White v. Jubitz Corp.

219 P.3d 566

347 Or. 212

George WHITE, Respondent on Review, v. JUBITZ CORPORATION, an Oregon corporation, dba Ponderosa Lounge, Petitioner on Review.

CC 040302468SC.

CA A128617.

S056015.

Supreme Court of Oregon, En Banc.

Argued and Submitted January 13, 2009.

Decided October 15, 2009.

On review from the Court of Appeals.^*

Michael T. Stone, Brisbee & Stockton LLC, Hillsboro, argued the cause and filed the briefs for petitioner on review.

Mark G. McDougal, Portland, argued the cause and filed the brief for respondent on review. With him on the brief was Gregory Kafoury.

C. Robert Steringer, Portland, filed a brief for amicus curiae Oregon Association of Defense Counsel.

Barry J. Goehler, Portland, filed a brief for amicus curiae Donald McGee. With him on the brief was Michael A. Lehner.

Charles Robinowitz, Portland, filed a brief for amicus curiae Oregon Trial Lawyers' Association.

With him on the brief was Maureen Leonard.

WALTERS, J.

Plaintiff walked into a bar. He was injured when the stool he sat on collapsed beneath him and he sued defendant, the bar owner and operator, for the injuries that he incurred. A jury awarded plaintiff $37,600 in economic damages, approximately the amount that plaintiff's medical providers had billed him for their services. Plaintiff was over 65 years old and, pursuant to the federal Social Security Act, qualified for Medicare benefits. 42 U.S.C. §§ 1395-1395hhh. In accordance with that federal law and the applicable formula for determining permitted payments, Medicare had paid plaintiff's medical providers a total of $13,400. Also in accordance with that law, the providers had accepted that sum as payment in full for their services and had "written off" the remainder of their charges. The question that this case presents is whether plaintiff may recover from defendant the total amount of the medical providers' reasonable charges or whether his recovery must be limited to the amount that Medicare paid to those providers. Both the trial court and the Court of Appeals ruled that plaintiff is entitled to recover the full amount of his judgment. For the reasons that follow, we affirm.

Alleging negligence on the part of defendant for failure to inspect and maintain the bar stool, plaintiff commenced a tort action, seeking as economic damages the total amount that his healthcare providers had billed him, as well as noneconomic damages.¹ Before trial, defendant moved to limit plaintiff's economic damages to "what was paid." Defendant argued that, under ORS 31.710(2)(a), the medical providers' "write-offs" were not "economic damages" that plaintiff had "necessarily incurred."² Defendant contended that "Medicare paid $13,000, and that was what was incurred. * * * [The amount `written off'] wasn't paid to the doctors. The doctors have no claim for that money that wasn't paid to them. They accepted the money from Medicare, and the plaintiff has no obligation to reimburse Medicare any other money than what they paid."

In the alternative, defendant argued that, to establish "the reasonable amount, * * * the market value" of the medical treatment that plaintiff had received, defendant should be permitted to present to the jury evidence of the amount that Medicare had paid for that treatment.

The trial court ruled that "the jury [wa]s not going to hear any reference to * * * Medicare[,]" and that plaintiff was entitled to claim the entire amount of the bills that he had received. However, the court granted defendant leave to file a post-verdict motion, under Oregon's collateral source statute, ORS 31.580, to reduce the jury award, "if it bec[ame] necessary."³ At trial, plaintiff offered the medical bills that he had received as evidence of his reasonable medical expenses.

Without waiving its pretrial legal arguments, defendant stipulated that those charges were both reasonable and necessary.

The jury found for plaintiff, awarding him $37,600 for economic damages and $100,000 for noneconomic damages. In a post-verdict motion, defendant requested "that the portion of the medical bills which were written-off be deducted from the amount of the verdict." As it had argued in its motion in limine, defendant asserted that plaintiff had not "necessarily incurred" those charges. As a consequence, defendant further argued, the jury verdict granted plaintiff a "double recovery" to which he was not entitled and that the collateral source statute, ORS 31.580, had been designed to prevent.

In a written order, the trial court noted, as an undisputed fact, that plaintiff contractually had agreed to pay the full amount that his providers billed him.⁴ The court concluded that the satisfaction of those obligations by Medicare through payment and provider "write-offs" were "federal Social Security benefits" that ORS 31.580(1)(d) precluded the court from deducting. The trial court therefore denied defendant's motion and entered judgment for plaintiff in the full amount of the jury verdict.

Defendant timely appealed to the Court of Appeals, renewing the arguments that it had made to the trial court in its pretrial and post-verdict motions. In a written opinion, that court affirmed the judgment of the trial court. White v. Jubitz Corp., 219 Or.App. 62, 182 P.3d 215 (2008). The Court of Appeals applied the definition of economic damages found in ORS 31.710(2)(a) and held that "`reasonable charges necessarily incurred' * * * are those charges to which a plaintiff becomes liable or subject when the plaintiff receive[s] treatment, without regard to amounts that a medical provider subsequently writes off." Id. at 70, 182 P.3d 215. The court also agreed with the trial court that the providers' "write-offs," as well as their Medicare payments, fell into the category of "federal Social Security benefits" that the trial court could not deduct. Id. at 76, 182 P.3d 215.

We granted defendant's petition for review. In this court, defendant assigns as error three rulings of the trial court, each of which challenges plaintiff's recovery of the medical expenses that his providers billed to him that exceeded the amounts that Medicare paid those providers. Defendant asserts that the trial court erred in (1) refusing to deduct those amounts from plaintiff's jury verdict; (2) allowing plaintiff to seek a jury award of those amounts; and (3) denying defendant's request to adduce evidence of those amounts.

Before we begin our analysis of defendant's legal arguments, it is important that we distinguish them from a factual argument that defendant does not make here and did not make below. Defendant does not contend that the total charges that the medical providers billed to plaintiff were excessive, inflated, or unreasonable. Nothing in this record suggests that, had plaintiff not been an eligible Medicare beneficiary, defendant would have contested plaintiff's right to recover those charges. Indeed, defendant stipulated at trial that, as a factual matter, the providers' charges were both reasonable and necessary. The arguments that defendant advances instead challenge plaintiff's right, as a Medicare beneficiary, to recover those expenses, thereby, in defendant's view, wrongfully granting plaintiff a "windfall" or "double recovery."

For reasons that we explain, the collateral source statute, ORS 31.580, compels our conclusion that the trial court and the Court of Appeals ruled correctly. However, because it assists in an understanding of that statute and each of defendant's legal arguments, we begin our analysis with a discussion of the common-law collateral source rule and the "double recovery" that it countenances. We then describe ORS 31.580 and analyze how it affects each of defendant's legal arguments.

I. THE COMMON-LAW COLLATERAL SOURCE RULE

Whenever a plaintiff seeks from a defendant a sum that the plaintiff also is entitled to recover from a third party, the specter of "double recovery" is presented. In 1942, this court first considered how to address such circumstances and adopted what came to be known as the "collateral source rule." In Cary v. Burris, 169 Or. 24, 127 P.2d 126 (1942), the plaintiff, a federal employee injured in the performance of official duties, was entitled to the benefits of a federal law that required the government to provide him with medical and hospital services either by furnishing him with government physicians and hospitals, or if impracticable, by paying for commensurate private services. When the plaintiff, who had received the benefits of that government program, also sought to recover medical expenses from the tortfeasor who caused his injuries, the trial court prohibited the jury from making such an award. Id. at 26, 127 P.2d 126. This court held that, although the "benefits of the United States Government compensation act," id. at 25, 127 P.2d 126, were provided to the plaintiff as a "mere gratuity," id. at 28, 127 P.2d 126, those benefits did not preclude the plaintiff from recovering the full amount of his special damages from the defendant, id. at 29, 127 P.2d 126. The court quoted 1 Sedgwick on Damages § 67 (9th ed. 1912), for the following proposition:

"Damages cannot be reduced by an amount which the plaintiff may have received from third parties, acting independently of the defendant, though it is given to the plaintiff on account of the injury. For it is given either as a pure gift, not intended by the giver to be in lieu of damages, or else it is given in performance of a contract, the consideration of which was furnished by the plaintiff. In neither case has the defendant any equitable or legal claim to share in the benefit."

Id. at 28, 127 P.2d 126 (internal quotation marks omitted).

The court also quoted 1 Sutherland on Damages § 158 (3d ed. 1903), for the principle that:

"Generally there can be no abatement of damages on the principle of partial compensation received for the injury where it comes from a collateral source, wholly independent of the defendant...