v. Delta Air Lines, Inc ( 2019 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
May 23, 2019
2019COA81
Nos. 18CA0049 & 18CA0760, Scholle v. Delta Air Lines, Inc. —
Labor and Industry — Workers’ Compensation; Damages —
Collateral Source Rule
A division of the court of appeals considers a case in which the
plaintiff was injured during the course of his employment and he
sued the third-party tortfeasor. Before filing the action, the plaintiff
had received workers’ compensation benefits covering some of his
medical expenses arising from the incident. By statute, a medical
provider could not collect payment for medical expenses beyond
those paid by the plaintiff’s workers’ compensation insurer. And,
before trial, the defendant here had extinguished the insurer’s
subrogated interest in the amounts paid by paying off the insurer’s
claim for those damages.
The division holds that, even in light of those facts, the
collateral source rule barred evidence of the medical expenses paid
by the workers’ compensation insurer, and the plaintiff could
present evidence of the higher medical expenses actually billed by
his medical providers. At most, the defendant, by virtue of its
settlement with the insurer, may receive a post-trial setoff against
any damages awarded to the plaintiff. To hold otherwise would
allow the defendant to benefit from the fact that the plaintiff was
covered by workers’ compensation insurance, contrary to the
collateral source rule.
Because the trial court erroneously admitted evidence of the
medical expenses paid by the workers’ compensation insurer and
erroneously excluded evidence of any greater amount of past
medical expenses, the division reverses the judgment in part and
remands for a new trial on past medical expenses.
The separate opinion concludes that the collateral source rule
does not apply under the facts here.
COLORADO COURT OF APPEALS 2019COA81
Court of Appeals Nos. 18CA0049 & 18CA0760
City and County of Denver District Court Nos. 14CV32213 & 14CV32268
Honorable Robert L. McGahey, Judge
Honorable Karen L. Brody, Judge
William Scholle,
Plaintiff-Appellee and Cross-Appellant,
v.
Delta Air Lines, Inc.,
Defendant-Appellant and Cross-Appellee.
JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
AND CASE REMANDED WITH DIRECTIONS
Division VI
Opinion by JUDGE NAVARRO
Welling, J., concurs
Richman, J., concurs in part and dissents in part
Announced May 23, 2019
Bendinelli Law Firm, P.C., Marco F. Bendinelli, Blaine L. Milne, Westminster,
Colorado, for Plaintiff-Appellee and Cross-Appellant
Treece Alfrey Musat P.C., Michael L. Hutchinson, Carol L. Thomson, Kathleen
J. Johnson, Denver, Colorado, for Defendant-Appellant and Cross-Appellee
¶1 When a plaintiff sues a defendant in tort for damages
sustained due to the defendant’s conduct, the collateral source rule
generally forbids admitting evidence of payments for those damages
made to the plaintiff by a collateral source such as an insurance
company. For instance, evidence of the amount of the plaintiff’s
medical expenses paid by an insurer is not admissible; instead, the
plaintiff may submit, as a measure of damages, evidence of a higher
amount of medical expenses billed by the medical provider.
¶2 But what if (1) the plaintiff was insured by workers’
compensation insurance, and by statute a medical provider could
not collect payment for medical expenses beyond those paid by the
workers’ compensation insurer; and (2) the defendant, before trial,
extinguished the insurer’s subrogated interest in the amounts paid
by paying off the insurer’s claim for those damages? We hold that
the collateral source rule applies all the same — evidence of the
amounts paid by the insurer is not admissible at trial, but evidence
of the amounts billed is admissible. At most, the defendant, by
virtue of its settlement of the insurer’s subrogated claim, may
receive a post-trial setoff against damages awarded to the plaintiff.
1
¶3 In this case, however, the damages awarded to plaintiff
William Scholle were reduced during trial through evidence of the
amounts his insurer paid to his medical providers and reduced
post-trial via a setoff in the amount of defendant Delta Air Lines,
Inc.’s settlement with the insurer. As a result, Scholle ultimately
recovered nothing in economic damages. Because admitting
evidence of the amounts paid by the insurer was error, we reverse
the judgment in part and remand for a new trial, as limited by the
following discussion.
I. Overview
¶4 This action arises from a luggage tug collision at Denver
International Airport. In 2012, Scholle, a United Airlines employee,
was driving a luggage tug in the course of his employment. Scholle
was stopped when Daniel Moody, a Delta employee also driving a
luggage tug, collided with Scholle. Scholle sustained injuries and
missed work.
¶5 United, a self-insured employer under Colorado’s workers’
compensation system, paid for Scholle’s medical expenses and
some of his lost wages. To the extent of those payments, United
2
was subrogated to Scholle’s rights to recover economic damages
from Delta and Moody for causing Scholle’s injuries.
¶6 In 2014, United sued Delta and Moody to recover the amounts
United had paid to or on behalf of Scholle. Shortly thereafter,
Scholle also sued Delta and Moody to recover for injuries related to
the tug collision. The trial court consolidated the actions.
¶7 Delta eventually settled United’s claim by paying United
$328,799.16, and the court dismissed United’s case with prejudice.
Scholle’s claims against Moody were later dismissed with prejudice
as well, leaving only Scholle and Delta as parties. Delta admitted
liability but disputed Scholle’s claimed damages; so the case went
to trial on damages.
¶8 In 2016, a jury returned a damages verdict for Scholle totaling
approximately $1.5 million. The court, however, granted Delta’s
motion for a new trial due to misconduct by Scholle’s attorney.
¶9 The case went to trial again in 2017, this time without a jury
and before a new judge. The court considered evidence of the
amounts paid by United for Scholle’s medical treatment; the court
excluded evidence of the higher amounts billed by medical
providers. The court awarded Scholle $259,176, including
3
$194,426 in economic damages.1 The court later entered a setoff
order reducing Scholle’s economic damages award by the amount
that Delta had already paid to settle United’s claim, effectively
reducing the amount owed to Scholle for economic damages to zero.
¶ 10 In case number 2018CA0049 (the merits appeal), each party
challenges various rulings related to the damages judgment. In
case number 2018CA0760 (the costs appeal), Scholle contests a
post-trial order denying him costs relating to two expert witnesses
struck by the trial court, a ruling at issue in the merits appeal. We
consolidated the appeals.
¶ 11 Regarding the merits appeal, we reverse the damages
judgment insofar as it relates to Scholle’s past medical expenses
because the trial court misapplied the collateral source rule.
Because this evidentiary error affected only the medical expenses
portion of the damages award, we affirm the judgment insofar as it
pertains to (1) economic damages for lost wages and
(2) noneconomic damages.
1 Scholle’s award consisted of $126,000 in past lost wages, $68,426
in past medical charges, and $64,750 in noneconomic losses.
4
¶ 12 We affirm the order granting a new trial as well as various
pre-trial rulings addressing issues that are likely to recur on
remand. Because we remand for a new trial as to past medical
expenses, we decline to decide any post-trial issues raised by the
parties, including any claim raised in the costs appeal.
II. Evidence of Medical Expenses Paid versus Billed
¶ 13 Scholle contends that the trial court erred by admitting
evidence of the amount of medical expenses paid by his workers’
compensation insurer (United), rather than the amounts billed by
his medical providers. He says that the payments were collateral
source benefits and, therefore, the pre-verdict evidentiary
component of the collateral source rule prohibited their admission
into evidence.
¶ 14 Delta responds that the trial court properly concluded that the
collateral source rule did not apply because Delta’s settlement with
United meant that the insurance payments no longer constituted
payments from a collateral source. Rather, Delta effectively became
a source of those payments. In other words, Delta says that, by
extinguishing United’s interest in recouping the insurance
payments, Delta paid compensation for, or contributed to, the
5
source of those payments. Further, Delta argues that the court
properly excluded evidence of the amounts billed by Scholle’s
medical providers because he was not liable for those amounts.
¶ 15 We agree with Scholle that the trial court misconstrued
Colorado law.
A. Standard of Review
¶ 16 “We review a trial court’s evidentiary rulings for an abuse of
discretion.” Sunahara v. State Farm Mut. Auto. Ins. Co., 2012 CO
30M, ¶ 12. A court abuses its discretion if its decision is based on
an incorrect legal standard. Id. We review de novo whether the
court applied the correct legal standard. Id.
B. Relevant Law
1. The Collateral Source Rule
¶ 17 Colorado’s collateral source rule consists of two components:
(1) a post-verdict setoff rule, codified at section 13-21-111.6, C.R.S
2018; and (2) a pre-verdict evidentiary component, established by
common law and codified at section 10-1-135(10), C.R.S. 2018.
Sunahara, ¶ 13. The first component requires a trial court to set off
tort verdicts by the amount of certain collateral source payments
received by the plaintiff unless the payments were made because of
6
a contract entered into and paid for on the plaintiff’s behalf. § 13-
21-111.6.
¶ 18 The second component bars evidence of a plaintiff’s receipt or
entitlement to benefits received from a collateral source, most often
an insurance company, “because such evidence could lead the
fact-finder to improperly reduce the plaintiff’s damages award on
the grounds that the plaintiff already recovered his loss from the
collateral source.” Wal-Mart Stores, Inc. v. Crossgrove, 2012 CO 31,
¶¶ 12, 20. “A plaintiff’s insurer is a collateral source because it is a
third party wholly independent of the tortfeasor to which the
tortfeasor has not contributed.” Id. at ¶ 25.
¶ 19 The rule’s purpose is to prevent a tortfeasor from benefitting,
in the form of reduced liability, from compensation in the form of
money or services that the victim may receive from a third-party
source. Volunteers of Am. Colo. Branch v. Gardenswartz, 242 P.3d
1080, 1083 (Colo. 2010). Our supreme court has explained that, if
either party is to receive a windfall, “the rule awards it to the
injured plaintiff who was wise enough or fortunate enough to secure
compensation from an independent source, and not to the
tortfeasor, who has done nothing to provide the compensation and
7
seeks only to take advantage of third-party benefits obtained by the
plaintiff.” Id.¶ 20 In 2010, the General Assembly codified the collateral source
rule’s pre-verdict evidentiary component in section 10-1-135(10)(a),
which provides in pertinent part: “The fact or amount of any
collateral source payment or benefits shall not be admitted as
evidence in any action against an alleged third-party
tortfeasor . . . .” See Smith v. Jeppsen, 2012 CO 32, ¶ 17. This
statute applies to “cases resulting in recoveries occurring after
August 11, 2010,” and excludes evidence of the amounts paid by a
plaintiff’s insurer for medical expenses. Id. at ¶¶ 12, 20.
¶ 21 In addition, where a plaintiff’s insurer has obliged a medical
provider to accept a discounted rate for services (or a “write off” of a
portion of the bill), the reduced rate constitutes a benefit received
from a collateral source. Gardenswartz, 242 P.3d at 1085.
Because the plaintiff would have been responsible for the entire
billed amount if the plaintiff had not been insured, the discounts
“are as much of a benefit for which [the plaintiff] paid consideration
as are the actual cash payments by his health insurance carrier to
the health care providers.” Id. (citation omitted).
8
¶ 22 The collateral source rule thus prevents a tortfeasor from
standing in the plaintiff’s shoes and enjoying the same discounted
medical rates as the plaintiff’s insurance company receives. Id. (“To
hold otherwise ‘is to allow the tortfeasor to receive a windfall in the
amount of the benefit conferred to the plaintiff from a source
collateral to the tortfeasor.’”) (citation omitted). As a result, a
“plaintiff’s damages are not limited to the amount paid by her
insurer, but may extend to the entire amount billed, provided those
charges are reasonable expenses of necessary medical care.” Arthur
v. Catour, 803 N.E.2d 647, 651 (Ill. App. Ct. 2004), aff’d, 833
N.E.2d 847 (Ill. 2005), quoted with approval in Gardenswartz, 942
P.3d at 1087; see Forfar v. Wal-Mart Stores, Inc., 2018 COA 125,
¶ 28.
¶ 23 In sum, the plaintiff “should be made whole by the tortfeasor,
not by a combination of compensation from the tortfeasor and
collateral sources. The wrongdoer cannot reap the benefit of a
contract for which the wrongdoer paid no compensation.”
Gardenswartz, 942 P.3d at 1083 (citation omitted).
9
2. The Workers’ Compensation Statute
¶ 24 Workers’ compensation insurance carriers pay benefits based
on a statutory fee schedule. § 8-42-101(3)(a)(I), C.R.S. 2018. The
statute declares that “[i]t is unlawful, void, and unenforceable as a
debt” for any person or medical provider to “contract with, bill, or
charge” any amount in excess of the relevant fee schedule unless
approved by the director of the division of workers’ compensation.
Id. A covered employee is not liable for benefits paid under the
workers’ compensation statute, and a medical provider may not
seek to recover fees or costs from a covered employee once an
employer has admitted liability for the employee’s medical costs.
§ 8-42-101(4).
¶ 25 An injured employee, in addition to accepting workers’
compensation, may also pursue a remedy against a third-party
tortfeasor “to recover any damages in excess of the compensation
available” under the statute. § 8-41-203(1)(a), C.R.S. 2018.
¶ 26 With respect to workers’ compensation paid, section 8-41-
203(1)(b) provides as follows:
The payment of compensation pursuant to [the
workers’ compensation statute] shall operate
as and be an assignment of the cause of action
10
against such other person to . . . the person,
association, corporation, or insurance carrier
liable for the payment of such compensation.
Said insurance carrier shall not be entitled to
recover any sum in excess of the amount of
compensation for which said carrier is liable
under said articles to the injured employee,
but to that extent said carrier shall be
subrogated to the rights of the injured
employee against said third party causing the
injury.
¶ 27 This provision creates two claims — “one ‘owned’ by the
employee and one ‘owned’ by the carrier.” Sneath v. Express
Messenger Serv., 931 P.2d 565, 568 (Colo. App. 1996). “Each of the
parties may prosecute his or its own individual claim”
independently of the other. Id.; see also § 8-41-203(1)(e)(II). The
right of subrogation created by section 8-41-203(1)(b) extends to all
benefits payable under the workers’ compensation statute but does
not extend to moneys collected for noneconomic damages. § 8-41-
203(1)(c)-(d).
C. Additional Facts
¶ 28 To reiterate, United, pursuant to section 8-41-203(1), filed an
action against Delta and Moody to recover as damages the
compensation United had paid to or on behalf of Scholle. The trial
court consolidated United’s action with Scholle’s later-filed action
11
against the same defendants. Delta then settled United’s damages
claim for $328,799.16, and the court dismissed United’s complaint.
After Moody was dismissed, Scholle and Delta remained as the only
parties.
¶ 29 Before the first trial, Scholle filed three motions in limine
implicating the collateral source rule. In essence, he argued that
evidence of the workers’ compensation payments he received should
not be admitted and that he should be able to present evidence of
the amounts billed by his medical providers because those amounts
were a truer reflection of the reasonable cost of his medical services.
Delta responded that the workers’ compensation benefits were not
payments from a collateral source because Delta had contributed to
the payments by settling United’s subrogation claim directly with
United. Delta further argued that evidence of amounts billed in
excess of the amounts paid should be excluded given that such
amounts were void under the workers’ compensation statute.
¶ 30 The trial court agreed with Delta. The court distinguished this
case from a typical collateral source case on the ground that “with
respect to the workers’ compensation benefits received by Scholle as
a result of the incident, United’s subrogation claim has been settled
12
and paid by Delta already.” Given Delta’s settlement, the court
concluded that “Delta is not seeking to reap the benefit of a contract
for which it paid nothing, nor is this a situation in which Delta has
done nothing to provide the compensation . . . .” The court also
ruled that, in light of the workers’ compensation statute, allowing
Scholle to introduce evidence of amounts billed in excess of
amounts paid by United “would constitute a windfall in favor of
Scholle to recover for medical expenses for which he never incurred
liability.” For the same reason, the court ruled that evidence of
amounts billed was inadmissible under CRE 401 and CRE 403.
¶ 31 Therefore, the court declined to apply the collateral source rule
and ordered that evidence of the amounts paid to Scholle’s medical
providers would be admissible while evidence of the full amounts
billed would not. Before the second trial, the second judge adopted
this ruling over Scholle’s objection. The court admitted evidence of
the medical expenses paid by United but excluded evidence of the
amounts billed by the medical providers. The court explicitly relied
on the amounts paid to determine Scholle’s damages for past
medical expenses.
13
D. Analysis
¶ 32 The trial court should have applied section 10-1-135(10)(a),
the pre-verdict, evidentiary component of the collateral source rule.
Under that statute, evidence of the amounts paid by Scholle’s
workers’ compensation insurer should have been excluded because
the workers’ compensation benefits paid to or on behalf of Scholle
were collateral source payments. Delta’s settlement of United’s
subrogation claim did not alter that fact. Rather, the settlement
simply entitled Delta to a setoff against any damages awarded to
Scholle. Moreover, the fact that Scholle could not be liable for any
medical expenses billed beyond those paid by United does not
distinguish this case from other collateral source cases. To the
extent that admitting evidence of the full amounts billed could lead
to a “windfall” to Scholle, our supreme court had decided that this
is preferable to the alternative: awarding the windfall to the
tortfeasor, Delta in this case.
1. The Workers’ Compensation Benefits Were
Collateral Source Payments.
¶ 33 As mandated by statute, the workers’ compensation benefits
arose out of the contract of hire between Scholle and United. See
14
Combined Commc’ns Corp. v. Pub. Serv. Co. of Colo., 865 P.2d 893,
902 (Colo. App. 1993) (holding that workers’ compensation benefits
fall within contract exception of section 13-21-111.6, thereby
protecting these collateral source payments from offset). Hence,
even though Scholle did not pay premiums toward his workers’
compensation insurance, he gave consideration in the form of his
employment services. See Van Waters & Rogers, Inc. v. Keelan, 840
P.2d 1070, 1074 (Colo. 1992) (holding that disability benefits a
firefighter received from a pension fund resulted from his
employment contract and his providing employment services).
¶ 34 Delta did not contribute anything toward the contract between
Scholle and United. Nor did Delta contribute toward the workers’
compensation insurance premiums — or, more precisely, to
United’s ongoing maintenance of its workers’ compensation
program. (Recall that United is a self-insurer for purposes of
workers’ compensation.) Consequently, the workers’ compensation
benefits paid on behalf of Scholle resulted from a contract wholly
collateral to Delta. A “wrongdoer cannot reap the benefit of a
contract for which the wrongdoer paid no compensation.”
Gardenswartz, 242 P.3d at 1083.
15
¶ 35 Also, to the extent the workers’ compensation statute led
Scholle’s medical providers to accept amounts less than those
ordinarily billed, the reduced rates constituted a benefit received
from a source collateral to Delta. See id. at 1085; cf. Crossgrove,
¶ 22 (noting that, because “the government sets the rates that
providers who honor public insurance programs, like Medicare and
Medicaid, must accept for certain services,” healthcare providers
“accept significantly less than the amount billed for certain services
in satisfaction of government insured patients’ bills”). That benefit
resulted from the fact that Scholle was covered by workers’
compensation insurance, a circumstance to which Delta did not
contribute.
¶ 36 If Scholle had not been insured, he would have been liable for
all expenses normally billed. Delta may not step into his shoes to
enjoy the benefit of the reduced rates occasioned by the insurance.
See Gardenswartz, 242 P.3d at 1085. Stated differently, Delta may
not benefit from the fact that the person whom it injured happened
to be covered by workers’ compensation insurance. See Prager v.
Campbell Cty. Mem’l Hosp., 731 F.3d 1046, 1059 (10th Cir. 2013)
(relying on Gardenswartz in a Wyoming case and holding that “to
16
limit [the plaintiff’s] damages to the amount paid by Workers’
Compensation would confer an unintended and inappropriate
benefit on the Hospital Defendants”).
¶ 37 Delta, relying on Ferrellgas, Inc. v. Yeiser, 247 P.3d 1022, 1028
(Colo. 2011), contends that its settlement with United must change
this conclusion. In that case, the plaintiff’s insurance company
(Farmers) settled with a propane company (Ferrellgas) responsible
for damaging the plaintiff’s home. Id. at 1024. Farmers had paid
the plaintiff approximately $200,000 to fix the damage, then
asserted a subrogation claim against Ferrellgas for that amount. Id.
Ferrellgas settled Farmers’s claim for about $175,000. Id.
¶ 38 The plaintiff sued Ferrellgas and argued that the collateral
source rule should bar evidence of Farmers’s payment to her and
preclude a post-verdict setoff from any damages awarded against
Ferrellgas. Id. at 1025. The trial court ruled that the collateral
source rule did not preclude a post-verdict setoff to account for
Farmers’s payment, given Ferrellas’s settlement with Farmers. But
the court ordered the parties not to introduce evidence of Farmers’s
17
payment to the plaintiff. Id. 2 The trial court later set off the
$200,000 from the jury verdict. Id.
¶ 39 The supreme court approved, holding that Farmers’s
subrogation interest in the $200,000 “effectively allowed it to stand
in [the plaintiff’s] shoes with respect to that amount, and
Ferrellgas’s [$175,000] settlement of Farmers’s subrogation interest
was thereby an effective settlement with [the plaintiff] of her interest
in the [$200,000] amount.” Id. at 1027. So, the supreme court
concluded, the settlement “extinguished” the plaintiff’s right to seek
the $200,000 from Ferrellgas. Id. In other words, Ferrellgas’s
settlement with Farmers “effectively constituted a partial settlement
with [the plaintiff] for that amount.” Id. at 1028. Because the
“collateral source doctrine is inapplicable to bar the setoff of
payments that are in some way ‘attributable’ to the defendant,”
2 Still, the parties introduced evidence of Farmers’s payment to the
plaintiff, and the trial court did not intervene. Ferrellgas, Inc. v.
Yeiser, 247 P.3d 1022, 1025 (Colo. 2011). To address any
confusion, the court instructed the jury that “[y]ou should not
reduce the amount of damages by amounts either paid to or by
Farmers. . . .” Id. The supreme court acknowledged the
“troublesome nature of the confusing presentation to the jury” and
the potential for such evidence to “taint” the jury’s verdict, but the
court declined to consider that issue because it was not before the
court. Id. at 1026.
18
Ferrellgas was entitled to a $200,000 setoff against the plaintiff’s
damage award. Id. (citation omitted).
¶ 40 Applied to this case, the reasoning of Ferrellgas means that
Delta’s settlement of United’s subrogated or assigned interest in the
amounts paid on Scholle’s behalf effectively constituted a partial
settlement with Scholle for those amounts. That is, Delta has
already settled with Scholle up to the amount of United’s claim, a
sort of prepayment of any damages awarded to Scholle. Because
Delta’s payment settling this claim is attributable to Delta, it was
entitled to a post-trial setoff from the damages award.
¶ 41 Delta was not also entitled, however, to reduce Scholle’s
damages award at trial by relying on evidence of United’s payments
on his behalf. See Crossgrove, ¶ 12 (“[S]uch evidence could lead the
fact-finder to improperly reduce the plaintiff’s damages award on
the grounds that the plaintiff already recovered his loss from the
collateral source.”). As explained, those workers’ compensation
benefits arose from a contract collateral to Delta to which Delta did
not contribute. Delta’s settlement of United’s damages claim —
occurring after the purchase of workers’ compensation insurance
and after most relevant medical expenses had been paid — did not
19
transform Delta into a source of the workers’ compensation
benefits.
¶ 42 To hold otherwise would allow a tortfeasor to benefit twice
from the same settlement with the victim’s insurer, which is what
happened here. Delta elicited evidence of the medical expenses
paid on the ground that the collateral source rule did not bar such
evidence given its settlement with United. By doing so and by
convincing the trial court to exclude evidence of the amounts billed,
Delta induced the court to award a lower damages amount (i.e.,
lower than if the court had considered the amounts billed rather
than paid).3 Then, Delta persuaded the court to reduce the
damages award again by setting off the amount of Delta’s
settlement with United. While the setoff was proper, admitting
evidence of the medical expenses paid was not.
¶ 43 To summarize, when calculating Scholle’s damages, the fact
finder should not have reduced them by considering the amounts
3Because the record does not contain Scholle’s actual medical bills,
we do not know the difference between the amounts billed and the
amounts paid. Hence, we do not know precisely how much Delta
benefitted from the court’s decision.
20
paid by United, like in Ferrellgas, but Delta’s settlement with United
entitled Delta to a post-trial setoff reflecting that settlement. 4 (We
express no opinion on whether the precise amount of the trial
court’s setoff was correct.)
2. The Workers’ Compensation Statute
Does Not Alter the Analysis.
¶ 44 The workers’ compensation statute provides that (1) any
amounts billed in excess of the fee schedule are generally
“unlawful,” “void,” and “unenforceable”; and (2) if an employer is
liable for a covered employee’s medical costs, that employee is not
4 Delta suggested at oral argument that, because United
independently pursued its claim against Delta, United effectively
took an assignment of Scholle’s claim for past medical expenses.
Delta thus contends that Scholle no longer had a claim for past
medical expenses at all. Under section 8-41-203(1)(b)-(d), C.R.S.
2018, however, United’s “assigned and subrogated cause of action”
was limited to the sum for which United was liable under the
workers’ compensation system. So, even if Delta were correct that
Scholle assigned his claim to United, such an assignment was
partial — it was limited to the amount paid by United. Scholle
retained his tort claim for past medical expenses in excess of the
amount paid by United. See also § 8-41-203(1)(f) (“Nothing in this
section shall be construed as limiting in any way the right of the
injured employee to take compensation under [this statute] and also
proceed against the third party causing the injury to recover any
damages in excess of the subrogated rights described in this
section.”). And, in the trial on such claim, section 10-1-135(10)(a),
C.R.S. 2018, barred evidence of amounts paid by United.
21
liable for such costs. See § 8-42-101(3)(a)(I). In light of this statute,
the trial court noted that “[a]llowing Scholle to introduce evidence of
any amount billed in excess of that actually paid by United would
allow Scholle to seek damages for bills that never, as a matter of
law, amounted to a legal obligation to pay.” This, the court
concluded, would result in an improper windfall to Scholle. Delta
makes the same point on appeal.
¶ 45 There is certainly some force to the trial court’s, and Delta’s,
reasoning. But our supreme court has rejected it in an analogous
context that is indistinguishable in any relevant sense.
¶ 46 In Gardenswartz, the supreme court considered section 10-16-
705(3), C.R.S. 2018, part of the Colorado Health Care Coverage Act
applying to “managed care plans.” That provision requires every
contract between a carrier and a participating provider to include a
“hold harmless provision specifying that covered persons shall, in
no circumstances, be liable for money owed to participating
providers by the plan and that in no event shall a participating
provider collect or attempt to collect from a covered person any
money owed to the provider by the carrier.” § 10-16-705(3).
22
¶ 47 The supreme court interpreted this provision to mean that the
plaintiff in Gardenswartz, a purchaser of a managed care plan,
could not be liable for the difference between the amounts billed by
his healthcare providers and the amounts paid by his insurance.
See 242 P.3d at 1085. When the providers contracted with the
insurance company and accepted payment on the plaintiff’s behalf,
they “gave up the right to seek compensation from [plaintiff] for the
amount billed.” Id. But, even though the plaintiff “could not be
billed” the difference between the amounts billed to the insurer by
medical providers and the amounts paid by the insurer, the
supreme court concluded that his tort damages should not be
limited to the reduced amounts paid by insurance. Id. at 1085-88.
So, the plaintiff retained a tort claim for medical expenses beyond
those paid by insurance.
¶ 48 The supreme court acknowledged that, due to the disparity
between the cost of medical services billed and the amounts paid by
insurance companies, “[i]t can be tempting to treat the discounted
amounts as being a truer reflection of a plaintiff’s damages.” Id. at
1087. The court resisted that temptation and recognized that a
covered plaintiff may seek the full amounts billed. See id. (noting
23
that plaintiff’s damages may extend to the entire amount billed,
provided those charges are reasonable expenses of necessary
medical care).5 “This is consistent with the common law position
that it is more repugnant to shift the benefits of the plaintiff’s
insurance contract to the tortfeasor in the form of reduced liability
when the tortfeasor paid nothing toward the health insurance
benefits.” Id. at 1088.
¶ 49 As construed in Gardenswartz, section 10-16-705(3) has the
same effect as section 8-42-101(3)(a)(I) of the workers’
compensation statute. In both situations, the injured party is not
liable for medical expenses billed beyond those paid by insurance.
In both situations, evidence of the full amounts billed is admissible
while evidence of the amounts paid by insurance is not. See 242
P.3d at 1088 (“Crediting the financial windfall arising from [the
insurer’s] discounted rates to the injured plaintiff is consistent with
the principles of the collateral source rule.”). Therefore, the
5 That is, “[b]ecause any write-offs conferred would have been a
byproduct of the insurance contract secured by [plaintiff], even
those amounts should be counted as damages.” Volunteers of Am.
Colo. Branch v. Gardenswartz, 242 P.3d 1080, 1088 (Colo. 2010)
(quoting Hardi v. Mezzanotte, 818 A.2d 974, 985 (D.C. 2003)).
24
workers’ compensation statute does not meaningfully distinguish
this case from Gardenswartz.
¶ 50 For clarity’s sake, we stress that, to the extent a medical
services contract or bill is unlawful, void, and unenforceable under
section 8-42-101(3)(a)(I), it remains so under our analysis. The
provider may not enforce the contract by collecting payment from
the injured employee or anyone else. But, simply because the bill is
uncollectable does not render it entirely irrelevant to the reasonable
value of the medical services provided — just as the uncollectable
bills in Gardenswartz were not irrelevant. Given the supreme
court’s holding that the plaintiff’s damages for medical expenses
were not limited to the amounts paid by insurance, evidence of
medical expenses in excess of the amounts paid was relevant, even
though those excess amounts could not be collected from the
plaintiff. (Indeed, how else could the plaintiff have sought more
damages than the amount paid by insurance?)
¶ 51 In addition to being analogous to Gardenswartz, this case
resembles Forfar, ¶ 24, where the tortfeasor argued that the
plaintiff’s recovery should be limited to the expenses paid by
Medicare because, by statute and regulation, he never incurred
25
liability for any greater amounts. See also id. at ¶ 3 (The defendant
argued that expenses owed under the plaintiff’s private contracts
with medical providers “were null and void under Medicare
regulations.”). The division rejected this claim, holding that, “to the
extent that a windfall occurs, we conclude that the plaintiff — not
the tortfeasor — should be the beneficiary.” Id. at ¶ 24.
¶ 52 As a result, “the reasonable value of [the plaintiff’s] medical
services was not limited to amounts that Medicare paid to his
providers, even assuming that they could receive no more from
[him] or anyone who might be vicariously liable to them, such as a
guarantor.” Id. at ¶ 30. Likewise, the reasonable value of Scholle’s
medical services was not limited to the amounts paid by his
workers’ compensation insurer, even though his providers could not
recover more from him. And, because the value of the services was
not limited to the amounts paid, evidence of a greater value was
relevant, including the amount of the reasonable expenses charged.
See id. at ¶ 28 (“Unsurprisingly, ‘[a] majority of courts have
concluded that plaintiffs are entitled to claim and recover the full
amount of reasonable medical expenses charged, based on the
reasonable value of medical services rendered, including amounts
26
written off from the bills pursuant to contractual rate reductions.’”)
(citation omitted); id. at ¶ 29 (recognizing that the majority rule
better aligns with our supreme court’s view).
¶ 53 For the foregoing reasons, the trial court erred by ruling that
CRE 401 and CRE 403 barred evidence of the amounts billed by
Scholle’s medical providers. While evidence of medical expenses
paid by United is inadmissible, Scholle must be allowed to present
evidence of his necessary and reasonable medical expenses. The
amounts billed are relevant to that question as well any other
evidence bearing on the reasonable value of the services. Of course,
Delta may present evidence disputing that those medical expenses
were either necessary or reasonable.6
¶ 54 We remand for a new trial on Scholle’s past medical expenses
as disclosed by September 10, 2015. We will address that cutoff
date below as well as other issues that may impact the new trial.
6 To the extent the decision in Lebsack v. Rios, No. 16-CV-02356-
RBJ, 2017 WL 5444568 (D. Colo. Nov. 14, 2017), conflicts with our
analysis, we decline to follow it because it misconstrues Colorado
law, particularly Gardenswartz and Ferrellgas. See Kovac v.
Farmers Ins. Exch., 2017 COA 7M, ¶ 19 (“[W]e are not bound by
decisions of federal courts applying Colorado law[.]”).
27
III. Expert Witness Disclosures
¶ 55 Scholle contends that the trial court erred by “striking” two of
his expert witnesses. We disagree.
A. Additional Facts
¶ 56 The trial court authored a thorough order addressing this
issue, from which we will quote liberally.
¶ 57 Scholle’s expert disclosures were due in February 2015. In
March 2015, the court granted the defendants’ unopposed motion
to continue the trial. The court extended the time for Delta to file
expert disclosures and for Scholle to file rebuttal expert disclosures.
The court also advised, however, that “no further discovery other
than what was reflected in the order could be conducted by the
parties” and “the continuance was not to be used as a means of
increasing the costs in the case by completely reopening discovery.”
¶ 58 After the deadline for submitting his rebuttal expert
disclosures — and without seeking leave of the court — Scholle
disclosed Dr. Eric Ray as an alleged rebuttal expert. Scholle
represented that Dr. Ray would testify about Scholle’s future
medical expenses, including charges by a specific medical facility.
Delta objected, arguing that Dr. Ray should have been disclosed as
28
a retained expert because his testimony would not actually rebut
any of Delta’s expert witnesses. The court agreed that Scholle
should have disclosed Dr. Ray earlier, but the court permitted the
late endorsement of Dr. Ray anyway. To reduce the prejudice to
Delta from the late disclosure, the court, on September 10, 2015,
continued the trial to allow Delta to depose Dr. Ray. “Because all
other discovery deadlines had passed, the Court allowed no
discovery other than that identified in its order.”
¶ 59 During Dr. Ray’s deposition, it was apparent that he did not
know anything about the “facility charges” associated with Scholle’s
future medical expenses, despite Scholle’s earlier representation to
the contrary. In November 2015, Scholle requested extra time to
disclose additional experts “to effectively quantify [his] future
economic losses.” Before the court ruled, Scholle disclosed Laura
Woodard as an expert who would testify to the costs of future
medications, gym memberships, and home services. On December
7, 2015, the court denied Scholle’s request for extra time to disclose
experts. The court explained that, when it had continued the trial,
[t]he Court specifically concluded that no
discovery other than that identified in the
September 10 order would be permitted and
29
did not intend to re-set any other deadlines
that may exist under the Rules of Civil
Procedure [because] when the case was
continued, the Court had concluded that all
necessary discovery had been completed with
the exception of [Dr. Ray’s deposition]. The
Court further notes that at the time of the
continuance, [Scholle] had already been
afforded the full opportunity to submit both
affirmative expert disclosures and rebuttal
expert disclosures.
¶ 60 Despite this order, Scholle then disclosed yet another expert,
Steven Hazel, on December 8, 2015. Hazel would have testified to
economic damages, including past and future medical costs, lost
future earnings, and future retirement benefits.
¶ 61 Delta moved to strike both Woodard and Hazel. The trial
court, applying C.R.C.P. 37(c) and the factors outlined in Todd v.
Bear Valley Village Apartments, 980 P.2d 973 (Colo. 1999), found
that Scholle had failed to establish that his late disclosures of
Woodard and Hazel were either substantially justified or harmless.
Hence, the court excluded their testimony, while still permitting Dr.
Ray’s. The second judge enforced this ruling at the second trial.
B. Analysis
¶ 62 C.R.C.P. 37(c) excludes evidence not properly disclosed under
C.R.C.P. 26(a) and C.R.C.P. 26(e) unless the failure to disclose is
30
either substantially justified or harmless to the opposing party.
Todd, 980 P.2d at 977. The nondisclosing party bears the burden
to show that its failure to disclose was substantially justified or
harmless. Id. at 978.
¶ 63 The trial court gave several cogent reasons for excluding
Woodard’s and Hazel’s testimony.
¶ 64 First, the court found that Scholle’s “repeated contention that
the Court continued the trial a second time to allow [him] to
quantify his future medical treatment and expenses
mischaracterizes what actually occurred.” In fact, the court
continued the trial to “cure prejudice that [Delta] had suffered from
[Scholle’s] improper disclosure of Dr. Ray.”
¶ 65 Second, the court was unmoved by Scholle’s argument that he
first learned that Dr. Ray did not know anything about the “facility
charges” associated with future medical treatment when Delta
deposed Dr. Ray. The court noted that Scholle had represented —
in August 2015 — that Dr. Ray would testify to such expenses and
“[t]he fact that [Scholle] failed to consult with his own expert before
disclosing his opinions is troubling.” The court was not persuaded
31
to permit Scholle to use his failure to consult with his own expert as
an excuse to present other experts.
¶ 66 Third, the court found “particularly concerning” Scholle’s
disregard for the December 7, 2015, order explicitly prohibiting
Scholle from disclosing additional experts.
¶ 67 Finally, the court considered other Todd factors and concluded
that Scholle had not met his burden of showing that his failure to
disclose Woodard and Hazel was substantially justified or harmless.
In particular, the court determined that Scholle had acted “in bad
faith” because
the Court made its position clear. Plaintiff
proceeded with these disclosures without leave
of the Court. For Plaintiff to now contend that
[he] had the right to these disclosures and that
Defendants are the cause of their own
prejudice demonstrates that Plaintiff has
engaged in misconduct worthy of the sanction
of witness preclusion.
¶ 68 Because the record supports the trial court’s decision, we
cannot conclude that the court abused its broad discretion by
barring Woodard’s and Hazel’s testimony. See People ex rel.
Strodtman, 293 P.3d 123, 129 (Colo. App. 2011) (recognizing that
we review such decisions for an abuse of discretion); see also People
32
v. Rhea, 2014 COA 60, ¶ 58 (“[U]nder the abuse of discretion
standard, the test is not ‘whether we would have reached a different
result but, rather, whether the trial court’s decision fell within a
range of reasonable options.’”) (citation omitted).
IV. Order Granting a New Trial
¶ 69 After the first trial, the trial court granted a new trial under
C.R.C.P. 59(d) because Scholle’s counsel had misrepresented facts
to the court, leading to improperly admitted evidence. Scholle
contends that the court erred, but the record shows that the court
acted well within its discretion.
A. Additional Facts
¶ 70 The trial court issued a compelling, twenty-four-page order
explaining why a new trial was warranted. We provide only a
summary.
¶ 71 During Dr. Ray’s deposition in November 2015, he “was not
shown any actual billing records.” Instead, he examined Scholle’s
counsel’s “summary disclosure” from August 2015 identifying costs
ranging from $329,550 to $659,100 for future treatment with Dr.
Ray. These costs included amounts that Dr. Ray charged ($3092)
and amounts that the medical facility charged ($20,923) per visit.
33
Dr. Ray testified that he knew only the amounts that he charged
and knew nothing “about the facility and what they charge.”
Scholle’s counsel said that he did not know why the facility charges
had been included in the August 2015 disclosure because Dr. Ray
knew nothing about them:
Q. (BY MR. BENDINELLI)[:] I don’t know why
we got the facility charge in there . . . you have
nothing to do with the facility charge, do you?
Okay.
¶ 72 After Dr. Ray’s deposition indicated that he could not testify to
the facility charges, Scholle disclosed the two additional experts
previously discussed (Woodard and Hazel). Responding to Delta’s
motion to strike those experts, Scholle stated that “[a]t the
deposition, both parties became aware that Dr. Ray could not testify
as to some ancillary charges related to the procedures (e.g.: Facility
Fee, attendants, etc.), and that additional expert testimony would
be required to substantiate the charges.”
¶ 73 In February 2016, Scholle’s counsel raised the issue of future
damages at a pre-trial conference and said that “if the witnesses . . .
retained to discuss the evidence of future medical expenses
[Woodard and Hazel] are struck, number one, then [Scholle’s]
34
efforts were frustrated to comply with putting together the future
medical expenses, because Dr. Ray cannot do that.” Scholle’s
counsel then asserted that, if Scholle were limited to Dr. Ray’s
testimony, “it is impossible for [Scholle] to present evidence of
future medical expenses.”
¶ 74 At trial, Dr. Ray’s testimony prompted many objections and
bench conferences. The court limited Dr. Ray’s testimony to only
“what had been testified to during his deposition.” Nevertheless,
Scholle’s counsel continued to question Dr. Ray about the facility
charges associated with future treatment, and Delta continued to
object. The court continued to limit Dr. Ray’s trial testimony to his
deposition testimony.
¶ 75 Then, during a bench conference, Scholle’s counsel told the
court that Dr. Ray had, in fact, “see[n] the bills” reflecting the
facility charges on the day of the deposition. He said that “[t]he
deposition indicates that [Dr. Ray] looked at [the bills] the day of the
deposition.” Delta’s counsel protested, but with this “new”
information, the court allowed Scholle’s counsel to “lay a foundation
as to what [Dr. Ray] did.” Scholle’s counsel then asked Dr. Ray, “So
you saw the bills from the surgery center at your deposition?” Dr.
35
Ray said, “Yes.” He then testified that the facility charges were
around $23,000 per visit.
¶ 76 In the end, the jury returned a verdict of $1,038,738 in
economic damages. After reviewing Dr. Ray’s deposition in
response to Delta’s motion for a new trial, the court found that
Scholle’s counsel misrepresented to the Court
that Dr. Ray had reviewed [the] facility charges
prior to or during his deposition and was,
therefore, competent to testify to these charges
over Delta’s objection. . . . It appears to the
Court that, at a minimum, this resulted in the
jury considering over $320,000 in future
medical expenses that should not have been
admitted . . . . Dr. Ray’s own deposition
testimony makes clear that he had not
reviewed the facility charges prior to his
deposition and was not competent to testify
about such costs.
B. Analysis
¶ 77 As relevant here, a court may grant a new trial based on “[a]ny
irregularity in the proceedings by which any party was prevented
from having a fair trial . . . .” C.R.C.P. 59(d)(1). A new trial may be
granted based “upon counsel’s misstatements of fact, or on his
statements of fact which have not been introduced in or established
by evidence . . . .” Park Stations, Inc. v. Hamilton, 38 Colo. App.
216, 218, 554 P.2d 311, 313 (1976).
36
¶ 78 The trial court detailed the various instances of Scholle’s
attorney’s misconduct. Particularly, the court found
that based on Dr. Ray’s deposition testimony it
could not be more clear that he never reviewed
the substantial facility charge bills prior to or
during his deposition and had no basis for
testifying about these charges at trial given
that the Court had limited his testimony to
items that he reviewed and were discussed in
his deposition. The only reason that the Court
allowed Scholle’s counsel to ask Dr. Ray about
facility charges and testify to these numbers
was that during the bench conference to
address the issue Scholle’s counsel
represented to the Court that Dr. Ray had
reviewed these numbers and had discussed
them at his deposition which was inaccurate
and a misrepresentation of what had occurred
at the deposition.
The court stressed that Scholle’s attorney had admitted several
times before trial that Dr. Ray could not properly testify to the
facility charges to which he later testified.
¶ 79 In addition, the court concluded that a separate
misrepresentation from Scholle’s counsel warranted a new trial.
Counsel had “engaged in misconduct . . . by failing to provide Delta
with a copy of [certain] Safeway pharmacy records prior to trial” and
then representing to the court at trial that he had so disclosed the
records. Based on this misrepresentation, the court “erroneously
37
admitted evidence of $18,542.07 in prescription costs.” Scholle
does not challenge this independent basis of the order granting a
new trial, which is sufficient itself to affirm that order. See IBC
Denver II, LLC v. City of Wheat Ridge, 183 P.3d 714, 717-18 (Colo.
App. 2008) (holding that a party’s failure on appeal to challenge all
alternative grounds for judgment requires affirmance of the
judgment).
¶ 80 In any event, the record abundantly supports the court’s
order. The record reveals that Scholle’s attorney misrepresented
what occurred at Dr. Ray’s deposition and that the attorney had
disclosed the pharmacy records. As a result, the court mistakenly
admitted evidence that led to an improperly inflated verdict.
¶ 81 On appeal, Scholle says only that, because he disclosed before
trial that he would incur future medical expenses in the amount to
which Dr. Ray later testified, Delta was not “unfairly surprised” by
the information. But that was not the basis of the trial court’s
order. Rather, the court granted a new trial because Scholle’s
counsel’s misconduct induced the court to improperly admit Dr.
Ray’s testimony about future medical costs as well as evidence
about prescription drug costs. We will not disturb the court’s
38
well-reasoned order. See Rains v. Barber, 2018 CO 61, ¶ 8 (noting
that we review a trial court’s order granting a new trial for an abuse
of discretion, which occurs only when the order is manifestly
arbitrary, unreasonable, or unfair, or a misapplication of the law).
V. Scope of New Trial
¶ 82 Scholle contends that the trial court erred in limiting evidence
of damages in the second trial to those properly disclosed as of
September 10, 2015 — the date that the court continued the trial
the second time. We disagree.
¶ 83 The trial court relied on three principles in limiting the scope
of damages on retrial. First, the parties are to be placed in the
same positions they occupied before the original trial. People in
Interest of M.B., 188 Colo. 370, 378, 535 P.2d 192, 197 (1975).
Second, “[r]eversal and remand for a new trial does not
automatically reopen discovery.” Erskine v. Beim, 197 P.3d 225,
232 (Colo. App. 2008). Third, a trial court should be permitted
“wide latitude” in managing a retrial because the trial court is
“much more familiar with the conduct of the original trial, the needs
for judicial management[,] and the requirements of basic fairness to
the parties in a new trial.” Cleveland v. Piper Aircraft Corp., 985
39
F.2d 1438, 1450 (10th Cir. 1993), abrogation on other grounds
recognized by US Airways, Inc. v. O’Donnell, 627 F.3d 1318 (10th
Cir. 2010).
¶ 84 The trial court explained that it had “felt compelled to grant
Defendant a new trial because of the misrepresentation by Plaintiff’s
counsel at trial that Dr. Ray had disclosed the future medical
expenses that Plaintiff claimed . . . .” Further, “had the Court
known that Dr. Ray lacked personal knowledge of the information
included in his late disclosure, the Court would not have granted
the continuance in the first place.” So, the court concluded:
Under the circumstances of this case, the
Court finds that manifest injustice to
Defendant would result from allowing Plaintiff
to present additional and new damages and to
correct the deficiencies in his trial
presentation. Were the Court to allow Plaintiff
this opportunity, which would essentially
result in a “do-over” of his case with a free
pass to fix the problems, Defendant, having
done nothing wrong here, would be penalized.
Defendant would be put in a worse position on
retrial and made to defend against new
damages without having had any hand in the
need for the retrial. Moreover, with additional
discovery comes additional cost that Defendant
should not have to bear. Basic fairness
requires that with respect to damages, the
Court should restore the parties to the position
that they were in on September 10, 2015.
40
¶ 85 The court’s reasoning is sound and enjoys record support.
Contrary to Scholle’s appellate argument, the court did not limit the
scope of the trial as a discovery sanction against Scholle. Rather,
the court did so to avoid injustice to Delta. We will not substitute
our judgment for the trial court’s discretionary decision to limit
evidence of damages to those properly disclosed before September
10, 2015. The same ruling may apply on remand.
VI. Jury Trial or Bench Trial
¶ 86 Scholle contends that the trial court erred in striking the jury
for the second trial. Reviewing de novo, we do not perceive error.
See Stuart v. N. Shore Water & Sanitation Dist., 211 P.3d 59, 61
(Colo. App. 2009).
¶ 87 In its case against Delta and Moody, United demanded a jury
trial on June 5, 2014, and paid the fee. Neither defendant did so.
In Scholle’s separate case against these defendants (filed on June 9,
2014), no party demanded a jury trial or paid the fee. The cases
were consolidated on September 22, 2014. As discussed, the trial
court later dismissed with prejudice United’s complaint, effectively
eliminating the first-filed case.
41
¶ 88 Yet, the remaining action proceeded to a jury trial, presumably
because no one noticed that only United — whose case had been
dismissed entirely — had ever demanded a jury trial.
¶ 89 Before the retrial, Delta alerted the trial court to the foregoing
facts. The court, relying on C.R.C.P. 38 and C.R.C.P. 39, issued an
order striking the jury for the retrial and ordered a bench trial.
¶ 90 Rule 38(a) states that “[u]pon the filing of a demand and the
simultaneous payment of the requisite jury fee by any party in
actions wherein a trial by jury is provided . . . including actions . . .
for injuries to person . . . all issues of fact shall be tried by a jury.”
Rule 38(b) provides that any party may demand a trial by jury of
any issue triable by a jury “by filing and serving upon all other
parties . . . a demand therefor at any time after the commencement
of the action but not later than 14 days after the service of the last
pleading directed to such issue . . . .” Rule 38(e) says that “[t]he
failure of a party to file and serve a demand for trial by jury and
simultaneously pay the requisite jury fee . . . constitutes a waiver of
that party’s right to trial by jury.”
¶ 91 Here, it is undisputed that United was the only party to ever
demand a jury trial. Under Rule 38(e), then, both Scholle and Delta
42
waived the right to a jury trial, and they did so before Scholle’s case
was consolidated with United’s. See Crawford v. Melby, 89 P.3d
451, 454-55 (Colo. App. 2003) (failure to timely pay requisite fee
results in waiver under C.R.C.P. 38(e)). Accordingly, the first trial,
as well as the second, should have been to the court. See C.R.C.P.
39(b) (“Issues not demanded for trial by jury as provided in Rule 38
shall be tried by the court.”); see also Machol v. Sancetta, 924 P.2d
1197, 1199 (Colo. App. 1996) (“C.R.C.P. 39(b) affords the court no
discretion to grant an untimely request for a jury trial.”).
¶ 92 Scholle argues that, because United never “withdrew” its jury
demand pursuant to Rule 38(e), it remained in effect. But United
and its cause of action were dismissed before trial; only Scholle’s
complaint remained, as to which no party requested a jury trial. Cf.
Nat’l Farmers Union Prop. & Cas. Co. v. Frackleton, 662 P.2d 1056,
1061 (Colo. 1983) (holding that consolidation order did not “merge
the consolidated suits into a single cause of action” or join the
parties in each other’s actions). 7 Because all parties to the
7 Moreover, because United, the only party who had demanded a
jury trial, naturally did not appear at either the first or second trial,
a jury trial was inappropriate. See C.R.C.P. 39(a).
43
remaining case had waived a jury trial, the court correctly ordered
that the second trial should be to the court. See C.R.C.P. 38(e); see
also § 13-71-144, C.R.S. 2018 (stating that the failure to timely pay
the jury fee shall constitute a waiver of a jury trial).
VII. Conclusion
¶ 93 The portions of the judgment awarding economic damages in
the form of Scholle’s lost wages and awarding noneconomic
damages are affirmed. The portion of the judgment awarding
economic damages in the form of Scholle’s medical expenses is
reversed, and we remand for a new trial limited to determining
those damages. We affirm the orders (1) striking witnesses
Woodard and Hazel; (2) granting a new trial; (3) limiting the scope of
damages; and (4) striking a jury. Because we remand for a new
trial, we do not reach the post-trial issues presented in either the
merits appeal or the costs appeal.
JUDGE WELLING concurs.
JUDGE RICHMAN concurs in part and dissents in part.
44
JUDGE RICHMAN, concurring in part and dissenting in part.
¶ 94 I concur with the majority’s opinion in all aspects except the
grant of a new trial on Scholle’s economic damages claims in the
form of past medical expenses.
¶ 95 According to the operation of the workers’ compensation
statute, the payment by United of Scholle’s medical expenses
effected an assignment of his claim to United for medical expenses
against the tortfeasor, in this case, Delta. § 8-41-203(1)(b), C.R.S.
2018. That assignment, or right of subrogation, applied to “all
compensation and all medical, hospital, . . . and other benefits and
expenses to which the employee . . . [is] entitled. § 8-41-203(1)(c).
The assignment to United permitted it to sue Delta for repayment of
the past medical expenses, a goal which it successfully achieved by
way of its settlement with Delta.
¶ 96 The settlement by Delta of United’s assigned, or subrogated,
interest in the past medical payments that United had paid Scholle
extinguished Scholle’s claim for past medical expenses against the
tortfeasor, here Delta. See Ferrelgas, Inc. v. Yeiser, 247 P.3d 1022,
1028 (Colo. 2011); see also Lebsack v. Rios, No. 16-CV-02346-RBJ,
2017 WL 5444568, at *3 (D. Colo. Nov. 14, 2017). Although
45
unpublished, Judge Brooke Jackson’s decision in Lebsack applied
Colorado law on facts indistinguishable from those in this case.
¶ 97 In addition, by operation of law, Scholle had no further
obligation to medical providers for any amounts other than those
paid under workers’ compensation. § 8-42-101(3)(a)(I), C.R.S. 2018.
In fact, under that statute it is “unlawful” for any provider to bill for
services in excess of the amounts paid under workers’
compensation, and any such bills issued would be “void, and
unenforceable” under the statute.
¶ 98 Therefore, in my view, allowing Scholle to pursue additional
amounts for past medical “expenses” against Delta, in excess of
what workers’ compensation (or United) has already paid for his
injuries and under circumstances where Delta has settled with
United, contravenes the intent and purpose of the workers’
compensation statutes. The workers’ compensation system is
designed, in part, to ensure that employees are paid promptly for
medical expenses incurred for injuries suffered on the job. See,
e.g., Paint Connection Plus v. Indus. Claim Appeals Office, 240 P.3d
429, 432 (Colo. App. 2010) (Workers’ compensation is “a statutory
scheme designed to promote, encourage, and ensure prompt
46
payment of compensation . . . .”). The system is not designed to
create a financial windfall for the injured employee. Thus, I
disagree with the majority’s suggestion that a windfall in this case
should go to Scholle.
¶ 99 Conversely, I do not see how Delta would receive a windfall if
Scholle is not permitted to pursue a claim for billed amounts. The
record shows that Delta paid over $300,000 to settle United’s claim
against it, far more than Scholle’s actual medical bills and lost
wages, which totaled $194,426. I recognize that Delta freely chose
to settle with United for the higher amount, but, under these
circumstances, Delta is hardly acquiring a windfall.
¶ 100 In addition, allowing Scholle to sue for amounts of medical
“expenses” that are void and unenforceable puts the court in the
position of facilitating the enforcement of an unlawful, void, and
unenforceable contract. We should not promote such action in the
case of an injured employee any more than we would in refusing to
support a lawsuit to enforce a gambling debt, see Condado Aruba
Caribbean Hotel, N.V. v. Tickel, 39 Colo. App. 51, 53, 561 P.2d 23,
24 (1977), or an illegal sales contract, see Potter v. Swinehart, 117
Colo. 23, 28, 184 P.2d 149, 151-52 (1947).
47
¶ 101 This case is distinguishable from the situation in Forfar v.
Wal-Mart Stores, Inc., 2018 COA 125. First, in Forfar, there was not
a workers’ compensation payment to the injured party, and the
tortfeasor in that case had not contributed anything to a settlement
with the injured plaintiff. Thus, subrogation and assignment
played no role. Second, although Forfar may not have been liable to
Medicare for the difference between paid and billed amounts, the
billed amounts were not deemed by statute to be “unlawful, void,
and unenforceable.” Third, Forfar notes that although the jury
awarded the plaintiff the reasonable value of the providers’ services,
it did so “without having seen any of the providers’ bills.” Id. at
¶ 56. Although it is not clear how the jury arrived at the amount of
damages, Forfar does not support the majority’s conclusion that the
bills from Scholle’s providers should be admitted into evidence.
¶ 102 In Volunteers of America Colorado Branch v. Gardenswartz,
242 P.3d 1080, 1083 (Colo. 2010), as in Forfar, the workers’
compensation system was not involved, there was no assignment of
the injured party’s claim to his insurer, and the tortfeasor had not
contributed to the settlement of the injured party’s claims. Thus,
there was no argument that the injured party’s claims against the
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tortfeasor were extinguished. The statute that protected the
tortfeasor from liability to the providers for amounts billed did not
render those bills unlawful or void. And while Gardenswartz
applies a collateral source rule as to a setoff, there is no holding in
the opinion on the admissibility of the injured party’s medical bills.
¶ 103 Extinguishing Scholle’s claim for additional past medical
expenses would avoid other thorny issues addressed by the
majority. It would avoid having to decide whether the collateral
source rule has any application to an injured employee’s efforts to
collect more from a third-party tortfeasor than he was paid under
workers’ compensation. It would avoid having to decide whether
evidence of actual payments, or billed amounts, reflects the injured
party’s past medical expenses. It would avoid having to decide how
and when a setoff for the payments by the third-party tortfeasor
would be applied. And most significantly, in this case, it would
obviate a third trial over Scholle’s past medical “expenses” (which
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have already been paid) since all his other damages claims against
Delta for noneconomic damages are resolved.1
¶ 104 Accordingly, I dissent from that portion of the majority opinion
that remands for a new trial on Scholle’s economic damages claims
for past medical expenses. I otherwise concur in the remainder of
the majority opinion.
1 Nothing in the reasoning of this separate opinion should be
applied to the injured workers’ claims against third-party
tortfeasors for noneconomic damages, unpaid future medical needs,
or punitive damages.
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