff rule, whereby a jointly and severally liable tortfeasor is entitled to a 

setoff from any adverse verdict in the amount of the cotortfeasor’s settlement, and the 

noneconomic damages cap of MCL 600.1483, which limits a medical malpractice 

plaintiff’s recovery of noneconomic damages. Specifically, we must decide whether the 

Michigan Supreme Court

Lansing, Michigan

Opinion Chief Justice: 

Robert P. Young, Jr. 

Justices: 

Michael F. Cavanagh 

Marilyn Kelly 

Stephen J. Markman 

Diane M. Hathaway 

Mary Beth Kelly 

Brian K. Zahra 
2

Legislature intended to abrogate the common-law setoff rule and, if not, the order in 

which the setoff rule and the noneconomic damages cap of MCL 600.1483 apply to a 

jury’s verdict. Both the circuit court and Court of Appeals held, pursuant to Markley v 

Oak Health Care Investors of Coldwater, Inc,

1

 that the common-law setoff rule applies 

and that the setoff must be applied to the jury’s verdict before application of the cap on 

noneconomic damages. 

We agree that Markley was correctly decided and thus hold that the Legislature 

did not abolish the common-law setoff rule in the context of joint and several liability 

medical malpractice cases. We affirm the Court of Appeals in this regard and further 

clarify that where the Legislature has retained principles of joint and several liability, the 

common-law setoff rule applies. The lower courts’ sequencing of the setoff and the 

noneconomic damages cap, however, results in an outcome contrary to the Legislature’s 

requirement that medical malpractice plaintiffs “shall not” recover more noneconomic 

losses than the amount determined by MCL 600.1483. Rather, the Legislature has 

exercised its authority to limit a medical malpractice plaintiff’s recovery by capping 

noneconomic losses and requiring the reduction of economic losses by the amounts paid 

by collateral sources. Because application of the setoff to the jury’s verdict can result in 

a recovery beyond those statutorily mandated damages limitations, we further hold that a 

joint tortfeasor’s settlement must be set off from the final judgment after application of 

the noneconomic damages cap of MCL 600.1483, as well as the collateral source rule. 

 

1 Markley v Oak Health Care Investors of Coldwater, Inc, 255 Mich App 245; 660 NW2d 

344 (2003). 
3

We therefore reverse that portion of the Court of Appeals’ judgment affirming the circuit 

court’s application of the common-law setoff rule. 

I. FACTS AND PROCEDURAL HISTORY 

In September 2001, plaintiff, Myriam Velez, filed suit against Detroit Receiving 

Hospital, Harper Hospital, and Drs. Lawrence Schwartz and Martin Tuma, alleging that 

their failure to timely operate on her leg necessitated its amputation below the knee. 

After plaintiff filed her notice of intent to sue, the hospitals entered into a settlement 

agreement with plaintiff in which those defendants paid plaintiff a total of $195,000. 

After the settlement, plaintiff’s lawsuit was dismissed by stipulation but without 

prejudice with respect to Tuma, who was not a part of the settlement agreement. 

Plaintiff then filed a new complaint against defendant Tuma in January 2004, 

raising the same allegations against defendant.2

 After a four-day jury trial, the jury found 

defendant to be professionally negligent and returned a $1,524,831.86 verdict in 

plaintiff’s favor. As required by MCL 600.1483(2), the jury itemized the verdict, 

separating it into past and future economic and noneconomic damages. The jury awarded 

plaintiff a total of $124,831.86 in economic damages and a total of $1.4 million in 

noneconomic damages.3

 

2

 Throughout the rest of this opinion, “defendant” refers to Tuma only, while 

“codefedants” refers to the hospital defendants that settled with plaintiff. 

3

 MCL 600.1483(3) defines “noneconomic loss” as “damages or loss due to pain, 

suffering, inconvenience, physical impairment, physical disfigurement, or other 

noneconomic loss.” 
4

Before the circuit court entered a final judgment in plaintiff’s favor, defendant 

requested that the circuit court apply the noneconomic damages cap to the jury’s verdict 

and then subtract codefendants’ $195,000 settlement from the final judgment. Plaintiff 

objected, relying on Markley, and argued that the circuit court was required to subtract 

codefendants’ settlement from the jury’s unadjusted “verdict.”

4

 The circuit court denied 

defendant’s request, citing Markley for the proposition that codefendants’ settlement had 

to be applied to the jury’s unadjusted “verdict,” as opposed to the “judgment.” The court 

agreed with plaintiff’s interpretation of Markley: 

The question to the Court is whether or not I believe that 

Markley . . . stand[s] for the proposition that the verdict is subject to the set 

off. Or whether the judgment is subject to the set off. 

The Court believes that Markley says verdict. I don’t know what 

they meant, but I’ll take it literally and we will apply it to the verdict. I will 

absolutely concur that that will result in a plaintiff receiving more money 

than the cap amount. 

Thereafter, the circuit court entered a judgment awarding plaintiff $394,200, 

which is the amount of the noneconomic damages cap in this case.5

 To calculate this 

amount, the circuit court first subtracted codefendants’ $195,000 settlement from the 

jury’s total unadjusted verdict of $1,524,831. Because plaintiff’s economic damages had 

been satisfied through collateral sources, the circuit court applied the collateral source 

 

4 Markley, 255 Mich App at 250-251. 

5

 There is no dispute between the parties that plaintiff’s noneconomic damages are 

capped at $394,200. 
5

rule and reduced plaintiff’s economic damages to zero.6

 Finally, the circuit court reduced 

the remaining noneconomic damages to the amount of the statutory cap on noneconomic 

damages, $394,200. The circuit court entered a final judgment for plaintiff in this 

amount.7

 Including the prior settlement amount, plaintiff’s total recovery was $589,200. 

In the Court of Appeals, defendant argued that the circuit court had erred by 

applying the setoff to the jury’s unadjusted verdict rather than to the amount of the final 

judgment after applying the noneconomic damages cap. The Court of Appeals, however, 

affirmed the circuit court’s decision to apply the setoff to the unadjusted verdict.8

 The 

 

6

 In medical malpractice cases, the collateral source rule requires a circuit court to reduce 

a jury’s award of economic damages by the amount already paid by collateral sources, 

such as insurers or other providers. MCL 600.6303. There is no dispute that plaintiff’s 

total economic damages are eliminated by the collateral source rule because plaintiff has 

received, and will continue to receive, supplemental security income benefits from the 

Social Security Administration. 

7

 The circuit court’s calculation can be demonstrated as follows: 

Total Jury Verdict $1,524,831.86 

Settlement Setoff - $195,000 

Post Setoff Verdict $1,329,831.86 

Economic Damages $0 due to reduction for 

collateral sources 

Noneconomic Damages $394,200 due to statutory cap 

on noneconomic damages 

Final Judgment $394,200 

8 Velez v Tuma, 283 Mich App 396; 770 NW2d 89 (2009). 
6

Court first reasoned that the common-law setoff rule remained applicable in medical 

malpractice cases involving joint and several tortfeasors and that the rule should be 

applied so that a plaintiff will not be overcompensated for his or her actual loss. Turning 

to the question whether the setoff is to be applied to a jury’s verdict or the final judgment 

after application of the noneconomic damages cap, the appeals panel could “discern no 

reason why the same principles that applied to the [now repealed] statutory right to 

setoffs [wherein prior settlements were set off against the verdict] should not apply to the 

common-law right to setoffs . . . .”9

 Without addressing the language of the statute 

capping noneconomic damages, the Court of Appeals reasoned that “[i]n cases where 

joint and several liability is imposed, the trier of fact’s determination of damages sets the 

limit regarding the amount a plaintiff can recover for his or her loss.”10 The Court thus 

concluded “that the application of the setoff rule to the jury verdict [which comprises a 

plaintiff’s actual loss], rather than the final judgment, is proper.”11 

Defendant applied for leave to appeal in this Court, and plaintiff filed a crossappeal. Initially, we denied both applications,12 but we later granted defendant’s motion 

for reconsideration and granted leave to appeal, limited to the issue “whether the Court of 

Appeals correctly held that the setoff amount in this case was properly set off against the 

 

9 Id. at 412. 

10 Id. at 413. 

11 Id. 

12 Velez v Tuma, 488 Mich 903 (2010). Before our initial denial, we had held the case in 

abeyance for the resolution of issues not involved in this appeal. Velez v Tuma, 775 

NW2d 146 (Mich, 2009). 
7

jury verdict, before application of the noneconomic damages cap of MCL 600.1483 and 

calculation of the final judgment.”13 After hearing oral argument on that limited issue, 

we sua sponte reconsidered plaintiff’s cross-application and granted leave to cross-appeal 

to consider “whether Markley . . . correctly decided that the common-law setoff rule 

applies in medical malpractice actions where joint and several liability is imposed.”14

II. STANDARD OF REVIEW 

The questions presented in these appeals are questions of law that we review de 

novo.15 To the extent we must interpret the meaning of applicable statutes, our review is 

also de novo.16

III. EXISTENCE OF COMMON-LAW SETOFF RULE 

Plaintiff argues that the Legislature abrogated the common-law setoff rule and 

thus any setoff of codefendants’ settlement award is not warranted. In support, plaintiff 

posits that in 1995 PA 161, the Legislature clearly intended to abrogate the common-law 

rule when it repealed former MCL 600.2925d(b), as added by 1974 PA 318, which had 

codified the setoff rule and provided that a settlement “reduces the claim against the other 

tort-feasors to the extent of any amount stipulated by the release . . . .” 

 

13 Velez v Tuma (On Reconsideration), 489 Mich 956 (2011). With respect to 

defendant’s remaining issue, leave to appeal is denied, because we are not persuaded that 

the question presented should be reviewed by the Court. 

14 Velez v Tuma, 491 Mich 873 (2012). 

15 Kaiser v Allen, 480 Mich 31, 35; 746 NW2d 92 (2008). 

16 Id. 
8

The common law remains in force until “changed, amended or repealed.”17 

Whether the Legislature has abrogated, amended, or preempted the common law is a 

question of legislative intent.18 We will not lightly presume that the Legislature has 

abrogated the common law.19 Nor will we will extend a statute by implication to 

abrogate established rules of common law.20 “Rather, the Legislature ‘should speak in no 

uncertain terms’ when it exercises its authority to modify the common law.”21 

 We cannot conclude that the Legislature intended to abolish the common-law 

setoff rule in the context of joint and several liability medical malpractice cases. While 

the pertinent statutes are silent with respect to the application of the common-law setoff 

rule, we cannot agree with plaintiff that the repeal of the statutory setoff, former MCL 

600.2925d(b), by 1995 PA 161 demonstrates a clear intent to abrogate the common-law 

rule. Plaintiff’s argument ignores the fact that the repeal of former MCL 600.2925d(b) 

was but one part of comprehensive tort-reform legislation and that there is no conflict 

between the common-law rule and the current legislation that would prevent the setoff’s 

application. Those 1995 reforms abolished joint and several liability in most contexts 

 

17 Const 1963, art 3, § 7. 

18 Wold Architects & Engineers v Strat, 474 Mich 223, 233; 713 NW2d 750 (2006). 

19 Id. 

20 Rusinek v Schultz, Snyder & Steele Lumber Co, 411 Mich 502, 507-508; 309 NW2d 

163 (1981). 

21 Dawe v Dr Reuven Bar-Levav & Assoc, PC, 485 Mich 20, 28; 780 NW2d 272 (2010), 

quoting Hoerstman Gen Contracting, Inc v Hahn, 474 Mich 66, 74; 711 NW2d 340 

(2006). 
9

and created an allocation-of-fault system in which each tortfeasor is liable only for the 

portion of the total damages that reflects that tortfeasor’s percentage of fault.22 Because a 

system of several liability already incorporates the fault of all tortfeasors in establishing 

every individual tortfeasor’s proportion of fault, there is no danger that the plaintiff will 

be overcompensated for the injury by the failure to set off the amount of another 

tortfeasor’s settlement. 

 The same comprehensive tort-reform legislation, however, also specifically 

retained “joint and several liability” in medical malpractice cases under MCL 

600.6304(6)(a) where, as in the present case, the plaintiff is determined to be without 

fault.23 For reasons we explain, the Legislature’s unambiguous intent to maintain joint 

and several liability in this context also evinces a clear intent to retain the common-law 

setoff rule in joint and several liability medical malpractice cases. 

 The term “joint and several” liability, as used in MCL 600.6304(6)(a), is a technical 

legal term. It has a long-acquired meaning that is well established in our jurisprudence: 

“[]Where multiple tortfeasors caused a single or indivisible injury, the injured party 

[may] either sue all tortfeasors jointly or he [may] sue any individual tortfeasor severally, 

and each individual tortfeasor [is] liable for the entire judgment . . . .”24 Consistent with 

 

22 1995 PA 161 added MCL 600.2956 to the Revised Judicature Act to provide that “the 

liability of each defendant for damages is several only and is not joint.” 

23 MCL 600.6304(6)(a) states that “joint and several” liability applies to a medical 

malpractice claim as long as the plaintiff is determined to be without fault. 

24 Gerling Konzern Allgemeine Versicherungs AG v Lawson, 472 Mich 44, 49; 693 

NW2d 149 (2005); see also Maddux v Donaldson, 362 Mich 425, 433; 108 NW2d 33 

(1961); Verhoeks v Gillivan, 244 Mich 367, 371; 221 NW 287 (1928). 
10

our rules of construction, “technical words and phrases, and such as may have acquired a 

peculiar and appropriate meaning in the law, shall be construed and understood according 

to such peculiar and appropriate meaning.”25 The Legislature’s use of the term “joint and 

several” liability, therefore, indicates a plain intent to adopt that term’s technical legal 

meaning. 

 Inherent in the meaning of joint and several liability is the concept that a plaintiff’s 

recovery is limited to one compensation for the single injury.26 Because in some 

instances a jointly and severally liable tortfeasor settles before trial, the common-law 

setoff rule is necessary to ensure that the plaintiff does not recover more than a single 

recovery for the single injury. The common-law setoff rule entitles the remaining 

tortfeasors, who are still liable for the entire injury, to set off the amount of the 

cotortfeasor’s settlement from any verdict rendered against them.27 By reiterating that 

liability in most medical malpractice cases is joint and several, the Legislature thus 

retained the common-law setoff rule. When understood in this way, the purpose of the 

 

25 MCL 8.3a. 

26 Lawson, 472 Mich at 49 (“[Under principles of joint and several liability,] each 

individual tortfeasor was liable for the entire judgment, although the injured party was 

entitled to full compensation only once.”); Verhoeks, 244 Mich at 371 (“‘The injured 

party has the right to pursue [tortfeasors] jointly or severally at his election, and recover 

separate judgments; but, the injury being single, he may recover but one 

compensation.’”) (citation omitted). 

27 Thick v Lapeer Metal Prod, 419 Mich 342, 348 n 1; 353 NW2d 464 (1984) (“[W]here 

a negligence action is brought against joint tortfeasors, and one alleged tortfeasor agrees 

to settle his potential liability by paying a lump sum in exchange for a release, and a 

judgment is subsequently entered against the non-settling tortfeasor, the judgment is 

reduced pro tanto by the settlement amount.”). 
11

Legislature’s repeal of the statutory setoff was not to abrogate the common-law setoff 

rule, but to acknowledge that a setoff does not apply in actions that involve several 

liability only. 

The Court of Appeals decision in Markley is consistent with this reasoning. 

There, the defendant sought a setoff against a jury verdict in the amount of the joint 

codefendant’s settlement. The Court of Appeals rejected the circuit court’s reasoning 

that the Legislature’s repeal of former MCL 600.2925d(b) was intended to abrogate any 

common-law right to a setoff. Instead, the appeals court reasoned: 

 [I]t is logical to conclude that common-law setoff in joint and 

several liability cases remained the law, where the new legislation was 

silent, where application of the common-law rule does not conflict with any 

current statutes concerning tort law, and where a plaintiff is conceivably 

overcompensated for its injury should the rule not be applied. Considering 

the general nature and tone of tort reform legislation, we conclude that the 

Legislature did not intend to allow recovery greater than the actual loss in 

joint and several liability cases when it deleted the relevant portion of 

[MCL 600.2925d], but instead intended that common-law principles 

limiting a recovery to the actual loss would remain intact.[28] 

Thus, the Court of Appeals held that “the principle of one recovery and the common-law 

rule of setoff, in the context of joint and several liability cases, continue to be the law in 

Michigan.”29 

 

28 Markley, 255 Mich App at 256-257. 

29 Id. at 257. We disagree with plaintiff’s characterization of Markley as “reviving” the 

common-law setoff rule. To the contrary, Markley’s reasoning, in our understanding, is 

consistent with our reasoning that the Legislature intended to preserve setoffs of a joint 

tortfeasor’s settlement because the Legislature expressly retained joint and several 

liability in the medical malpractice context. 
12

 After Markley, this Court in Kaiser v Allen30 considered whether principles of joint 

and several liability and the common-law setoff rule applied in vehicle-owner vicariousliability cases. After the jury returned a verdict in the plaintiff’s favor, the defendant 

sought a setoff in the amount of his codefendant’s settlement, which would reduce the 

plaintiff’s award to zero. Because there can be no allocation of fault in vicarious-liability 

cases and there exists no amount of damages that belong to the vehicle owner separately 

from the negligent operator, we held that “[t]he tort-reform statutes do not apply to . . . 

vehicle-owner vicarious-liability cases . . . . Therefore, the common-law setoff rule 

remains the law in Michigan for vehicle-owner vicarious-liability cases.”31 

While the present case is factually dissimilar from Kaiser, the principles espoused 

in Kaiser nonetheless support our interpretation of the tort-reform statutes; mainly, that 

where the Legislature has retained joint and several liability, the common-law setoff rule 

remains intact. Indeed, as the Court of Appeals acknowledged in Markley, we are aware 

of no conflicting provision that would prevent the setoff’s application, and plaintiff has 

identified none. Given our reasoning and our decision in Kaiser, we cannot hold that 

Markley was wrongly decided, as plaintiff urges. Accordingly, we hold that the 

common-law setoff rule remains the law in joint and several liability medical malpractice 

cases. We further clarify, consistent with our decision in Kaiser, that where the 

Legislature has specifically retained the technical common-law term “joint and several 

liability,” the common-law setoff rule remains applicable. 

 

30 Kaiser, 480 Mich 31. 

31 Id. at 36. 
13

IV. APPLICATION OF COMMON-LAW SETOFF RULE 

Our conclusion that the common-law setoff rule remains applicable in joint and 

several liability cases does not end our analysis. Rather, we must address the issue of the 

sequence in which to apply the common-law setoff rule and the statutory cap on 

noneconomic damages to the jury’s verdict. We therefore examine the interplay between 

the common-law rule and MCL 600.1483. We are cognizant that we are the stewards of 

the common law and that the Legislature is presumed to be aware of the common law 

when enacting legislation.32 Our function in construing statutory language is to 

effectuate the Legislature’s intent.33 Plain and clear language is the best indicator of that 

intent, and such statutory language must be enforced as written.34 Further, a statute in 

derogation of the common law will not be construed to abrogate the common law by 

implication, but if there is any doubt, the statute is to be given the effect that makes the 

least change in the common law.35

We agree with defendant that the lower courts erred by applying the setoff before 

applying the noneconomic damages cap, thereby allowing plaintiff to recover a total 

judgment beyond what Michigan law permits. While the Court of Appeals properly 

recognized that the common-law setoff rule applies in this case and is necessary to ensure 

 

32 Henry v Dow Chem Co, 473 Mich 63, 83; 701 NW2d 684 (2005); Nation v W D E 

Electric Co, 454 Mich 489, 494; 563 NW2d 233 (1997). 

33 Nation, 454 Mich at 494. 

34 Driver v Naini, 490 Mich 239, 247 n 24; 802 NW2d 311 (2011). 

35 Nation, 454 Mich at 494. 
14

that a plaintiff is not overcompensated for his or her injury, the Court erred by failing to 

address how the mandatory limitation on noneconomic damages affects application of the 

setoff. 

As noted, MCL 600.1483(1) limits a plaintiff’s damages for “noneconomic losses 

recoverable” and provides, in part: 

 In an action for damages alleging medical malpractice by or against 

a person or party, the total amount of damages for noneconomic loss 

recoverable by all plaintiffs, resulting from the negligence of all 

defendants, shall not exceed $[394,200] . . . .[36]

This language mandates an absolute cap on all available noneconomic losses: a medical 

malpractice plaintiff’s “total amount” of noneconomic damages “recoverable” “shall not 

exceed” the statutory cap. Use of the term “recoverable,” giving it its plain meaning, 

denotes noneconomic losses that are capable of being recovered, which necessarily 

includes recovery through settlements, jury verdicts, or arbitration.37 Because the term 

“total” modifies “amount of damages for noneconomic loss recoverable,” it makes clear 

that all such sums recovered “shall not exceed” the cap. The Legislature, through the 

unambiguous language of MCL 600.1483(1), has then determined that a plaintiff’s actual 

 

36 Emphasis added. Although there is no dispute regarding the cap amount in this case, 

the amount of the cap is adjustable “at the end of each calendar year to reflect the 

cumulative annual percentage change in the consumer price index.” MCL 600.1483(4). 

37 In the absence of a statutory definition, we may rely on dictionary definitions. Cox v 

Flint Bd of Hosp Managers, 467 Mich 1, 18; 651 NW2d 356 (2002). Black’s Law 

Dictionary (9th ed) broadly defines “recoverable” to mean “[c]apable of being 

recovered.” Justice HATHAWAY, however, claims that we have added language to MCL 

600.1483 because the provision “makes no reference to settlements at all.” Post at 9. 

This interpretation ignores entirely the breadth of the definition of the term 

“recoverable.” 
15

loss—and thus full compensation—for noneconomic losses caused by the single injury 

may be less than what a jury awards and may not in total exceed the statutory limit.38

Despite the unequivocal language of MCL 600.1483 limiting noneconomic 

damages, the statute is silent with respect to when the cap is to be applied both generally 

and in relation to the common-law setoff.39 And while the common-law setoff rule is 

 

38 Justice HATHAWAY mischaracterizes MCL 600.1483, and other provisions limiting 

damages, as measures that “preclude a plaintiff from receiving overcompensation,” post

at 5, and opines that a “court must determine whether the plaintiff is being 

overcompensated,” post at 6. As we have explained, however, by automatically limiting 

a verdict of noneconomic damages to the amount of the cap, MCL 600.1483 sets the total 

amount of compensation allowed. Because the cap represents a predetermined legislative 

policy limitation on a plaintiff’s total compensation for noneconomic injuries, it forms 

the basis of determining to what extent a recovery for noneconomic damages necessarily 

represents overcompensation, and a court cannot exceed that predetermined limitation on 

compensation. 

39 MCL 600.6306 directs a trial court to make certain deductions from a jury’s award of 

damages before entering a final judgment, but it does not provide guidance with respect 

to application of the cap or the common-law setoff rule. MCL 600.6306 states in relevant 

part: 

 (1) After a verdict rendered by a trier of fact in favor of a plaintiff, 

an order of judgment shall be entered by the court. Subject to [MCL 

600.2959], the order of judgment shall be entered against each defendant, 

including a third-party defendant, in the following order and in the 

following judgment amounts: 

 (a) All past economic damages, less collateral source payments as 

provided for in [MCL 600.6303]. 

 (b) All past noneconomic damages. 

 (c) All future economic damages, less medical and other health care 

costs, and less collateral source payments determined to be collectible 

under [MCL 600.6303(5)] reduced to gross present cash value. 

 (d) All future medical and other health care costs reduced to gross 

present cash value. 
16

traditionally applied to a jury’s verdict, we do not view the statutory silence or the 

traditional application of the common-law setoff to be dispositive of the sequencing 

issue. Rather, the clear legislative directive of MCL 600.1483, when considered in 

juxtaposition with the purpose of the common-law setoff rule, provides the necessary 

guidance. Because a medical malpractice plaintiff cannot by operation of law recover 

more noneconomic damages than the statutory limit, it follows that a plaintiff’s full 

recovery of noneconomic losses for the single injury—assuming the jury verdict exceeds 

the cap—is legislatively predetermined to be limited to the statutory amount. If a 

plaintiff has been partially compensated through a prior settlement from a jointly and 

severally liable tortfeasor, then the common-law setoff rule, consistent with its purpose 

and the statute, must be applied to ensure that the plaintiff is not compensated beyond 

statutorily permissible limits. To achieve this result, the settlement must be subtracted 

from a jury verdict after application of the noneconomic damages cap, as well as the 

collateral source rule; otherwise, the plaintiff could recover more than his or her full 

compensation, that is, the plaintiff could recover the settlement amount, plus the amount 

of the cap and the amount of statutorily permissible economic damages, if any.40

 

 (e) All future noneconomic damages reduced to gross present cash 

value.

40 Justice HATHAWAY contends that our application of the setoff creates a “new rule that 

bears little resemblance to the common-law setoff rule or its underlying purpose,” post

at 8, and that our failure to recognize the verdict as the measure of full compensation 

“disregards the obvious,” post at 7. However, before the Legislature’s creation of the cap 

on noneconomic damages, there was no need for the common law to make the distinction 

that we recognize. We have not, therefore, ignored that the setoff has traditionally been 

applied to the verdict. Rather, consistent with our jurisprudence, we have applied both 

the common-law rule and the statute in the manner that best gives effect to the purposes 
17

Yet this is exactly what the lower courts did in this case. Neither the circuit court 

nor the Court of Appeals recognized that the Legislature has statutorily limited a medical 

malpractice plaintiff’s recovery and that a setoff must be applied to ensure that the 

plaintiff does not recover an amount more than that which the Legislature has fixed by 

statute. Instead, the lower courts ignored the mandate of MCL 600.1483 and measured 

plaintiff’s “actual loss,” or full compensation, as the jury’s verdict. This erroneous 

reasoning led to the legally incorrect conclusion that plaintiff’s recovery for her single 

injury could not exceed the amount of the verdict, thereby justifying a setoff from the 

jury’s verdict, rather than the judgment, after application of the noneconomic cap and 

collateral source rule. By applying the setoff directly to the unadjusted verdict, the lower 

courts thus subverted both the clear directive of MCL 600.1483—that medical 

malpractice plaintiffs not recover noneconomic losses beyond the legislatively 

determined amount—and the purpose of the common-law setoff rule—to ensure that 

overcompensation does not occur. Under the lower courts’ application of the cap and 

common-law setoff rule, plaintiff recovered $195,000 more than her actual loss as 

determined by the Legislature. Because plaintiff’s economic losses were zero, because of 

collateral sources, the remaining final judgment of $394,200 after the cap was necessarily 

composed of only noneconomic losses. Plaintiff’s total recovery from all joint 

 

of both. See, e.g., People v Nowack, 462 Mich 392, 406; 614 NW2d 78 (2000) (noting 

that the common law is adopted into our jurisprudence to the extent that it is consistent 

with our state and federal constitutions and statutes). Consequently, it is the dissent’s 

interpretation that fails to effectuate both the purpose of the statute and the common-law 

rule because, as the dissent does not dispute, its interpretation would allow a medical 

malpractice plaintiff to recover more than the statutorily limited amount. 
18

tortfeasors, however, was $589,200—which is $195,000 more than that allowed by the 

collateral source rule and the cap on noneconomic damages. 

Plaintiff would have us affirm the lower courts’ erroneous application of the cap 

and rule, but her argument fails due to similar shortcomings. Like the Court of Appeals, 

plaintiff and Justice HATHAWAY’s dissent assert that the measure of her actual losses for 

purposes of the setoff is the jury’s verdict and that she can only be overcompensated for 

purposes of the common-law setoff rule if she receives more than the jury’s verdict. 

Plaintiff cites both Kaiser and Markley for the proposition that the unadjusted jury verdict 

is the measure of the one full recovery to which plaintiff is entitled, but these cases are 

simply inapposite. Kaiser involved a vehicle owner’s vicarious liability for those who 

drive the owner’s vehicle, and there is no similar damages cap in the context of vehicleowner vicarious-liability cases. It was not necessary for Kaiser to address the interaction 

between a statutory limitation on damages and the common-law setoff and, thus, 

distinguish between “judgments” and “jury verdicts” as the measure of the one full 

recovery to which a plaintiff is entitled. Markley also does not support plaintiff’s 

position. Indeed, Markley itself acknowledged that “there [was] no reason to address the 

damage cap” when applying the setoff rule.41 Like in Kaiser, it was unnecessary for 

Markley to distinguish between “judgments” and “jury verdicts” as the measure of actual 

loss. Plaintiff also cites our decision in Rittenhouse v Erhart42 for the same proposition, 

 

41 Markley, 255 Mich App at 258. 

42 Rittenhouse v Erhart, 424 Mich 166; 380 NW2d 440 (1985). 
19

but Rittenhouse is likewise unhelpful because it did not address the interaction between 

the damages cap and the common-law setoff rule.

43

Accordingly, we hold that where principles of joint and several liability apply in a 

medical malpractice case and a codefendant has settled a plaintiff’s claim before trial, a 

circuit court must first apply to the jury’s verdict the noneconomic damages cap, as well 

as any other statutorily required adjustments, before reducing the award by the amount of 

the codefendant’s settlement. Here, plaintiff received a settlement from codefendants in 

the amount of $195,000. At a later trial against defendant, the jury returned a verdict for 

 

43 As additional support, plaintiff and Justice HATHAWAY argue that MCL 600.1483 does 

not limit the total amount of noneconomic damages plaintiff may recover because MCL 

600.1483(1) only applies to jury awards, not settlements. Specifically, the dissent posits 

that MCL 600.1483(1) applies only to jury awards because the language of MCL 

600.1483(2), which requires juries “awarding damages” to “itemize damages,” refers 

only to jury awards. This conclusion does not logically follow when the subsections are 

read together because MCL 600.1483(1) makes no reference to a jury award, but uses the 

broader phrase “the total amount of damages for noneconomic loss recoverable . . . .” 

Justice HATHAWAY further asserts that the Legislature only intended jury awards, not 

settlements, to be reduced by the noneconomic damages cap because MCL 600.6304(5) 

is silent with respect to any reduction by reason of a settlement. Post at 10. That 

provision requires a circuit court to reduce an excessive “award of damages” to the 

amount of the noneconomic damages cap. This silence, however, does not preclude a 

court from applying the common-law setoff rule after applying the noneconomic 

damages cap to the jury verdict. Finally, these arguments are unavailing because to 

interpret the noneconomic damages cap as applying only to jury awards and not 

settlements would render nugatory the term “recoverable” in MCL 600.1483(1), which as 

we have explained does not delimit the manner in which recovery is obtained. Plaintiff 

and the dissent’s construction is one we cannot adopt because we “‘must give effect to 

every word, phrase, and clause in a statute and avoid an interpretation that would render 

any part of the statute . . . nugatory.’” Jenkins v Patel, 471 Mich 158, 167; 684 NW2d 

346 (2004) (citation omitted). Justice HATHAWAY, like plaintiff, simply neglects to 

consider that the Legislature did not intend a plaintiff to recover noneconomic damages 

greater than that allowed by the statute and that plaintiff’s recovery of noneconomic 

damages is, in effect, set by law. 
20

plaintiff for $1,524,831.86. Given our holding, it was error for the lower courts to apply 

the setoff against the jury’s verdict. Rather, the proper order of operation was to first 

apply both the collateral source rule and the noneconomic damages cap to arrive at the 

final judgment, which is plaintiff’s full compensation for her injury as determined by the 

Legislature.44 Because plaintiff has already received partial compensation for that injury, 

application of the common-law setoff rule requires that codefendants’ settlement be 

subtracted from the final judgment so that plaintiff does not receive more than a single 

 

44 Justice CAVANAGH criticizes this application of the setoff rule because it “provides 

defendants with both the benefit of the damages cap and the further reduction of the 

common-law setoff.” Post at 2. Yet this result is exactly what we intend because it is 

also what the Legislature intends. Had the Legislature intended to preclude this result 

from inuring to the benefit of a medical malpractice defendant, it could have used a 

phrase less broad than “total amount of damages for noneconomic loss recoverable” in 

MCL 600.1483(1) or otherwise prohibited any application of the setoff rule. 
21

recovery for her single injury.45 Consequently, plaintiff is entitled to a judgment against 

defendant in the amount of $199,200.46

This result and our holding are in accord with decisions of other jurisdictions with 

similar damages-cap statutes. In Fairfax Hosp Sys, Inc v Nevitt,

47 the Virginia Supreme 

 

45 By allegedly reducing plaintiff’s “noneconomic damages award” by the amount of the 

settlement, Justice HATHAWAY is concerned that our decision has assumed that the 

settlement proceeds consisted of noneconomic damages and that this result “ignores the 

actual agreement of the settling parties.” Post at 12. These concerns are unfounded. Our 

holding does not require the reduction of plaintiff’s noneconomic damages by the amount 

of the settlement. Rather, our holding requires a court to subtract the entire amount of the 

settlement from whatever damages remain after applying the relevant statutory 

adjustments. Nor have we assumed that the settlement in this case was composed solely 

of noneconomic damages. Indeed, as the dissent admits, the settlement was an aggregate 

award for all the damages, including economic and noneconomic damages, costs, 

attorney fees, and interest. As an aggregate award, subtraction of the settlement from the 

adjusted verdict in this case does not alter the terms of the settling parties’ agreement. 

While collateral sources that exist in this case happened to reduce the economic damages 

to zero, the order-of-operations rule that we establish today applies to all adjusted 

verdicts, whether they contain only economic damages, only noneconomic damages, or 

some combination thereof. 

46 This equation can be summarized as follows: 

Total Jury Verdict $1,524,831.86 

Economic Damages $124,831.86, reduced to $0 by 

collateral sources 

Noneconomic Damages $1,400,000, reduced to $394,200 due 

to cap on noneconomic damages 

Settlement Setoff - $195,000 

Final Judgment $199,200 

47 Fairfax Hosp Sys, Inc v Nevitt, 249 Va 591, 599; 457 SE2d 10 (1995) (citation 

omitted). 
22

Court ruled that the $1 million cap on medical malpractice damages reduces a verdict 

before any settlements are set off against it: “[W]here there is a verdict by a jury or a 

judgment by a court against a health care provider for ‘injury to . . . a patient’ and the 

total amount recovered in that action and in all settlements related to the medical 

malpractice injury exceeds one million dollars, the total amount the plaintiff can recover 

for that injury is one million dollars.” Similarly, in Lockshin v Semsker,

48 the Maryland 

Court of Appeals ruled that “any verdict rendered by a jury exceeding the amount of the 

non-economic damages cap inherently is a verdict in the amount of the cap from the 

moment it is rendered.” The court therefore concluded that “the appropriate order of 

operations is to apply first the cap to the jury’s verdict for non-economic damages, 

followed by a credit for the joint tortfeasor settlement.”49 

Plaintiff criticizes this position and claims that it requires the itemization of 

settlements. Plaintiff’s position actually causes this perceived harm, however. When a 

judgment contains both economic and noneconomic damages, a circuit court applying the 

 

48 Lockshin v Semsker, 412 Md 257, 283; 987 A2d 18 (2010). 

49 Id. Numerous other jurisdictions have also required application of noneconomic 

damages caps before setting off a settlement so that plaintiffs do not recover more 

damages than permitted by the applicable law. See Mayes v Bryan, 139 Cal App 4th 

1075, 1099-1103; 44 Cal Rptr 3d 14 (2006) (holding that the trial court properly applied 

the noneconomic damages cap, Cal Civ Code 3333.2, first before reducing the judgment 

by the percentage of fault attributed to the settlement the plaintiff had already recovered 

because “the plaintiff could not recover more than $ 250,000 in noneconomic damages 

from all health care providers for one injury,”); Garhart v Columbia/Healthone, LLC, 95 

P3d 571, 591 (Colo, 2004) (holding that noneconomic damages cap allowing a total 

recovery of $250,000, Colo Rev Stat 13-64-302, must be applied to a jury’s verdict first 

before allocating fault attributed to a settlement, so that the plaintiff does not recover 

more than the cap). 
23

setoff to the jury’s verdict before application of the collateral source rule would have to 

determine how to allocate the settlement between economic and noneconomic damages. 

This is a result we cannot condone, not only because it can result in an outcome contrary 

to the mandate of MCL 600.1483, but also because it could discourage settlements in 

instances in which there are multiple related defendants.50 Additionally, in instances like 

the present, in which the composition of the settlement is unknown, circuit courts would 

be left to guess at how a settlement should be allocated. Requiring circuit courts to 

engage in this guesswork, from which a range of potential outcomes could result, 

unreasonably burdens them with a determination that they are, in the absence of any 

statutory guidance, ill-prepared to make. Our holding, on the other hand, that a circuit 

court must subtract the total settlement from the final judgment, creates no need to 

allocate the settlement proceeds between economic or noneconomic damages before 

applying the setoff. Rather, the settlement is treated as an aggregate award to be applied 

against the plaintiff’s total actual loss, meaning the final judgment after application of the 

applicable statutory adjustments. 

V. CONCLUSION 

To the extent the Legislature has not abolished principles of joint and several 

liability, those principles and the common-law setoff rule remain the law in Michigan. 

 

50 Under plaintiff’s rule, medical malpractice plaintiffs would have an incentive to 

structure settlement agreements as entirely economic damages, especially when the 

plaintiff expects collateral sources to wipe out all economic damages. The settling 

codefendants, however, might be unwilling to enter into such an agreement, knowing that 

it could potentially prejudice their associates and potentially sour business relationships. 
24

Markley reached this same conclusion, and we decline plaintiff’s invitation to conclude 

that Markley was wrongly decided. Further, when joint and several liability principles 

apply in medical malpractice cases, any settlement must be set off from the final 

judgment after application of the noneconomic damages cap and the collateral source 

rule. The lower courts erroneously set off codefendants’ settlement against the jury’s 

verdict, which resulted in plaintiff receiving $195,000 more for her injury than permitted 

by law. Accordingly, we reverse the portion of the Court of Appeals’ judgment 

upholding the circuit court’s application of the common-law setoff rule and remand to the 

circuit court for entry of an order reducing the final judgment by $195,000. 

 Mary Beth Kelly 

 Robert P. Young, Jr. 

 Stephen J. Markman (except for the 

 fourth sentence of the first 

 paragraph on page 8) 

 Brian K. Zahra 
S T A T E O F M I C H I G A N 

SUPREME COURT 

MYRIAM VELEZ, 

 Plaintiff-Appellee/CrossAppellant, 

v No. 138952 

MARTIN TUMA, M.D., 

 Defendant-Appellant/CrossAppellee. 

MARKMAN, J. (concurring). 

I concur in the majority opinion with the exception of the majority’s statement that 

“we will [not] extend a statute by implication to abrogate established rules of common 

law.” Ante at 8. I do believe that a statute may by implication abrogate established rules 

of common law. That is, the Legislature does not have to explicitly state that it is 

abrogating a common-law right in order for it to abrogate a common-law right. The 

Legislature’s intent to abrogate the common law may be sufficiently clear without its 

having to explicitly state that this is its intent. A legislative body need not provide a 

running commentary of the effect of its actions on the common law when its actions will 

admit of only the most obvious interpretation. The statement is unnecessary to the 

opinion, and no injury would be done to the opinion were it not there. I join the majority 

because I believe the Legislature has not, either expressly or implicitly, abrogated the 
2

common-law setoff rule in the context of joint and several liability medical malpractice 

cases. 

 Stephen J. Markman 
S T A T E O F M I C H I G A N 

SUPREME COURT 

MYRIAM VELEZ, 

 Plaintiff-Appellee/CrossAppellant, 

v No. 138952 

MARTIN TUMA, M.D., 

 Defendant-Appellant/CrossAppellee. 

CAVANAGH, J. (concurring in part and dissenting in part). 

I agree with both the majority and dissenting opinions that the common-law setoff 

rule applies in the context of joint and several liability medical malpractice cases. There 

is no indication that the Legislature intended to abrogate the common-law setoff rule 

when it eliminated the statutory setoff rule in MCL 600.2925d(b).1

 Contrary to plaintiff’s 

argument, in the absence of clear legislative intent to abrogate the common law, “[t]he 

repeal of a statute revives the common-law rule as it was before the statute was enacted.” 

People v Reeves, 448 Mich 1, 8; 528 NW2d 160 (1995). 

I would, however, affirm the judgment of the Court of Appeals with respect to 

how the common-law setoff rule should be applied because, in my view, the panel did not 

clearly err by holding that the common-law setoff should be applied as it traditionally has 

 

1

 Former MCL 600.2925d(b), as added by 1974 PA 318, was deleted by 1975 PA 161. 
2

been—to the unadjusted jury verdict. To apply the common-law setoff after the 

operation of the medical malpractice noneconomic-damages cap provides defendants 

with both the benefit of the damages cap and the further reduction of the common-law 

setoff. I agree with Justice HATHAWAY that the jury verdict represents the total amount 

of damages a plaintiff is entitled to recover and that applying the common-law setoff to 

the unadjusted jury verdict before operation of the damages cap ensures that plaintiff is 

not overcompensated for a single, indivisible injury. Further, applying the common-law 

setoff to the unadjusted jury verdict does not impair the protections afforded to a 

defendant by the medical malpractice damages cap, as the Legislature intended. 

 Michael F. Cavanagh 

 Marilyn Kelly 
S T A T E O F M I C H I G A N 

SUPREME COURT 

MYRIAM VELEZ, 

 Plaintiff-Appellee/CrossAppellant, 

v No. 138952 

MARTIN TUMA, M.D., 

 Defendant-Appellant/CrossAppellee. 

HATHAWAY, J. (dissenting). 

 I generally agree with the majority that when a trier of fact determines that a 

plaintiff in a medical malpractice case is not comparatively negligent, the common-law 

setoff rule applies. However, I disagree with the manner in which the majority applies 

this rule because it does so in a fashion that is contrary to the rule’s purpose. Because 

today’s decision departs from the common-law setoff rule, I respectfully dissent. 

 For many years, the rule in this state was that concurrent tortfeasors were held to 

be jointly and severally liable. Joint and several liability operated to place the full burden 

of the injustice on a tortfeasor, rather than on the injured party.1

 When a defendant is 

jointly and severally liable, that defendant is liable for all the injured party’s damages, 

 

1

 See Maddux v Donaldson, 362 Mich 425, 432-434; 108 NW2d 33 (1961); Velez v 

Tuma, 283 Mich App 396, 409; 770 NW2d 89 (2009); Bell v Ren-Pharm, Inc, 269 Mich 

App 464, 471-472; 713 NW2d 285 (2006). 
2

including damages for injury caused by a codefendant or a nonparty, in order to ensure 

that an injured party is fully compensated.2

 

A corollary of joint and several liability is the common-law setoff rule.3

 

Common-law setoff is grounded in the principle that an injured party is entitled to only 

one recovery for a single, indivisible injury and precludes an injured party from receiving 

a double recovery.4

 Thus, historically, when an injured party suffered a single, 

indivisible injury as a result of the negligent conduct of two or more tortfeasors, any 

amount paid by a settling defendant was “set off” or subtracted from the verdict awarded 

by the trier of fact.5

 The common-law application of setoff carried out the purpose of the 

rule: the injured party was fully compensated, but not overcompensated.6

The common-law setoff rule was codified in former MCL 600.2925d by 1974 PA 

318 and this statutory version of the setoff rule was applied in the same manner as it was 

at common law in instances in which the defendants were jointly and severally liable. 

However, statutory setoff was subsequently eliminated by 1995 PA 161, along with joint 

and several liability for virtually all tort claims.7

 Because no relevant statute currently 

addresses setoff, the question arises whether the Legislature intended common-law setoff 

 

2 Id. 

3 Kaiser v Allen, 480 Mich 31, 41; 746 NW2d 92 (2008) (KELLY, J., concurring). 

4

 See Larabell v Schuknecht, 308 Mich 419, 423; 14 NW2d 50 (1944). 

5 Id.

6 Kaiser, 480 Mich at 39-40. 

7

 MCL 600.2956. 
3

to apply to the limited categories of tort claims for which joint and several liability was 

retained.8

 Although factually dissimilar to this case, Kaiser v Allen, 480 Mich 31; 746 

NW2d 92 (2008), provides guidance in answering this question. 

Kaiser addressed the issue of whether the common-law setoff rule applies to 

claims against owners and operators of motor vehicles when vicarious liability is 

statutorily imposed. In holding that the common-law setoff rule applies to such cases, 

this Court explained: 

The common-law setoff rule is based on the principle that a plaintiff 

is only entitled to one full recovery for the same injury. An injured party 

has the right to pursue multiple tortfeasors jointly and severally and recover 

separate judgments; however, a single injury can lead to only a single 

compensation. 

 . . . Allowing plaintiff to recover the entire verdict against Allen 

[vehicle owner] and to retain all the proceeds from the settlement with [the 

vehicle’s operator] would allow the plaintiff to recover four times more 

than the jury determined plaintiff should be awarded for his injuries. The 

Legislature did not intend that a plaintiff be awarded damages greater than 

the actual loss in vicarious-liability cases, resulting in a double recovery. 

The common-law setoff rule should be applied to ensure that a plaintiff 

only recovers those damages to which he or she is entitled as compensation 

for the whole injury. . . . 

* * * 

To the extent that joint and several liability principles have not been 

abrogated by statute, they remain intact, and the common-law setoff rule 

remains the law in Michigan with regard to vehicle-owner vicariousliability cases.[9]

 

8

 See, for example, MCL 600.2956, which retains vicarious liability for employers, and 

MCL 257.401(1), which retains vicarious liability for vehicle owners. 

9 Kaiser, 480 Mich at 39-40 (citation omitted). 
4

Thus, Kaiser recognized that when a party suffers a single, indivisible injury as the 

result of the conduct of multiple tortfeasors, the injured party is entitled to be made 

whole. This means that the injured party is entitled to be fully compensated, but not 

overcompensated. I see no reason why the principles set forth in Kaiser should not be 

extended to the category of medical malpractice claims that also retain joint and several 

liability.10 

Moreover, I believe that in Markley v Oak Health Care Investors of Coldwater, 

Inc, 255 Mich App 245, 256-257; 660 NW2d 344 (2003), the Court of Appeals correctly 

reasoned that 

[w]ith tort reform and the switch to several liability, it is logical to conclude 

that common-law setoff in joint and several liability cases remained the 

law . . . where application of the common-law rule does not conflict with 

any current statutes concerning tort law, and where a plaintiff is 

conceivably overcompensated for its injury should the rule not be applied. 

Thus, Markley correctly held that in medical malpractice cases that retain joint and 

several liability, the common-law setoff rule applies. However, with that said, if the 

common-law setoff rule is to be imposed in the absence of statutory authority, it must be 

applied in the same manner and for the same purpose as it was at common law. 

Otherwise, the common-law setoff rule is not being applied; instead, an entirely new rule 

is created. 

 

10 Medical malpractice claims are bifurcated into two categories on the basis of whether 

the plaintiff is comparatively negligent. Under MCL 600.6304(6)(b), when a plaintiff is 

comparatively negligent, joint and several liability has been abolished, and the 

defendants’ liability is several. When a plaintiff is not comparatively negligent, joint and 

several liability is imposed under MCL 600.6304(6)(a). 
5

The undisputed historical purpose of the common-law setoff rule was to preclude a 

plaintiff from being overcompensated for a single, indivisible injury.11 That is its only 

goal. The common-law setoff rule accomplished this goal by subtracting any settlement 

amount for that injury from the trier of fact’s determination of the entire amount of the 

injured party’s damages. When applying the common-law setoff rule to medical 

malpractice cases under the current statutory scheme, the goal of preventing 

overcompensation remains the same. 

In analyzing whether a medical malpractice plaintiff has been overcompensated, 

we must be mindful of the so-called “tort reform” liability statutes that contain measures 

to preclude a plaintiff from receiving overcompensation in many regards. For example, 

the fact-finder is required to separate all economic damages from noneconomic ones,12

with future damages itemized on a year-by-year basis13 and any future damages reduced 

to present cash value.14 Economic damages are subject to statutory setoff for payments 

made by a collateral source.15 Payment for future damages exceeding $250,000 may be 

satisfied by the purchase of an annuity contract.16 Noneconomic damages awarded at 

 

11 Kaiser, 480 Mich at 39-40. 

12 MCL 600.6305(1)(a) and (b). 

13 MCL 600.6305(1)(b). 

14 MCL 600.6306(1)(c). 

15 MCL 600.6303. 

16 MCL 600.6307. 
6

trial are subject to two different limitations based on the nature of the injury.17 Each of 

these measures serves to reduce the amount that an injured party may ultimately receive 

in a judgment entered as a result of a verdict rendered in his or her favor. These 

measures greatly reduce the possibility that a medical malpractice plaintiff can be 

overcompensated. 

To determine whether a medical malpractice plaintiff has actually been 

overcompensated, a multistep analysis is required that considers all the principles 

discussed above. The first step is to consider whether the plaintiff was comparatively 

negligent. If the plaintiff was comparatively negligent, a defendant’s liability is several 

and, as such, the defendant is only responsible for his or her pro rata share of the 

plaintiff’s damages.18 In these instances, the issue of setoff is irrelevant because there is 

no possibility of the plaintiff being overcompensated. On the other hand, if the jury 

determines that the plaintiff was not comparatively negligent, the court must determine 

whether the plaintiff is being overcompensated and, if so, the common-law setoff rule is 

applicable. In these instances, after a verdict has been rendered, any settlement amounts 

paid for damages arising from that single, indivisible injury must be set off in the same 

manner and for the same purpose as at common law—to prevent overcompensation. 

Thus, settlement amounts should be subtracted from the amount that the trier of fact 

 

17 MCL 600.1483. 

18 MCL 600.6304(6)(b). 
7

determines is the full amount that the plaintiff is entitled to recover so that the plaintiff is 

made whole, but not overcompensated.19 

The majority opines that the verdict must first be reduced by the applicable 

limitation on noneconomic damages;20 then, only after the verdict is reduced to that 

amount, is any settlement set off or subtracted from the reduced award. Additionally, 

under the majority’s analysis, the entire amount of the settlement proceeds must be set off 

from the noneconomic-damages portion of the plaintiff’s adjusted net verdict, without 

any consideration of whether all the settlement proceeds were intended to compensate the 

plaintiff for noneconomic damages. I disagree with this analysis. 

The majority applies setoff in a manner that is at odds with the common-law rule, 

which was used to prevent a plaintiff from receiving a double recovery or 

overcompensation for a single, indivisible injury. The majority seemingly disregards the 

obvious—the trier of fact determines the total amount of a plaintiff’s damages, and only 

when a plaintiff receives more than that amount as compensation is the plaintiff 

overcompensated. A plaintiff is not overcompensated when he or she receives less than 

the trier of fact’s determination of the amount that is required to make him or her whole. 

The goal of the common-law setoff rule is merely to prevent overcompensation; it is not 

to further undercompensate the plaintiff. Unfortunately, the majority’s method of 

 

19 As will be discussed, MCL 600.6305 requires damages to be separated into economic 

and noneconomic damages and, accordingly, only amounts paid for like damages should 

be set off. 

20 The limitations on damages contained in MCL 600.1483 are commonly referred to as 

“caps” on noneconomic damages. 
8

applying this rule fails to achieve the goal of common-law setoff. While the majority 

asserts that it is applying “common-law setoff,” it instead creates a new rule that bears 

little resemblance to the common-law setoff rule or its underlying purpose. It is 

axiomatic that if a common-law rule is to be used, it should be applied in the manner and 

for the purposes that it was intended at common law. To do otherwise defies logic and 

does nothing more than judicially create a new rule in order to fill what the creator of the 

new rule perceives to be a statutory void. 

The majority counters that its manner of applying the common-law setoff rule is 

mandated by the language of MCL 600.1483(1), which sets forth the limitations on 

damages.21 The majority claims that the limitations in this subsection preclude any 

 

21 The full text of MCL 600.1483 provides: 

(1) In an action for damages alleging medical malpractice by or 

against a person or party, the total amount of damages for noneconomic 

loss recoverable by all plaintiffs, resulting from the negligence of all 

defendants, shall not exceed $280,000.00 unless, as the result of the 

negligence of 1 or more of the defendants, 1 or more of the following 

exceptions apply as determined by the court pursuant to [MCL 600.6304], 

in which case damages for noneconomic loss shall not exceed $500,000.00: 

 (a) The plaintiff is hemiplegic, paraplegic, or quadriplegic resulting 

in a total permanent functional loss of 1 or more limbs caused by 1 or more 

of the following: 

 (i) Injury to the brain. 

 (ii) Injury to the spinal cord. 

 (b) The plaintiff has permanently impaired cognitive capacity 

rendering him or her incapable of making independent, responsible life 

decisions and permanently incapable of independently performing the 

activities of normal, daily living. 
9

recovery above that amount regardless of whether an award of damages by a trier of fact 

is involved. I disagree. The majority reaches its conclusion by myopically focusing on a 

few selected words of MCL 600.1483(1), rather than the entirety of that subsection, and 

then adds language to that subsection that does not exist. It argues that because MCL 

600.1483(1) uses the terms “total amount,” “recoverable,” and “shall not exceed,” 

recoverable noneconomic losses “necessarily include[] recovery through settlements, jury 

verdicts, or arbitration.”22 However, contrary to the majority’s position, subsection (1) 

makes no reference to settlements at all. Moreover, when MCL 600.1483 is read as a 

whole and in conjunction with MCL 600.6304, as was intended, it is clear from the text 

 

 (c) There has been permanent loss of or damage to a reproductive 

organ resulting in the inability to procreate. 

 (2) In awarding damages in an action alleging medical malpractice, 

the trier of fact shall itemize damages into damages for economic loss and 

damages for noneconomic loss. 

 (3) As used in this section, “noneconomic loss” means damages or 

loss due to pain, suffering, inconvenience, physical impairment, physical 

disfigurement, or other noneconomic loss. 

 (4) The state treasurer shall adjust the limitation on damages for 

noneconomic loss set forth in subsection (1) by an amount determined by 

the state treasurer at the end of each calendar year to reflect the cumulative 

annual percentage change in the consumer price index. As used in this 

subsection, “consumer price index” means the most comprehensive index 

of consumer prices available for this state from the bureau of labor statistics 

of the United States department of labor. 

22 Ante at 14. 
10

of those sections that the limitations on damages are only intended to be applied to 

awards of damages, not settlements. 

The majority’s analysis ignores the full language of MCL 600.1483(2), which 

requires the “trier of fact” to segregate the economic and noneconomic elements of 

damages. This language logically means that only awards by a trier of fact are within the 

scope of the subsection, not settlements, which do not involve a trier of fact. More 

importantly, MCL 600.6304(5) mandates that only following an “award of damages” is 

the court to reduce that “award” of noneconomic damages to the appropriate limitation 

found in MCL 600.1483. MCL 600.6304(5) provides: 

In an action alleging medical malpractice, the court shall reduce an 

award of damages in excess of 1 of the limitations set forth in section 1483 

to the amount of the appropriate limitation set forth in section 1483. The 

jury shall not be advised by the court or by counsel for either party of the 

limitations set forth in section 1483 or any other provision of section 1483. 

However, no comparable language can be found allowing a court to reduce awards by the 

amount of a settlement. Thus, two logical conclusions can be drawn from the actual text 

of this provision. First, the Legislature did not intend to preclude a trier of fact from 

determining the full amount of recovery that is necessary to make the plaintiff whole and, 

second, the Legislature only intended awards by a trier of fact to be reduced to the 

noneconomic-damages limitation. If the Legislature had intended the interpretation 

adopted by the majority, it would be logical to assume that it would have made some 

reference to settlement somewhere in the statutory scheme. Instead, the statutory scheme 

is silent with respect to settlements. While the absence of such language does not 

preclude common-law setoff, the common-law setoff rule is only applicable when 
11

overcompensation is involved. When there is no overcompensation, the common-law 

setoff rule does not apply. In the absence of statutory authority, and in situations where 

the common-law setoff rule does not apply, there is simply no basis to apply the 

reduction in the manner that the majority requires. 

 In this case, a jury determined that as a result of defendant Dr. Tuma’s negligence, 

plaintiff Ms. Velez’s left leg had to be amputated. The jury found that defendant was 

both professionally negligent and the proximate cause of plaintiff’s injuries. The jury 

returned a verdict in plaintiff’s favor that included $124,831.86 in economic damages and 

$1.4 million in noneconomic damages for a total verdict of $1,524,831. It is the total 

verdict that constitutes full recovery and makes plaintiff whole. Only if she receives 

more than this total amount would she be receiving a double recovery or 

overcompensation. Plaintiff is clearly not receiving a double recovery or 

overcompensation because the trial court reduced the amount the jury determined would 

make her whole to $394,200.23 The trial court reached this judgment amount by first 

subtracting the settling codefendants’ payment to plaintiff ($195,000) from the jury’s 

total verdict ($1,524,831) and then reducing the net verdict ($1,329,831) to the amount 

required under MCL 600.6303 (in this instance, the noneconomic-damages limitation was 

 

23 The jury verdict included a total of $124,831.86 in economic damages and a total of 

$1,400,000 in noneconomic damages. Economic damages were reduced pursuant to 

MCL 600.6304(3) to zero, because all economic damages had been paid by a collateral 

source. Noneconomic damages were reduced pursuant to MCL 600.6304(5) to the 

amount of the applicable limitation on damages, which at the time was $394,200. The 

final judgment totaled $649,655.59, which included the reduced verdict in the amount of 

$394,200, as well as $43,000 in taxable costs, $105,812.50 for attorney fees, and 

$106,643.09 in statutory interest covering the period up to the date of the judgment. 
12

$394,200). The Court of Appeals affirmed this equation. I agree with the trial court and 

the Court of Appeals, and the majority errs by failing to take this approach. Rather than 

applying the common-law setoff rule, the majority creates a new rule and simply calls it 

“common-law setoff.” I cannot agree with this approach. 

My final concern regarding the majority’s decision is that it concludes that the 

entire amount of plaintiff’s prior settlement with Tuma’s codefendants must be set off or 

subtracted from plaintiff’s noneconomic-damages award. I find this action considerably 

troubling because it ignores the actual agreement of the settling parties. The settlement 

agreement between plaintiff and the settling codefendants is contained in a document 

entitled “Covenant Not to Sue Agreement.” The total settlement amount was $195,000, 

and the agreement specifically states the settlement is for all the damages including 

economic, noneconomic, costs, attorney fees, and interest. This settlement was intended 

to resolve all of plaintiff’s claims with the settling codefendants. Pursuant to the 

unambiguous terms of the agreement, the amount of $195,000 was not allocated into any 

specific category of damages. As such, there is no logical way to conclude that all the 

settlement proceeds were for noneconomic damages. Despite this, the majority ignores 

the terms of the agreement and instead assumes that the entire settlement was for 

noneconomic damages that are limited by the noneconomic-damages limitation contained 
13

in MCL 600.1483. Because an agreement between the parties is a contract, the majority 

is not free to alter its unambiguous terms by making such an assumption.24 

For all the foregoing reasons, I respectfully dissent. 

 Diane M. Hathaway 

 

24 Grosse Pointe Park v Mich Muni Liability & Prop Pool, 473 Mich 188, 198; 702 

NW2d 106 (2005); Lintern v Mich Mut Liability Co, 328 Mich 1, 4; 43 NW2d 42 (1950).