Lead Opinion
delivered the Opinion of the Court.
¶1 In this original proceeding under C.A.R. 21, we determine whether section 10-1-185, C.R.S. (2011), applies prospectively to this action and precludes admission of evidence of the amounts paid by the plaintiffs insurance company pursuant to the plaintiff's medical expense coverage. We hold that the trial court was correct in applying section 10-1-185 here because the statute pertains to cases pending recovery as of August 11, 2010. Further, we hold that the trial court correctly excluded from evidence the amount of the insurance company's payments because section 10-1-135(10)(a) codifies the common law pre-verdiet evidentiary component of the collateral source rule and unambiguously requires the exelusion. Therefore, we discharge the rule to show cause.
¶2 This original proceeding regarding the admissibility of evidence of the amounts paid by a collateral source arises out of the negligence action plaintiff Donald Francis Smith filed against defendant Michael D. Jeppsen after Smith and Jeppsen were involved in an automobile accident. Smith sought to recover, among other damages, the cost of past and future medical expenses resulting from the crash. Jeppsen admitted liability, and the parties agreed that the proper measure of Smith's medical expense damages should be the necessary and reasonable value of the medical services rendered. The parties disagreed, however, as to whether the trial court, in determining reasonable value, could consider evidence of the amounts billed to and paid by a collateral source: Smith's insurance company.
¶3 Both parties filed motions with the trial court regarding the admissibility of evidence of the amounts paid by Smith's insurer. The trial court ruled on November 25, 2009, that the parties could submit relevant evidence of both the amount billed by the healthcare providers for the medical services, and the amount paid by Smith's insurer for those services.
¶4 On January 28, 2010, Smith petitioned this Court for a rule to show cause pursuant to C.A.R. 21 to preclude enforcement of the trial court's November 25, 2009 order. Specifically, Smith requested that this Court vacate the portion of the order ruling that the parties could present evidence of the amounts paid by his insurer. We first issued the rule, but later discharged it as improvidently granted and instructed the trial court to consider the effect, if any, of section 10-1-135, effective as of August 11, 2010, on the admissibility of the "amounts paid" evidence.
¶5 After additional briefing regarding the impact of section 10-1-185, the trial court ruled on January 18, 2011, that subsection 10-1-185(10)(a) bars the admission of any evidence of collateral source payments, discounts, and write-offs-including evidence of the amounts paid by Smith's insurance company. Jeppsen and his insurer, State Farm Mutual Automobile Insurance Company (collectively "Petitioners"), then filed the C.A.R. 21 petition underlying this opinion. Petitioners requested that this Court vacate the trial court's January 18, 2011 order holding that subsection 10-1-185(10)(a) applies prospectively and precludes admission of evidence regarding the actual amounts paid for Smith's medical treatments. We issued a rule to show cause and now discharge the rule.
II. Jurisdiction and Standard of Review
¶6 C.A.R. 21 authorizes this Court to exercise its original jurisdiction and review an interlocutory order of the trial court for an abuse of discretion when appellate review of the order would be inadequate. CAR. 2l1(a)(1); Hall v. Levine,
¶7 The trial court issued an interlocutory order applying section 10-1-185 and exelud-ing from evidence the amount paid by Smith's insurer pursuant to Smith's medical expense coverage. This case raises an issue of first impression and of public importance because this Court has yet to interpret seetion 10-1-185 with respect to the statute's bearing on the admissibility of collateral source evidence. Thus, review of the trial court's interlocutory order under C.A.R. 21 for an abuse of discretion is appropriate.
III. Applicability of Section 10-1-135
¶8 Section 10-1-185 applies prospectively here because recovery in the underlying case was pending as of the effective date of the statute. Additionally, although the bulk of section 10-1-185 addresses post-verdict subrogation, the plain language of subsection 10-1-135(10)(a) indicates that the subsection applies to pre-verdict evidence
A. Prospective Application of Section 10-1-135
¶9 Petitioners argue that the trial court improperly applied section 10-1-135 retroactively to this 2008 case because Smith's negligence claim accrued, and Smith's insurer paid the medical expenses resulting from the accident, prior to the statute's August 11, 2010 effective date. We disagree.
¶ 10 A statute is presumed to operate prospectively absent clear legislative intent that it apply retroactively. § 24-202, C.R.S. (2011); Ficarra v. Dep't of Regulatory Agencies,
¶ 11 The "transaction" to which section 10-1-185 pertains is a "recovery made on or after the applicable effective date" of the act. Ch. 164, see. 2 12, § 10-1-185, 2010 Colo. Sess. Laws 575, 580 (emphasis added); see also, I 1 (effective date of section 10-1-185 is August 11, 2010). Thus, section 10-1-135 will apply to this action if recovery was pending as of August 11, 2010. The legislature defines "recovery" for the purposes of section 10-1-185 as "a monetary award from a third party through either settlement or judgment to compensate an injured party for bodily injury sustained as a result of an act or omission of the third party." § 10-1-185(2)(d). Recovery hаs yet to occur in this case because the parties have not settled, nor has the trial court issued a final judgment. As such, section 10-1-185 applies to this action because recovery remains pending.
¶12 The trial court did not improperly apply section 10-1-185 retroactively because the statute's applicability does not hinge on the dates of transactions such as the accrual of claims or the payment of medical expenses. See ch. 164, see. 2, § 10-1-135, 2010 Colo. Sess. Laws 575, 580. Rather, the statute applies to cases resulting in recoveries occurring after August 11, 2010. Id. Because the relevant transaction-recovery-was pending as of the effective date of the statute, the trial court did not abuse its discretion by applying section 10-1-185.
B. Subsection 10-1-135(10)(a) Applies Pre-Verdict
¶13 Petitioners argue that section 10-1-1385 does not address the pre-verdict calculation of thе reasonable value of medical expenses, or the admissibility of evidence on that issue. Instead, Petitioners claim, the statute only applies to post-verdict procedures because it limits the rights of a subro-gated health insurance company to be repaid from settlement or judgment proceeds that the insured has already recovered from a tort defendant. Again, we disagree.
¶14 "When interpreting a stаtute, we strive to give effect to the legislative purposes by adopting an interpretation that best effectuates those purposes." Smith v. Exec. Custom Homes, Inc.,
¶ 15 Section 10-1-185 contains ten subsections, most of which expressly concern post-judgment subrogation. Seq eg., § 10-1-135(8)(a)(I) ("Reimbursement or subrogation pursuant to a provision in an insurance policy . is permitted only if the injured party has first been fully compensated for all damages arising out of the claim."). The plain language of subsection 10-1-135(10)(a), however, is not limited to post-judgment situations. It states in the relеvant part:
The fact or amount of any collateral source payment or benefits shall not be admitted as evidence in any action against an alleged third-party tortfeasor or in an action to recover benefits under [the uninsured motorist coverage statute].
§ 10-1-135(10)(a) (emphasis added).
¶ 16 The plain meaning of the phrase "any action" includes this ongoing case because
C. Section 10-1-135(10)(a) Codifies the Common Law Pre-Verdict Component of the Collateral Source Rule
¶ 17 In addition, the trial court also properly applied subsection 10-1-135(10)(a) pre-verdiet because the subsection codifies the common lаw pre-verdict evidentiary component of the collateral source rule. At common law, trial courts were required to exclude from evidence at trial the amounts paid by a collateral source to cover a plaintiff's medical bills. See Wal-Mart Stores, Inc. v. Crossgrove,
¶18 This pre-verdiect evidentiary exclusion prevented the fact finder from improperly reducing the plaintiff's damages award on the grounds that the plaintiff already recovered his loss from the collateral source. Crossgrove,
¶ 19 Subsection 10-1-185(10)(a) unambiguously codifies this pre-verdiect common law principle by excluding from evidence "[the fact or amount of any collateral source payment or benefits" Thus, the trial court properly applied the subsection pre-verdict in a manner consistent with the common law rule.
IV. Excluding Evidence of Collateral Source Payments Pursuant to Subsection 10-1-135(10)(a)
¶20 Subsection 10-1-185(10)(a) excludes evidence of the amounts paid by Smith's insurance company for medical expenses. As previously noted, we first give the plain language of a statute its commonly accepted and understood meaning when ascertaining legislative intent. Smith,
¶ 21 Subsection 10-1-135(10)(a) clеarly and unambiguously states that "the fact or amount of any collateral source payment or benefits shall not be admitted as evidence in any action against an alleged third-party tortfeasor." (emphasis added). A collateral source is a person or company, wholly independent of an alleged tortfeasor, that compensates an injured party for that person's injuries. Van Waters,
¶ 22 Smith filed a negligence action, sounding in tort, against Jeppsen. Jeppsen was
V. Conclusion
¶23 We conclude that the trial court did not abuse its discretiоn when it applied seetion 10-1-185 to this action and also did not abuse its discretion when it excluded evidence of the amount Smith's insurer paid for his medical expenses from the reasonable value calculation.
¶ 24 Section 10-1-185 applies prospectively here because Smith's recovery remains pending. In addition, subsection 10-1-135(10)(a) applies pre-verdict because the plain language of the provision encompasses both pre- and postjudgment actions. Finally, subsection 10-1-~185(10)(a) plainly and unambiguously reflects the legislature's intent to codify the pre-verdict evidentiary component of the common law collateral source rule and exclude evidence of collateral source payments-such as the amount paid by Smith's insurer-from actions against an alleged tortfeasor.
¶25 We therefore discharge the rule to show cause.
Dissenting Opinion
dissenting.
¶26 Today the majority holds not only that the collateral source doctrine prevents a jury, when considering the reasonable value of medical services, from hearing the fact that the medical provider accepted less than the amount billed for the services, see Wal-Mart v. Crossgrove,
¶27 There is no question that section 10-1-185, on its face, is aimed at changing the way in which post-verdict reimbursement claims may be brought by insurers who have paid benefits to insureds. See, eg., maj. op. at ¶8 (noting that the "bulk" of section 10-1-135 addresses such claims); id. at 115 (same). Indeed, the statute itself declares that it is designed to address the problem of "payers of benefits ... seek[ing] repayment of benefits out of a recovery obtained by the injured party without paying attorney fees incurred by the injured party in obtaining the recovery." §$ 10-1-185(e); see also § 10-1~185(f) (requiring such payment). The statute's title-"Reimbursement for benefits-limitations-notice-definitions-legislative declaration"-reinforees this focus, as do the repeated references to "recovery." See, eg., 10-1-185(@8)(d)(I), (I1), (IIN), (4)(b).
¶28 In fact, the effective date provision upon which the majority relies for its "pros-pectivity" determination, maj. op. at 1111, makes clear that the statute addresses only "recoveries." See Ch. 164, see. 2(2), 2010 Colo. Sess. Laws 575, 580 (providing that section 10-1-185 applies to a "recovery made on or after the applicable effective date of the act" (emphasis added); see also § 10-1-185(2)(d) (defining "recovery" as "recovery of a monetary award ... either through settlement or judgment"). It would make no sense for the legislature to make a substantial change in pre-verdict evidentiary rules-as the majority would have it-and then not apply that change to the pre-verdiсt stage of the proceedings. Put differently, under the majority's interpretation, the legislature made a substantial change in the trial practice in a statute that, by its very terms, does not apply to trials.
¶29 The majority glosses over this problem by suggesting that the statute applies to cases that have been filed but where no recovery has yet been reached. Seq, eg., maj. op. at 11 (statute applies to "cases
¶30 Read in this context, seсtion 10-1-135(10)(a) is simply a "savings clause" that preserves the status quo in other areas of the law not impacted by the changes the legislature made with regard to post-verdict reimbursement claims by insurers. The provision begins with "[njothing in this [statute] modifies," and then lists a number of areas that are not modified.
¶31 Contrary to this context, the majority's interpretation suggests that the legislature made a major change in trial practice in a section that expressly states that it is making no change at all. Indeed, there is no indication from the language that the statute modified the long-standing rule that juries should consider what a medical provider accepted as payment. for medical services in determining the reasonable value of those services. See Crossgrove,
¶ 32 As such, I would reject any suggestion in the majority opinion that the legislature has actually addressed, let alone resolved, the issue presented in this case-that is, whether the collateral source doctrine bars introduction of the fact that a medical provider accepted an amount less than what was billed-although it certainly may do so in the future. Bеcause I do not believe the collateral source doctrine bars introduction of such a fact, see Crossgrove,
Notes
. Section 10-1-135(10) provides:
(10) Nothing in this section modifies:
(a) The requirement of section 13-21-111.6, C.R.S., regarding the reduction of damages based on amounts paid for the damages from a collateral source. The fact or amount of any collаteral source payment or benefits shall not be admitted as evidence in any action against an alleged third-party tortfeasor or in an action to recover benefits under section 10-4-609.
(b) Lien rights of hospitals pursuant to section 38-27-101, C.R.S., or of the department of health care policy and financing pursuant to section 25. 5-4-301(5), C.R.S.; or
(c) Subrogation and lien rights granted to workers' compensation carriers or self-insured employers pursuant to section 8-41-203, C.R.S.