Sisters of St. Joseph of Peace, Health, & Hospital Services v. Russell

EDMONDS, J.

Defendant Aetna Casualty and Surety Company (Aetna) appeals from a judgment awarding plaintiff $97,092.74.¹ Defendant makes multiple assignments of error. We reverse.

This case arose out of an employment related injury to defendant Russell. At the time of the injury, Russell was uncertain as to who his employer was and, therefore, he filed four separate workers’ compensation claims against four purported employers. Following a workers’ compensation hearing, the referee held that Aetna’s insured was Russell’s employer for workers’ compensation purposes.

During the pendency of Aetna’s appeal to the Workers’ Compensation Board, Russell, the four employers and their insurers, including Aetna, entered into a Disputed Claim Settlement (DCS) that was approved by the Workers’ Compensation Board. ORS 656.289(4). The DCS absolved the employers and their insurers of any further responsibility for Russell’s “disputed and denied conditions” and awarded a lump sum settlement to Russell. The DCS also included specified amounts “alleged” by Russell as medical expenses. It provided that Aetna would be solely responsible for “sums heretofore set forth” and that it would hold Russell harmless from any claim by plaintiff seeking recovery for medical expenses. Moreover, the DCS said that Aetna was “free to make whatever arrangements [it wished] with regard to settlement of the alleged bills.”

Plaintiff brought this action against Russell and Aetna to recover the medical expenses. Plaintiffs claims against Russell are on the basis of an account stated and for the reasonable and necessary value of the medical services furnished. Its claim against Aetna is based on the theory that the DCS constituted a third-party beneficiary contract under which Aetna agreed to be responsible for Russell’s obligation. At trial, the jury found against plaintiff on the account stated claim, but in favor of plaintiff on the other claims. The court entered judgment judgment against Aetna. Aetna appeals from that judgment.

Aetna assigns error to the court’s denial of its motion for a directed verdict. ORCP 60. It argues that plaintiff presented no evidence “sufficient to show that the services that were allegedly provided to defendant Russell were services which were reasonable, as alleged, and necessary.” We review the denial of a defendant’s directed verdict motion to determine whether, viewing the evidence in the light most favorable to plaintiff, there was any evidence from which the jury could have found the facts necessary to establish the elements of its claims. Brown v. J. C. Penney Co., 297 Or 695, 705, 688 P2d 811 (1984).

At issue is the nature of plaintiffs claims. Plaintiffs claim against Aetna alleges that Aetna is indebted to plaintiff in “the reasonable amount of Nathan C. Russell’s bills.” Its claim against Russell alleges an implied contract for the “reasonable value of goods and services provided.” In its opening statement, plaintiff told the trial court:

“We are proceeding on two separate accounts [sic], one which is commonly known as Reasonable Value of Goods and Services Provided. Count 2 is what’s called Account Stated. In other words, there has been an account between the parties and nobody disputed it. And then the last is whether or not there is a Third Party Beneficiary Account which Sacred Heart should be able to sue on.”

Contrary to plaintiffs argument on appeal that its claim against Aetna is entirely on the basis of an express contract,² the claim alleges an express agreement between plaintiff and Aetna that incorporates an implied agreement between plaintiff and Russell. See Gillman v. Emel, 89 Or App 153, 747 P2d 390 (1987). In other words, Aetna’s liability for Russell’s bills may arise from an express agreement (the DCS) that Aetna pay Russell’s obligation owed to plaintiff, but Russell’s liability is on the basis of an implied contract. In order to prevail on the implied contract portion of the claim, plaintiff must prove three elements: (1) that the labor and/or materials were supplied for the benefit of Russell, (2) that what was supplied was necessary and reasonable and (3) that the charges for what was supplied were reasonable. See Haggard v. Edwards, 57 Or App 537, 539, 645 P2d 590, rev den 293 Or 483 (1982).

Plaintiff presented evidence that it provided to Russell the medical services for which it sought payment. Moreover, it presented evidence that the charges for the medical services were reasonable. However, there was no admissible evidence that what was supplied was necessary for the care of Russell. Because plaintiff failed to establish a necessary element of its claim, the trial court erred in not granting defendant’s directed verdict motion. Central Coast Electric, Inc. v. Mendell, 66 Or App 42, 46, 672 P2d 1224 (1983).

Because of our resolution of this case we need not consider defendant’s other assignments of error.

Reversed.

1 Defendant Russell is not a party to this appeal.

2 Plaintiffs argument assumes that the DCS is an enforceable third-party beneficiary contract and that it is the beneficiary. We need not reach that issue because plaintiff has not proven that it is entitled to recover under the agreement between it and Russell.