Opinion
No. CV 03 0480767
August 15, 2008
MEMORANDUM OF DECISION RE MOTION FOR RECONSIDERATION OF COLLATERAL SOURCE REDUCTION
The question presented by this motion is whether the cost of the plaintiff's medical expenses exceeding that which was covered by Medicare and Medicaid is a collateral source for purposes of General Statutes § 52-225b. As more fully explicated below, the court concludes that these lost medical fees were involuntarily forgiven by the defendant hospital and that they are collateral sources for purposes of § 52-225b because the defendant was statutorily required to accept the lower coverage rates offered by Medicare and Medicaid as a condition of accepting Medicare and Medicaid payments on behalf of its patients.
This case involved a medical malpractice suit that was brought by the plaintiff, Doris McInnis, against the defendant, Hospital of St. Raphael, for injuries she sustained as a result of a fall she had while admitted to the defendant's emergency room and for the subsequent administration of medication to treat her pain which contributed to intestinal rupture. The case was tried before this court on May 1, 2007, and concluded on May 22, 2007. After reviewing the requisite post-trial briefs, the court issued its memorandum of decision, finding in favor of the plaintiff, and awarding total damages in the amount of $1,403,240.91. Of that amount, $500,000 was awarded for non-economic injuries and $903,240.91 was awarded for economic injuries. On January 17, 2008, the defendant filed a motion to open judgment and for a collateral source reduction in the verdict due. This court granted that motion for the sole purpose of determining the collateral source reduction due, and a hearing was held on April 30, 2008.
The primary dispute between the parties is whether the difference in medical fees between the actual cost to provide the required services and the amount that Medicare and Medicaid pays for those services is a collateral source reduction. The parties stipulated that a total of $430,534.20 worth of economic damages were not collateral sources because the payments were either subject to subrogation or were paid directly by the plaintiff. Thus, the portion of the plaintiff's economic damages that is potentially subject to a collateral source reduction is $472,706.71.
Before reaching the substantive legal issues, however, the court first pauses to note the appropriate standard of review. As a threshold matter, the relevant statutory scheme instructs that "the trial court shall reduce an award for economic damages by an amount equal to the total amount of collateral sources that have been paid for the benefit of the claimant, less any premium paid by or on behalf of the claimant to secure the benefit of such collateral source payments." Jones v. Kramer, 267 Conn. 336, 345, 838 A.2d 170 (2004), citing General Statutes § 52-225a. Courts evaluating whether an expense is a collateral source begin their inquiry by consulting General Statutes § 52-225b, which provides in relevant part: "`Collateral sources' means any payments made to the claimant, or on his behalf, by or pursuant to: (1) Any health or sickness insurance, automobile accident insurance that provides health benefits, and any other similar insurance benefits, except life insurance benefits available to the claimant, whether purchased by him or provided by others; or (2) any contract or agreement of any group, organization, partnership or corporation to provide, pay for or reimburse the costs of hospital, medical, dental or other health care services." General Statutes § 52-225b. Finally, our Supreme Court has concluded that because the purpose of this statute was to "prevent plaintiffs from obtaining double recoveries, i.e., collecting economic damages from a defendant and also receiving collateral source reductions"; Jones v. Kramer, supra, 267 Conn. 346; the initial burden of proving an expense to be a collateral source rests with the party seeking to reduce the amount of economic damages awarded, while the subsequent burden of proving any offsets against those sources is then shifted to the non-moving party. See Pikulski v. Waterbury Hospital Health Center, 269 Conn. 1, 9, 848 A.2d 373 (2004); see also Jones v. Kramer, supra, 267 Conn. 349-50.
Indeed, "in enacting [this statute], the legislature sought to strike an `equitable balance . . . between preventing defendants from benefiting from reduced judgments due to collateral source payments, on the one hand, and barring plaintiffs from recovering twice for the same loss, on the other.'" (Citation omitted.) Jones v. Kramer, supra, 267 Conn. 346.
There are two exceptions to the rule proscribing double recoveries, however, which now merit attention. The first concerns a situation where a plaintiff's medical bills were paid by medical insurance that includes a federal right of subrogation capable of preempting Connecticut law. See, e.g., Napoletano v. CIGNA Healthcare of Connecticut, Inc., 238 Conn. 216, 233, 680 A.2d 127 (1996) (noting that "ERISA, 29 U.S.C. § 1144(a) (1994), preempts any state law that `may now or hereafter relate to any employee benefit plan'"). Thus, a collateral source reduction is not permitted where a federal law providing for subrogation rights of insurers preempts § 52-225c, which otherwise proscribes subrogation rights in personal injury and wrongful death actions. A second exception involves cases where health care providers write off the difference of lost fees between the amount their services actually cost and the amount they are reimbursed for those services by the plaintiff's insurance company. "If the write-offs were voluntarily forgiven, it has been held that they are not collateral sources; but, if they were forgiven pursuant to the requirements of an insurance arrangement or any contract or agreement, then it has been held that they are collateral sources just as much as a payment would be collateral sources." Couture v. Donnarumma, Superior Court, judicial district of Tolland at Rockville, Docket No. CV 06 6000060 (November 5, 2007, Vacchelli, J.) [ 44 Conn. L. Rptr. 455], citing Hassett v. New Haven, 49 Conn.Sup. 7, 10, 858 A.2d 922 (2004) [ 37 Conn. L. Rptr. 735], aff'd, 91 Conn.App. 245, 247, 880 A.2d 975 (2005).
Section 52-225c provides in relevant part: "Unless otherwise provided by law, no insurer or any other person providing collateral source benefits as defined in section 52-225b shall be entitled to recover the amount of any such benefits from the defendant or any other person or entity as a result of any claim or action for damages for personal injury or wrongful death regardless of whether such claim or action is resolved by settlement or judgment."
With these principles in mind, the court now considers whether the amount of medical expenses forgiven by the defendant was voluntary. In the case of patients whose medical expenses are covered by either Medicare or Medicaid, a health care provider is statutorily prohibited from seeking compensation for the expenses it writes off as a result of its accepting the lower fee schedules required by Medicare and Medicaid. See 42 U.S.C. § 1395cc(a)(1). A Medicare health care provider is required to file an agreement with Secretary of Health and Human Services stipulating it will "not charge . . . any individual or any other person for items or services for which such individual is entitled to have payment made under this subchapter." 42 C.F.R. § 447.15 ("Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amounts paid by the agency plus any deductible, coinsurance or copayment required by the plan to be paid by the individual"); see also Wildermuth v. Staton, United States District Court, Docket No. CIV.A.01-2418-CM (D.Kan. 2002) ("the write-offs are required by operation of federal law, and Medicare providers are prohibited under Medicare law and regulations from seeking reimbursement of the written-off amounts from any source"); Spectrum Health Continuing Care Group v. Anna Marie Bowling Irrevocable Trust, 410 F.3d 304, 318 (6th Cir. 2005) ("the Medicaid payment is the total amount owed to the provider for the services rendered, and thus the provider "may not attempt to recover any additional amounts elsewhere"). Accordingly, the court concludes that the amount of the plaintiff's medical expenses that exceeded the amount covered by Medicare and Medicaid were write-offs that the defendant was statutorily required to make, and were, therefore, involuntary.
The plaintiff takes issue with a conclusion that the Appellate Court held that involuntary write-offs are collateral sources; see Hassett v. New Haven, supra, 91 Conn.App. 247; arguing instead that the court's discussion of involuntary write-offs was nothing more than dictum. The court separates the wheat from the chaff to address this issue below.
The court pauses to note that the burden is on the defendant, as the party seeking to reduce the amount of economic damages awarded, to prove an expense to be a collateral source. See Pikulski v. Waterbury Hospital Health Center, supra, 269 Conn. 9. In this case, the defendant has not proffered copies of the contracts between itself and either Medicare or Medicaid, though that is not necessary where, as is the case here, the court may judicially notice the statutory obligation it has to write off the medical expenses not covered by the lower fees paid by Medicare and Medicaid. See Powers v. Powers, 186 Conn. 8, 10, 438 A.2d 846 (1982) (court may take judicial notice of federal statutes and federal regulations). Accordingly, the court concludes that the defendant has met its burden of establishing that it wrote off these expenses involuntarily.
The court next addresses the plaintiff's assertion that the Appellate Court did not hold that involuntary write-offs are collateral sources. As a preliminary matter, it is observed that the Appellate Court adopted fully the Superior Court's memorandum of decision in that case "as a proper statement of the issues and the applicable law concerning those issues." Hassett v. New Haven, supra, 91 Conn.App. 247. The court, therefore, turns its attention to the text of the Superior Court decision in that case. In his memorandum of decision, Judge Blue explained that there were essentially two components to the statutory definition of a collateral source in § 52-225b. The first is that there must be a payment made on behalf of the claimant, and the second is that the payment must be made pursuant to either an insurance policy or to a contract or agreement. Hassett v. New Haven, supra, 49 Conn.Sup. 10. Although Judge Blue assumed arguendo that a health care provider's forgiveness of a medical bill is a payment, he held that voluntarily forgiven debts are not collateral sources. Consequently, this court concludes that, at a minimum, our Appellate Court has affirmed Judge Blue's decision insofar as it held that the involuntary nature of a payment is an essential element of a collateral source under § 52-225b.
This is a safe assumption. As that court noted, "[p]ayment is not a talismanic word. It may have many meanings depending on the sense and context in which it is used. United States v. Consolidated Edison Co., 366 U.S. 380, 391, 81 S.Ct. 1326, 6 L.Ed.2d 356 (1961). In economic terms, at least, the forgiveness of a debt is as much a payment as a transfer of money." (Internal quotation marks omitted.) Hassett v. New Haven, supra, 49 Conn.Sup. 10.
Thus, the court is left with Judge Blue's dictum regarding whether the forgiveness of a debt by a medical care provider qualifies as a payment. While it is correct that the court's pronouncement in this regard was dictum, "it does not diminish the persuasiveness of the legal proposition stated. There is weak dictum and strong dictum. Our Supreme Court has acknowledged that dictum is not binding because it is made `with no intent to lay down in positive form a rule of law.' Sharkiewicz v. Smith, 142 Conn. 410, 412, 114 A.2d 691 (1955)." In this case, however, the court concludes that Judge Blue employed strong dictum that was intended to lay down positive law.
In the first instance, it is noted that the defendant in Hassett argued both that the definition of economic damages encapsulated in General Statutes § 52-572h did not include forgiveness of a debt by a medical care provider and that, in the alternative, such write-offs were collateral sources for purposes of § 52-225b. See Hassett v. New Haven, supra, 91 Conn.App. 247. Judge Blue's decision addressed both of these arguments fully and independently of each other, and either argument could have altered, the amount of damages paid to the plaintiff. The degree to which defining forgiven debts as collateral sources could have proven dispositive to the amount of damages awarded in that case confirms the decision's precedential nature, which is further buttressed by the Appellate Court affirming the court's analysis of both issues.
Moreover, the other Superior Courts to confront this issue since Hassett have uniformly adhered to Judge Blue's conclusion that a health care provider's forgiveness of a medical bill is a payment for purposes of § 52-225b, which again evidences the precedential nature of the decision. See Couture v. Donnarumma, Superior Court, judicial district of Tolland at Rockville, Docket No. CV 06 6000060 (November 5, 2007, Vacchelli, J.) [ 44 Conn. L. Rptr. 455]; Crawford v. Lugo, Superior Court, judicial district of New Haven, Docket No. CV 05 04008345 (July 20, 2007, Lopez, J.) [ 43 Conn. L. Rptr. 803]; Furlong v. Merriman, Superior Court, judicial district of New Britain, No. CV 04 4000416 (May 4, 2006, Shapiro, J.); Bonsanti v. Newman, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 03 0401098 (February 3, 2006, Gilardi, J.) [ 40 Conn. L. Rptr. 700].
Finally, it is additionally noted that such a holding is consistent with the stated statutory purpose of "preventing plaintiffs from obtaining double recoveries." Jones v. Kramer, supra, 267 Conn. 346. Accordingly, this court concludes that the strong dictum in Judge Blue's decision concerning whether forgiveness of a debt by a medical care provider is a `payment' for purposes of § 52-225b is tantamount to a holding that has been affirmed by the Appellate Court, and is, therefore, binding precedent that this court is obliged to follow. See Jolly, Inc. v. Zoning Board of Appeals, 237 Conn. 184, 195, 676 A.2d 831 (1996) ("[i]t is axiomatic that a trial court is bound by [appellate court] precedent . . .")
Having concluded that the cost of the plaintiff's medical expenses exceeding that which was covered by Medicare and Medicaid is a collateral source for purposes of General Statutes § 52-225b, and that the defendant has met its burden proving these write-offs to be involuntary, the court now tabulates the size of the collateral source reduction. As previously noted, the parties stipulated that a total of $430,534.20 worth of economic damages were not collateral sources because the payments were either subject to subrogation or were paid directly by the plaintiff. The remaining sum of money that was necessary to actually provide the medical services which the plaintiff received is $453,718.19, which has been involuntarily written off and cannot be recouped. Thus, the health care providers in this case have already paid that money to the plaintiff in the form of medical services rendered, and it would offend the legislative intent of the collateral reduction statutes to allow this plaintiff to obtain a double recovery. Consequently, the court concludes that the defendant is entitled to a collateral source reduction in the amount of $472,706.71.
This amount is the total paid for medical services by Medicare ($133,445.75), Medicaid ($241,113.43), the plaintiff's private insurer ($18,988.52), and the plaintiff herself ($55,692.04). Normally, the plaintiff would be entitled to offset the amount she spent to secure the rights to any collateral source; see § 52-225a(c); however, such an offset is not appropriate here because the plaintiff did not meet its burden of proving how much the plaintiff spent to secure these rights. See Pikulski v. Waterbury Hospital Health Center, supra, 269 Conn. 9 (burden of proving any offsets against those sources is shifted to the non-moving party).
CONCLUSION
In view of the forgoing. the court orders a collateral source reduction in the amount of $472,706.71.
Judgment may enter in favor of the Estate of Doris McInnis as against the Hospital of St. Raphael as follows:
500,000.00
Economic Damages: $430,534.20 Non-economic Damages: $ Total Damages: $930,534.20Together with costs of suit.