John N. Kenney v. Samuel C. Liston
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Full Opinion
In this appeal from the Circuit Court of Monongalia County, we are asked to examine a juryâs award of compensatory and punitive damages in a car wreck caused by a drunk driver. The driver â the defendant â caused serious injuries to the plaintiff.
The defendantâs appeal challenges the collateral source rule. The defendantâs appeal also asserts that the circuit court erred in allowing certain evidence at trial and in giving a limiting instruction pertaining to the defendantâs assets in the punitive damage phase of the trial.
After careful consideration of the record, oral argument, and the briefs of the parties and amicus curiae,
I.
FACTUAL AND PROCEDURAL BACKGROUND
On April 6,2010, plaintiff Samuel C. Liston was a passenger in a vehicle sitting at a stoplight. Defendant John N. Kenney slammed his car into the rear end of the plaintiffs vehicle. The defendant did not brake before the collision, and the force of the impact broke the seat in which the plaintiff was sitting. The defendant had previously consumed a number of alcoholic beverages, and an hour after the collision his blood alcohol was measured at .328, over four times the legal limit. He later pleaded no contest to first-offense driving under the influence.
The plaintiff suffered serious, permanent, painful injuries to his spine in the collision, and brought suit against the defendant for his injuries. The defendant admitted that he was solely liable for the collision, and the case was bifurcated into a two-phase damages trial. The first phase was to determine the amount of the plaintiffs compensatory damages; the second phase was to determine whether and to what extent the defendant should pay punitive damages.
Prior to trial, the defendant filed a motion in limine and asserted that only a portion of each medical bill had been paid, either by the plaintiff (as co-pays or deductibles) or by the plaintiffâs health insurance carrier (Blue Cross/Blue Shield). By an agreement between the plaintiffs medical providers and his health insurance carrier, the medical bills were discounted, reduced, or adjusted downward. Because of the agreement with the health insurance carrier, the remaining, unpaid portions of the medical bills were âwritten offâ by the plaintiffâs medical providers.
The defendant asserted that the plaintiffâs damages âshould be limited to the amounts actually paid by Plaintiff ... and amounts paid on Plaintiffâs behalf by any collateral source,â such as the plaintiffâs health insurance carrier. The defendant argued to the circuit court that the value of the medical bills before reduction was not paid by either the plaintiff or his health insurance carrier. Further, because of health insurance, the value of the medical bills was not an obligation that the plaintiff was expected to pay. The defendant contends that since the full bills were neither paid nor actually incurred by the plaintiff or the plaintiffs health insurance carrier, the plaintiff should not be allowed to introduce evidence of those written-off amounts at trial.
The circuit court denied the defendantâs motion in limine because the discounts or write-offs were a collateral source to the plaintiff. The circuit court reasoned that under the collateral source rule, the plaintiff was entitled to recover damages for the value of any reasonable and necessary medical services he received, âwhether such services are rendered gratuitously or paid for by another.â
On September 21, 2012, the jury returned a verdict in the first phase of the bifurcated trial. The jury awarded the plaintiff compensatory damages totaling $325,272.92. The verdict included $74,061.00 for the plaintiffâs past medical expenses, an amount almost equal to the total amount of the plaintiffâs medical bills.
After receiving the juryâs compensatory damage verdict, the circuit court held a punitive damage trial. Counsel for the defense told the jury in opening statement that the defendant was impoverished and unable to pay any punitive damage verdict. During plaintiffâs direct examination of the defendant, plaintiffâs counsel properly countered the defenseâs opening remarks by eliciting testimony from the defendant that he had liability insurance. On cross examination, defense counsel prompted the defendant to testify that he only had $100,000.00 in liability insurance. In response, and over an objection by defense counsel, plaintiffâs counsel extracted a statement from the defendant that he knew his liability insurer might be
The circuit court entered a judgment order on the juryâs verdict on October 9, 2012. The defendant filed a motion for a new trial. The circuit court denied that motion on February 26, 2013.
The defendant now appeals and asks that we vacate the circuit courtâs judgment order in its entirety and grant the parties a new trial. In the alternative, the defendant requests that we grant the parties a new trial solely on the issue of punitive damages.
II.
STANDARD OF REVIEW
The defendant appeals the circuit courtâs ruling denying his motion for a new trial. âAs a general proposition, we review a circuit courtâs rulings on a motion for a new trial under an abuse of discretion standard.â
Although the ruling of a trial court in granting or denying a motion for a new trial is entitled to great respect and weight, the trial courtâs ruling will be reversed on appeal [only] when it is clear that the trial court has acted under some misapprehension of the law or the evidence.7
III.
ANALYSIS
The defendant raises two issues of consequence.
First, the defendant argues the trial court erred in applying the collateral source rule to exclude evidence, testimony and argument relating to medical expenses that were discounted or written off by the plaintiffs medical providers. The defendant asserts he is not challenging the collateral source rule; he says he merely seeks to introduce evidence of what the plaintiffs insurer actually paid the providers as evidence of the reasonable value of the medical services.
Second, the defendant argues that the trial court erred in the punitive damage phase by allowing the jury to hear plaintiffs counselâs questions suggesting that additional coverage may be available to the defendant to pay the juryâs excess verdict. Further, the defendant contends it was error for the trial court to instruct the jury that excess liability insurance coverage might be available.
A Collateral Source Rule
We begin with the question of whether those portions of the plaintiffs medical bills that were discounted or written off can be submitted to the jury. The defendant does not dispute that the collateral source rule protects the portions of the plaintiffs medical bills that his health insurer actually paid and that the plaintiffs health-care providers accepted as payment in full. Further, the defendant concedes that the plaintiff is entitled to recover the reasonable value of the medical services that were necessary and caused by the defendantâs misconduct.
The question presented concerns how to calculate the âreasonable valueâ of the plaintiffs medical services in light of the collateral source rule. The defendant argues that the collateral source rule does not apply to the difference in value between the amount billed and the amount paid. The plaintiff responds that the collateral source rule protects the entire amount initially billed, so long as it was necessary and reasonable, because any
The collateral source rule is a longstanding principle in West Virginia law and has been âa staple of American tort law since before the Civil War.â
The law is clear that, âA tort victim who has incurred medical expenses, suffered lost wages, or experienced other eompensable loss, may sue the tortfeasor for the entire amount of the victimâs injuries even if those losses have been neutralized by first-party insurance, by the victimâs relatives, by the victimâs employer, or through the kindness of strangers.â
[Benefits from collateral sources] do not have the effect of reducing the recovery against the defendant. The injured partyâs net loss may have been reduced correspondingly, and to the extent that the defendant is required to pay the total amount there may be a double compensation for a part of the plaintiffs injury. But it is the position of the law that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor:15
Stated succinctly, a person who is negligent and injures another âowes to the latter full compensation for the injury inflicted[,] ... and payment for such injury from a collateral source in no way relieves the wrongdoer of [the] obligation.â
âAs a rule of evidence, [the collateral source rule] precludes the defendant in a personal injury or wrongful death case from introducing evidence that some of the plaintiffâs damages have been paid by a collateral source.â
As a rule of damages, the collateral source rule âprecludes the defendant from offsetting the judgment against any receipt of collateral sources by the plaintiff.â
The drafters of the Restatement (Second) of Torts recognized that there are four general categories of collateral benefits that should never be subtracted from the plaintiffs recovery.
(1) Insurance policies, whether maintained by the plaintiff or a third party.*628 Sometimes, as in fire insurance or collision automobile insurance, the insurance company is subrogated to the rights of the third party. This additional reason for keeping the tortfeasorâs liability alive is not necessary, however, as the rule applies to insurance not involving subrogation, such as life or health policies.26
(2)Employment benefits. These may be gratuitous, as in the ease in which the employer, although not legally required to do so, continues to pay the employeeâs wages during his incapacity. They may also be benefits arising out of the employment contract or a union contract. They may be benefits arising by statute, as in workerâs compensation acts or the Federal Employersâ Liability Act. Statutes may subrogate the employer to the right of the employee, or create a cause of action other than by subrogation.
(3) Gratuities. This applies to cash gratuities and to the rendering of services. Thus the fact that the doctor did not charge for his services or the plaintiff was treated in a veterans hospital does not prevent his recovery for the reasonable value of the services.
(4) Social legislation benefits. Social security benefits, welfare payments, pensions under special retirement acts, all are subject to the collateral-source rule.27
Examples of collateral sources that are inadmissible to reduce a defendantâs liability, in both our jurisprudence and that of other states, are legion. Benefits to a plaintiff protected by the collateral source rule come from sources as diverse as life insurance,
We turn now to the specific question at hand: does the collateral source rule protect the amounts discounted from the plaintiffs medical bill or written off by the medical provider? We hold that it does, because the amount of the medical expense that was discounted or written off can be considered both a benefit of the plaintiffs bargain with his health insurance carrier, and a gratuitous benefit arising from the plaintiffs bargain with the medical provider. âA creditorâs forgiveness of debt â that is what a write-down in the present context amounts to â is often considered equivalent to payment in other contexts, e.g., income tax, credit bids at fore-closure, etc. In other words, a creditorâs partial forgiveness of a tort victimâs medical bills via a write-down is properly considered a third-party âpayment,â evidence of which is barred by the collateral source rule.â
The general rule is that a plaintiff who has been injured by the tortious conduct of the defendant is entitled to recover the reasonable value of medical and nursing services reasonably required by the injury. This is a recovery for their value and not the expenditures actually made or obligations incurred.45
A majority of jurisdictions that have considered this question hold that a plaintiff can present to the jury the amount that a health care provider initially billed for the services necessarily rendered, and not merely amounts that were later paid.
The defendant argues that the collateral source rule operates solely to piâotect âpayments.â He argues that a discount, reduction or write-off of a bill by a creditor is not a payment, and is therefore not encompassed by the collateral soxxree rule. We reject this tenuous distinction, because the law is clear that the collateral source rule applies to any benefit received by a plaintiff from any source in line with the plaintiffs interests.
The public policies behind the collateral source rule are wide ranging. For one, âit is better for injured plaintiffs to receive the benefit of collateral sources in addition to actual damages than for defendants to be able to limit their liability for damages merely by the fortuitous presence of these sources.â
The collateral source rule is designed to stiâike a balance between two competing principles of tort law: (1) a plaintiff is entitled to compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that proximately result from his wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the wrongdoer:49
The collateral source rule is a central part of the tort systemâs goal of ârequiring tortfeasors to make right their wrongful acts.â
We are persuaded that a defendant owes to an injured plaintiff a duty to make right for his or her wrongful acts, and so must pay the plaintiff compensation for all losses proximately caused by any negligence or wrongdoing. It is the defendantâs responsibility to repair the damage he or she has done to the plaintiff, and the plaintiffs receipt of benefits from collateral sources, whether from affection, philanthropy, contract, social services, or others cannot relieve the defendant of this obligation. âThe collateral source rule requires the injured party to be made whole exclusively by the tortfeasor and not by a combination of compensation from the tortfeasor and collateral sources.â
In light of the above, we hold that the rule that collateral source benefits are not subtracted from a plaintiffs recovery applies to proceeds or benefits from sources
In summary, we stand by the principle that an âinjured person is entitled to recover damages for reasonable and necessary nursing services rendered to him, whether such services are rendered gratuitously or paid for by another.â
Stated another way, the collateral source rule permits an injured person to recover all of his or her reasonable medical costs that were necessarily required by the injury. Where a personâs health care provider agrees to reduce, discount or write off a portion of the personâs medical bill, the collateral source rule permits the person to recover the entire reasonable value of the medical services necessarily required by the injury. The tortfeasor is not entitled to receive the benefit of the reduced, discounted or written-off amount.
In this ease, the defendant does not deny that the plaintiff would have been liable for the total amount billed by his medical providers absent his health insurance coverage. Whether the plaintiff took benefits from his health insurer in the form of medical expense payments or in the form of discounts and write-offs because of agreements between his health insurer and his health care providers is irrelevant. Those amounts written off are as much of a benefit for which the plaintiff paid consideration as are the actual cash payments made by his health insurer to the health care providers. This is the very purpose of the collateral source rule: to prevent a defendant from reaping the benefits of a plaintiffâs preparation and protection.
Accordingly, we find no error in the circuit courtâs decision to apply the collateral source rule and prohibit the defendant from introducing evidence of the plaintiffâs discounted medical bills.
B. Punitive Damage Verdict
The defendantâs second argument concerns the punitive damage verdict. Specifically, the defendant asserts that the circuit court erred in allowing one question to be asked about the availability of liability insurance in excess of policy limits, and erred in instructing the jury that insurance coverage for an excess verdict âmay or may notâ be available.
The lawyers for both parties were permitted to give opening statements in the punitive damages phase of the trial. The lawyer for the defendant informed the jury that the defendant would testify that he did not have the resources to pay punitive damages, stating:
He will also tell you that he has no financial means at this point to pay a punitive damage verdict. He was working at the time of this accident, but heâll tell you [he] since has been laid off. He was working for a company that sold equipment to mines and has been laid off since May and is currently receiving unemployment benefits in the amount of 800-and-some dollars a week. At the time that he was working, he made 30-some thousand dollars [a]*633 year. He has â as a part of his unemployment, has an obligation to apply for jobs. He has no job prospects at this point.
Heâs 35 years old. Living with his parents. Doesnât own any property. He owns a car, which I believe is a 2002 car that is paid off. He has nothing else of financial value to pay [a punitive damage verdict].
This Court has said that if a defendant âoffers evidence of his financial status to influence the jury on punitive damages, then the plaintiff may rebut such evidence by introducing proof of the defendantâs liability insurance.â
Plaintiffs Counsel: You also, in fact, have insurance, donât you?
Defendant: I do.
Plaintiffs Counsel: So you are not a man without assets; isnât that correct?
Defendant: I â I would not say that that would â I mean, I donât have a lot of assets
Defense counsel responded by asking the defendant on cross-examination about the amount of liability insurance he had:
Defense Counsel: [Plaintiffs counsel] also asked you about insurance. And you did have insurance at the time of the accident, correct?
Defendant: I did.
Defense Counsel: What â do you know what your policy limits are?
Defendant: I believe they were $100,000 at the time, yes.
On appeal, counsel for the defendant challenges one question that was asked on redirect examination of the defendant. Because counsel for the defendant left the jury with the impression that there was only $100,000.00 in coverage available to the defendant, counsel for the plaintiff asked:
Plaintiffs Counsel: With regards to your insurance coverage, there was, in fact, a question about actually how much coverage you have; isnât there?
This question pertains to the amount of insurance coverage actually available to the defendant in excess of policy limits under Shamblin v. Nationwide Mutual Insurance Company.
Defense counsel objected to plaintiffs counselâs question, and the trial court had an extensive discussion with the lawyers (outside of the juryâs presence) to discuss whether the defendantâs insurer had been âShamblin-izeĂĄ.â Defense counsel conceded that the defendant hired an independent lawyer (not paid by the insurance carrier) to protect him from any Shamblin-type excess verdict. Further, it was the defendantâs personal position that the liability insurer âis going to be responsible for the entire verdict, regardless of what it is.â The trial court determined
When the jury returned, plaintiffs counsel asked the defendant the following:
Plaintiffs Counsel: Mr. Kenney, before we broke we were discussing the issue regarding your amount of insurance coverage. You understand that; is that correct? Defendant: I do.
Plaintiffs Counsel: Okay. You understand that because of some actions that have been taken in ... the course of this case, that you may have additional coverage to cover whatever the verdict may be; isnât that correct?
Defendant: That is correct.
At the conclusion of evidence in the punitive damage phase of the trial, the trial court proposed giving the following limiting instruction to the jury:
The Court instructs you that because of certain legal actions that have been taken in this case that there may or may not be additional coverage to pay whatever your verdict may be.
Defense counsel objected to this instruction that there âmay or may not be additional coverageâ under Shamblin on the ground that âunder Rule 51 [of the Rules of Civil Procedure ] that thatâs commenting upon the evidence.â The trial court rejected this objection and read the instruction to the jury.
After deliberations, the jury returned a verdict finding that the defendant âengaged in grossly negligent or reckless conduct which caused the motor vehicle accidentâ with the plaintiff. The jury returned a $300,000.00 punitive damage award against the defendant.
The defendant argues that the questions and instructions allowed by the' circuit court crossed the line from the existence and policy limits of defendantâs liability insurance, and allowed the jury to wander in areas of pure speculation about whether there âmay beâ unlimited insurance coverage available to the defendant. The defendant argues that the circuit court permitted the jury to speculate about the potential post-judgment effect of their punitive damage award.
The defendant also argues that the circuit courtâs instruction to the jury was in error, because it was an improper comment upon the evidence. Rule 51 of the Rules of Civil Procedure [1998] says that, âthe instructions given by the court ... shall not comment upon the evidence^]â The defendant contends that by instructing the jury that âthere may or may not be additional coverage to pay whatever your verdict may be,â the circuit couiât had given undue influence to one piece of the defendantâs financial condition.
After carefully reviewing the appendix record, we find that the circuit court did not err. Counsel for the defendant âopened-the-doorâ to the issue of liability coverage when she asserted in opening argument that the defendant was financially unable to pay any punitive damage verdict when, in fact, he had liability insurance. Further, when counsel for the defendant asked questions leaving the jury with the impression that only $100,000.00 in coverage was available, she âopened-the-doorâ to the availability of coverage for an excess verdict. At the time of the
Furthermore, the formulation of jury instructions is a matter within the discretion of the trial court:
The formulation of jury instructions is within the broad discretion of a circuit court, and a circuit courtâs giving of an instruction is reviewed under an abuse of discretion standard. A verdict should not be disturbed based on the formulation of the language of the jury instructions so long as the instructions given as a whole are accurate and fair to both parties.59
The appendix record establishes that the circuit courtâs instruction was accurate and based directly on the testimony of the defendant. Further, the instruction was fair to both parties.
We therefore find no error underlying the juryâs punitive damage verdict.
IV.
CONCLUSION
We find no error in the circuit courtâs judgment order dated October 9, 2012, or in the circuit courtâs decision denying the defendant a new trial dated February 26, 2013.
Affirmed.
. The Court acknowledges and wishes to express appreciation for the excellent amicus curiae brief submitted by the West Virginia Association for Justice.
. See W.Va.Code § 57-5-4j [1981] ("Proof that medical, hospital and doctor bills were paid or incurred because of any illness, disease, or injury shall be prima facie evidence that such bills so paid or incurred were necessary and reasonable.â).
. Syllabus Point 5, Kretzer v. Moses Pontiac Sales, Inc., 157 W.Va. 600, 201 S.E.2d 275 (1973).
. Kretzer, 157 W.Va. at 610, 201 S.E.2d at 281.
. At trial, the plaintiff introduced medical bills totaling $76,313.49, but it appears that the jury declined to award the plaintiff compensation for $2,252.00 in bills from a chiropractor.
. Tennant v. Marion Health Care Found., Inc., 194 W.Va. 97, 104, 459 S.E.2d 374, 381 (1995).
. Syllabus Point 4, Sanders v. Georgia-Pacific Corp., 159 W.Va. 621, 225 S.E.2d 218 (1976). See also, In re State Pub. Bldg. Asbestos Litig., 193 W.Va. 119, 124, 454 S.E.2d 413, 418 (1994) (quoting 11 Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 2818 at 118 (1973) ("There are few subjects in the entire field of procedure that have been subject to so much change and controversy in recent years as the proper scope of review of an order granting or denying a motion for a new trial. The trial court has very broad discretion and the appellate courts will defer a great deal to his exercise of this discretion. This much is settled.â)).
. See supra, footnote 2.
. Michael I. Krauss & Jeremy Kidd, Collateral Source and Tort's Soul, 48 U. Louisville L.Rev. 1, 4 (2009). The collateral source rule first appeared in America in The Propeller Monticello v. Mollison, 58 U.S. 152, 17 How. 152, 15 L.Ed. 68 (1854). The term "collateral sourceâ derives from language used in 1870, in Harding v. Town of Townshend, 43 Vt. 536, 538 (1870) ("The policy of insurance is collateral to the remedy against the defendant, and was procured solely by the plaintiff and at his expense, and to the procurement of which the defendant was in no way contributory.â).
. Syllabus Point 11, Ilosky v. Michelin Tire Corp., 172 W.Va. 435, 307 S.E.2d 603 (1983).
. Restatement (Second) of Torts § 920A (1979) gives the following effect to payments made to an injured party:
(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) Payments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasorâs liability, although they cover all or a part of the harm for which the tortfeasor is liable.
. Syllabus Point 7, Ratlief v. Yokum, 167 W.Va. 779, 280 S.E.2d 584 (1981).
. Krauss & Kidd, 48 U. Louisville L.Rev. at 11. See also, Pack v. Van Meter, 177 W.Va. 485, 488, 354 S.E.2d 581, 584 (1986) ("Our law is quite clear that the amount of money that an injured plaintiff receives from a collateral source is not admissible.â).
. Covington v. George, 359 S.C. 100, 103-04, 597 S.E.2d 142, 144 (2004) (citation omitted).
. Restatement (Second) of Torts § 920A, cmt. b (emphasis added).
. Walthew v. Davis, Admâr, 201 Va. 557, 563, 111 S.E.2d 784, 788 (1960).
. James L. Branton, The Collateral Source Rule, 18 St. Maryâs L.J. 883 (1987). See also, Michael Flynn, Private Medical Insurance and The Collateral Source Rule: A Good Bet?, 22 Toledo L.Rev. 39, 42 (1990) ("As to evidence, it bars the submission of evidence that the injured plaintiff received payment for any part of his damages, including medical expenses, from other sources.â)
. Eichel v. New York Cent. R. Co., 375 U.S. 253, 255, 84 S.Ct. 316, 11 L.Ed.2d 307 (1963) ("In our view the likelihood of misuse by the jury clearly outweighs the value of this evidence. Insofar as the evidence bears on the issue of malingering, there will generally be other evidence having more probative value and involving less likelihood of prejudice than the receipt of a disability pension."); Hrnjak v. Graymar, Inc., 4 Cal.3d 725, 732, 94 Cal.Rptr. 623, 484 P.2d 599, 604 (1971) ("The potentially prejudicial impact of evidence that a personal injury plaintiff received collateral insurance payments varies little from case to case.â).
. Ilosky v. Michelin Tire Corp., 172 W.Va. at 447, 307 S.E.2d at 615.
. Ratlief v. Yokum, 167 W.Va. at 787, 280 S.E.2d at 590. See also James M. Fischer, Understanding Remedies § 12(a), at 77 (1999) ("The evidentiary component bars admission of evidence of the existence of the collateral source or the receipt of benefits. The concern here is that the trier of fact may use that evidence improperly to deny the plaintiff the full recovery to which he is entitled