Nаomi Pressey, by and through her conservator, Jennifer Pressey, Plaintiff-Appellee, v. Children‘s Hospital Colorado, Defendant-Appellant.
Court of Appeals No. 15CA1372
COLORADO COURT OF APPEALS
March 9, 2017
2017COA28
Honorable Kurt A. Horton, Judge
Arapahoe County District Court No. 13CV72
Division I
Opinion by JUDGE GRAHAM
Taubman and Navarro, JJ., concur
Announced March 9, 2017
Leventhal Puga P.C., James E. Puga, Benjamin I. Sachs, David P. Mason, Denver, Colorado, for Plaintiff-Appellee
Hall & Evans LLC, Alan Epstein, Denver, Colorado; Martin Conklin P.C., John Martin, Carolyn Sprinthall Knaut, Denver, Colorado, for Defendant-Appellant
I. Background
¶ 2 Four days after birth, plaintiff, Naomi Pressey (Naomi), suffered irreversible brain damage caused by a lack of blood and
¶ 3 The case was tried to a jury, which found the Hospital negligent and awarded Naomi $17,839,784.60. The damages award included past medical expenses, past noneconomic losses, future medical expenses, future lost earnings, and future noneconomic losses.
¶ 4 After trial, the court reduced Naomi‘s damages to $1,000,000 based on the legislative directive in
The total amount recoverable for all damages for a course of care for all defendants in any civil action for damages in tort brought against a health care professional . . . whether past damages, future damages, or a combination of both, shall not exceed one million dollars, present value per patient, including any claim for derivative noneconomic loss or injury, of which no more than two hundred fifty thousand dollars, present value per patient . . . shall be attributable to direct or derivative noneconomic loss or injury; except that, if, upon good cause shown, the court determines
that the present value of past and future economic damages would exceed such limitation and that the application of such limitation would be unfair, the court may award in excess of the limitatiоn the present value of additional past and future economic damages only.
¶ 5 Naomi filed a motion to exceed the cap for good cause. In a lengthy written opinion, the court determined that good cause had been shown and, after reducing the amount of noneconomic losses and future medical expenses awarded to Naomi, entered judgment in her favor for $14,341,538.60.
II. Discussion
¶ 6 The Hospital claims several post-verdict errors by the trial court. First, the Hospital argues that the court erred in excluding evidence of Medicaid benefits and private insurance available to Naomi in the рost-verdict proceeding to exceed the damages cap. The Hospital contends that if the court had considered that evidence, Naomi would not have established good cause to exceed the cap. Second, the Hospital asserts the court erred in denying its motion for judgment notwithstanding the verdict on Naomi‘s pre-majority medical expenses because her parents incurred the
A. The HCAA Damages Cap and the Collateral Source Statute
¶ 7 The Hospital argues that the legislative purpose of the HCAA damages cap cannot be fulfilled if a trial court is precluded from considering the actual losses of a plaintiff based on the contract exception to the collateral source statute. Because the cap imposed by
1. Standard of Review
¶ 8 We review questions of statutory interpretation de novo. Pulte Home Corp. v. Countryside Cmty. Ass‘n, 2016 CO 64, ¶ 24. “In interpreting a statute, we look to ‘the entire statutory scheme to give consistent, harmonious, and sensible effect to all parts’ and apply ‘words and phrases according to their plain and ordinary meaning.‘” Id. (quoting Denver Post Corp. v. Ritter, 255 P.3d 1083, 1089 (Colo. 2011)).
¶ 9 The General Assembly enacted the HCAA “to assure the continued availability of adequate health care services to the people of this state.”
¶ 10 The damages cap contained in the HCAA is constitutional and does not usurp a trial court‘s right to review a jury award. Garhart v. Columbia/HealthOne, L.L.C., 95 P.3d 571, 581-83 (Colo. 2004). This is because a trial court may uncap damages if it finds “good cause” and determines that application of the cap would be “unfair.”
[T]he statute does not specify factors that a trial court must consider when determining whether a movant has shown good cause or unfairness. Therefore, a court may exercise its discretion to consider factors it deems relevant when determining whether a movant qualifies for the . . . exception to the cap. The trial court may not make that determination in a vacuum, but must necessarily consider the circumstances in each case.
3. Common Law and Post-Verdict Statutory Collateral Source Rule; Medicaid Is a Collateral Source
¶ 11 “At common law, the collateral source rule provided that ‘compensation or indemnity received by an injured party from a collateral source, wholly independent of the wrongdoer and to which he has not contributed, will not diminish the damages otherwise recoverable from the wrongdoer.‘” Colo. Permanente Med. Grp., P.C. v. Evans, 926 P.2d 1218, 1230 (Colo. 1996) (quoting Kistler v. Halsey, 173 Colo. 540, 545, 481 P.2d 722, 724 (1971)). “The purpose of the collateral source rule was to рrevent the defendant from receiving credit for such compensation and thereby reduce the amount payable as damages to the injured party.” Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070, 1074 (Colo. 1992).
In any action by any person or his legal representative to recover damages for a tort resulting in death or injury to person or property, the court, after the finder of fact has returned its verdict stating the amount of damages to be awarded, shall reduce the amount of the verdict by the amount by whiсh such person . . . has been or will be wholly or partially indemnified or compensated for his loss by any other person, corporation, insurance company, or fund in relation to the injury, damage, or death sustained; except that the verdict shall not be reduced by the amount by which such person . . . has been or will be wholly or partially indemnified or compensated by a benefit paid as a result of a contract entered into and paid for by or on behalf of such person.
(Emphasis added.) The italicized portion of the statute is commonly referred to as the contract exception to the collateral source statute. Evans, 926 P.2d at 1230. By including the contract exception, the General Assembly “chose to allow a plaintiff to obtain the benefit of his contract, even if the award resulted in a double recovery.” Volunteers of Am. Colo. Branch v. Gardenswartz, 242 P.3d 1080, 1088 (Colo. 2010). “This is consistent with the common law
¶ 13 Private insurance, private disability benefits, Social Security disability benefits, and retirement benefits all fall within the contract exception to the collateral source statute. Id. (holding write-offs to his medical bills by plaintiff‘s health care provider “were a direct result of the benefits negotiated by his health insurance company, which is a source independent of the tortfeasor“); Barnett v. Am. Family Mut. Ins. Co., 843 P.2d 1302, 1309 (Colo. 1993) (concluding Social Security disability benefits should not be set off from an award under
¶ 14 We now conclude that Medicaid benefits are also subject to the contract exception to the collateral source statute in post-verdict proceedings. See id. at ¶ 12 (leaving open whether Medicaid benefits are collateral sources undеr
¶ 15 The Hospital relies upon City of Englewood v. Bryant, 100 Colo. 552, 68 P.2d 913 (1937), and Gomez v. Black, 32 Colo. App. 332, 511 P.2d 531 (1973),1 for the proposition that Medicaid is a gratuitous government benefit, not a collateral source. We note that Bryant predates the adoption of Medicaid. Further, the case summarily states that the plaintiff was “on relief” and so her liability was “so remote as to be purely speculative,” Bryant, 100 Colo. at 554, 68 P.2d at 915. And we decline to follow the division in Gomez, which relied on Bryant. See Harper Hofer & Assocs., LLC v. Nw. Direct Mktg., Inc., 2014 COA 153, ¶ 25 (one division of the court of appeals is not bound by the decision of another division).
¶ 16 The clear trend in the law is to apply the common law collateral source rule (or, in our case, the contract exception to the
4. The Contract Exception to the Collateral Source Statute Applies to Post-Verdict Proceedings Under the HCAA
¶ 17 Having determined that Medicaid benefits fall under the contract exception under the collateral source statute, we are next asked to determine whether the HCAA damages cap and the collateral source statute are in conflict. The Hospital contends that the contract exception prevents the HCAA from accomplishing its purpose of limiting damages in medical malpractice actions. Therefore, the Hospital argues that the court should have ignored the contract exception and instead considered the availability of Medicaid and private insurance, which will be ongoing, in
¶ 18 We perceive no conflict between the HCAA provision that caps damages and the contract exception to the collateral source statute.2 First, the contract exception applies to “any action . . . to recover damages for a tort . . . to [a] person,”
¶ 19 We reject the Hospital‘s argument that if the contract exception allows awards to exceed the cap, the HCAA would be rendered meaningless in cases with significant verdicts. The purpose of the contract exception is to prevent a tortfeasor from enjoying a benefit based on the plaintiff‘s foresight to purchase
¶ 20 The Hospital‘s position is also untenable because it seeks to shift the cost of its negligence onto the taxpayer. The common law collateral source rule sought to prevent a tortfeasor from shifting costs to third-party payers. The Hospital now argues that private insurance and Medicaid should pay for the injuries Naomi sustained because of its negligence. Even under the HCAA‘s purpose to cap damages to reduce liability, it is not the clear intent of the General Assembly to lay that liability at the feet of the citizens of Colorado.
¶ 22 In sum, we conclude that the contract exception to the collateral source statute,
B. Pre-Majority Economic Damages
¶ 23 The Hospital further argues that the trial court erred in denying its motion for judgment notwithstanding the verdict because Naomi failed to establish that she, rather than her parents, was entitled to her pre-majority economic damages. The Hospital contends that Colorado follows the common law in holding that parents own the legal right to seek reimbursement for a minor‘s pre-majority economic damages, and that Naomi‘s parents failed to institute such a claim within the applicable statute of limitations.
¶ 24 The Hospital also asserts that Naomi failed to present any evidence that she will be personally responsible for those expenses or that she was the real party in interest to those claims. Because we conclude that (1) Colorado continues to follow the common law rule that parents own the right to pre-majority damages to a minor;
1. Standard of Review
¶ 25 We review de novo the denial of a motion for judgment notwithstanding the verdict. Vaccaro v. Am. Family Ins. Grp., 2012 COA 9M, ¶ 40. We also review de novo questions of law. In re Marriage of Johnson, 2016 CO 67, ¶ 9.
2. Colorado and the Common Law Rule
¶ 26 Under the general common law rule, only a parent may recover for a minor child‘s pre-majority medical expenses. Wilson v. Knight, 982 P.2d 400, 405 (Kan. Ct. App. 1999). Colorado appears to follow the common law rule that the parents have the right to seek pre-majority damages and expenses of a minor, subject to certain exceptions. Pawnee Farmers’ Elevator Co. v. Powell, 76 Colo. 1, 7, 227 P. 836, 839 (1924); see CJI-Civ. 4th 6:3 (2014).3
¶ 27 A parent may relinquish his or her right to pre-majority expenses, Powell, 76 Colo. at 7-8, 227 P. at 839, “but . . . the merе fact that the [parent], as the next friend of the minor, brought the
¶ 28 Those states that follow the common law rule typically allow four exceptions:
The parents’ cause of action for medical expenses can be shifted to the minor if: (1) the minor child has paid or agreed to pay the expenses; (2) the minor child is legally responsible for payment (emancipation, death or incompetency of the parents); (3) if the parents waive or assign their right to recovery in favor of the minor; or (4) when recovery of expenses is permitted by statute.
Betz v. Farm Bureau Mut. Ins. Agency of Kan., Inc., 8 P.3d 756, 760 (Kan. 2000); see, e.g., Boley v. Knowles, 905 S.W.2d 86, 89-90 (Mo. 1995) (discussing common law rule and its exceptions and collecting cases).
¶ 29 There is a trend to abandon the common law rule and hold that the right to recover pre-majority expenses belongs both to the injured minor and the parents. See Estate of DeSela v. Prescott Unified Sch. Dist. No. 1, 249 P.3d 767, 770 (Ariz. 2011) (“Because the common law should adapt when circumstances make it no longer just or consistent with sound policy, we hold that the right to recover pre-majority medical expenses belongs to both the injured
¶ 30 However, the supreme court appears to have reaffirmed the common law rule in Elgin v. Bartlett, 994 P.2d at 416, stating that “[u]nder Colorado law, parents can maintain a derivative action for certain types of damages they incur as a result of their child‘s injury.” Those damages include economic damages “such as reimbursement for medical and other expenses incurred because of the child‘s injuries, loss of household and similar services that the injured child would have rendered during his or her minority, and loss of the child‘s earning capacity during minority.” Id. at 416 n.3. According to the court, “[c]laims for derivative damages turn upon the right of the injured person to recover and are subject to the same defenses available to the underlying claims; nonetheless, they are separate from the claims of the injured person.” Id. at 416.
3. The Statute of Limitations and Relinquishment of a Parent‘s Claim for Pre-Majority Expenses
¶ 32 Although the common law rule still applies in Colorado, the supreme court has recognized that a parent may relinquish his or her right to a minor‘s pre-majority damages, Powell, 76 Colo. at 7-8, 227 P. at 839, and so we must determine if Naomi‘s parents did, or could, relinquish that right in this case.
¶ 33 First, we note that the act of filing this suit as next friend does not establish relinquishment by Naomi‘s parents. Wales, 164 Colo. at 172, 433 P.2d at 496. Other jurisdictions have concluded that when a parent files suit as next friend, or testifies on behalf of the minor, the parent has relinquished the right to seek recovery on
¶ 34 However, those cases do not address whether relinquishment is appropriate when the statute of limitations has expired on a parent‘s claim. In Elgin, our supreme court held that a minor‘s disability does not toll a parent‘s derivative claims based on injury to that minor. Id. at 416-17. The court concluded that “[a] vast majority of federal and state courts agree that the minor‘s disability does not toll the statute of limitations applicable to the parents’ separate claims, although such claims are derivative in nature.” Id. at 417; see, e.g., Garay v. Overholtzer, 631 A.2d 429, 438 (Md. 1993) (collecting cases).
¶ 37 Here, it is undisputed that Naomi filed her suit long after her parents’ claim for pre-majority damages was extinguished by operation of the statute of limitations. Therefore, we conclude that it was not possible for her parents to relinquish that claim to Naomi, and the trial court erred in holding to the contrary. Accordingly, the portion of the judgment awarding Naomi pre-majority damages comprising past medical expenses and future medical еxpenses to her age of majority must be reversed.
4. No Other Reasons Support Affirming the Trial Court‘s Ruling
¶ 38 The trial court provided two additional reasons for Naomi to collect pre-majority economic expenses: (1) that she had incurred or would be responsible for those expenses and (2) that she was the
¶ 39 First, Naomi presented no proof that she was the guarantor on any medical bills or that she had actually incurred or paid bills on her own behalf. “Whether a party has assumed a duty is a mixed question of law and fact.” E. Meadows Co. v. Greeley Irrigation Co., 66 P.3d 214, 218 (Colo. App. 2003). Here, thе facts relied on by the trial court are undisputed. But those facts do not support a finding that Naomi incurred medical expenses. Indeed, we perceive no relation between the court‘s findings — which included facts such as “Naomi‘s parents and [her] expert witnesses testified Naomi received past medical care and other health care services,” “[t]he parties stipulated that the reasonable past medical and other healthcare expenses . . . were $557, 823.60,” and “Naomi‘s parents and [her] expert witnesses testified Naomi will need future ongoing medical care and healthcаre services prior to the age of majority” — and its ultimate conclusion that Naomi incurred pre-majority medical expense.
¶ 40 And while Naomi argues that the damages instruction provided to the jury states damages are “expenses the plaintiff, as a
¶ 41 Second, the common law (and thus Colorado) rejects the idea that a minor is the real party in interest to recover his or her pre-majority economic damages by creating a separate right to sue for those damages in the minor‘s parents. See Kinsella, 826 P.2d at 435. Consequently, we conclude that the court‘s ruling cannot be affirmed on either of these bases.
III. Remaining Contentions
¶ 42 The Hospital presents two remaining contentions: (1) that irrespective of the evidence of Medicaid and private insurance benefits, Naomi did not establish good cause to exceed the cap; and (2) she received a duplicаte award for future medical care and lost future earnings. We disagree.
¶ 43 We review a trial court‘s determination of good cause for an abuse of discretion. Wallbank, 140 P.3d at 179. A trial court abuses its discretion when its decision is manifestly arbitrary, unreasonable, or unfair, or when it misapplies the law. In re Estate of Fritzler, 2017 COA 4, ¶ 6.
¶ 44
¶ 45 “[A] court may exercise its discretion to consider factors it deems relevant when determining whether a movant qualifies for the . . . exception tо the cap.” Id. at 180-81. “The trial court may not make that determination in a vacuum, but must necessarily consider the circumstances in each case.” Id. at 181.
¶ 46 Here, we perceive no abuse of discretion by the trial court in concluding that Naomi established good cause to exceed the damages cap in
B. Naomi Did Not Receive a Duplicate Award for Future Medical Care and Future Lost Earnings
¶ 47 We review a court‘s determination that a plaintiff has not received a duplicate award for an abuse of discretion. Vitetta, 240 P.3d at 329. In Vitetta, a division of this court affirmed a trial court‘s determination that an award for future life care included amounts for loss of future income. Id. We likewise conclude there is record support for the trial court‘s findings that Naomi‘s damage award for future medical care does not overlap with her future lost earnings award. Because the Hospital has not shown any abuse of
IV. Conclusion
¶ 48 The judgment is reversed as to the $2,461,735.60 аwarded to Naomi for her pre-majority economic damages. The judgment is affirmed in all other respects. The case is remanded to the trial court for recalculation of the total amounts owed by the Hospital to Naomi.
JUDGE TAUBMAN and JUDGE NAVARRO concur.