Opinion ID: 2620623
Heading Depth: 4
Heading Rank: 1

Heading: Setoff for Medical Expenses

Text: On appeal, Union Pacific assigns that the district court erred in not permitting it to set off the portion of Strasburg’s medical bills as reflected in exhibit 27 that were written off by Strasburg’s medical providers as a result of negotiations between Union Pacific and the providers, an amount referred to herein as the “writeoff amount.” We note Strasburg’s medical expenses were paid by Union Pacific Railroad Employes Health Systems, which is a third-party administrator for Union Pacific’s health plan. Any rights Union Pacific Railroad Employes Health Systems might have against Strasburg have been assigned to Union Pacific, and accordingly, we refer to Union Pacific Railroad Employes Health Systems as “Union Pacific” for ease of comprehension. There is no dispute that Union Pacific is entitled to a lien for the amount actually paid; such a lien was requested by Union Pacific and enforced by the district court. The only issue on appeal is whether the district court erred when it denied Union Pacific’s request to also set off the writeoff amount. 1 DMK Biodiesel v. McCoy, 285 Neb. 974, 830 N.W.2d 490 (2013). Nebraska Advance Sheets 748 286 NEBRASKA REPORTS
[3-5] We begin with an explanation of the underlying legal principles, in particular the collateral source rule and 45 U.S.C. § 55. The collateral source rule provides that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.2 The theory underlying the adoption of this rule by a majority of jurisdictions is to prevent a tort-feasor from escaping liability because of the act of a third party, even if a possibility exists that the plaintiff may be compensated twice.3 Under the collateral source rule, the fact that the party seeking recovery has been wholly or partially indemnified for a loss by insurance or otherwise cannot be set up by the wrongdoer in mitigation of damages.4 But if the tort-feasor contributed in some way to the benefits provided to the injured person, then the tort-feasor might be entitled to mitigation of damages.5 This common-law rule was codified, with modifications, by 45 U.S.C. § 55: Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void: Provided, That in any action brought against any such common carrier under or by virtue of any of the provisions of this chapter, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought. 2 Countryside Co-op v. Harry A. Koch Co., 280 Neb. 795, 790 N.W.2d 873 (2010). 3 Id. 4 Fickle v. State, 274 Neb. 267, 759 N.W.2d 113 (2007). 5 See Huenink v. Collins, 181 Neb. 195, 147 N.W.2d 508 (1966) (citing 25 C.J.S. Damages § 99(2) (1966)). Nebraska Advance Sheets STRASBURG v. UNION PACIFIC RR. CO. 749 Cite as 286 Neb. 743 This section has been interpreted to mean that if the intent of “any sum . . . contributed or paid to any insurance, relief benefit, or indemnity” was in exchange for indemnification from FELA liability, then setoff is appropriate.6 If not, and if the intent of the sum is to provide some type of benefit akin to compensation, then setoff is impermissible.7 It is generally accepted that although under 45 U.S.C. § 55 a railroad may set off only the amount of the premiums and not what the premiums bought, this “harsh result” can be avoided “by specific provision in the collective bargaining agreement.”8 The collective bargaining agreement that governs the employment relationship between Union Pacific and Strasburg contains such a provision. As such, Union Pacific and Strasburg’s union contracted for a limited waiver of FELA liability. In return for the payment of certain benefits—in this case, via a health plan which paid all expenses related to an on-the-job injury—Union Pacific was entitled to indemnification from FELA liability. The question remaining is the value of that indemnification.
Union Pacific contends that in denying its request for a setoff of the writeoff amount, Union Pacific was denied the benefit of its bargain under the collective bargaining agreement and Strasburg was granted a windfall. Strasburg disagrees and argues that Union Pacific is entitled to set off only those funds which it paid to settle his medical bills. Resolution of this issue is a legal question involving the interpretation of 45 U.S.C. § 55, namely whether the writeoff amount is “any sum . . . contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee.” 6 See Folkestad v. Burlington Northern, Inc., 813 F.2d 1377 (9th Cir. 1987). 7 See id. 8 Blake v. Delaware and Hudson Railway Company, 484 F.2d 204, 207 (2d Cir. 1973) (Friendly, J., concurring). See Folkestad v. Burlington Northern, Inc., supra note 6. Nebraska Advance Sheets 750 286 NEBRASKA REPORTS [6] Absent anything to the contrary, an appellate court will give statutory language its plain and ordinary meaning.9 And the plain meaning of the language used by Congress when drafting 45 U.S.C. § 55 was that an employer may set off any sum paid or contributed. Union Pacific did pay certain funds on Strasburg’s behalf and is undisputedly entitled to a setoff of $139,845.03 for that payment. But it did not pay or contribute the writeoff amount, and it is not entitled to set off such amount under the plain language of 45 U.S.C. § 55. Nor are we convinced by Union Pacific’s argument that Strasburg received a windfall where the jury awarded the medical expenses as billed, when in fact Strasburg paid none of those expenses. The jury’s verdict was a general one, and thus it is not possible to know what amount was actually awarded to Strasburg for his medical expenses. Moreover, Union Pacific did not object to exhibit 27, the exhibit which listed all of Strasburg’s medical expenses, and in fact, Union Pacific stipulated to its admission. Union Pacific did not offer any other evidence contradicting the impression left by exhibit 27 that the medical expenses in that exhibit were actually incurred in full by Strasburg. The plain language of 45 U.S.C. § 55 does not provide for a setoff of the insurance writeoff amount. And the record shows that Union Pacific failed to take actions that might have prevented the award of medical expenses which Union Pacific claims the jury made and with which Union Pacific now takes issue. On these facts, the statute does not require, and equity does not demand, that Union Pacific’s request be granted. As such, we conclude that the district court did not err in denying Union Pacific’s request for setoff of that amount. Union Pacific’s first assignment of error is without merit.