2021 CO 20
Colo.2021Background
- In June 2012 William Scholle, a United Airlines employee, was injured in a car accident caused by a Delta employee; United (self‑insured) paid Scholle’s workers’ compensation medical benefits.
- United sued Delta (subrogation) to recover the benefits it paid; Scholle separately sued Delta for negligence; the actions were consolidated and United eventually settled its subrogation claim with Delta.
- After settlement, Delta admitted liability and the case proceeded to damages; at trial the court reduced Scholle’s economic award by the amount United paid, effectively eliminating recovery for past medical expenses.
- A split Colorado Court of Appeals reversed as to medical expenses, applying the collateral‑source evidentiary rule to permit Scholle to introduce billed (not paid) amounts as proof of reasonable value and remanded for a new trial.
- The Colorado Supreme Court granted certiorari to resolve whether a workers’ compensation insurer’s settlement of its subrogation claim extinguishes the injured employee’s claim for past medical expenses and whether the collateral‑source rule applies.
Issues
| Issue | Plaintiff's Argument (Scholle) | Defendant's Argument (Delta / Majority below) | Held (Colorado Supreme Court majority) |
|---|---|---|---|
| Whether insurer’s settlement of its subrogation claim extinguishes plaintiff’s claim for past medical expenses paid by workers’ comp | United’s settlement could only extinguish insurer’s right to the amount it paid; Scholle retains claim for any amount billed above what United paid | Settlement by insurer standing in plaintiff’s shoes extinguishes plaintiff’s claim for those medical expenses | Insurer’s settlement extinguished the employee’s claim for past medical expenses covered and paid by workers’ compensation; plaintiff no longer had viable claim for those expenses |
| Whether billed amounts in excess of workers’ comp fee schedule remain admissible to prove reasonable value after insurer’s settlement | Billed amounts reflect reasonable value and should be admissible; collateral‑source rule bars evidence of amounts actually paid | Because insurer settled, amounts paid are not collateral source and billed excess is irrelevant/void under WCA | No need to admit billed or paid amounts once claim is extinguished; collateral‑source evidentiary rule not implicated after settlement |
| Effect of WCA fee schedule (statutorily void bills above schedule) on plaintiff’s right to seek billed excess | Statutory invalidity of excess bills doesn’t create separate surviving claim for unpaid billed difference | Void bills mean plaintiff cannot claim amounts in excess of schedule | WCA makes excess bills unenforceable; there is no separate surviving claim after insurer’s settlement for amounts paid by workers’ comp |
| Applicability of collateral‑source evidentiary rule after insurer settlement | Collateral‑source rule should bar admission of workers’ compensation payments and allow evidence of billed/market value | Settlement converts paid amounts into non‑collateral payment; collateral‑source rule not implicated | Collateral‑source evidentiary rule does not apply because the employee’s claim for those medical expenses was extinguished by the insurer’s settlement (no damages to which rule would apply) |
Key Cases Cited
- Volunteers of Am. Colo. Branch v. Gardenswartz, 242 P.3d 1080 (Colo. 2010) (collateral‑source rule bars tortfeasor from enjoying insurer’s discounted rates; billed amounts may be admissible to show reasonable value)
- Ferrellgas, Inc. v. Yeiser, 247 P.3d 1022 (Colo. 2011) (where insurer stood in insured’s shoes for amount it paid, insurer’s settlement extinguished insured’s claim to recover that amount)
- Am. Fam. Mut. Ins. Co. v. DeWitt, 218 P.3d 318 (Colo. 2009) (subrogation defined as standing in the injured party’s shoes to assert rights against the defendant)
- Colo. Comp. Ins. Auth. v. Jorgenson, 992 P.2d 1156 (Colo. 2000) (Workers’ Compensation Act creates a partial assignment; subrogation reaches only economic damages for which carrier is liable)
- Wal‑Mart Stores, Inc. v. Crossgrove, 276 P.3d 562 (Colo. 2012) (explains collateral‑source rule components and statutory modifications)
- Forfar v. Wal‑Mart Stores, Inc., 436 P.3d 580 (Colo. App. 2018) (Medicare/other capped payments are collateral source payments; plaintiff may prove reasonable value of services notwithstanding payment limits)