Lead Opinion
We have jurisdiction pursuant to Hawai'i Revised Statutes (HRS) § 602-5(2) (1993) and Hawai'i Rules of Appellate Procedure (HRAP) Rule 13(a) (2000)
Where a plaintiffs healthcare expenses are paid by Medicare and/or Medical, does the discounted amount paid to a healthcare provider by [Medicare3 ] and Medi-Cal constitute the amount that should be awarded as medical special damages to a plaintiff in a negligence action? In this circumstance, is evidence of amounts billed in excess of the amount[]paid irrelevant and inadmissible?
For the reasons set forth herein, the answer to both questions is “no.”
The questions posed arise out of a medical malpractice action in which Plaintiffs-Appel-lees Joseph Bynum (Joseph) and his wife Lila Bynum (Lila) (collectively the Bynums), sued to recover damages for injuries Joseph allegedly suffered in connection with coronary artery bypass grafting surgery.
While vacationing on the Big Island of Hawai'i in July of 1998, Joseph experienced chest pains. Initially, Joseph went to North Hawai'i Community Hospital for treatment, and was later transferred to the Queen’s Medical Center (Queen’s) in Honolulu, for further treatment. Dr. Joana Magno (Mag-no), a cardiologist at Queen’s, assumed responsibility for coordinating Joseph’s care as his attending physician. Magno consulted with Dr. Michael Dang (Dang), a cardiovascular surgeon, and Dr. John Callan (Callan), a pulmonologist, and recommended that Joseph undergo bypass surgery on an urgent basis. Magno did not advise the Bynums that Joseph could try alternate treatments, such as medical therapy or angioplasty, but presented surgery as his only option. At the time Magno recommended bypass surgery, she knew Joseph had experienced respiratory failure two years earlier, and recognized that his history of lung disease was a “red flag” to bypass surgery.
During the bypass surgery performed by Dang, Joseph suffered respiratory distress, which required him to be placed on mechanical ventilation for the remainder of his life. After spending three months in Queen’s, Joseph was transferred to six different intensive care facilities in California.
From the time of the surgery, Joseph was eligible for Medicare, which initially paid for his medical bills. However, to allow Joseph to become eligible for Medi-Cal, California’s Medicaid program, and to protect their life savings from the costs of Joseph’s ongoing hospitalization, the Bynums legally divorced on February 11,1999.
Joseph lived in intensive care facilities for over 1,314 days after the surgery, and was dependent upon the ventilator for the rest of his life, passing away on February 21, 2002.
II.
The Bynums filed a lawsuit against Magno, Dang, Callan, and Queen’s (hereinafter, collectively, Defendants), on December 30,1999, prior to Joseph’s death.
On February 6, 2001, Magno and Callan filed a motion in limine to limit Joseph’s recovery of his medical expenses to only those fees actually paid to his healthcare providers as full and final payment for the services. In this regard, Defendants sought to preclude the Bynums from introducing, as evidence of special damages, the standard rates for Bynum’s medical care that might have been billed to other patients for comparable treatment. Additionally, Defendants asserted that “a patient cannot be held liable for any medical expenses that exceed the amount approved by Medicare or actually paid by Medicare and Medi-Cal payments to a healthcare provider.”
The district court denied the motion, and did not limit the evidence of special damages to the amount charged by Medicare/Medicaid.
The jury returned it’s verdict on April 4, 2001, and on May 2, 2001, the district court entered judgment against Magno in the amount of $2,063,750.00 for Joseph ($1,462,-500.00 in special damages and $601,250 in general damages), and $107,250 for Lila (in general damages). Additionally, the district court dismissed with prejudice all claims against Callan, Dang, and Queen’s, pursuant to a stipulation for partial dismissal.
Magno appealed the judgment to the United States Ninth Circuit Court of Appeals (the Ninth Circuit), asserting, inter alia, that “the district court erred by submitting the amount of the medical expenses billed by [Joseph’s] healthcare providers to the jury as the reasonable value of their services, instead of the lesser amount negotiated by [Medi-eare/Medicaid].” The Ninth Circuit reversed the district court’s judgment and remanded the ease for a new trial.
the novel question under Hawai'i law whether the discounted amount paid to a healthcare provider by Medieaid[8 ] and Medi-Cal reflects the amount that should be awarded to a plaintiff in a negligence action might well be a suitable candidate for certification.
Accordingly, the district court, upon remand, submitted its certified questions to this court.
III.
Joseph’s healthcare providers, as required of provider participants in the Medicare
IV.
In response to the certified questions presented, the parties raise several arguments. Magno argues that a plaintiff whose health care expenses are covered by Medicare/Medicaid, is entitled to recover the amount of the Medicare/Medicaid approved payments, and nothing more, because (1) principles of compensatory damages do not permit recovery for more than the actual costs incurred for medical services; (2) the collateral source rule does not entitle a plaintiff to recover
The Bynums, on the other hand, assert that Joseph’s recoverable medical expenses should be based upon the standard rates, because (1) the policies behind the recovery of damages for personal injury tort victims are not analagous to the principles of “compensatory damages” in property damage cases; (2) the collateral source rule applies, inasmuch as (a) the “ ‘discount^]’ created by the lower fee schedules” are “unquestionably a benefit to Medieare/Medicaid recipients[,]” (b) the programs “benefitted” Joseph by preventing the providers from “balance billing” him for the full amount, (c) if Joseph was not eligible for Medieare/Medicaid, “he would have been liable for the full amount of his medical bills,” and thus, (d) “allowing [Mag-no] to reduce her liability by virtue of [Joseph’s] participation in Medieare/Medicaid would indeed result in a windfall for [Magno], which is exactly what Hawai'i collateral source rule prohibits”; and (3) because the collateral source rule applies to all Medi-eare/Medicaid benefits, evidence of standard rates is relevant and admissible for (a) determining the reasonable value of medical services, (b) understanding the extent of the plaintiffs injuries, and (c) providing a foundation for future medical care and expenses.
AARP filed an amicus brief in this case. It maintains that millions of elderly and low income individuals rely on Medicaid for their health care, and urges this court to follow jurisdictions which have applied the collateral source rule to Medieare/Medicaid benefits. Essentially, ARRP argues two primary reasons for applying the collateral source rule. First, AARP notes that a “court can either reward the tortfeasor by making them [sic] responsible for an amount less than the full amount of the plaintiffs medical services or a court can award the entire amount of damages to the injured person even though the victim did not pay for the serviees[; thus, i]f there is a windfall, the innocent plaintiff should benefit, not the defendant.” Secondly, citing Joseph M. Engle, Comment: Gratuitous Nursing Services Rendered by Extended Family Members and Other Third Parties: Can Injured Patties Receive Reimbursement Under Wisconsin’s Collateral Source Rule?, 85 Marq. L.Rev. 1003, 1009-10 (2002), AARP asserts that “[allowing a plaintiff to recover from collateral sources ensures that the plaintiff will be fully compensated[, a]n injured party can never be fully compensated for permanent injuries[,]” and, “[t]hus, while the collateral source rule may allow a plaintiff to receive a larger award than he or she appears entitled, the amount the plaintiff actually receives comes closer to full compensation for [the] loss.”
V.
Inasmuch as the questions presented involve the scope of special compensatory damages, the underlying principles relating to damages in the personal injury context are pertinent. Compensatory damages seek to “compensate the injured party for the injury sustained,” Kuhnert v. Allison,
The “collateral source rule,”
Similarly, the Restatement (Second) of Torts: Damages (hereinafter Restatement) § 920A, entitled “Effect of Payments Made to [an] Injured Party,” establishes ■that, under the collateral source rule, “[p]ay- ■ ments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or part of the harm for which the tortfeasor is liable.” Restatement § 920A(2) (emphasis added).
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 § 920A cmt. b (emphases added). Ultimately, comment b explains that “it is the tortfeasor’s responsibility to compensate for all harm that he causes, not confined to the net loss that the injured party receives.” Id.
While acknowledging that “[p]erhaps there is an element of punishment of the wrongdoer” in the rule, the Restatement indicates that “[p]erhaps also this is regarded as a means of helping to make the compensation more nearly compensatory to the injured party.” Id. The Restatement further declares that the rule “that collateral benefits are not subtracted from the plaintiffs recovery applies to the following types of benefits: ... [g]ratuities[ ] ... [and s]ocial legislation benefits.” Restatement § 920A cmt. c(3)-(4) (emphasis added). As to social legislation benefits, the Restatement explains that “[i]f the benefit was ... established ... by law, [the plaintiff] should not be deprived of the advantage that it confers.” Restatement § 920A cmt. b.
With the aforementioned authorities in mind, we consider the certified questions.
VI.
In an action to recover medical expenses caused by a defendant’s negligence, a
Although the parties do not dispute that the medical bills introduced at trial reflected medical services necessary for Joseph’s medical condition, they disagree, as previously mentioned, on how to calculate the “reasonable value” of such services in light of the Medicare/Medicaid benefits.
VII.
A.
Magno points to cases which have concluded that the Medicaid/Medieare programs and rates do not fall within the scope of the collateral source rule. Such eases have based their decisions on essentially two grounds: (1) no one incurs liability for any charges above the Medicare/Medicaid payments,
B.
As previously noted, the Restatement declares that the collateral source rule applies to “gratuities,” explaining, for example, that “the fact that the doctor did not charge for his services or the plaintiff was treated in a veterans hospital does not prevent his recovery for the reasonable value of the services.” Restatement § 920A, emt. c(3). See Pryor v. Webber,
Rather, because a plaintiff would be able to recover the “reasonable value” of medical services if such services were rendered gratuitously, it would appear to follow that a plaintiff should be allowed to recover the “reasonable value” of such services, even if Medicare/Medieaid had already paid a part, or a discounted amount, of the “reasonable value” of such services. See Pryor,
C.
But, as previously observed, the Restatement applies the collateral source rule to certain “types” of benefits such as social legislation benefits, listed as “social security benefits, welfare payments, pensions under special requirement acts.” Restatement § 920A, cmt. c(4). Medicare/Medicaid are medical insurance programs for those in need, such as the elderly, disabled, and low-income individuals. See Suhor,
As aptly described by the North Carolina Supreme Court, “Medicaid is a form of insurance paid for by taxes collected from society in general. The Medicaid program is social legislation; it is the equivalent of health insurance for the needy.” Cates v. Wilson,
Accordingly, we cannot agree with Mag-no’s assertion that Medicare/Medicaid programs are simply fee “agreements between the government and healthcare providers for their mutual benefit, independent of the interests of Medicare/Medicaid recipients.” (Emphasis added.) Although Medicare/Med-ieaid programs involve fee agreements that are mutually beneficial to the government and the participating healthcare providers, such accommodations appeal’ secondary to the essential purpose of Medicare/Medicaid, which is to provide medical assistance to the needy.
This court has followed the same approach. In Sam Teague, this court agreed with the United States Supreme Court that unemployment benefits paid by the state to the plaintiff, “were not made to discharge any liability or obligation of respondent, but to carry out a policy of social betterment for the benefit of the entire state,” which “plainly show[s] the benefits to be collateral.”
Inasmuch as Medieare/Meclicaid are social legislation programs, we conclude that the collateral source rule applies to prevent the reduction of a plaintiffs award of damages to the discounted amount paid by Medi-eare/Medieaid.
VIII.
Other jurisdictions have applied similar rationale in deciding that the reasonable value of medical services should be determined in light of the standard rates, rather than the amount paid to Medicare/Medieaid. See Ellsworth,
It explained that “[t]he general rule is that a plaintiff who has been injured by the tor-tious conduct of the defendant is entitled to recover the reasonable value of medical and nursing services reasonably required by the injury. This is a recovery for their value and not the expenditures actually made or obligations incurred.” Id. at 769 (quoting 22 Am.Jur.2d Damages § 207 (1965) (emphases added)). According to the Wisconsin court, under this general rule, “medical and nursing services rendered gratuitously ... [would] not preclude the injured party from recovering the value of those services as part of his compensatory damages. Id. (quoting 22 Am. Jur.2d Damages § 207). Hence, it held that “the injured plaintiff may recover the reasonable value of gratuitous medical services as part of his compensatory damages.” Id.
As to defendant’s argument “that recovery for past medical expenses should be limited to the amount paid by Medical Assistance because this amount is the reasonable value of services provided,” id, the Wisconsin court declared that “in most cases” the reasonable value of medical costs “is the actual expense, but in some eases it is not. But the test is the reasonable value, not the actual charge.” Id. (emphasis in original).
It explained that “[t]he collateral source rule seeks to place upon the tortfeasor full responsibility for the loss he has caused,” such that the tortfeasor “is not entitled to reap the benefit of [plaintiffs] eligibility for public assistance or from the government’s economic clout in the health care market place.” Id. Hence, the Ellsworth court rejected the defendant’s arguments that the “reasonable value” of medical services should be limited to the “amount paid” by Medicaid. Id.
Similarly, the Supreme Court of South Carolina, in Haselden, held that “the collateral source rule applies to Medicaid payments,”
IX.
While other jurisdictions have limited medical special damages to medical expenses paid, these decisions appear to have rested upon the courts’ interpretation of specific language in a state statute,
Two such jurisdictions, as relied on by Magno, have held that the “reasonable value” of medical services, in the context of awarding damages, is limited to the amount paid by Medicare/Medicaid. See Hanif
But as employed in § 911,
the exchange value of property or services is the amount of money for which the subject matter coidd be exchanged or procured if there is a market continually resorted by traders, or if no market exists, the amount that could be obtained in the usual course of finding a purchaser or hirer of similar property or services.
(Emphases added.) Comment h only pertains to the “value of services rendered” in the context of ascertaining the “measure of recovery of a person who sues for the value of his services tortiously obtained ” or when a plaintiff “seeks to recover for expenditures made or liability incurred to third persons for services rendered.” (Emphases added.) This definition of “value of services rendered” is inapplicable, for the present ease does not involve a provider who is suing for the value of the medical services provided or who seeks to recover expenditures incurred to third persons.
On the other hand, Restatement § 924, entitled “Harm to the Person,” is directly applicable to determining the reasonable value of medical services for an injured person. That section is part of the Restatement’s topic of “Compensatory Damages for Specific Types of Harm.” Restatement § 924 provides that “[o]ne whose interests of personality have been tortiously invaded[
X.
We concur, then, with those jurisdictions that have held that a plaintiff, injured by the tortious conduct of a defendant, is entitled to recover the reasonable value of medical services and is not limited to the expenditures actually paid by Medieaid/Medicare. See Ellsworth,
XI.
Such a conclusion is consistent with the established practice in Hawai'i courts for determining special damages for medical services, as embodied in Hawai'i Civil Jury Instruction No. 8.9.
XII.
Moreover, allowing a particular plaintiff to recover the reasonable value of medical services leads to a more just result. The consequences of a contrary approach may penalize the recipient of Medieare/Medicaid payments. AARP reports in its amicus curiae brief, that “[Medieare/Medicaid], parts of the Social Security Act, together compromise the nation’s largest source of public health insurance ... and long term care services for the poorest and most vulnerable in society.” AARP maintains that “[a]pplying the collateral source rule helps to ensure that low-income elderly and disabled individuals are treated equitably vis a vis privately insured individuals by compensating for aspects of the [Medieare/Medicaid] programs that would substantially limit, if not completely eliminate, the beneficiary’s recovery of special damages.” Cf. Masaki v. Columbia Cas. Co.,
AARP observes that “federal and state law[s] require, as a condition of Medicaid eligibility, that beneficiaries assign rights to third party payment for medical expenses, including tort recovery. 42 U.S.C. § 1396k(a) (2003); [HRS] § 346-37 (2003).[
XIII.
The dissent contends that the majority’s holding “allows the recovery of an amount which does not fall within one of the permissible categories of damages,” thereby “creating a new category of damages without justification.” Dissenting opinion at 98,
Moreover, limiting medical expenses to the pecuniary loss suffered by a plaintiff would mean, for example, that injured plaintiffs who received gratuitous medical services, were treated at a veteran’s hospital, or were covered by medical insurance plans such as offered to Kaiser Hospital patients would not be entitled to recover any monetary amount from the tortfeasor (except perhaps nominal out-of-pocket fees), see Masaki,
Finally, adoption of the dissent’s position would create various new categories of plaintiffs, similarly injured whose recovery would depend upon the type of their insurance coverage, and not upon the nature of their injuries. The incongruity of the dissent’s position is further evident for its effect on future medical expenses. Patients such as those receiving treatment at military hospitals and Kaiser would not be entitled to future medical expenses. This would inevitably invite trial disputes regarding the plaintiffs continuing indigency or the likelihood of a plaintiffs change in insurance coverage in the future and its consequential effect on the amount of recovery. See infra Part XIV.
XIV.
Therefore, in answer to the district court’s first question, the amount of medical special damages awardable to a plaintiff in a negligence action is not limited to the discounted amount paid to a healthcare provider by Medicare/Medicaid. Inasmuch as we hold that the collateral source rule prohibits reducing a plaintiffs award of medical special damages to reflect the discounted amount paid by Medicare/Medicaid, we consider the district court’s second question.
Because the “reasonable value” in awarding damages to a plaintiff for medical services is not limited to the amount billed to healthcare providers by Medieare/Medicaid, the answer to the district court’s second question is, “No.” As indicated previously, the standard rates are relevant and should be admissible for establishing the reasonable value of medical costs constituting such special damages. See Haselden,
Moreover, we agree with the statement of the Supreme Court of Ohio that receipt of such payments should not be admitted in evidence to reduce damages “[s]inee, by the collateral source rule, the receipt of collateral source benefits is deemed irrelevant and immaterial on the issue of damages[J” Pryor,
Further, in regard to future public benefits, the Supreme Court of North Carolina opined persuasively that the collateral source rule should also preclude “defendants from offering evidence demonstrating that plaintiffs
Forced dependence on public charity because of injuries tortiously inflicted puts the injured party in a position more disadvantageous than if he were freed from his dependence. Full compensaticm that frees the injured party from dependence on charity is more in keeping with the compensatory goal of tort recovery .... The Plaintiff should be able to recover the cost of future medical services, since he is likely to prefer private care, and it is his “right” to have it. It may be that he will employ the free care for which he is eligible and thereby receive a “windfall,” but ... at the time of suit there is no way of knowing what he will choose to do.
Id. (emphases added) (citations omitted). Additionally, the court noted that “the collateral source rule should apply to possible future public benefits” because (1) “the lack of certainty characterizing the availability of public resources renders it unwise to allow mitigation of damages premised on their continued existence,” and (2) the “utilization of many of these benefits hinges on a plaintiffs continued indigency.” Id. at 738-39. Hence, on the grounds set forth herein, “the amounts billed in excess of the” Medicare/Medicaid “amount paid” are not irrelevant or inadmissible on the issue of medical special damages.
XV.
Accordingly, for the reasons discussed herein, the answer to each of the district court’s certified questions is, “No.”
Notes
.HRAP Rule 13(a) provides in relevant part as follows:
(a) When certified. When a federal district or appellate court certifies to the Hawai'i Supreme Court that títere is involved in any proceeding before it a question concerning the law of Hawai'i that is determinative of the cause and that there is no clear controlling precedent in the Hawai'i judicial decisions, the Hawai'i Supreme Court may answer the certified question by written opinion.
. With, the consent of both parties, this case was reassigned to Magistrate Judge Kevin S.C. Chang, pursuant to 28 U.S.C. § 636(c)(1).
. Although the district court question actually used the term "Medicaid," it appears the district court meant to use the term "Medicare” as previously stated. Inasmuch as Medi-Cal is a "Medicaid” program, as explained infra, the use of "Medicaid” appears redundant. See infi-a Part III.
. The Bynums maintain that although they were forced to "legally divorce,” they did not divorce “in reality,” and Lila continued to support Joseph throughout the remainder of his life.
. Joseph died during the litigation of this dispute, and thus, the "Special Administrator” was substituted as a party to the action while it was pending before the Ninth Circuit Court of Appeals.
.The "Stipulation and Order Re: Statements Reflecting Medical Expenses” was filed on January 18, 2001.
. The Ninth Circuit issued its decision on March 13, 2003, in an unpublished memorandum opinion.
. It is presumed the Ninth Circuit meant "Medicare." See supra note 3.
. Medicare is the federally funded medical insurance program for the elderly and disabled established as part of the Social Security Act, and is funded and administered solely by the federal government. 42 U.S.C. §§ 1395 et seq (hereinafter, the Medicare Act); Fischer v. United States,
. Medcaid is a medical insurance program jointly funded by the federal and state governments, but administered by the individual states. 42 U.S.C. §§ 1396 et seq (1973) (hereinafter the Medicaid Act); 42 C.F.R § 430.0 (2004); Children's Hosp. & Health Ctr. v. Belshe,
. The Restatement comment d explains that "[t]he collateral[ Isource rule is of common law origin.” Restatement (Second) of Torts § 920A cmt. d (1979).
. This court has many times relied on the Restatement (Second) of Torts as persuasive authority. See, e.g., Hac v. Univ. of Hawaii,
. The term "reasonable value,” in the context of awarding damages for medical expenses, has not expressly been defined in this jurisdiction. Black’s Law Dictionary 1265 (6th ed.1990) defines "reasonable” as "[flair, proper, just, moderate, suitable under the circumstances. Fit and appropriate to the end in view. Having the faculty of reason; rational; governed by reason; ... Not immoderate or excessive, being synonymous with rational, honest, equitable, fair, suitable, moderate, tolerable.” (Citation omitted.) Black’s Law Dictionary describes “value” in part as, "[t)o estimate the worth of; to rate at a certain price; to appraise; or to place a certain estimate of worth on in a scale of values.” Id. at 1551 (citation omitted).
. This is essentially the dissent’s position. See dissenting opinion at 96-97, 98-99,
. Of course, no “new category of damages” is created as the dissent would contend. Dissenting opinion at 97,
. The dissent is incorrect in asserting that allowing Joseph to "recover more than ... he is legally obligated to pay contravenes Hawaii's compensatory special damages law by restoring him to a position better than he would have been had the wrong not been committed-;, e., Joseph will be over compensated." Dissenting opinion at 97,
.From the references in the case, such benefits would include Medicare, Ellsworth,
. See Horton v. Channing,
. See Hanif,
.See McAmis v. Wallace,
See also Bates v. Hogg, [
. Restatement § 911, entitled "Value,” falls within Chapter 47 on "Damages.”
. Restatement § 924, comment a, refers to the definition of "invasions of interests in personality, as defined in the Introductory Note to Chapter 2.” The Introductory Note lists examples of "interests of personality” including, among others, "freedom from harmful bodily contact,” and explains that "the freedom from bodily harm is given the greatest protection. It is protected not only against intentional invasion but against invasions caused by negligence, and also against invasions caused unintentionally and without negligence by activities so dangerous that the law requires them to be carried on at the risk of those whose activities they are.” Restatement, Chapter 2, Introductory Note.
. However, a statute may provide a third party with the right to apparently sue directly for recovery of expenses paid. Hence, comment f also provides that "there can be no recovery for services for which a third person may recover, as when a worker’s compensation act gives an employer or insurance carrier a claim against the tortfeasor for medical expenses incurred on account of a worker.’’ Restatement § 924 cmt. f.
. Contrary to the dissent's contention, dissenting opinion at 6-9, no precedent is overturned inasmuch as the issue at hand has not been decided in this jurisdiction. Indeed, none of the parties argue that a decision such as this one, consistent with other decisions reaching the same or similar results, would result in overturning Hawai'i law. Both Bynum and Magno, in fact, agree that the reasonable value of medical services is a measure of medical special damages. Magno recognizes that "[t]he reasonable value of the services is an upper limit on the amount recoverable,” although relying on Restatement § 911 cmt. h (1979).
Moreover, the compelling justification standard as to overturning precedent is inapplicable. That standard has been applied where specific precedent is overturned. See, e.g., State v. Garcia,
.Hawai'i Civil Jury Instruction No. 8.9 states, in relevant part that:
If you find for plaintiff(s) on the issue of liability, plainliff(s) is/are entitled to damages in such amount as in your judgment will fairly and adequately compensate him/her/them for the injuries which he/she/they suffered. In deciding the amount of such damages, you should consider;
(3) The reasonable value of the medical services provided by physicians, hospitals and other health care providers, including examinations, attention and care, drugs, supplies, and ambulance services, reasonably required and actually given in the treatment of plaintiff(s) and the reasonable value of all such medical sendees reasonably probable to be required in the treatment of plaintiff(s) in the future.
(Emphases added.) The "reasonable value” formulation has been used in this jurisdiction for at least thirty-five years. See Kometani,
. There is no “sidestepping our long standing damages law and instead reifying] on the Restatement (Second) of Torts/' as the dissent claims. Dissenting opinion at 98,
. HRS § 346-37(d), entitled "Recovery of Payments and Costs of Medical Assistance/' provides in pertinent part:
(d) The department [of Human Services], as to this right of reimbursement, shall also be subrogated to all rights or claims that a claimant has against the third person for all damages not to exceed the full extent of the costs of medical assistance ... furnished or to be furnished by the department. The department's right to full reimbursement of the costs of medical assistance ... as a subrogee of a claimant shall not be diminished by the recovery of any judgment, settlement, or award of an amount less than the value of the original or settled claim as perceived or calculated by the claimant or any other person.
Dissenting Opinion
Dissenting Opinion by
I disagree with the majority’s conclusion that a Medicare and/or Medicaid beneficiary may recover medical expenses that he or she, pursuant to federal law, was not legally obligated to pay. The majority’s conclusion improperly, unnecessarily, and lightly disregards this jurisdiction’s long standing formulation and treatment of special damages. I, therefore, respectfully dissent.
In its first certified question, the district court essentially asks whether the amount paid by Medicare and/or Medicaid — as opposed to the amount charged by a health care provider — should be awarded as medical expenses to a plaintiff in a negligence action. Because the amount paid is subsumed within the amount charged and none of the parties disagree that a plaintiff is entitled to recover the amount paid as medical expenses, the question becomes whether the amount written-off (ie., the amount charged less the amount paid) can be awarded as medical expenses to a plaintiff in a negligence action.
In actions arising in tort, three categories of damages are recoverable: (1) compensatory damages (including special and general damages); (2) punitive damages; and (3) nominal damages. See Zanakis-Pico v. Cutter Dodge, Inc.,
Medical expenses, which are at the center of the instant dispute, are recoverable as compensatory special damages — not general damages. Dunbar v. Thompson,
In the instant case, plaintiff-appellee Joseph Bynum (Joseph) was a beneficiary of Medicare and Medicaid. Pursuant to federal law, Joseph’s health care providers were required to accept the amount paid by Medicare and Medicaid as payment in full. Thus, Joseph’s providers wrote-off the remaining portion of his medical expenses. Because it is undisputed that no one paid this amount, the dispositive question is whether Joseph is legally obligated to pay that amount.
Medicare and Medicaid law prohibits participating health care providers from seeking reimbursement of the amount written-off from anyone, including the beneficiary, Medicare and/or Medicaid, or any other source. In other words, a beneficiary, whose medical expenses are paid by Medicare and/or Medicaid, does not incur the amount written-off by the health care provider. Accord Temll,
The majority’s conclusion that Joseph may recover more than the amount he is legally obligated to pay contravenes Hawaii’s compensatory special damages law by restoring him to a position better than he would have been had the wrong not been committed— ie., Joseph will be over compensated. See Gump,
“As a general rule, we do not lightly disregard precedent; we subscribe to the view that great consideration should always be accorded precedent, especially one of long standing and general acceptance.” State v. Jenkins,
Although the certified question is one of first impression as noted by the majority, we arrive at an answer to that question by examining our ease law. Thus, great consideration must be accorded to this jurisdiction’s long standing damages law. See Jenkins,
Not only does the majority turn a blind eye to Hawaii’s damages law, but it also fails to address the policy considerations justifying its departure therefrom. Although the majority asserts that such considerations are inherent in authorities to which it cites and its discussion, the majority points only to policies relating to its application of the collateral source rule; it does not discuss policies justifying its deviation from this jurisdiction’s precedent. Accordingly, inasmuch as thé majority fails to address these policy concerns, provides no “compelling justification” or “cogent reason” for sidestepping our long standing damages law, and, instead, relies on the Restatement (Second) of Torts to reach the desired result, I believe that the majority improperly, unnecessarily, and “lightly disregard[s our] precedent.”
The majority also erroneously relies on arguments advanced in the American Association of Retired Person’s (AARP) amicus curiae brief for its proposition that allowing Medicare and/or Medicaid beneficiaries to recover the amount written-off “leads to a more just result.” For example, the majority states that, according to the AARP, permitting recovery of the amount written-off “ ‘ensure[s] that low-income elderly and disabled individuals are treated equitably vis a vis ‘privately insured individuals by compensating for aspects of the [Medicare/Medieaid] programs that would substantially limit, if not completely eliminate, the beneficiary’s recovery of special damages' ” (Emphases added). Put differently, the AARP and the majority essentially reason that a Medicare and/or Medicaid beneficiary should recover the same amount of medical expenses as any other individual, irrespective of whether the other individual receives public medical insurance, pays for private medical insurance, or is uninsured. This assertion is plainly wrong. We have stated that “special damages do not arise solely from the wrongful act itself, but rather depend on the circumstances peculiar to the infliction of each paHicular injury.” Ellis v. Crockett,
Moreover, the AARP’s position that, if a beneficiary is not allowed to recover the amount written-off, his or her recovery of medical expenses will be “substantially limit[ed], if not completely eliminate[d],” is also incorrect. Based on this jurisdiction’s formulation and treatment of special damages as discussed above, a beneficiary will receive thejfull award of special damages to which he
Additionally, awarding a Medicare and/or Medicaid beneficiary only medical expenses that were incurred will not result in a windfall to the tortfeasor. In fact, limiting the award to the amount incurred ensures that neither party will receive a windfall. Tort-feasors would be held fully liable for their actions, and the beneficiary would be made whole. However, if, as the majority holds, a beneficiary is allowed to recover medical expenses that noi one incurred, the beneficiary would recover a windfall at the expense of taxpayers. See Bozeman v. State,
The majority cites to Sam Teague, Ltd. v. Hawai'i Civil Rights Comm’n,
In contrast to Sam Teague, Ltd., the alleged benefit received by Joseph — i.e., the amount written off by his health care providers — does not serve to deter future conduct. Thus, recovery of only the amount paid cannot be said to “dilute! ] the prophylactic purposes of’ an award for medical expenses. See id. (citation omitted). Moreover, inasmuch as the instant case concerns the recovery of medical expenses, which are awarded for compensable losses, it is irrelevant whether Joseph “may have experienced other noneompensable losses!.]” Additionally, the court in Sam Teague, Ltd. applied the collateral source rule to payments — not write offs — made by a collateral source. Id. at 281-83,
In conclusion, I believe that the questions presented to this court can be answered by applying the existing precedent in this jurisdiction regarding Hawaii’s special damages law. The majority offers no compelling justification or cogent reason to disregard our precedent and resort to the Restatement’s discussion of the collateral source rule to overeompensate Medicare and/or Medicaid
. Of course, a beneficiary’s recovery is not limited to his or her award of medical expenses. He or she may also recover (1) other special damages, such as "loss of earnings[ ] and diminished capacity to work[,]” Dunbar,