Court Opinion

ID: 9729912
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:52:26.757212+00
Date Added: 2024-06-11T18:26:02.212685
License: Public Domain

DIANE S. SYKES, J.
¶ 23. (dissenting). "In Wisconsin compensatory damages are given to make whole the damage or injury suffered by the injured party." White v. Benkowski, 37 Wis. 2d 285, 290, 155 N.W.2d 74 (1967). Past medical and health care expenses are recoverable as compensatory damages where they are reasonably and necessarily incurred for the treatment of injuries sustained by a plaintiff as a result of a defendant's tortious conduct. Wis JI-Civil 1756; see also Lautenschlager v. Hamburg, 41 Wis. 2d 623, 630, 165 N.W.2d 129 (1969).
*694¶ 24. The collateral source rule provides that a plaintiffs recovery " 'will not be reduced by the fact that the medical expenses were paid by some source collateral to the defendant, such as by a beneficial society, by members of the plaintiffs family, by the plaintiffs employer, or by an insurance company.'" McLaughlin v. Chicago, Milwaukee, St. Paul & Pac. Ry. Co., 31 Wis. 2d 378, 396, 143 N.W.2d 32 (1966) (quoting 22 Am. Jur. (2d), Damages, § 207, p. 288). The collateral source rule has been extended to cases in which the plaintiff s medical expenses were paid by a government welfare program. Thoreson v. Milwaukee & Suburban Transp. Co., 56 Wis. 2d 231, 243-45, 201 N.W.2d 745 (1972). The policies underlying the collateral source rule are aptly catalogued in the majority opinion and summarized at ¶ 7: "The tortfeasor who is legally responsible for causing injury is not relieved of his obligation to the victim simply because the victim had the foresight to arrange, or good fortune to receive, benefits from a collateral source for injuries and expenses."
¶ 25. So far, there is no controversy. These are well-established principles of the law of damages, and they are fully applicable in this case. Indeed, no one is arguing that Hope Ellsworth's recovery for past medical expenses should be reduced by the amount paid by a source collateral to the tortfeasor, in this case, Medical Assistance. The foregoing authorities establish that it cannot be; the collateral source rule clearly applies to allow recovery for the amounts paid by Medical Assistance. Furthermore, this is not a situation in which the collateral source rule conflicts with the law of subrogation and therefore must give way.1 The state, through *695Dunn County, is statutorily subrogated. Wis. Stat. § 49.89(2); Wis. Admin. Code § HFS 106.03(8). The application of the collateral source rule — at least to the extent of the Medical Assistance payments — therefore does not frustrate subrogation's goal of preventing double recovery. By operation of the collateral source rule, the amount paid by Medical Assistance is included in the damages award, and by operation of the principles of subrogation, Medical Assistance recoups that amount from the award.
¶ 26. The real question here is not whether the collateral source rule applies but which measure of damages it applies to. The plaintiff put in expert testimony regarding the full retail value of the medical services provided: $597,448.27. The parties stipulated, however, that a discounted amount, $354,941.21, was actually paid by Medical Assistance and was accepted by the medical providers as payment in full pursuant to the rules of the Medical Assistance program. See Wis. *696Stats. §§ 49.43(lm), 49.46 and 49.49(3m)(a). The difference — almost $250,000 — was absorbed by the providers as legally unrecoverable. The plaintiff can never be held liable for the excess; she has not incurred it. Wis. Admin. Code § HFS 106.04(3). Nevertheless, the circuit court concluded as a matter of law that she was entitled to recover the higher amount.
¶ 27. The applicable jury instruction provides that the measure of damages for past medical expenses is "the sum of money. . .reasonable and necessarily incurred. . .for the care and treatment of the [plaintiffs] injuries." Wis JI-Civil 1756. The defendant argues that the plaintiff s damages cannot encompass the higher retail value of the medical services provided for two reasons: (1) because she never "incurred" that amount; and (2) because the amount paid pursuant to the rules governing Medical Assistance, which was accepted by the medical providers as full payment for their services, constitutes the reasonable value of those services; regardless of whether the providers could have received more from some other person or source.2 I agree.
¶ 28. While this is an issue of first impression in this state, I am persuaded by the reasoning of the California Court of Appeals in Hanif v. Housing Authority of Yolo County, 246 Cal. Rptr. 192 (1988), the Kansas Court of Appeals in Bates v. Hogg, 921 P.2d 249 (1996), and the United States District Court for the Western District of Virginia in McAmis v. Wallace, 980 F. Supp. 181 (W.D. Va. 1997). All of these cases involved injured *697plaintiffs whose medical expenses were paid by government medical assistance programs. In each, the ■plaintiff was attempting to recover the difference between the full market value of the medical services and the discounted amount that was paid by the program and accepted by the medical providers as full payment.
¶ 29. The reasoning of the California Court of Appeals in Hanif is particularly persuasive:
Preliminarily, we note there is no question here that Medi-Cal's payment for all injury-related medical care and services does not preclude plaintiffs recovery from defendant, as special damages, of the amount paid. This follows from the collateral source rule. . . . For purposes of analysis, plaintiff is deemed to have personally paid or incurred liability for these services and is entitled to recompense accordingly. This is not unreasonable or unfair in light of Medi-Cal's subrogation and judgment lien rights... .
Nor is there any question about the appropriate measure of recovery: a person injured by another's tortious conduct is entitled to recover the reasonable value of medical care and services reasonably required and attributable to the tort. . . .
The question here involves the application of that measure, i.e., whether the "reasonable value" measure of recovery means that an injured plaintiff may recover from the tortfeasor more than the actual amount he paid or for which he incurred liability for past medical care and services. Fundamental principles underlying recovery of compensatory damages in tort actions compel the following answer: no.
"In tort actions damages are normally awarded for the purpose of compensating the plaintiff for injury *698suffered, i.e., restoring him as nearly as possible to his former position, or giving him some pecuniary equivalent.". . .The primary object of an award of damages in a civil action, and the fundamental principle on which it is based, are just compensation or indemnity for the loss or injury sustained by the complainant, and no more....
Applying the above principles, it follows that an award of damages for past medical expenses in excess of what the medical care and services actually cost constitutes overcompensation.. . .
Thus, when the evidence shows a sum certain to have been paid or incurred for past medical care and services, whether by the plaintiff or by an independent source, that sum certain is the most the plaintiff may recover for that care despite the fact it may have been less than the prevailing market rate.
Hanif, 246 Cal. Rptr. 192, 194-95 (citations omitted).
¶ 30. McAmis and Bates involved injured plaintiffs whose medical expenses were paid by Medicaid, and the courts reached similar results. The United States District Court in McAmis summarized its holding in this way:
Since Plaintiff did not incur the written-off amounts, they cannot be included in any compensatory damage award she may receive. In order to make Plaintiff whole, to reimburse her for costs expended as a result of this accident, Plaintiff need only receive the actual costs of medical care borne by Medicaid. These are the amounts that Plaintiff has incurred for purposes of the collateral source rule. While Plaintiff was not able to pay her medical bills herself, under the collateral source rule, she may deserve to be compensated for what Medicaid paid as if these benefits were insurance. . . . Defen*699dant is not permitted to avoid compensating his victim merely because she was able to qualify for Medicaid benefits. At the same time, Plaintiff only receives compensation sufficient to make her whole.
McAmis, 980 F. Supp. at 185 (citations omitted).
¶ 31. I agree with the reasoning of these courts, and conclude it is fully consistent with Wisconsin law. Since the plaintiff never incurred medical expenses at the higher retail cost, her measure of damages cannot encompass that amount. The value of the medical services necessary to treat the plaintiffs injuries is not what the medical providers might have been able to charge and recover from someone else (say, someone with private, fee-for-service insurance, or someone with the financial wherewithal to pay the highest market rate) but what they accepted as full payment for the services reasonably and necessarily rendered in this case. In other words, the measure of damages is not what the highest payor would have paid for the same medical services but what was actually incurred in the care and treatment of the plaintiff s injuries. Thus, the plaintiffs measure of damages in this case is that which Medical Assistance paid and the medical providers accepted as payment in full for the services rendered. By this measure, the defendant is not relieved of responsibility for his tortious conduct, and the plaintiff is made whole. Accordingly, I respectfully dissent.
¶ 32. I am authorized to state that Justices JON P. WILCOX and N. PATRICK CROOKS join this dissent.

 The cases involving the- interaction between the law of subrogation and the collateral source rule are difficult to recon*695cile. For example, where an insurer has made payments but is not contractually subrogated and fails to prove equitable subro-gation, or has expressly waived subrogation (gratuitously or in favor of some other form of recovery), the collateral source rule generally applies. See Jindra v. Diederich Flooring, 181 Wis. 2d 579, 511 N.W.2d 855 (1994); Voge v. Anderson, 181 Wis. 2d 726, 512 N.W.2d 749 (1994); Rixmann v. Somerset Pub. Sch., 83 Wis. 2d 571, 266 N.W.2d 326 (1978). On the other hand, where subro-gation is present but unenforceable by operation of law (because of the expiration of the statute of limitations), the collateral source rule does not apply. See Lambert v. Wrensch, 135 Wis. 2d 105, 399 N.W.2d 369 (1987), relying on Heifetz v. Johnson, 61 Wis. 2d 111, 211 N.W.2d 834 (1973). The general rule seems to be that where subrogation is present and the principles of the collateral source rule and subrogation would conflict, subrogation trumps the collateral source rule, and the latter will not apply.

 Disputes over the "reasonableness" of medical expenses in personal injury actions more commonly focus on whether the plaintiff was overtreated, given the nature and extent of the injury. That type of "reasonableness" evaluation is a question of fact for the jury. This case presents an issue of law.