492 Mich. 1 | Mich. | 2012
Lead Opinion
In this joint and several liability medical malpractice case, defendant, Dr. Martin Tuma, seeks a reduction of the final judgment rendered against him by the amount of his codefendants’ settlement. This case therefore concerns the interplay between the common-law setoff rule, whereby a jointly and severally liable tortfeasor is entitled to a setoff from any adverse verdict in the amount of the cotortfeasor’s settlement, and the noneconomic damages cap of MCL 600.1483, which limits a medical malpractice plaintiffs recovery of noneconomic damages. Specifically, we must decide whether the Legislature intended to abrogate the common-law setoff rule and, if not, the order in which the setoff rule and the noneconomic damages cap of MCL 600.1483 apply to a jury’s verdict. Both the circuit court and Court of Appeals held, pursuant to Markley v Oak Health Care Investors of
We agree that Markley was correctly decided and thus hold that the Legislature did not abolish the common-law setoff rule in the context of joint and several liability medical malpractice cases. We affirm the Court of Appeals in this regard and further clarify that where the Legislature has retained principles of joint and several liability, the common-law setoff rule applies. The lower courts’ sequencing of the setoff and the noneconomic damages cap, however, results in an outcome contrary to the Legislature’s requirement that medical malpractice plaintiffs “shall not” recover more noneconomic losses than the amount determined by MCL 600.1483. Rather, the Legislature has exercised its authority to limit a medical malpractice plaintiffs recoveiy by capping noneconomic losses and requiring the reduction of economic losses by the amounts paid by collateral sources. Because application of the setoff to the jury’s verdict can result in a recovery beyond those statutorily mandated damages limitations, we further hold that a joint tortfeasor’s settlement must be set off from the final judgment after application of the noneconomic damages cap of MCL 600.1483, as well as the collateral source rule. We therefore reverse that portion of the Court of Appeals’ judgment affirming the circuit court’s application of the common-law setoff rule.
I. FACTS AND PROCEDURAL HISTORY
In September 2001, plaintiff, Myriam Velez, filed suit against Detroit Receiving Hospital, Harper Hospital,
Plaintiff then filed a new complaint against defendant Tuma in January 2004, raising the same allegations against defendant.
Before the circuit court entered a final judgment in plaintiffs favor, defendant requested that the circuit court apply the noneconomic damages cap to the jury’s verdict and then subtract codefendants’ $195,000 settlement from the final judgment. Plaintiff objected, relying on Markley, and argued that the circuit court was required to subtract codefendants’ settlement from the jury’s unadjusted “verdict.”
The question to the Court is whether or not I believe that Markley... stand[s] for the proposition that the verdict is subject to the set off. Or whether the judgment is subject to the set off.
The Court believes that Markley says verdict. I don’t know what they meant, but I’ll take it literally and we will apply it to the verdict. I will absolutely concur that that will result in a plaintiff receiving more money than the cap amount.
Thereafter, the circuit court entered a judgment awarding plaintiff $394,200, which is the amount of the noneconomic damages cap in this case.
In the Court of Appeals, defendant argued that the circuit court had erred by applying the setoff to the jury’s unadjusted verdict rather than to the amount of the final judgment after applying the noneconomic damages cap. The Court of Appeals, however, affirmed the circuit court’s decision to apply the setoff to the unadjusted verdict.
Defendant applied for leave to appeal in this Court, and plaintiff filed a cross-appeal. Initially, we denied both applications,
The questions presented in these appeals are questions of law that we review de novo.
III. EXISTENCE OF COMMON-LAW SETOFF RULE
Plaintiff argues that the Legislature abrogated the common-law setoff rule and thus any setoff of codefendants’ settlement award is not warranted. In support, plaintiff posits that in 1995 PA 161, the Legislature clearly intended to abrogate the common-law rule when it repealed former MCL 600.2925d(b), as added by 1974 PA 318, which had codified the setoff rule and provided that a settlement “reduces the claim against the other tort-feasors to the extent of any amount stipulated by the release .. . .”
The common law remains in force until “changed, amended or repealed.”
We cannot conclude that the Legislature intended to abolish the common-law setoff rule in the context of joint and several liability medical malpractice cases. While the pertinent statutes are silent with respect to the application of the common-law setoff rule, we cannot agree with plaintiff that the repeal of the statutory setoff, former MCL 600.2925d(b), by 1995 PA 161 demonstrates a clear intent to abrogate the common-law rule. Plaintiffs argument ignores the fact that the repeal of former MCL 600.2925d(b) was but one part of comprehensive tort-reform legislation and that there is no conflict between the common-law rule and the current legislation that would prevent the setoffs application. Those 1995 reforms abolished joint and several liability in most contexts and created an allocation-of-fault system in which each tortfeasor is liable only for the portion of the total damages that reflects that tortfeasor’s percentage of fault.
The same comprehensive tort-reform legislation, however, also specifically retained “joint and several liability” in medical malpractice cases under MCL 600.6304(6)(a) where, as in the present case, the plain
The term “joint and several” liability, as used in MCL 600.6304(6)(a), is a technical legal term. It has a long-acquired meaning that is well established in our jurisprudence: “[]Where multiple tortfeasors caused a single or indivisible injury, the injured party [may] either sue all tortfeasors jointly or he [may] sue any individual tortfeasor severally, and each individual tortfeasor [is] liable for the entire judgment. .. .”
Inherent in the meaning of joint and several liability is the concept that a plaintiffs recovery is limited to one compensation for the single injury.
The Court of Appeals’ decision in Markley is consistent with this reasoning. There, the defendant sought a setoff against a jury verdict in the amount of the joint codefendant’s settlement. The Court of Appeals rejected the circuit court’s reasoning that the Legislature’s repeal of former MCL 600.2925d(b) was intended to abrogate any common-law right to a setoff. Instead, the appeals court reasoned:
[I]t is logical to conclude that common-law setoff in joint and several liability cases remained the law, where the new legislation was silent, where application of the common-law rule does not conflict with any current statutes con*15 cerning tort law, and where a plaintiff is conceivably overcompensated for its injury should the rule not be applied. Considering the general nature and tone of tort reform legislation, we conclude that the Legislature did not intend to allow recovery greater than the actual loss in joint and several liability cases when it deleted the relevant portion of [MCL 600.2925d], but instead intended that common-law principles limiting a recovery to the actual loss would remain intact.[28 ]
Thus, the Court of Appeals held that “the principle of one recovery and the common-law rule of setoff, in the context of joint and several liability cases, continue to be the law in Michigan.”
After Markley, this Court in Kaiser v Allen
IV APPLICATION OF COMMON-LAW SETOFF RULE
Our conclusion that the common-law setoff rule remains applicable in joint and several liability cases does not end our analysis. Rather, we must address the issue of the sequence in which to apply the common-law setoff rule and the statutory cap on noneconomic damages to the jury’s verdict. We therefore examine the interplay between the common-law rule and MCL 600.1483. We are cognizant that we are the stewards of the common law and that the Legislature is presumed to be aware of the common law when enacting legislation.
We agree with defendant that the lower courts erred by applying the setoff before applying the noneconomic damages cap, thereby allowing plaintiff to recover a total judgment beyond what Michigan law permits. While the Court of Appeals properly recognized that the common-law setoff rule applies in this case and is necessary to ensure that a plaintiff is not overcompensated for his or her injury, the Court erred by failing to address how the mandatory limitation on noneconomic damages affects application of the setoff.
As noted, MCL 600.1483(1) limits a plaintiffs damages for “noneconomic losses recoverable” and provides, in part:
In an action for damages alleging medical malpractice by or against a person or party, the total amount of damages for noneconomic loss recoverable by all plaintiffs, resulting from the negligence of all defendants, shall not exceed $[394,200] ... .[36 ]
This language mandates an absolute cap on all available noneconomic losses: a medical malpractice plaintiffs “total amount” of noneconomic*damages “recoverable” “shall not exceed” the statutory cap. Use of the term “recoverable,” giving it its plain meaning, denotes non-
Despite the unequivocal language of MCL 600.1483 limiting noneconomic damages, the statute is silent with respect to when the cap is to be applied both generally and in relation to the common-law setoff.
Yet this is exactly what the lower courts did in this case. Neither the circuit court nor the Court of Appeals recognized that the Legislature has statutorily limited a medical malpractice plaintiffs recovery and that a setoff must be applied to ensure that the plaintiff does not recover an amount more than that which the Legislature has fixed by statute. Instead, the lower courts ignored the mandate of MCL 600.1483 and measured plaintiffs “actual loss,” or full compensation, as the jury’s verdict. This erroneous reasoning led to the legally incorrect conclusion that plaintiffs recovery for her single injury could not exceed the amount of the verdict, thereby justifying a setoff from the jury’s verdict, rather than the judgment, after application of the noneconomic cap and collateral source rule.
Plaintiff would have us affirm the lower courts’ erroneous application of the cap and rule, but her argument fails due to similar shortcomings. Like the Court of Appeals, plaintiff and Justice HATHAWAY’s dissent assert that the measure of her actual losses for purposes of the setoff is the jury’s verdict and that she can only be overcompensated for purposes of the common-law setoff rule if she receives more than the jury’s verdict. Plaintiff cites both Kaiser and Markley for the proposition that the unadjusted jury verdict is the measure of the one full recovery to which plaintiff is entitled, but these cases are simply inapposite. Kaiser involved a vehicle owner’s vicarious liability for those who drive the owner’s vehicle, and there is no similar damages cap in the context of vehicle-owner vicarious-liability cases. It was not necessary for Kaiser to address the interaction between a statutory limitation on damages and the common-law setoff and, thus, distinguish between “judgments” and “jury verdicts” as the measure of the one full recovery to which a plaintiff is entitled. Markley also does not support
This result and our holding are in accord with decisions of other jurisdictions with similar damages-cap statutes. In Fairfax Hosp Sys, Inc v Nevitt,
Plaintiff criticizes this position and claims that it requires the itemization of settlements. Plaintiffs position actually causes this perceived harm, however. When a judgment contains both economic and noneconomic damages, a circuit court applying the setoff to the jury’s verdict before application of the collateral source rule would have to determine how to allocate the settlement between economic and noneconomic damages. This is a result we cannot condone, not only because it can result in an outcome contrary to the mandate of MCL 600.1483, but also because it could discourage settlements in instances in which there are
V CONCLUSION
To the extent the Legislature has not abolished principles of joint and several liability, those principles and the common-law setoff rule remain the law in Michigan. Markley reached this same conclusion, and we decline plaintiffs invitation to conclude that Markley was wrongly decided. Further, when joint and several liability principles apply in medical malpractice cases, any settlement must be set off from the final judgment after application of the noneconomic damages cap and the collateral source rule. The lower courts
Markley v Oak Health Care Investors of Coldwater, Inc, 255 Mich App 245; 660 NW2d 344 (2003).
Throughout the rest of this opinion, “defendant” refers to Tuma only, while “codefedants” refers to the hospital defendants that settled with plaintiff.
MCL 600.1483(3) defines “noneconomic loss” as “damages or loss due to pain, suffering, inconvenience, physical impairment, physical disfigurement, or other noneconomic loss.”
Markley, 255 Mich App at 250-251.
There is no dispute between the parties that plaintiffs noneconomic damages are capped at $394,200.
In medical malpractice cases, the collateral source rule requires a circuit court to reduce a jury’s award of economic damages by the amount already paid by collateral sources, such as insurers or other providers. MCL 600.6303. There is no dispute that plaintiff’s total economic damages are eliminated by the collateral source rule because plaintiff has received, and will continue to receive, supplemental security income benefits from the Social Security Administration.
The circuit court’s calculation can be demonstrated as follows:
Total Jury Verdict $1,524,831.86
Settlement Setoff - $195,000
Post Setoff Verdict $1,329,831.86
Economic Damages ) due to reduction for collateral sources
Noneconomic Damages $394,200 due to statutory cap on noneconomic damages
Final Judgment $394,200
Velez v Tuma, 283 Mich App 396; 770 NW2d 89 (2009).
Id. at 412.
Id. at 413.
Id.
Velez v Tuma, 488 Mich 903 (2010). Before our initial denial, we had held the case in abeyance for the resolution of issues not involved in this appeal. Velez v Tuma, 775 NW2d 146 (Mich, 2009).
Velez v Tuma (On Reconsideration), 489 Mich 956 (2011). With respect to defendant’s remaining issue, leave to appeal is denied, because we are not persuaded that the question presented should be reviewed by the Court.
Velez v Tuma, 491 Mich 873 (2012).
Kaiser v Allen, 480 Mich 31, 35; 746 NW2d 92 (2008).
Id.
Const 1963, art 3, § 7.
Wold Architects & Engineers v Strat, 474 Mich 223, 233; 713 NW2d 750 (2006).
Id.
Rusinek v Schultz, Snyder & Steele Lumber Co, 411 Mich 502, 507-508; 309 NW2d 163 (1981).
Dawe v Dr Reuven Bar-Levav & Assoc, PC, 485 Mich 20, 28; 780 NW2d 272 (2010), quoting Hoerstman Gen Contracting, Inc v Hahn, 474 Mich 66, 74; 711 NW2d 340 (2006).
1995 PA 161 added MCL 600.2956 to the Revised Judicature Act to provide that “the liability of each defendant for damages is several only and is not joint.”
MCL 600.6304(6)(a) states that “joint and several” liability applies to a medical malpractice claim as long as the plaintiff is determined to be without fault.
Gerling Konzern Allgemeine Versicherungs AG v Lawson, 472 Mich 44, 49; 693 NW2d 149 (2005); see also Maddux v Donaldson, 362 Mich 425, 433; 108 NW2d 33 (1961); Verhoeks v Gillivan, 244 Mich 367, 371; 221 NW 287 (1928).
MCL 8.3a.
Lawson, 472 Mich at 49 (“[Under principles of joint and severed liability,] each individual tortfeasor was liable for the entire judgment, although the injured party was entitled to full compensation only once.”); Verhoeks, 244 Mich at 371 (“ ‘The injured party has the right to pursue
Thick v Lapeer Metal Prod, 419 Mich 342, 348 n 1; 353 NW2d 464 (1984) (“[W]here a negligence action is brought against joint tortfeasors, and one alleged tortfeasor agrees to settle his potential liability by paying a lump sum in exchange for a release, and a judgment is subsequently entered against the non-settling tortfeasor, the judgment is reduced pro tanto by the settlement amount.”).
Markley, 255 Mich App at 256-257.
Id. at 257. We disagree with plaintiffs characterization oí Markley as “reviving” the common-law setoff rule. To the contrary, Markley’s reasoning, in our understanding, is consistent with our reasoning that the Legislature intended to preserve setoffs of a joint tortfeasor’s settlement because the Legislature expressly retained joint and several liability in the medical malpractice context.
Kaiser, 480 Mich 31.
Id. at 36.
Henry v Dow Chem Co, 473 Mich 63, 83; 701 NW2d 684 (2005); Nation v W D E Electric Co, 454 Mich 489, 494; 563 NW2d 233 (1997).
Nation, 454 Mich at 494.
Driver v Naini, 490 Mich 239, 247 n 24; 802 NW2d 311 (2011).
Nation, 454 Mich at 494.
Emphasis added. Although there is no dispute regarding the cap amount in this case, the amount of the cap is adjustable “at the end of each calendar year to reflect the cumulative annual percentage change in the consumer price index.” MCL 600.1483(4).
In the absence of a statutory definition, we may rely on dictionary definitions. Cox v Flint Bd of Hosp Managers, 467 Mich 1, 18; 651 NW2d 356 (2002). Black’s Law Dictionary (9th ed) broadly defines “recoverable” to mean “[cjapable of being recovered.” Justice Hathaway, however, claims that we have added language to MCL 600.1483 because the provision “makes no reference to settlements at all.” Post at 36. This interpretation ignores entirely the breadth of the definition of the term “recoverable.”
Justice Hathaway mischaracterizes MCL 600.1483, and other provisions limiting damages, as measures that “preclude a plaintiff from receiving overcompensation,” post at 32, and opines that a “court must determine whether the plaintiff is being overcompensated,” post at 32, 33. As we have explained, however, by automatically limiting a verdict of noneconomic damages to the amount of the cap, MCL 600.1483 sets the total amount of compensation allowed. Because the cap represents a predetermined legislative policy limitation on a plaintiffs total compensation for noneconomic injuries, it forms the basis of determining to what extent a recovery for noneconomic damages necessarily represents overcompensation, and a court cannot exceed that predetermined limitation on compensation.
MCL 600.6306 directs a trial court to make certain deductions from a jury’s award of damages before entering a final judgment, but it does
(1) After a verdict rendered hy a trier of fact in favor of a plaintiff, an order of judgment shall be entered by the court. Subject to [MCL 600.2959], the order of judgment shall be entered against each defendant, including a third-party defendant, in the following order and in the following judgment amounts:
(a) All past economic damages, less collateral source payments as provided for in [MCL 600.6303].
(b) All past noneconomic damages.
(c) All future economic damages, less medical and other health care costs, and less collateral source payments determined to be collectible under [MCL 600.6303(5)] reduced to gross present cash value.
(d) All future medical and other health care costs reduced to gross present cash value.
(e) All future noneconomic damages reduced to gross present cash value.
Justice Hathaway contends that our application of the setoff creates a “new rule that bears little resemblance to the common-law setoff rule or its underlying purpose,” post at 35, and that our failure to recognize the verdict as the measure of full compensation “disregards the obvious,” post at 34 However, before the Legislature’s creation of the cap on noneconomic damages, there was no need for the common law to make the distinction that we recognize. We have not, therefore, ignored that the setoff has traditionally been applied to the verdict. Rather, consistent with our jurisprudence, we have applied both the common-law rule and the statute in the manner that best gives effect to the purposes of both. See, e.g., People v Nowack, 462 Mich 392, 406; 614 NW2d 78 (2000) (noting that the common law is adopted into our jurisprudence to the extent that it is consistent with our state and federal constitutions and statutes). Consequently, it is the dissent’s interpretation that fails to effectuate both the purpose of the statute and the common-law rule because, as the dissent does not dispute, its interpretation would allow a medical malpractice plaintiff to recover more than the statutorily limited amount.
Markley, 255 Mich App at 258.
Rittenhouse v Erhart, 424 Mich 166; 380 NW2d 440 (1985).
As additional support, plaintiff and Justice Hathaway argue that MCL 600.1483 does not limit the total amount of noneconomic damages plaintiff may recover because MCL 600.1483(1) only applies to jury awards, not settlements. Specifically, the dissent posits that MCL 600.1483(1) applies only to jury awards because the language of MCL 600.1483(2), which requires juries “awarding damages” to “itemize damages,” refers only to jury awards. This conclusion does not logically follow when the subsections are read together because MCL 600.1483(1) makes no reference to a jury award, but uses the broader phrase “the total amount of damages for noneconomic loss recoverable....” Justice Hathaway further asserts that the Legislature only intended jury awards, not settlements, to be reduced by the noneconomic damages cap because MCL 600.6304(5) is silent with respect to any reduction by reason of a settlement. Post at 37. That provision requires a circuit court to reduce an excessive “award of damages” to the amount of the noneconomic damages cap. This silence, however, does not preclude a court from applying the common-law setoff rule after applying the noneconomic damages cap to the jury verdict. Finally, these arguments are unavailing because to interpret the noneconomic damages cap as applying only to jury awards and not settlements would render nugatory the term “recoverable” in MCL 600.1483(1), which as we have explained does not delimit the manner in which recovery is obtained. Plaintiff and the dissent’s construction is one we cannot adopt because we “ ‘must give effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute ... nugatory’ ” Jenkins v Patel, 471 Mich 158, 167; 684 NW2d 346 (2004) (citation omitted). Justice Hathaway, like plaintiff, simply neglects to consider that the Legislature did not intend a plaintiff to recover noneconomic damages greater than that allowed by the statute and that plaintiffs recovery of noneconomic damages is, in effect, set by law.
Justice Cavanagh criticizes this application of the setoff rule because it “provides defendants with both the benefit of the damages cap and the further reduction of the common-law setoff.” Post at 28. Yet this result is exactly what we intend because it is also what the Legislature intends. Had the Legislature intended to preclude this result from inuring to the benefit of a medical malpractice defendant, it could have used a phrase less broad than “total amount of damages for noneconomic loss recoverable” in MCL 600.1483(1) or otherwise prohibited any application of the setoff rule.
By allegedly reducing plaintiffs “noneconomic damages award” by the amount of the settlement, Justice Hathaway is concerned that our decision has assumed that the settlement proceeds consisted of noneconomic damages and that this result “ignores the actual agreement of the settling parties.” Post at 39. These concerns are unfounded. Our holding does not require the reduction of plaintiffs noneconomic damages by the amount of the settlement. Rather, our holding requires a court to subtract the entire amount of the settlement from whatever damages
This equation can be summarized as follows:
Total Jury Verdict $1,524,831.86
Economic Damages $124,831.86, reduced to $0 by collateral sources
Noneconomic Damages $1,400,000, reduced to $394,200 due to cap on noneconomic damages
Settlement Setoff • $195,000
Final Judgment $199,200
Fairfax Hosp Sys, Inc v Nevitt, 249 Va 591, 599; 457 SE2d 10 (1995) (citation omitted).
Lockshin v Semsker, 412 Md 257, 283; 987 A2d 18 (2010).
Id. Numerous other jurisdictions have also required application of noneconomic damages caps before setting off a settlement so that plaintiffs do not recover more damages than permitted by the applicable law. See Mayes v Bryan, 139 Cal App 4th 1075, 1099-1103; 44 Cal Rptr 3d 14 (2006) (holding that the trial court properly applied the noneconomic damages cap, Cal Civ Code 3333.2, first before reducing the judgment by the percentage of fault attributed to the settlement the plaintiff had already recovered because “the plaintiff could not recover more than $250,000 in noneconomic damages from all health care providers for one injury,”); Garhart v Columbia/Healthone, LLC, 95 P3d 571, 591 (Colo, 2004) (holding that noneconomic damages cap allowing a total recovery of $250,000, Colo Rev Stat 13-64-302, must be applied to a jury’s verdict first before allocating fault attributed to a settlement, so that the plaintiff does not recover more than the cap).
Under plaintiffs rule, medical malpractice plaintiffs would have an incentive to structure settlement agreements as entirely economic damages, especially when the plaintiff expects collateral sources to wipe out all economic damages. The settling codefendants, however, might be unwilling to enter into such an agreement, knowing that it could potentially prejudice their associates and potentially sour business relationships.
Concurrence in Part
(concurring in part and dissenting in part). I agree with both the majority and dissenting
I would, however, affirm the judgment of the Court of Appeals with respect to how the common-law setoff rule should be applied because, in my view, the panel did not clearly err by holding that the common-law setoff should be applied as it traditionally has been — to the unadjusted jury verdict. To apply the common-law setoff after the operation of the medical malpractice noneconomic-damages cap provides defendants with both the benefit of the damages cap and the further reduction of the common-law setoff. I agree with Justice HATHAWAY that the jury verdict represents the total amount of damages a plaintiff is entitled to recover and that applying the common-law setoff to the unadjusted jury verdict before operation of the damages cap ensures that plaintiff is not overcompensated for a single, indivisible injury. Further, applying the common-law setoff to the unadjusted jury verdict does not impair the protections afforded to a defendant by the medical malpractice damages cap, as the Legislature intended.
Former MCL 600.2925d(b), as added by 1974 PA 318, was deleted by 1975 PA 161.
Dissenting Opinion
(dissenting). I generally agree with the majority that when a trier of fact determines that a plaintiff in a medical malpractice case is not comparatively negligent, the common-law setoff rule applies. However, I disagree with the manner in which the majority applies this rule because it does so in a fashion that is contrary to the rule’s purpose. Because today’s decision departs from the common-law setoff rule, I respectfully dissent.
For many years, the rule in this state was that concurrent tortfeasors were held to be jointly and severally liable. Joint and several liability operated to place the full burden of the injustice on a tortfeasor, rather than on the injured party.
A corollary of joint and several liability is the common-law setoff rule.
The common-law setoff rule was codified in former MCL 600.2925d by 1974 PA 318 and this statutory version of the setoff rule was applied in the same manner as it was at common law in instances in which the defendants were jointly and severally liable. However, statutory setoff was subsequently eliminated by 1995 PA 161, along with joint and several liability for virtually all tort claims.
Kaiser addressed the issue of whether the common-law setoff rule applies to claims against owners and operators of motor vehicles when vicarious liability is statutorily imposed. In holding that the common-law setoff rule applies to such cases, this Court explained:
The common-law setoff rule is based on the principle that a plaintiff is only entitled to one full recovery for the same injury. An injured party has the right to pursue multiple tortfeasors jointly and severally and recover separate judgments; however, a single injury can lead to only a single compensation.
*31 ... Allowing plaintiff to recover the entire verdict against Allen [vehicle owner] and to retain all the proceeds from the settlement with [the vehicle’s operator] would allow the plaintiff to recover four times more than the jury determined plaintiff should be awarded for his injuries. The Legislature did not intend that a plaintiff be awarded damages greater than the actual loss in vicarious-liability cases, resulting in a double recovery. The common-law setoff rule should be applied to ensure that a plaintiff only recovers those damages to which he or she is entitled as compensation for the whole injury... .
To the extent that joint and several liability principles have not been abrogated by statute, they remain intact, and the common-law setoff rule remains the law in Michigan with regard to vehicle-owner vicarious-liability cases.[9 ]
Thus, Kaiser recognized that when a party suffers a single, indivisible injury as the result of the conduct of multiple tortfeasors, the injured party is entitled to be made whole. This means that the injured party is entitled to be fully compensated, but not overcompensated. I see no reason why the principles set forth in Kaiser should not be extended to the category of medical malpractice claims that also retain joint and several liability.
Moreover, I believe that in Markley v Oak Health Care Investors of Coldwater, Inc, 255 Mich App 245, 256-257; 660 NW2d 344 (2003), the Court of Appeals correctly reasoned that
*32 [w]ith tort reform and the switch to several liability, it is logical to conclude that common-law setoff in joint and several liability cases remained the law ... where application of the common-law rule does not conflict with any current statutes concerning tort law, and where a plaintiff is conceivably overcompensated for its injury should the rule not be applied.
Thus, Markley correctly held that in medical malpractice cases that retain joint and several liability, the common-law setoff rule applies. However, with that said, if the common-law setoff rule is to be imposed in the absence of statutory authority, it must be applied in the same manner and for the same purpose as it was at common law. Otherwise, the common-law setoff rule is not being applied; instead, an entirely new rule is created.
The undisputed historical purpose of the common-law setoff rule was to preclude a plaintiff from being overcompensated for a single, indivisible injury.
In analyzing whether a medical malpractice plaintiff has been overcompensated, we must be mindful of the so-called “tort reform” liability statutes that contain measures to preclude a plaintiff from receiving overcompensation in many regards. For example, the fact-finder is required to separate all economic damages from noneconomic ones,
To determine whether a medical malpractice plaintiff has actually been overcompensated, a multistep analysis is required that considers all the principles discussed above. The first step is to consider whether the plaintiff was comparatively negligent. If the plaintiff was comparatively negligent, a defendant’s liability is several and, as such, the defendant is only responsible for his or her pro rata share of the plaintiffs damages.
The majority opines that the verdict must first be reduced by the applicable limitation on noneconomic damages;
The majority applies setoff in a manner that is at odds with the common-law rule, which was used to prevent a plaintiff from receiving a double recovery or overcompensation for a single, indivisible injury. The majority seemingly disregards the obvious — the trier of fact determines the total amount of a plaintiffs damages, and only when a plaintiff receives more than that amount as compensation is the plaintiff overcompensated. A plaintiff is not overcompensated when he or she receives less than the trier of fact’s determination of the amount that is required to make him or her whole. The goal of the common-law setoff rule is merely to
The majority counters that its manner of applying the common-law setoff rule is mandated by the language of MCL 600.1483(1), which sets forth the limitations on damages.
The majority’s analysis ignores the full language of MCL 600.1483(2), which requires the “trier of fact” to
In an action alleging medical malpractice, the court shall reduce an award of damages in excess of 1 of the limitations set forth in section 1483 to the amount of the appropriate limitation set forth in section 1483. The jury shall not be advised by the court or by counsel for either party of the limitations set forth in section 1483 or any other provision of section 1483.
However, no comparable language can be found allowing a court to reduce awards by the amount of a settlement. Thus, two logical conclusions can be drawn from the actual text of this provision. First, the Legislature did not intend to preclude a trier of fact from determining the full amount of recovery that is necessary to make the plaintiff whole and, second, the Legislature only intended awards by a trier of fact to be reduced to the noneconomic-damages limitation. If the Legislature had intended the interpretation adopted by the majority, it would be logical to assume that it would have made some reference to settlement somewhere in the statutory scheme. Instead, the statutory scheme is silent with respect to settlements. While the absence of such language does not preclude common-law setoff, the common-law setoff rule is only applicable when overcompensation is involved. When there is no overcompensation, the common-law setoff rule does not apply. In the absence of statutory authority, and in situations
In this case, a jury determined that as a result of defendant Dr. Tuma’s negligence, plaintiff Ms. Velez’s left leg had to be amputated. The jury found that defendant was both professionally negligent and the proximate cause of plaintiffs injuries. The jury returned a verdict in plaintiffs favor that included $124,831.86 in economic damages and $1.4 million in noneconomic damages for a total verdict of $1,524,831. It is the total verdict that constitutes full recovery and makes plaintiff whole. Only if she receives more than this total amount would she be receiving a double recovery or overcompensation. Plaintiff is clearly not receiving a double recovery or overcompensation because the trial court reduced the amount the jury determined would make her whole to $394,200.
My final concern regarding the majority’s decision is that it concludes that the entire amount of plaintiff’s prior settlement with Tuma’s codefendants must be set off or subtracted from plaintiffs noneconomic-damages award. I find this action considerably troubling because it ignores the actual agreement of the settling parties. The settlement agreement between plaintiff and the settling codefendants is contained in a document entitled “Covenant Not to Sue Agreement.” The total settlement amount was $195,000, and the agreement specifically states the settlement is for all the damages including economic, noneconomic, costs, attorney fees, and interest. This settlement was intended to resolve all of plaintiffs claims with the settling codefendants. Pursuant to the unambiguous terms of the agreement, the amount of $195,000 was not allocated into any specific category of damages. As such, there is no logical way to conclude that all the settlement proceeds were for noneconomic damages. Despite this, the majority ignores the terms of the agreement and instead assumes that the entire settlement was for noneconomic damages that are limited by the noneconomic-damages limitation contained in MCL 600.1483. Because an agreement between the parties is a contract, the majority is not free to alter its unambiguous terms by making such an assumption.
For all the foregoing reasons, I respectfully dissent.
See Maddux v Donaldson, 362 Mich 425, 432-434; 108 NW2d 33 (1961); Velez v Tuma, 283 Mich App 396, 409; 770 NW2d 89 (2009); Bell v Ren-Pharm, Inc, 269 Mich App 464, 471-472; 713 NW2d 285 (2006).
Id.
Kaiser v Allen, 480 Mich 31, 41; 746 NW2d 92 (2008) (Kelly, J., concurring).
See Larabell v Schuknecht, 308 Mich 419, 423; 14 NW2d 50 (1944).
Id.
Kaiser, 480 Mich at 39-40.
MCL 600.2956.
See, for example, MCL 600.2956, which retains vicarious liability for employers, and MCL 257.401(1), which retains vicarious liability for vehicle owners.
Kaiser, 480 Mich at 39-40 (citation omitted).
Medical malpractice claims are bifurcated into two categories on the basis of whether the plaintiff is comparatively negligent. Under MCL 600.6304(6)(b), when a plaintiff is comparatively negligent, joint and several liability has been abolished, and the defendants’ liability is several. When a plaintiff is not comparatively negligent, joint and several liability is imposed under MCL 600.6304(6)(a).
Kaiser, 480 Mich at 39-40.
MCL 600.6305(1)(a) and (b).
MCL 600.6305(1)(b).
MCL 600.6306(1)(c).
MCL 600.6303.
MCL 600.6307.
MCL 600.1483.
MCL 600.6304(6)(b).
As will be discussed, MCL 600.6305 requires damages to be separated into economic and noneconomic damages and, accordingly, only amounts paid for like damages should be set off.
The limitations on damages contained in MCL 600.1483 are commonly referred to as “caps” on noneconomic damages.
The full text of MCL 600.1483 provides:
(1) In an action for damages alleging medical malpractice by or against a person or party, the total amount of damages for noneconomic loss recoverable by all plaintiffs, resulting from the negligence of all defendants, shall not exceed $280,000.00 unless, as the result of the negligence of 1 or more of the defendants, 1 or more of the following exceptions apply as determined by the court pursuant to [MCL 600.6304], in which case damages for noneconomic loss shall not exceed $500,000.00:
(a) The plaintiff is hemiplegic, paraplegic, or quadriplegic resulting in a total permanent functional loss of 1 or more limbs caused by 1 or more of the following:
(i) Injury to the brain.
(ii) Injury to the spinal cord.
(b) The plaintiff has permanently impaired cognitive capacity rendering him or her incapable of making independent, responsible life decisions and permanently incapable of independently performing the activities of normal, daily living.
*36 (c) There has been permanent loss of or damage to a reproductive organ resulting in the inability to procreate.
(2) In awarding damages in an action alleging medical malpractice, the trier of fact shall itemize damages into damages for economic loss and damages for noneconomic loss.
(3) As used in this section, “noneconomic loss” means damages or loss due to pain, suffering, inconvenience, physical impairment, physical disfigurement, or other noneconomic loss.
(4) The state treasurer shall adjust the limitation on damages for noneconomic loss set forth in subsection (1) by an amount determined by the state treasurer at the end of each calendar year to reflect the cumulative annual percentage change in the consumer price index. As used in this subsection, “consumer price index” means the most comprehensive index of consumer prices available for this state from the bureau of labor statistics of the United States department of labor.
Ante at 17-18.
The jury verdict included a total of $124,831.86 in economic damages and a total of $1,400,000 in noneconomic damages. Economic damages were reduced pursuant to MCL 600.6304(3) to zero, because all economic damages had been paid by a collateral source. Noneconomic damages were reduced pursuant to MCL 600.6304(5) to the amount of the applicable limitation on damages, which at the time was $394,200. The final judgment totaled $649,655.59, which included the reduced verdict in the amount of $394,200, as well as $43,000 in taxable costs, $105,812.50 for attorney fees, and $106,643.09 in statutory interest covering the period up to the date of the judgment.
Grosse Pointe Park v Mich Muni Liability & Prop Pool, 473 Mich 188, 198; 702 NW2d 106 (2005); Lintern v Mich Mut Liability Co, 328 Mich 1, 4; 43 NW2d 42 (1950).
Concurrence Opinion
(concurring). I concur in the majority opinion with the exception of the majority’s statement that “we will [not] extend a statute by implication to abrogate established rules of common law.” Ante at 11. I do believe that a statute may by implication abrogate established rules of common law. That is, the Legislature does not have to explicitly state that it is abrogating a common-law right in order for it to abrogate a common-law right. The Legislature’s intent to abrogate the common law may be sufficiently clear without its having to explicitly state that this is its intent. A legislative body need not provide a running commentary of the effect of its actions on the common law when its actions will admit of only the most obvious interpretation. The statement is unnecessary to the opinion, and no injury would be done to the opinion were it not there. I join the majority because I believe the Legislature has not, either expressly or implicitly, abrogated the common-law setoff rule in the context of joint and several liability medical malpractice cases.