Opinion ID: 885573
Heading Depth: 1
Heading Rank: 3

Heading: issues

Text: ¶ 25 Did the District Court err when it denied the Appellants' request for an offset from the judgment for money paid to the Shilhaneks by a collateral source? ¶ 26 Appellants assert they are entitled to an offset from the judgment in favor of the Shilhaneks for payments made by State Farm to the Shilhaneks pursuant to the terms of their underinsured-motorist coverage. Appellants rely on § 27-1-308, MCA (1997), in support of their assertion. Appellants contend that § 27-1-308, MCA (1997), does not require the verdict to actually be paid in order for the Plaintiffs to be fully compensated and since the jury found there was no comparative negligence on the part of the Shilhaneks, their awards reflect full compensation for their damages. The Shilhaneks assert that the verdict is simply a determination of the amount of money it will take to fully compensate the Shilhaneks and they will not be fully compensated until such time as the Appellants actually pay the judgment in excess of $3.1 million. Following a hearing on the issue, the District Court concluded that the legislature contemplated actual payment to an injured party before he could be considered fully compensated. ¶ 27 The statute regarding collateral source reductions provides as follows: Collateral source reductions in actions arising from bodily injury or death-subrogation rights. (1) In an action arising from bodily injury or death when the total award against all defendants is in excess of $50,000 and the plaintiff will be fully compensated for his damages, exclusive of court costs and attorney fees, a plaintiff's recovery must be reduced by any amount paid or payable from a collateral source that does not have a subrogation right. Section 27-1-308(1), MCA (1997) (emphasis added). Prior to any reduction, two requirements must be met. The first requirement under this statute is that the total award against all defendants must be in excess of $50,000. See § 27-1-308(1), MCA (1997). After dividing the punitive damage award among each of the four Plaintiffs equally and adding it to their compensatory damage awards, this requirement is satisfied. ¶ 28 The second requirement under this statute is that the plaintiff will be fully compensated. See § 27-1-308(1), MCA (1997). While the statute does not define fully compensated, it is clear from the plain language of the statute what the legislature intended. As the District Court correctly noted, the statute provides that it is a plaintiff's recovery that must be reduced by any amount paid or payable from a collateral source without a subrogation right, not a plaintiff's award. In this case, there was only $1,000,000 in insurance proceeds available to satisfy the Shilhaneks' judgment of $3,117,000. In addition, the entire $1,000,000 has not been paid to the Shilhaneks. Approximately one-fourth of the proceeds has been deposited with the federal district court and is the subject of an interpleader action involving the Shilhaneks and their health insurance provider. ¶ 29 To allow the Appellants an offset against the remaining $750,000 in insurance proceeds, clearly frustrates the intention of the collateral source statute. As the District Court pointed out, the collateral source statute exists to ensure that a plaintiff's eventual recovery has a ceiling no higher than the full amount of the award, minus appropriate collateral offsets. This is illustrated by the legislature's use of the word recovery as opposed to the word award when referring to reduction for payments made by a collateral source. ¶ 30 Section 27-1-308(1), MCA (1997), mandates a reduction from the plaintiff's recovery for payments made by a collateral source when the award against the defendants is in excess of $50,000 and when the plaintiff will be fully compensated for his damages. Based on the plain language of the statute, the District Court properly determined that the legislature contemplated actual payment to an injured party before they could be considered fully compensated. If an injured party receives an award of monetary damages against a judgment-proof defendant, it cannot be said that the injured party will be fully compensated. Thus, the phrase will be fully compensated indicates that full payment must be made. ¶ 31 Since the Appellants have only paid approximately $750,000 toward the judgment rendered in favor of the Shilhaneks in excess of $3,000,000, the second requirement under § 27-1-308(1), MCA (1997), that the plaintiff will be fully compensated, has not been met. Thus, we conclude that the District Court did not err when it denied the Appellants' request for a collateral source reduction from the judgment in favor of the Shilhaneks.