Opinion
Civil No. A1-02-56
October 21, 2003
MEMORANDUM AND ORDER
I. INTRODUCTION
Before the Court is Defendant, The Industrial Company of Wyoming's ("TIC"), motion for reduction of verdict for collateral source payments (doc. #94). TIC asserts that social security disability benefits reduce the plaintiff's award for economic loss damages by application of the collateral source rule, N.D. Cent. Code § 32-03.2-06 (2003). The plaintiffs, Ron and Jeanne Krein, resist the motion. For the reasons articulated below, TIC's motion is DENIED.
The sole issue before the Court is the application of the statutory collateral source rule. By this Memorandum and Order, the Court prejudges no other issue or motion the parties may wish to file.
II. FACTS
The events relevant to this present motion occurred at Falkirk Mine near Underwood, North Dakota. The mine utilized an overland cable belt conveyor system to transport coal from the mine to various collection points. Ron Krein, an employee of the mine, was conducting a routine inspection of the conveyor when a large piece of coal fell from the conveyor injuring him. Krein sustained severe and permanent brain damage rendering him permanently disabled. As a result of his injuries, the plaintiff received workers compensation benefits and social security disability benefits. Krein and his wife also filed suit against the manufacturer of the conveyor belt system and TIC, the contractor who installed the system. Krein and the manufacturer reached a settlement agreement shortly before trial. TIC, however, maintained it was not at fault for any damage sustained by Krein. The case proceeded to trial where a jury found that TIC was 30 percent at fault for Krein's injuries. The jury determined the Kreins' total damages to be $3,292,278.62, including $301,660.62 for past economic damages and $690,618 for future economic damages. TIC filed a post-trial brief requesting an order reducing the amount of the verdict by any collateral source, namely social security disability benefits payments.
III. DISCUSSION
The question before the court is whether social security disability benefits payments are a collateral source that reduces the amount of the economic damages award the defendant is required to pay the plaintiffs. The Court begins with a basic common law premise, which is that "payments or benefits received from other sources do not have the effect of reducing the recovery against the defendant." See Restatement (Second) of Torts § 920A. The logic behind the common law rule was that a "benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor. If the plaintiff was himself responsible for the benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself." Id.
On October 10, 2003, the Court held a teleconference to propose certifying the question to the North Dakota Supreme Court (doc. #100). The parties opposed certification and the Court hereby accedes to the parties' wish.
Many states, including North Dakota, shifted away from the common law rule as a method to reduce the size of jury verdicts and therefore control rising insurance rates. Dewitz v. Emery, 508 N.W.2d 334, 340-41 (N.D. 1993). In North Dakota, a party responsible for payment of an award of economic damages may apply to the court for a reduction to the extent the economic damages are covered by payment from a collateral source. N.D. Cent. Code § 32-03.2-06. The statute defines a "collateral source" payment as "any sum from any other party paid or to be paid to cover an economic loss which need not be repaid by the party recovering economic damages, but does not include life insurance, other death or retirement benefits, or any insurance benefit purchased by the party recovering economic damages." Id.
The North Dakota Supreme Court in dicta referred to legislative history of the statutory collateral source rule indicating that the purpose of the statute was to "encourage people to secure personal insurance and to eliminate double recovery from sources such as workers compensation and social security." Leingang v. George, 589 N.W.2d 585, 589 (N.D. 1999);Dewitz, 508 N.W.2d at 340 (citing House Judiciary Committee, Report of Tort Reform Subcommittee, HB 1571, Feb. 10, 1987, at 3).
TIC cites the Leingang and Dewitz cases and the legislative history of the statutory collateral source rule in support of its argument that the verdict must be reduced for social security disability payments. The Court has secured and examined the legislative history of the statutory collateral source rule, including the House Judiciary Subcommittee Report cited by the North Dakota Supreme Court. The Court finds compelling the context of the portion of the legislative history cited by the court inLeingang, 589 N.W.2d at 589, and Dewitz, 508 N.W.2d at 340. In context, Representative Aas was responding to a question asking whether workers compensation would be a collateral source under the statute. His answer to the question was workers compensation and social security benefits would be deducted as collateral sources under the law. See House Judiciary Committee, Report of Tort Reform Subcommittee, HB 1571, Feb. 10, 1987, at 3.
The plaintiffs, the defendant, and the Court unanimously agree workers compensation benefits are not a collateral source deducted from the verdict. The statutory collateral source rule excludes payments that need be repaid by the party recovering economic damages. N.D. Cent. Code § 32-03.2-06. Even at the time the legislature was debating the statutory collateral source rule, the law in North Dakota obligated persons receiving workers compensation benefits to repay any benefits received upon receipt of judgment. N.D. Cent. Code § 65-01-09. Thus, Representative Aas was speaking about something with which he was unfamiliar.
Therefore, the Court assumes Representative Aas was also unfamiliar with the applicability of the statutory collateral source rule to social security disability benefits, and gives little weight to his testimony and to the legislative history. The plain language of the statute indicates that social security disability benefits fit within an exception to the statutory collateral source rule. The rule excludes collateral sources received because the party recovering economic damages purchased insurance. N.D. Cent. Code § 32-03.2-06. Social Security is insurance purchased by an individual using a percentage of his or her paycheck. Damages in Tort Actions, The Collateral Source Rule, § 17.23; Overton v. United States, 619 F.2d 1299, 1308 (8th Cir. 1980). Thus, in light of the plain language of the statutory rule and the rationale of the common law rule, the Court cannot justify creating a windfall for a tortfeasor by finding social security disability benefits within the statutory collateral source rule.
IV. CONCLUSION
Defendant's Motion for Reduction of Verdict for Collateral Source Payment is DENIED (doc. #94).