Court Opinion

ID: 9784753
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:53:17.706961+00
Date Added: 2024-06-11T07:35:58.710139
License: Public Domain

Luckert, J.,
dissenting: The majority holds that the collateral source rule applies to all benefits provided to the plaintiff by the tortfeasor, Via Christi. I would agree with the application of the collateral source rule to the $82,862.99 paid for by Medicare. However, I would find that the collateral source rule does not apply to the value of the medical care which Via Christi provided but for which it did not receive compensation from plaintiff, Medicare, or any other source. Application of the collateral source rule to this portion of the judgment is contrary to the basic precept of the collateral source rule which is 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.
The cases cited by the majority in support of its conclusion arise in the prototypical situation of the medical provider being a third party, non-tortfeasor. In these cases the plaintiff is injured through the negligence or other wrongful act of a defendant and receives treatment for those injuries from a Medicare provider who is not a defendant. The bill for medical services is then paid by Medicare, and the provider writes off those amounts which Medicare does not reimburse, thus, providing a benefit to the plaintiff to which the wrongdoer did not contribute and which is, therefore, collateral to the tortfeasor. By definition, the collateral source rule applies in these situations.
In contrast, in this case the injury occurred while Rose was being treated at Via Christi. Care continued at Via Christi; thus, it was the tortfeasor which paid those costs not reimbursed by Medicare. Benefits conferred by the tortfeasor upon the plaintiff are not wholly independent of and collateral to the tortfeasor. In all of the cases from other jurisdictions cited by the majority or the parties in which the tortfeasor was the Medicare provider and the issue *553was how to treat the amount not reimbursed by Medicare, the court concluded the defendant was entitled to a credit against the judgment for the medical expenses which the tortfeasor provided without reimbursement or the plaintiff was otherwise not entitled to that amount as damages.
The majority rejects these cases based upon an overly broad reading of 42 U.S.C. § 1395cc(a)(l)(A) (2000). The majority’s interpretation is contrary to the plain language of the statute and legislative intent. Further, this interpretation violates basic tenets of the law of damages, requiring Via Christi to absorb the cost of the services for which there was no reimbursement and then, once again, pay for providing these services.

Collateral Source Rule in Kansas

The collateral source rule in Kansas is usually stated as follows:
“At common law, the collateral source rule prevented the jury from hearing evidence of payments made to an injured person by a source independent of the tortfeasor as a result of the occurrence upon which the personal injury action is based. The court has stated the rule as follows: ‘Under the “collateral source rule,” 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.’ Farley v. Engelken, 241 Kan. 663, Syl. ¶ 1, 740 P.2d 1058 (1987).” (Emphasis added.) Thompson v. KFB Ins. Co., 252 Kan. 1010, 1014, 850 P.2d 773 (1993).
See Gregory v. Carey, 246 Kan. 504, 508, 791 P.2d 1329 (1990); Wentling v. Medical Anesthesia, 237 Kan. 503, 515, 701 P.2d 939 (1985); Allman v. Holleman, 233 Kan. 781, Syl. ¶ 8, 667 P.2d 296 (1983); Pape v. Kansas Power & Light Co., 231 Kan. 441, 446, 647 P.2d 320 (1982); Southard v. Lira, 212 Kan. 763, 768-69, 512 P.2d 409 (1973); Rexroad v. Kansas Power & Light Co., 192 Kan. 343, 354, 388 P.2d 832 (1964).
In Harrier v. Gendel, 242 Kan. 798, 800, 751 P.2d 1038 (1988), the court indicated the collateral source rule as applied in Kansas was consistent with Restatement (Second) of Torts § 920A (1977). That section, specifically subparagraph (1), provides that when the tortfeasor contributes the services or pays damages the tortfeasor is entitled to a credit toward the payment of the damages:
*554“(1) A payment made by a tortfeasor or by a person acting for him to a person whom he has injured is credited against his tort liability, as are payments made by another who is, or believes he is, subject to the same tort liability.
“(2) Payment made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or a part of the harm for which the tortfeasor is liable.”
Consistent with the rule stated in subparagraph (1) of this section, in Hustead v. Bendix Corp., 233 Kan. 870, 877-78, 666 P.2d 1175 (1983), this court considered the effect of a partial payment of damages predicated upon possible tort liability. The court held that the advance or partial payment was not admissible into evidence under K.S.A. 40-275. The court continued, stating: “Such a payment constitutes a credit and may be deducted from any settlement or final judgment rendered.”

Cases From Other Jurisdictions

The majority does not discuss this rule and, in determining that the collateral source rule applies to the amount Via Christi wrote off, does not distinguish between cases where the Medicare provider is the tortfeasor and cases where the Medicare provider is a third party. The following cases cited by the majority involve a Medicare provider who was not a defendant. Therefore, these cases are distinguishable and do not address the limited issue raised in this case of how to treat the services provided to plaintiff by the defendant health-care provider. See Holle v. Moline Public Hosp., 598 F. Supp. 1017, 1021 (C.D. Ill. 1984) (defendant was driver of automobile; hospital was third-party collateral source); Olariu v. Marrero, 248 Ga. App. 824, 549 S.E.2d 121 (2001) (defendant was vehicle driver; medical provider was third-party collateral source); Wal-Mart Stores, Inc. v. Frierson, 818 So. 2d 1135 (Miss. 2002) (defendant was store; medical provider was third-party collateral source); Brown v. Van Noy, 879 S.W.2d 667 (Mo. App. 1994) (defendant was pub; medical provider was third-party collateral source); Radvany v. Davis, 262 Va. 308, 310, 551 S.E.2d 347 (2001) (personal injury action; medical provider was third-party collateral source); Acuar v. Letourneau, 260 Va. 180, 192, 531 S.E.2d 316 (2000) (defendant was car driver; medical provider was third-party *555collateral source); Koffman v. Leichtfuss, 246 Wis. 2d 31, 630 N.W.2d 201 (2001) (defendant was motorist; medical provider was third-party collateral source).
In two other cases cited by the majority, the issue addressed was whether the payment made by Medicare was a collateral source. Manko v. United States, 830 F.2d 831 (8th Cir. 1987); Hodge v. Middletown Hosp. Assn., 62 Ohio St. 3d 236, 581 N.E.2d 529 (1991). Thus, these cases do not address the issue before us which is how to treat the expense paid for by the defendant not Medicare.
On the other hand, in all cases cited in the majority opinion where the tortfeasor was the Medicare provider the court bas refused to apply the collateral source rule to the portion of the medical services not paid for by Medicare.
In Moorhead v. Crozer Chester Med. Center, 564 Pa. 156, 765 A.2d 786 (2001), the plaintiff filed a malpractice action after she suffered a fall at the hospital. Treatment was provided by the hospital and Medicare provided partial reimbursement. At issue was the amount not reimbursed by Medicare. As noted by the majority, the Pennsylvania Supreme Court held that the plaintiff could not recover the amounts paid. In part, its holding was based upon the determination that the plaintiff did not incur the expenses, stating: “Appellant never has, and never will, incur the $96,500.91 sum from Appellee as an expense. We discern no principled basis upon which to justify awarding that additional amount.” 564 Pa. at 163. The majority distinguishes the case because of this holding.
But the Pennsylvania Supreme Court also stated as part of its rationale:
“Additionally, we find that the collateral source rule is inapplicable to the additional amount of $96,500.91. The rule ‘provides that payments from a collateral source shall not diminish the damages otherwise recoverable from the wrongdoer.’ . . .
“Clearly, Appellant is entitled to recover $12,167.40, the amount which was paid on her behalf by Medicare and Blue Cross, the collateral sources. See Restatement (Second) of Torts § 920A(2) . . . . But the essential point to recognize is that Appellee is not seeking to diminish Appellant’s recovery by this amount. Rather, the issue is whether Appellant is entitled to collect the additional amount of $96,500.91 as an expense. Appellant did not pay $96,500.91, nor did Medicare or Blue Cross pay that amount on her behalf. The collateral source rule does not *556apply to the illusory ‘charge’ of $96,500.91 since that amount was not paid by any collateral source.” 564 Pa. at 164-65.
The majority also notes the factually similar case of Williamson v. St. Francis Medical Center, 559 So. 2d 929 (La. App. 1990), and again dismisses it because there is a split between various circuits of the Louisiana Court of Appeals regarding whether the measure of damages is the amount incurred as a result of the injury or the amount billed representing the reasonable value of services. In Williamson, the trial court applied a rule, as would the majority in this case, that the plaintiff should receive damages in the full amount of the bill, not just as reimbursed. On appeal, the court did not reverse that conclusion, but decided the case on other grounds and stated:
“However, in the present case, the hospital, to whom the bill was owed, was also a tort-feasor. Thus, the benefit to the plaintiffs of the contractual adjustment results from the ‘procuration or contribution’ of the tort-feasor. As a result, we will not allow the plaintiffs to recover for the amount contractually adjusted, or cancelled, by the hospital tort-feasor.” 559 So. 2d at 934.
Similarly, as the majority notes, the Georgia Court of Appeals in Candler Hosp. v. Dent, 228 Ga. App. 421, 491 S.E.2d 868 (1997), applied the collateral source rule to portions of the medical bills paid by Medicare, but allowed the hospital a credit for those amounts written off.
“[I]n the event that the plaintiff recovers a special verdict that awards damages for medical expenses previously written off by the defendant, the defendant is entitled to a set-off or credit against the specific award of medical expenses in the verdict prior to the entry of the judgment in the amount of any write-off that the defendant made to the total medical expenses. If the jury makes no award of medical expenses as damages or there is a general verdict, then it would not be ascertainable whether such special damages for medical expenses were awarded and the defendant would not be entitled to a set-off against a general verdict for damages.
“Georgia, as part of its common law and public policy, has always prohibited a plaintiff from a double recovery of damages; the plaintiff is entitled to only one recovery and satisfaction of damages, because such recovery and satisfaction is deemed to make the plaintiff whole. Where damages are special and ascertainable and the defendant or its privies, indemnitor, or insurers have paid the medical expenses prior to judgment, in whole or in part, a set-off against such special damages, specifically identified and awarded in the verdict, is mandated to prevent *557a double recovery. [Citations omitted.] ‘An injured person can have but one satisfaction for his injuries; and therefore the amount paid by the tortfeasor . . . wall be regarded as a satisfaction pro tanto as to the joint tortfeasors.’ [Citation omitted.] Thus, plaintiff can recover from the jury all special damages provable, but cannot receive in judgment again what has already been paid by the defendant or on the defendant’s behalf by an insurer.” 491 S.E.2d at 869-70.
The rationale of the Georgia court parallels Kansas common law regarding damages. An award of damages should make a party whole. See State ex rel. Stephan v. Wolfenbarger & McCulley, P.A., 236 Kan. 183, Syl. ¶ 4, 690 P.2d 380 (1984). However, a plaintiff is not entitled to have the defendant or defendants pay twice for the damages. This court has cited to the summary of general rules in 25 C.J.S., Damages § 3, as follows:
“ ‘As a general rule, a person who has sustained loss or injury may receive no more than just compensation for the loss or injuiy sustained. He is not entitled to be made more than whole, and he may not recover from all sources an amount in excess of the damages sustained, or be put in a better condition than he would have been had the wrong not been committed ....
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“ ‘It is generally recognized that there can be only one recovery of damages for one wrong or injury. Double recoveiy of damages is not permitted; the law does not permit a double satisfaction for a single injury. A plaintiff may not recover damages twice for the same injury simply because he has two legal theories ....’” E.g., Ingram v. Howard-Needles-Tammen & Bergendoff, 234 Kan. 289, 303, 672 P.2d 1083 (1983) (Schroeder, C.J., dissenting).
The decision of the majority violates these basic tenets of just compensation.
The majority cites Manko v. United States, 830 F.2d 831 as a similar case which reached the conclusion that the collateral source rule does apply. Manko dealt with the government’s liability under the Swine Flu Act of 1976 which established a national program for immunization. As an incentive to stimulate manufacturing of the vaccine, the government, in essence, stepped into the shoes of the manufacturer for purposes of liability. When plaintiff sued, the government argued the collateral source rule did not apply because the government had contributed the Medicare funds. However, the court appropriately noted that the plaintiff had also contributed *558to Medicare. Accord Hodge, 62 Ohio St. 3d at 240-41 (considering whether collateral sources rule applied to Medicare payments).
“The District Court rejected the claim, holding that, under Missouri law, the Medicare and social-security programs were collateral sources because Manko had made contributions to them, so the government should not receive a credit against its damages liability for those payments. Id. at 1450-51.
“We agree with the District Court.” 830 F.2d at 836.
In this case, the same conclusion applies to the amount Medicare paid. See Rexroad, 192 Kan. at 354 (“damages recoverable for a wrong are not diminished by the fact that the party injured has been wholly or partly indemnified for his loss by insurance effected by him, and to the procurement of which the wrongdoer did not contribute”). However, the holding in Manko has nothing to do with the issue before this court of how to deal with the amount of the write-off, an amount which Medicare did not pay.
The distinction was discussed recently by the District of Columbia Court of Appeals in Hardi v. Mezzanotte, 818 A.2d 974 (D.C. 2003). Discussing and distinguishing Moorhead, because in Hardi the Medicare provider was not the tortfeasor, the court stated:
“Since the [Pennsylvania Supreme Court in Moorhead} allowed plaintiff s damages for the amount actually paid to the medical facility, and the facility itself provided services in the greater amount, it is fair to say that the medical facility actually made plaintiff whole for the full amount of the claimed medical expenses. It was the tortfeasor’s contract that accounted for this result, not the plaintiff s, as far as we can tell.
“It is worth noting again here that in this jurisdiction, the collateral source rule is applicable when payment comes from a source wholly independent of the tort-feasor or when plaintiff' contracts] for the prospect of double recovery.’ [Citation omitted.] It does not appear that the facts in Moorhead would meet these tests.” 818 A.2d at 985.
This conclusion is contrary to the analysis of the majority opinion in this case and brings into focus the primary distinction between the majority opinion and this dissent. The majority credits the contract between Rose and Medicare as being responsible for the requirement that Via Christi write off the $154,193.24. However, as the Pennsylvania Supreme Court and District of Columbia Court of Appeals note, this requirement arises because of the provider agreement between Medicare and Via Christi. In other words, the *559quid pro quo for this agreement flows between Medicare and Via Christi, not between Medicare and Rose. As several courts have recognized, the guarantee of a prompt payment by Medicare is the “quid” for which the medical provider’s agreement to accept reimbursement at Medicare’s rate is the “quo.” See Rybicki v. Hartley, 792 F.2d 260, 261-62 (1st Cir. 1986); Mallo v. Public Health Trust of Dade County, 88 F. Supp. 2d 1376, 1384 (S.D. Fla. 2000).

42 U.S.C. § 1395cc(a)(l)(A)(i)

The majority summarily dismisses these cases and their rationale upon the grounds that the holdings conflict with 42 U.S.C. § 1395ec(a)(l)(A)(i). The majority does so only through an overly broad reading of the statute. Contrary to the majority’s analysis, neither Rose nor any other Medicare beneficiary, by paying Medicare taxes, contracts for the right to recover amounts paid through the Medicare program. Medicare asserts a lien against any judgment for amounts it has paid and, in several circumstances, allows liability carriers to do the same. Thus, this is not a circumstance where the plaintiff has paid for or contracted for the right to receive a double recovery.
The statute cited by the majority, the limiting charge provision, requires providers to accept the Medicare payment and agree “not to charge . . . any individual or any other person for items or services for which such individual is entitled to have payment made . . . .” 42 U.S.C. § 1395cc(a)(l)(A)(i). The provision applies to payments made by Medicare under subchapter 18 of the Social Security Act, which includes both primary and secondary payments. The Medicare program is structured upon a prospective payment system requiring that providers who agree to accept primary payment from Medicare be reimbursed on a flat fee basis determined by average cost and length of stay for various diagnostic related groups (DRG’s). If a provider’s actual cost falls below the DRG amount, it keeps the difference; if the provider’s actual cost exceeds the DRG amount, the provider absorbs the loss. Under the secondary payer statutes, the costs are limited to costs that are reasonable and necessary or customary. See 42 U.S.C. § 1395f (2000).
*560By stating the provider may not “charge” the beneficiary with the unreimbursed amount, the limiting charge statute clearly constrains a provider’s ability to treat the unreimbursed expenses as a debt of the beneficiary. Black’s Law Dictionary 233 (6th ed. 1990) defines “charge” as “an encumbrance, lien, or claim” and “a liability.” However, the statute does not specifically address situations where the provider seeks reimbursement in ways other than treating the amount as a debt of the beneficiary. See, e.g., Smith v. Farmers Ins. Exchange, 9 P.3d 335, 341 (Colo. 2000) (health care provider entitled to reimbursement from primary insurance, including amounts required by Medicare to be “written off’); Joiner v. Medical Center East, Inc., 709 So. 2d 1209, 1221 (Ala. 1998) (can assert lien against injured party’s settlement where liability insurer was primary to Medicare).
In this regard, it is important to note that the Restatement (Second) of Torts § 920A(1) and our statements of the rule speak of the tortfeasor being allowed a “credit” rather than an “offset” for the damages paid. The distinction, though seemingly minor, is technically very important. “The right of setoff (also called ‘offset’) allows entities that owe each other money to apply their mutual debts against each other, thereby avoiding ‘the absurdity of making A pay B when B owes A.’ Studley v. Boylston Nat. Bank, 229 U.S. 523, 528 (1913).” Citizens Bank of Maryland v. Strumpf, 516 U.S. 16, 133 L. Ed. 2d 258, 116 S. Ct. 286 (1995). Compare that situation to a circumstance where a tortfeasor gratuitously provides a benefit to the plaintiff; the plaintiff owes no debt. The tortfeasor could not “charge” the victim or seek an offset for the gratuitous service. Yet, the tortfeasor is entitled to a credit for the benefits the tortfeasor conferred upon the plaintiff. Restatement (Second) of Torts § 920A.
Via Christi does not seek to treat the written-off amounts as a debt of the plaintiff. Via Christi seeks to be credited for having provided the services and having paid for those services without reimbursement from Medicare, plaintiff, or any other source. Therefore, the plain language of 42 U.S.C. § 1395cc(a)(l)(A)(i) does not apply in this case.
*561Further, the majority interprets the statute to mean that a plaintiff s recovery may never be reduced. This broad reading is contrary to the provisions of 42 C.F.R. § 411.35 which allows the Medicare provider to “collect or seek to collect, for the Medicare-covered services from the beneficiary or any entity” (emphasis added) those amounts paid by a workers’ compensation plan, a no-fault insurer, or an employer health plan as the primary insurer. “If this amount exceeds the amount payable by Medicare (without regard to deductible or coinsurance), the provider or supplier may retain the third party payment in full without violating the terms of the provider agreement or conditions of assignment.” 42 C.F.R. § 411.35(c)(1).
Further, the provider, although it cannot assert a lien against liability insurance, may look to an insurer for primary payment where prompt payment is expected. 42 U.S.C. § 1395y(b)(2)(A)(ii) (2000); 42 C.F.R. § 411.50. Additionally, upon payment of benefits, Medicare obtains a right of subrogation. Medicare may seek reimbursement from a beneficiary’s settlement with a liability insurer or other third-party payer. 42 U.S.C. § 1395y(b)(2)(B).
Although the provisions of 42 U.S.C. § 1395y(b)(2), 42 C.F.R. § 411.35, and 42 C.F.R. § 411.50 do not apply in this case, these provisions reflect Congress’ attempt to strike a balance between protecting beneficiaries and saving money for the Medicare system. Joiner, 709 So. 2d at 1216-17. Clearly, the legislative and regulatory scheme, although designed to assure a full recovery for the beneficiary’s out-of-pocket expenses such as deductibles and co-insurance and to maximize any settlement, is not established to assure that the Medicare beneficiary/plaintiff keeps for himself or herself the amount recovered through a judgment or settlement. Rather, the scheme contemplates that Medicare or the provider should be made whole or nearly whole through any third-party payments.
Given this scheme, it would be against public policy and legislative intent to interpret 42 U.S.C. § 1395cc(a)(l)(A)(i) to apply in this situation when to do so would require the Medicare provider to incur a double expense of absorbing the unreimbursed cost and paying the cost again.
*562I would, therefore, affirm the trial court, although on different grounds. Rather than allowing the offset for the reasons stated by the trial court, I would allow Via Christi a credit for the amount it billed and for which there was no reimbursement, the write-off amount. The credit would be allowed against that portion of the past medical expense damage award which is owed by Via Christi pursuant to the jury verdict.
McFarland, C.J., and Brazil, S.J., join in the foregoing dissenting opinion.