Arthur v. Catour ( 2005 )

JUSTICE FREEMAN

delivered the opinion of the court:

We are presented with the following certified question:

“Whether the Plaintiff who was charged $19,355.25 in medical bills for medical services related to her injuries can present that amount of bills as medical expenses in the case or, whether the Plaintiff shall be limited to presenting only $13,577.97 in medical bills to the jury because that is the amount that was paid by the Plaintiff and Blue Cross/ Blue Shield, who was an insurance carrier for the Plaintiff and who paid the Plaintiffs medical bills pursuant to insurance contracts at a substantially reduced rate with the medical providers and which the providers accepted as payment in full.”

We hold that a plaintiff may present to the jury the amount that the plaintiffs health-care providers initially billed for services rendered.

BACKGROUND

Plaintiff, Joyce Arthur, brought a personal injury action in the circuit court of Henry County against defendants Laurie Catour and Stenzel Brothers Auction Services, Inc. Plaintiff alleged that on October 2, 1999, defendant Stenzel Brothers was conducting an auction on a farm that defendant Catour owned. Plaintiff further alleged that, while attending the auction, she stepped in a hole in Catour’s yard, fell, and was injured. Plaintiff alleged negligence on the part of each defendant and sought damages. Each defendant filed an answer denying negligence or liability.

Discovery ensued. In her answers to defendant Stenzel Brothers’ interrogatories, plaintiff stated that she fractured her leg just below the knee, which required surgery. Plaintiff also disclosed the categories of damages that she sought. Included in this list was: “Incurred medical to date — $19,314.07.” The following facts are undisputed. Through February 2002, plaintiff received services from various health-care providers valued at $19,355.25. Plaintiff had private, group health insurance with Blue Cross/Blue Shield (Blue Cross) through her husband’s employer.

Further, Blue Cross had contractual agreements with plaintiffs health-care providers. Through this arrangement, many of the charges for health-care services rendered were discounted. Several examples are illustrative. Plaintiff received health-care services from Orthopedic Specialists valued at $4,308.70. However, based on their arrangement, Blue Cross actually paid the provider only $1,800.90 and plaintiff personally paid $375.10, for a total actual payment of only $2,176, which satisfied the bill. The provider discounted the remaining $2,132.70.

Likewise, plaintiff received health-care services from Genesis Medical Center valued at $7,425.49. However, $4,642.06 from Blue Cross and $522.51 from plaintiff, a total of $5,164.57, satisfied the bill. The provider discounted the remaining $2,260.92. Plaintiff received health-care services from Hammond-Henry Hospital valued at $5,299.56. However, $4,218.67 from Blue Cross and $59.64 from plaintiff, a total of $4,278.31, satisfied the bill. The provider discounted the remaining $1,021.25. Plaintiff received health-care services from St. Joseph Medical Center valued at $1,214.70. However, $877.90 from Blue Cross and $258.49 from plaintiff, a total of $1,136.39, satisfied the bill. The provider discounted the remaining $78.31. Plaintiff received health-care services from Heart Care Midwest valued at $117. However, $88.80 from Blue Cross satisfied the bill. The provider discounted the remaining $28.20. In this manner, plaintiffs health-care providers discounted a total of $5,777.28; Blue Cross and plaintiff actually paid a total of only $13,577.97 to satisfy the $19,355.25 of billed health-care services rendered.

Defendants filed a motion for partial summary judgment, seeking to limit plaintiffs claim for medical expenses to the amount paid rather than the amount billed. Granting defendants’ motion, the circuit court’s order stated in part:

“The court does not find that the collateral source rule applies to the present set of facts, and to allow the plaintiff to seek and recover $19,355.25 worth of medical damages when she was only charged for and became liable for $13,577.97 would only serve to punish the defendants punitively and provide a windfall for the plaintiff.”

The court ruled that “plaintiff will be limited to seeking compensatory damages not exceeding those actually paid to her medical providers.”

The circuit court certified the above-quoted legal question for immediate appeal. The appellate court allowed plaintiffs application for leave to appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308).

The appellate court, with one justice dissenting, reversed the circuit court’s entry of partial summary judgment for defendants. 345 Ill. App. 3d 804. The appellate court majority held that “plaintiffs 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.” 345 Ill. App. 3d at 808.

Presiding Justice Holdridge dissented, reasoning as follows: “Here, the amount received from the plaintiffs insurance company in full payment of plaintiff’s past medical expenses — $13,577.97—will be fully protected by the collateral source rule. The additional $5,777.28 needs no such protection, as the plaintiff never incurred or became obligated for that expense.” (Emphasis in original.) 345 Ill. App. 3d at 809 (Holdridge, EJ., dissenting). He concluded: “I see no legal reason to allow the plaintiff to recover for expenses she never paid nor ever became obligated to pay as a result of the negligence of the defendant.” 345 Ill. App. 3d at 810 (Holdridge, P.J., dissenting).

Each defendant petitioned for leave to appeal. 177 Ill. 2d R. 315(a). We allowed each petition and consolidated the appeals. We granted the Illinois Trial Lawyers Association leave to submit an amicus curiae brief in support of plaintiff. We also granted the Illinois Association of Defense Trial Counsel leave to submit an amicus curiae brief in support of defendants. See 155 Ill. 2d R. 345. We now affirm the judgment of the appellate court and reverse the circuit court’s entry of partial summary judgment in favor of defendants.

ANALYSIS

We note at the outset our standard of review. In this case, we review the propriety of the appellate court’s answer to the certified question. The pertinent facts being undisputed, the certified question essentially asked whether the trial court’s grant of partial summary judgment in favor of defendants was legally correct. “If the facts are uncontroverted and the issue is the trial court’s application of the law to the facts, a court of review may determine the correctness of the ruling independently of the trial court’s judgment.” Norskog v. Pfiel, 197 Ill. 2d 60, 70-71 (2001); see Woods v. Cole, 181 Ill. 2d 512, 516 (1998) (stating rule that questions of law are reviewed de novo); Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 43 (2004) (stating rule that summary judgment rulings are reviewed de novo). Accordingly, our review is de novo.

“Under the collateral source rule, benefits received by the injured party from a source wholly independent of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from the tortfeasor.” Wilson v. The Hoffman Group, Inc., 131 Ill. 2d 308, 320 (1989); see Beaird v. Brown, 58 Ill. App. 3d 18, 21 (1978), quoting Bireline v. Espenscheid, 15 Ill. App. 3d 368, 370 (1973); 11 Ill. Jur. Personal Injury & Torts § 5:62, at 354 (2002). Defendants do not dispute that the collateral source rule protects the $13,577.97 that Blue Cross paid and plaintiffs health-care providers accepted as payment in full. Rather, defendants contend that the collateral source rule does not apply to the $5,777.28 difference between the amount billed and the amount paid. Plaintiff contends that the collateral source rule protects the entire $19,355.25 initially billed.

The collateral source rule protects collateral payments made to or benefits conferred on the plaintiff by denying the defendant any corresponding offset or credit. Such collateral benefits do not reduce the defendant’s tort liability, even though they reduce the plaintiffs loss.

“They do not have the effect of reducing the recovery against the defendant. The injured party’s 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.” Restatement (Second) of Torts § 920A, Comment b, at 514 (1979).

Accord Muranyi v. Turn Verein Frisch-Auf, 308 Ill. App. 3d 213, 215 (1999); 2 D. Dobbs, Remedies § 8.6(3), at 493 (2d ed. 1993). The rule operates to prevent the jury from learning anything about collateral income. Boden v. Crawford, 196 Ill. App. 3d 71, 76 (1990).

A situation in which courts frequently apply the collateral source rule is where the defendant seeks a reduction of damages because the plaintiff has received insurance benefits that partly or wholly indemnifies the plaintiff for the loss. Wilson, 131 Ill. 2d at 320; Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill. 2d 353, 362 (1979); accord 1 D. Dobbs, Remedies § 3.8(1), at 373 (2d ed. 1993). The rule is well established that damages recovered by the plaintiff from the defendant are not decreased by the amount the plaintiff received from insurance proceeds, where the defendant did not contribute to the payment of the insurance premiums. Peterson, 76 Ill. 2d at 362; see Biehler v. White Metal Rolling & Stamping Corp., 30 Ill. App. 3d 435, 444 (1975). “The justification for this rule is that the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of contracts or other relations that may exist between the injured party and third persons.” Wilson, 131 Ill. 2d at 320; see 11 Ill. Jur. Personal Injury & Torts § 5:63 (2002). Also: “Calling attention to the fact that a plaintiff had such insurance can be prejudicial error because the jury may conclude that plaintiff sustained no damages for which he was entitled to recover if his medical bills were paid by insurance.” Biehler, 30 Ill. App. 3d at 444; accord Boden, 196 Ill. App. 3d at 76.

The dual nature of the collateral source rule is evident:

“The traditional approach is to treat [the collateral source rule] as having substantive and evidentiary components. The substantive component is a rule of damages. This component bars a defendant from reducing the plaintiffs compensatory award by the amount the plaintiff received from the collateral source. 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.” J. Fischer, Understanding Remedies § 12(a), at 77 (1999).

Clearly, to the extent the evidentiary component of the collateral source rule implicates the substantive component of the rule, the evidentiary component applies only to prevent defendants from introducing evidence that a plaintiffs losses have been compensated for, even in part, by insurance.

However, the collateral source rule is not an evidentiary rule that permits a defendant to limit a plaintiffs ability to introduce evidence of the reasonable cost of health care necessitated by the defendant’s conduct.

“The usual [collateral source rule] case is one in which the plaintiff is injured by the defendant’s tort hut suffers no actual medical expense loss because those expenses are paid for by the plaintiffs own medical insurance or paid for as part of government benefits to veterans. In these cases the rule is quite firm that the defendant must pay for the reasonable value of medical services reasonably required even though the plaintiff’s own insurance has paid for such services.” 1 D. Dobbs, Remedies § 3.8(1), at 373 (2d ed. 1993).

Accord Wilson, 131 Ill. 2d at 320.

In the present case, plaintiff received health-care services and became liable for the resulting expenses upon receipt of those services, not when the final bill was eventually issued. Her liability was not somehow nonexistent merely because the providers submitted bills directly to her insurer. Indeed, it is not uncommon for an insurer, upon receipt of such bills, to deny coverage, leaving the patient/plaintiff personally liable for the balance. For example, the policy might have lapsed for nonpayment of premiums, or the policy may not cover some services, such as cosmetic or reconstructive surgery.

The medical expenses for which plaintiff was liable were covered in full by her health insurance. The bill was paid in part and the balance written off pursuant to a contractual arrangement between the insurer and the provider — a contract to which the plaintiff was not a party. Thus, the collateral source was the insurance company and not the so-called “discount.” To restate the obvious: plaintiff did not receive a discount from the provider. Rather, plaintiff received the benefit of her bargain with her insurance company — full coverage for incurred medical expenses.

This leads us to the certified question, which presents a question of proof rather than of entitlement, i.e., a question involving an evidentiary component of the collateral source rule and not a substantive rule of damages. Plaintiff, of course, is entitled to recover as compensatory damages the reasonable expense of necessary medical care resulting from defendants’ negligence, if proved. See Chicago City Ry. Co. v. Henry, 218 Ill. 92, 95 (1905); accord Donk Bros. Coal & Coke Co. v. Thil, 228 Ill. 233, 241-42 (1907); Department of Law Enforcement v. Willis, 61 Ill. App. 3d 495, 498 (1978). The only relevant question in the litigation between plaintiff and defendants is the reasonable value of the services rendered. The certified question merely asks whether certain evidence is admissible in such cases.

The controlling principles are quite settled:

“In Illinois, the question of damages is peculiarly one of fact for the jury. Flynn v. Vancil, 41 Ill. 2d 236, 240, 242 N.E.2d 237, 240 (1968). The rules regarding the admissibility of evidence of medical expenses and the burden of proving medical expenses are well established. In order to recover for medical expenses, the plaintiff must prove that he or she has paid or become liable to pay a medical bill, that he or she necessarily incurred the medical expenses because of injuries resulting from the defendant’s negligence, and that the charges were reasonable for services of that nature. See North Chicago Street Ry. Co. v. Cotton, 140 Ill. 486, 498, 29 N.E. 899, 902 (1892); Wicks v. Cuneo-Henneberry Co., 319 Ill. 344, 349, 150 N.E. 276, 279 (1925).

When evidence is admitted, through testimony or otherwise, that a medical bill was for treatment rendered and that the bill has been paid, the hill is prima facie reasonable. Flynn v. Cusentino, 59 Ill. App. 3d 262, 266, 375 N.E.2d 433, 436 (1978). A party seeking the admission into evidence of a bill that has not been paid can establish reasonableness by introducing the testimony of a person having knowledge of the services rendered and the usual and customary charges for such services. Once the witness is shown to possess the requisite knowledge, the reasonableness requirement necessary for admission is satisfied if the witness testifies that the bills are fair and reasonable. Diaz v. Chicago Transit Authority, 174 Ill. App. 3d 396, 528 N.E.2d 398 (1988).

The prima facie reasonableness of a paid hill can be traced to the enduring principle that the free and voluntary payment of a charge for a service by a consumer is presumptive evidence of the reasonable or fair market value of that service. See Wicks, 319 Ill. at 349, 150 N.E. at 279; Lanquist v. City of Chicago, 200 Ill. 69, 73-74, 65 N.E. 681, 683 (1902). The premise is that a consumer will not willingly pay an unreasonable or unusual charge for a service. When a bill has been paid, there is little reason to suspect that the charge is collusive or speculative. The defendant may rebut the prima facie reasonableness of a medical expense by presenting proper evidence casting suspicion upon the transaction. It must he emphasized that offering a paid hill or the testimony of a knowledgeable witness that a bill is fair and reasonable merely satisfies the requirement to prove reasonableness. The proponent must also present evidence that the charges were necessarily incurred because of injuries caused by the defendant’s negligence. Cotton, 140 Ill. at 498-99, 29 N.E. at 902. Only then have the evidentiary requirements for admission into evidence been satisfied. Moreover, it is axiomatic that merely satisfying the minimum requirements for the admission of a bill into evidence does not conclusively establish that the amount of the bill in its entirety must be awarded to the plaintiff. The admission of the bill into evidence simply allows the jury to consider whether to award none, part, or all of the bill as damages.” (Emphasis in original.) Baker v. Hutson, 333 Ill. App. 3d 486, 493-94 (2002).

Accord 11 Ill. Jur. Personal Injury & Torts § 5:22 (2002).

Applying these principles to the present case, plaintiff cannot make a prima facie case of reasonableness based on the bill alone, because she cannot truthfully testify that the total billed amount has been paid. Instead, she must establish the reasonable cost by other means — -just as she would have to do if the services had not yet been rendered, e.g., in the case of required future surgery, or if the bill remained unpaid. Defendants, of course, are free to challenge plaintiffs proof on cross-examination and to offer their own evidence pertaining to the reasonableness of the charges.

Therefore, we answer the certified question as follows. Plaintiff may present to the jury the amount that her health-care providers initially billed for services rendered.

CONCLUSION

For the foregoing reasons, the judgment of the appellate court is affirmed; the partial summary judgment in favor of defendants, entered by the circuit court of Henry County, is reversed; and the cause is remanded to the circuit court for further proceedings.

Certified question answered; appellate court affirmed; circuit court reversed; cause remanded.