Court Opinion

ID: 9671845
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:43:53.77506+00
Date Added: 2024-06-11T18:16:12.555959
License: Public Domain

PATIENCE DRAKE ROGGENSACK, J.
¶ 101. (concurring in part and dissenting in part). I concur in the majority opinion's conclusion that Klover Lager-strom and the estate of Vance Lagerstrom (Lagerstrom) proved its claim for funeral expenses of $7,610.10. Majority op., ¶ 8. Therefore, I would order that the circuit court enter a judgment modified accordingly. I also concur in the majority opinion's conclusion that Wis. Stat. § 893.55(7) is constitutional. Majority op., ¶ 22. However, I dissent from the majority opinion's conclusion that evidence admitted pursuant to § 893.55(7) could not be used by a fact-finder to abrogate Wisconsin's collateral source rule1 in this case. Majority op., ¶ 5.
¶ 102. The legislature enacted Wis. Stat. § 893.55(7) in order to reduce health care providers' insurance premiums by reducing medical malpractice jury verdicts through the use of evidence of expenses2 that the plaintiff has incurred, but has not paid. In *51order to achieve the legislature's purpose, when third parties with rights of subrogation or direct action have not been joined, a jury must be able to reduce the damages awarded to a plaintiff for amounts the plaintiff has not paid, thereby abrogating the collateral source rule under those circumstances. Because the United States government was not joined in the lawsuit, the case before us presents a fact-finder's reduction of health care expenses for amounts the Lagerstroms have not paid, which I conclude is permissible under § 893.55(7). Accordingly, because I would affirm the judgment of the circuit court, as modified to include an award of $7,610.10 for funeral expenses, I do not join the majority opinion.
A. Standard of Review
¶ 103. This appeal requires us to interpret Wis. Stat. § 893.55(7), which is a question of law that we review without deference to the circuit court's interpretation. State v. Reed, 2005 WI 53, ¶ 13, 280 Wis.2d 68, 695 N.W.2d 315.
B. Wisconsin Stat. § 893.55(7)
¶ 104 Wisconsin Stat. § 893.55(7) states:
Evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant for the injury is admissible in an action to recover damages for medical malpractice. This section does not limit the substantive or procedural rights of persons who have claims based upon subrogation.
The interpretation of § 893.55(7) begins with the plain meaning of the words chosen by the legislature. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, *52¶ 45, 271 Wis. 2d 633, 681 N.W.2d 110. Context, scope and purpose are relevant in ascertaining the plain meaning of a statute. Id., ¶¶ 46, 48. Accordingly, statutory language is not interpreted in isolation, but as a part of a whole statutory scheme that may address a particular topic, giving proper accord to closely-related statutes. Id., ¶ 46. It is also to be interpreted reasonably, "to avoid absurd or unreasonable results." Id. (citations omitted). If the statute is plain on its face, it is simply applied. Id. However, if the statute is ambiguous, we may examine extrinsic sources, such as legislative history, to aid in construction. Id., ¶ 50. Statutes may be ambiguous through the legislature's use of imprecise terms, See Landis v. Physicians Ins. Co. of Wis., 2001 WI 86, ¶ 26, 245 Wis. 2d 1, 628 N.W.2d 893, or through the statute's interaction with other statutes, State v. White, 97 Wis. 2d 193, 198, 295 N.W.2d 346 (1980). In either case, the statute is ambiguous because it is capable of being understood by reasonably well-informed persons in two or more ways. Kalal, 271 Wis. 2d 633, ¶ 47. When a statute is ambiguous, the legislature is presumed to intend the interpretation that advances the purpose of the statute. Sonnenburg v. Grohskopf, 144 Wis. 2d 62, 65, 422 N.W.2d 925 (Ct. App. 1988).
¶ 105. Here, both parties agree that Wis. Stat. § 893.55(7) is ambiguous, although they differ in regard to what its meaning should be. The majority opinion concludes the statute provides for the admission of evidence of payments by others and write-offs of health care charges that otherwise would be inadmissible under our holding in Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201. Majority op., ¶ 70. But once admitted, the majority opinion holds that this evidence cannot be used as a subtraction from the *53damages to be awarded a successful plaintiff because to do so would abrogate the collateral source rule. Majority op., ¶ 76. In my view, that second conclusion is not reasonable. As I explain below, it cuts against the legislative purpose behind the enactment of § 893.55(7), that of reducing the size of damage awards in medical malpractice actions through the abrogation of the collateral source rule when doing so will prevent windfalls or double recoveries by the plaintiff.
¶ 106. In 1975, the legislature first responded to what it perceived as a crisis in the provision of health care by creating ch. 655. It saw the rapid rise in medical malpractice suits as part of the problem, and it began to address that concern by creating a number of procedures that were required in medical malpractice actions. Aicher v. Wisconsin Patients Comp. Fund, 2000 WI 98, ¶ 22, 237 Wis. 2d 99, 613 N.W.2d 849. In subsequent years, the legislature maintained its concern with the continuing rise in health care costs, and again it focused on medical malpractice actions by attempting to limit the size of malpractice awards. See Maurin v. Hall, 2004 WI 100, ¶¶ 48-62, 274 Wis. 2d 28, 682 N.W.2d 866. It did so, in part, to reduce the cost of malpractice insurance, which is born by all consumers of health care services. Id., ¶¶ 48, 65.
¶ 107. In 1995, as a further development of the legislature's comprehensive scheme to reduce health care costs, 1995 Wis. Act 10 was passed. It revised parts of ch. 655. 1995 Wis. Act 10, §§ 3-7. Section 3 of Act 10 shows that the legislature continued to be concerned about the premiums that health care providers pay for health care liability insurance. 1995 Wis. Act 10 also created Wis. Stat. § 893.55(7). 1995 Wis. Act 10, § 12m. Accordingly, § 893.55(7) must be read in the context of a comprehensive legislative scheme to reduce health *54care costs through containment of the size of awards in medical malpractice cases. See Kalal, 271 Wis. 2d 633, ¶ 46.
¶ 108. A drafting request for an amendment to the original proposal for Wis. Stat. § 893.55(7) from Senator Joanne Huelsman shows that § 893.55(7), as finally enacted, was created to modify the collateral source rule and to permit evidence of other sources of payment to be presented to the fact-finders in medical malpractice actions. See Legislative Reference Bureau Drafting File for 1995 Wis. Act 10. That amendment of § 893.55(7) did not require an offset or a reduction of the award by the amount of other payments. Rather, the Legislative Reference Bureau's file shows that presenting information to facilitate a reduction, while not requiring a reduction in each case, was done in order to preserve the interests of parties to the action that had subrogated rights. See id. The Legislative Reference Bureau Drafting File for 1995 Wis. Act 10 also shows that states that have enacted similar modifications of the collateral source rule have experienced a reduction in the size of medical malpractice verdicts by reducing the possibility of windfalls to plaintiffs. See id.
¶ 109. Accordingly, I interpret Wis. Stat. § 893.55(7) as permitting a reduction of damages awarded to a successful plaintiff in a medical malpractice action by amounts that a plaintiff has incurred, but has not paid, for health care services. In order to accomplish the legislative purpose for which § 893.55(7) was enacted, a reduction should occur when write-offs have occurred or when third-party payers with rights of reimbursement or subrogation were not joined in the action. This is fair to plaintiffs who will be made whole, and it is fair to defendants who will not be required to give windfalls or double recoveries to plaintiffs. How*55ever, when third parties with subrogated rights or rights of direct action due to their payment of the injured party's medical expenses are joined in the lawsuit and their rights are adjudicated in that lawsuit, a reduction in the amount the tortfeasor is found to owe for what those parties paid would not be appropriate. Stated otherwise, when the parties who paid medical expenses claim for repayment in the lawsuit, the award of damages will include compensation for those parties, as well as for the injured party.
¶ 110. In the case before us, Lagerstrom paid only $755 for medical services, yet Lagerstrom sought $89,375.78 from the jury. Medicare paid $64,759.40 and received provider write-offs of $23,861.38 for a total participation of $88,620.78 as payment for Lagerstrom's health care services. Lagerstrom was made whole by the jury's verdict because everything Lagerstrom paid was repaid by the damages that were awarded. Yet, Lagerstrom appeals. Lagerstrom seeks all that Medicare paid and all that the health care providers wrote off of their bills, the latter of which no one will ever have to pay. In support of that position, Lager-strom asserts that he should get a windfall under the collateral source rule in regard to the amounts that were written off and that he has potential liability to Medicare for the payments that Medicare made. I disagree with both contentions.
¶ 111. In regard to the first contention, that La-gerstrom is legally entitled to a windfall for the amounts that health care providers wrote off, the statute cannot be so interpreted. While the collateral source rule may permit a windfall to a plaintiff when the claim is not based on medical malpractice, See Koffman, 246 Wis. 2d 31, ¶ 27, the purpose of Wis. Stat. § 893.55(7) was to modify the collateral source rule in *56medical malpractice actions. Accordingly, Lagerstrom is due only so much in reimbursement for health care expenses as Lagerstrom paid. That is sufficient to make Lagerstrom whole. Id., ¶ 69 (Sykes, J., dissenting). In my view, § 893.55(7) cannot be interpreted to permit recoveries of amounts written off of hills for health care services in medical malpractice actions and be consistent with the legislative policy choice underlying § 893.55(7).
¶ 112. In regard to the second contention, that Lagerstrom should recover the $64,759.40 that Medicare paid, I again disagree. Lagerstrom purposefully refused to name the United States government as a party, either as a defendant or as an involuntary plaintiff, pursuant to Wis. Stat. § 803.03.3 Accordingly, as I explain below, the judgment in this case does not affect any claim the United States government has by virtue of the Medicare payments that were made.
¶ 113. When Medicare participates in the payment of health care services, at times it does so as a secondary payer by making "conditional" payments. 42 U.S.C. § 1395y(b)(2)(B)(i). One of the occasions when Medicare is a secondary payer and its payments are "conditional" is when there is a liability insurance policy or plan that may be responsible for paying for the services. 42 CFR § 411.21. If a Medicare conditional payment is made, the Center for Medicare & Medicaid *57Services (CMS), an arm of Health Care Financing Administration (HCFA), may seek recovery of those conditional payments. 42 CFR § 411.24. CMS can recover conditional payments from parties who have "received a third party payment." Section 411.24(g). This includes a beneficiary, such as Vance Lagerstrom. Id. If a "party receives a third party payment," that party must reimburse Medicare within 60 days. Section 411.24(h). The payment due Medicare may be reduced by the costs of collection. 42 CFR § 411.37(a).
¶ 114. "In the case of liability insurance settlements ... [i]f Medicare is not reimbursed as required by paragraph (h) of this section [411.24], the third party payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party." 42 CFR § 411.24(f)(1). In liability insurance settlements where a lump sum, which does not allocate among the types of damages included, is received, the beneficiary/ recipient of the settlement may be subject to claims by CMS that it has received a third-party payment to which Medicare is entitled. See Zinman v. Shalala, 67 F.3d 841, 843 (9th Cir. 1995); Denekas v. Shalala, 943 F. Supp. 1073, 1075 (S.D. Iowa 1996); Smith v. Travelers Indem. Co., 763 F. Supp. 554, 558 (M.D. Fla. 1989). However, this case does not present a settlement by a liability insurance company, nor has Lagerstrom received a lump sum, undifferentiated payment. Furthermore, Lagerstrom has not received any third-party payment for sums paid by Medicare. However, the United States government does retain the right to pursue recovery of conditional payments it made by direct action against all who were required or responsible to make payment with respect to the same item or service. 42 U.S.C. § 1395y(b)(2)(B)(iii). Accordingly, a lawsuit by the United States government against the *58tortfeasor's insurer has not been precluded by this lawsuit. However, there is no basis for a claim against Lagerstrom under the jury's clearly itemized verdict.
¶ 115. The majority opinion criticizes the circuit court's jury instruction and concludes it prevented the real controversy from being fully tried. Majority op., ¶ 85. Lagerstrom requested a jury instruction that said, "Vance Lagerstrom is obligated to reimburse Medicare for expenditures made by it." The majority opinion asserts that by refusing to give this instruction, Lager-strom was prevented from advising the jury of the estate's "potential" obligation to reimburse Medicare. Majority op., ¶¶ 79-89. However, the instruction La-gerstrom requested did not say "potential" liability.
¶ 116. Further, as the tortfeasor's insurer argued, the insurer has "potential" liability to Medicare. 42 CFR § 411.24(h)-(i). Since Lagerstrom refused to name the United States government as a party to the action, both the plaintiff and the defendants were treated similarly in regard to the arguments each could make to the jury. That is, Lagerstrom could argue to the jury that if it included in the damages amounts that Medicare paid, it would repay those amounts to the United States government, and the insurer could argue that amounts paid by Medicare should not be included in the verdict because it remained obligated to Medicare for those same amounts. Therefore, I agree that the circuit court properly instructed the jury.
¶ 117. In my view, it would have been contrary to law to give the instruction Lagerstrom requested because Medicare was not a party to the action. Instead, the instruction given followed the purpose set out by the legislature in enacting Wis. Stat. § 893.55(7). The reduction the jury made prevented a windfall to Lagerstrom, and it prevented a double recovery that could have *59occurred because Lagerstrom refused to name the United States government as a party and thereby adjudicate its interests. Accordingly, a new trial is not appropriate. Lagerstrom was made whole by the jury's verdict. That the United States government still may have a right of action for the Medicare payments it made, is not unfair to Lagerstrom. Lagerstrom is left with the choice he made, as are the defendants who may be required to deal with CMS about what is yet due to Medicare.
¶ 118. Therefore, for the reasons set out above, I would affirm the judgment of the circuit court, as modified, to include $7,610.10 for funeral expenses.
¶ 119. Accordingly, I respectfully concur in part and dissent in part from the majority opinion.
¶ 120. I am authorized to state that Justices JON E WILCOX and DAVID T. PROSSER join this concurrence and dissent.

 1 address only medical expenses here, but I agree with the majority that the statute is not so limited and could cover other types of payments made to a plaintiff due to the fault of the tortfeasor. Majority op., ¶ 28. However, I do not agree that the statute goes so far as to contemplate evidence of "volunteer services." Majority op., ¶ 30.

 The record reflects that on July 30,2001, the United States government gave notice to Lagerstrom's attorney that "Medicare's regulations require that your client pay Medicare back within 60 days of your receipt of settlement or insurance proceeds." Medicare had then paid $64,759.40. The record also reflects that the defendants attempted to get Lagerstrom to name the United States as a necessary party pursuant to Wis. Stat. § 803.03, hut Lagerstrom resisted and prevailed. The jury verdict dated February 2003 did not adjudicate the interests of the United States.