Opinion ID: 1807424
Heading Depth: 2
Heading Rank: 3

Heading: Method of Deduction of Collateral Sources

Text: Since we determined only the uninsured motorist benefits are collateral sources to which no subrogation rights were asserted, it is then necessary to examine when and if these collateral sources payments should be deducted from appellants' recovery against respondent city. The trial court deducted the uninsured motorist benefits from the total jury verdict before reducing to 40% the judgment against respondent city. The court of appeals panel affirmed, holding the collateral source should be deducted first from the total verdict because [a]ll defendants in cases with more than one defendant are entitled to the benefit of a section 548.36 deduction. Imlay, 444 N.W.2d at 601. Neither respondent nor appellants agree with the method of calculation used by the trial court and the court of appeals panel. There is no caselaw construing this question, and no language in either the collateral source (section 548.36) or the joint and several liability (section 604.02) statutes indicates to us which deduction should be applied first and from what amount this deduction should be made. Respondent city asserts the total judgment of over $2.2 million first should be apportioned pursuant to Minn.Stat. § 604.02, with 40% to respondent, and then all the uninsured motorist benefits should be credited to it. This result would leave respondent with less than $200,000 of liability and is properly rejected. Its analogy to no-fault insurance cases is not applicable since there is no comparative fault by the plaintiffs here. In addition, it is inequitable for one party to receive the entire benefit of collateral source deduction. If Miller's estate was not insolvent and had it been sued by appellants, respondent could not even make the argument that it should receive the entire collateral source deduction, since Miller would be proportionately entitled to the collateral source deductions. Appellants argue the uninsured motorist benefits should not be deducted from the judgment against respondent city because they would not be getting a double recovery. We agree with appellants' approach to this issue. Since the primary purpose of section 548.36 is to avoid double recoveries, we feel its application in favor of respondent city when appellants are undercompensated is not justified. We also believe the uninsured motorist benefits should be applied first to the obligation of the uninsured motorist, third-party defendant Miller, before being deducted from respondent city's obligation. Taking collateral sources off the top of the jury verdict is justified if there are co-defendants who are liquid, but it is not equitable to give a single defendant the benefit of collateral source payments when there would be no double recovery and when the payments result from a source the plaintiffs did not even sue. A plaintiff's award can be reduced as required by the collateral source statute, and yet this reduction should not be used to benefit a single liquid defendant until it is shown the plaintiff would be receiving a double recovery. In this case, the uninsured motorist benefits of $703,326.79 first should be deducted from the uncompensated portion of the award, which is over $1.2 million. This would bring appellants' recovery from all sources to over $1.8 million, still less than the $2.2 million jury verdict. We do not believe the legislature would pass a statute that primarily is aimed at eliminating double recoveries, but then have it applied to reduce awards where there is no possibility of a double recovery. See Minn.Stat. § 645.17(1) (1988) (absurd result).