Lagerstrom v. Myrtle Werth Hospital-Mayo Health System

2005 WI 124, 700 N.W.2d 201, 285 Wis. 2d 1, 2005 Wisc. LEXIS 398

• Court: Wisconsin Supreme Court
• Decided: July 14, 2005
• Docket: 2003AP2027
• Status: Published

Opinions

SHIRLEY S. ABRAHAMSON, C.J.

¶ 1. This is an appeal from a judgment and order of the Circuit Court for Dunn County, William C. Stewart, Jr., Judge. This wrongful death medical malpractice case comes before this court on certification¹ from the court of appeals pursuant to Wis. Stat. § 809.61 (2001-02).²

¶ 2. Following a jury's verdict, the circuit court entered judgment in the amount of $55,755 plus costs in favor of Klover Lagerstrom, individually as surviving spouse of Vance H. Lagerstrom and as Special Administrator of the Estate of Vance H. Lagerstrom, deceased, referred to collectively as the estate, against Myrtle Werth Hospital-Mayo Health System, ABC Insurance Company, its insurer, Red Cedar Clinic-Mayo System, and DEF Insurance Company, its insurer, referred to collectively as the defendants. The circuit court's order denied a post-verdict motion under Wis. Stat. § 805.14(5)(c)³ to change the answers on the special verdict; the estate appealed.

¶ 3. The primary issue presented is whether the circuit court erred under Wis. Stat. § 893.55(7) in admitting evidence of collateral source payments in this medical malpractice action, in refusing to admit evidence of the estate's potential obligation to reimburse Medicare, and in instructing the jury that it may, but need not, consider the collateral source payments in determining the reasonable value of the medical services rendered. A second issue is whether the circuit court erred in not awarding the estate $7,610.10 for funeral expenses.

¶ 4. Wisconsin Stat. § 893.55(7) reads:

Evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant for the injury is admissible in an action to recover damages for medical malpractice. This section does not limit the substantive or procedural rights of persons who have claims based upon subrogation.

¶ 5. We conclude that the text of § 893.55(7) explicitly allows evidence of collateral source payments to be introduced in medical malpractice actions but fails to state the purpose for which the evidence is admitted. We further conclude that if evidence of collateral source payments from sources including Medicare, other state or federal government programs, medical insurance or write-offs, and discounted or free medical services is presented to the fact-finder, then the parties must he allowed to furnish the jury with evidence of any obligations of subrogation or reimbursement. Because the statutory text does not inform a fact-finder what to do with the evidence, in interpreting the statute and determining what a fact-finder must do with the evidence we consider the text of the statute, the legislative history, the legislative goal, and three common-law concepts encompassed in medical malpractice actions and Wis. Stat. § 893.55(7), namely the reasonable value of medical services, the collateral source rule, and subrogation. We conclude that the circuit court must instruct the fact-finder that it must not reduce the reasonable value of medical services on the basis of the collateral source payments. Although the jury is instructed not to use the evidence of collateral source payments to reduce the award for medical services, evidence of collateral source payments may be used by the jury to determine the reasonable value of medical services.

¶ 6. We further conclude that regardless of the interpretation of Wis. Stat. § 893.55(7) adopted, because the jury in the present case was advised of the collateral source payments and the net amount the estate paid for medical services, but was not advised of the estate's potential obligation to reimburse Medicare for medical services, the jury was not able to assess the reasonable value of medical services fully and fairly. This error in refusing to admit evidence of or argument about the estate's potential obligation to reimburse Medicare is reversible error.

¶ 7. Accordingly, under our interpretation of Wis. Stat. § 893.55(7), and indeed under any interpretation of § 893.55(7), we must reverse the judgment and order of the circuit court and remand the cause to the circuit court for a new trial on the issue of hospital and medical expenses.

¶ 8. On the issue of funeral expenses, the defendants argue that according to Wis. Stat. § 895.04(5),⁴ the award of funeral expenses is permissive, not mandatory, and therefore a fact-finder has discretion whether to award these expenses. In the instant case the jury awarded no sum of money to reimburse the estate for funeral and burial expenses even though the jury found that the defendants' negligence was a cause of the decedent's death and even though no evidence controverted the sum of $7,610.10 as a reasonable expense. We hold that under these circumstances the circuit court erred in not granting the estate's motion to change the special verdict answer relating to funeral and burial expenses to reflect the undisputed amount of $7,610.10 for these expenses. On remand, we therefore instruct the circuit court to enter $7,610.10 on the special verdict form as the amount required to fairly and reasonably compensate the estate for funeral and burial expenses.

I

¶ 9. For purposes of this appeal the facts are undisputed. The defendants conceded that they were negligent in their care and treatment of the decedent and committed malpractice by inserting a feeding tube into the passageway of the decedent's lung rather than into the stomach and inserting fluids.

¶ 10. The defendants asserted that their negligence caused injury but was not a cause of death. They argued that the decedent's age and medical history, combined with the severe trauma associated with breaking his hip and the ensuing surgery, caused the death some two months after the negligent placement of the feeding tube. The jury found that the defendants' negligence was a cause of the decedent's death. The issue of causation is not before the court in this appeal. The issues before the court involve the jury award of damages for medical services and funeral expenses.

¶ 11. Vance H. Lagerstrom, the decedent, was 87 years old when he fell and broke his hip on November 24, 2000. He was admitted to Myrtle Werth Hospital, and within two days following hip replacement surgery, the family doctor noted some congestion in the decedent's lungs and a fever. A chest x-ray showed no acute damage to the lungs.

¶ 12. On December 2 the duty doctor decided to insert a feeding tube to ensure that the decedent was getting the proper nutrients. The feeding tube was misplaced, reaching into the passageway of the decedent's lung rather than into his stomach. In the afternoon of December 2, 8 ounces of a nutrient-laden drink, Ensure, was pumped through the feeding tube directly into the decedent's left lung.

¶ 13. The decedent was transferred to the critical care unit, then to Luther Hospital, and then to Lakeside Nursing Home. The decedent remained on a ventilator and on Christmas Day, 2000, was re-admitted to Luther Hospital with a fever, despite treatments with antibiotics. After his fever was controlled, the decedent was returned to Lakeside Nursing Home, where he remained from December 29, 2000 until January 14, 2001, when the fever recurred and he was returned to Luther Hospital.

¶ 14. By February 14, the decedent had been off the ventilator a week, but the following day he was taken to the emergency room of St. Joseph's with joint pain. The decedent then returned to Lakeside Nursing Home. By February 22, the decedent was having problems, including hallucinations. He died on February 24, 2001. The death certificate listed the cause of death as pneumonia.

¶ 15. The decedent's wife initiated a wrongful death medical malpractice action under ch. 655 as the surviving spouse and as the special administrator of the decedent's estate.

¶ 16. Counsel for the estate communicated with Medicare in regard to various medical expenses that Medicare paid. Communications from Medicare indicate that Medicare would rely on its statutory right to reimbursement. Medicare was therefore not joined in the action.

¶ 17. The estate introduced evidence about the reasonable value of the medical services rendered to the decedent. The amount was approximately $89,000. The defendants, over the estate's objections, presented evidence and argued to the jury that the out-of-pocket charges incurred by the estate were only $755, with the remaining medical expenses paid through collateral sources, such as Medicare, medical provider write-offs pursuant to Medicare regulations, and private insurance. The circuit court instructed the jury that the estate's total out-of-pocket expense for medical services was $755.

¶ 18. The jury was instructed that the law does not require it to reduce the sum it determines to be the reasonable value of the medical services caused by the defendants' negligence to reflect payments made by other sources. The jury was further instructed, however, that it may reduce, if it so decides, the amount awarded for the reasonable value of medical services by the amount of collateral source payments.

¶ 19. The circuit court limited the estate's argument to the jury regarding the estate's obligation to reimburse Medicare. The estate could not argue that the estate had potential liability to Medicare. Rather, the estate was forced to argue that the estate could, if it wished, voluntarily repay Medicare.

¶ 20. The circuit court gave the jury special verdict questions with separate instructions on each element of damages as recommended by the Civil Jury Instruction Committee⁵ and as required by Wis. Stat. (5).⁶ The jury answered the separate verdict questions on damages, awarding the estate $20,000 for the decedent's pain and suffering and awarding the surviving spouse $35,000 for the loss of society and companionship.⁷ The jury awarded the estate $755 for medical expenses ("ambulance, medical, hospital, nursing home, rehabilitation, and bed hold expenses") and nothing for funeral expenses.

¶ 21. The focus of the appeal is the circuit court's admission of evidence of collateral source payments for the purpose of determining the reasonable value of the medical services, its refusal to admit evidence of the estate's potential obligation to reimburse Medicare, and its instruction to the jury that it may consider the collateral source payments in awarding damages for the medical expenses.

¶ 22. The estate's central objection to Wis. Stat. § 893.55(7) is that in permitting evidence of collateral benefits and in not providing guidance regarding the fact-finder's consideration of this evidence, the legislature has unlawfully delegated public policy and equitable considerations to juries on a case-by-case basis without any guidelines. The estate challenges the constitutionality of § 893.55(7) on several grounds, including violation of separation of powers, right to trial by jury, and equal protection and due process guarantees.⁸ We conclude that under a proper interpretation of § 893.55(7), these constitutional issues do not arise.

¶ 23. The estate also asserts it is entitled to $7,610.10 for funeral and burial expenses. The estate's position is that because negligence was conceded, the jury established causation between the negligence and the death, and the funeral expenses were undisputed, the circuit court should have entered that undisputed amount on the verdict, instead of allowing the jury to determine the award. The defendant asserts that the estate is not entitled to a new trial on the funeral and burial expenses because the jury was merely doing what it always does, that is, making a factual determination of the amount of money that would fairly and reasonably compensate the estate for funeral and burial expenses.

l — l 1 — 1

¶ 24. The primary issue presented is the interpretation of Wis. Stat. § 893.55(7), a question of law that this court decides independently of the circuit court or court of appeals but benefiting from their analyses. Section 893.55(7) provides that in a medical malpractice action, evidence of compensation for bodily injury received from sources other than the defendant is admissible in a medical malpractice action to recover damages. The statute adds that it does not limit the substantive or procedural rights of persons with subro-gation claims. The statute reads as follows:

Evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant for the injury is admissible in an action to recover damages for medical malpractice. This section does not limit the substantive or procedural rights of persons who have claims based upon subrogation.

¶ 25. This case appears to be the first time an appellate court in this state has considered this statute.

¶ 26. We determine the meaning of Wis. Stat. § 893.55(7) in light of (A) the text of the statute; (B) the legislative history of the statute; (C) the legislative goal in adopting the statute; and three concepts of law embodied in the statute; namely, (D) the valuation of medical services; (E) the collateral source rule; and (F) subrogation.

¶ 27. We conclude that the text of § 893.55(7) explicitly allows evidence of collateral source payments to be introduced in medical malpractice actions. We further conclude that if evidence of collateral source payments from sources including Medicare, other state or federal government programs, medical insurance or write-offs, and discounted or free medical services is presented to the fact-finder, then the parties must be allowed to furnish the jury with evidence of any obligations of subrogation or reimbursement. Because the text does not inform a fact-finder what to do with the evidence, in interpreting the statute and determining what a fact-finder must do with the evidence we consider the text of the statute, the legislative history, the legislative goal, and three common-law concepts encompassed in medical malpractice actions and Wis. Stat. § 893.55(7), namely reasonable value of medical services, the collateral source rule, and subrogation. We conclude that the circuit court must instruct the fact-finder that it must not reduce the reasonable value of medical services on the basis of the collateral source payments. Although the jury is instructed not to use the evidence of collateral source payments to reduce the award for medical services, evidence of collateral source payments may be used by the jury to determine the reasonable value of medical services.

A

¶ 28. We examine first the text of Wis. Stat. § 893.55(7). It is only 50 words long, yet covers a large area of the law of damages in medical malpractice cases. Although the instant case involves medical expenses, the statute appears to encompass all damages in a medical malpractice action and to make evidence of all collateral source payments admissible in regard to all damage claims.

¶ 29. Although the statute speaks of compensation to the claimant, the instant case demonstrates that the statute also encompasses payments, write-offs, or forgiveness made directly to health care providers rather than to the claimant. Also, even though the statute uses only the phrase "bodily injury," unlike Wis. Stat. § 893.55(4)(b) and (e), which use both "bodily injury" and "death," it is broad enough to include wrongful death actions.

¶ 30. The statute does not limit the nature of the collateral source payments and thus on its face seems to encompass payments such as those from federal and state governments, life insurance, income continuation plans, and volunteer services, some of which are ordinarily excluded by similar statutes in other states.⁹

¶ 31. The only limitation stated in Wis. Stat. § 893.55(7) is that it does not limit the substantive or procedural rights of persons who have claims based upon subrogation. The legislature obviously attempted to make the statute conform to the rules of subrogation.

¶ 32. The text of the statute does not address numerous issues in relation to medical expenses, the subject of this appeal. First and foremost, the text does not state the purpose for which the evidence of collateral source payments is admissible. The statute does not require that a fact-finder or circuit court reduce the reasonable value of the medical services rendered to account for the collateral source payments. The collateral source rule denies a tortfeasor credit for payments or benefits conferred upon the plaintiff by any person other than the tortfeasor.¹⁰

¶ 33. The statute is silent about the admissibility of evidence about the expenses a victim incurred to acquire the collateral source payments, such as premiums or other expenditures.¹¹ The statute neither prohibits nor allows the admission of such evidence.

¶ 34. The statute explicitly states that it does not limit the rights of subrogees but says nothing about the rights of reimbursement. The statute is silent about whether a victim may introduce evidence of subrogation or the victim's obligation to reimburse a collateral source.¹² The statute neither prohibits nor allows the admission of such evidence.

¶ 35. The statute is silent about whether the parties may argue to the fact-finder about the public policies underlying the collateral source rule, such as preventing tortfeasors from benefiting from payments inuring to the victim and deterring tortfeasors. Similarly, the statute does not say whether the public policies underlying subrogation, such as the prevention of double recovery, can be argued to the jury. The statute neither prohibits nor allows such arguments. In sum, the text of the statute raises more questions than it answers.

¶ 36. Even though the legislature did not clearly articulate how fact-finders and courts are supposed to use and apply Wis. Stat. § 893.55(7), and even though the language of the statute does not express a complete abrogation of the collateral source rule in medical malpractice actions, we must interpret Wis. Stat. § 893.55(7) to give effect to the legislature's explicit language allowing the admission of evidence of collateral source payments in medical malpractice actions under chapter 655.

B

¶ 37. The legislative history of Wis. Stat. § 893.55(7) provides some guidance in interpreting the statute.

¶ 38. An early draft of the bill that became Wis. Stat. § 893.55(7) included a sentence requiring that collateral source payments reduce an award of damages: "The award of damages under ch. 655 shall be reduced by any compensation that the injured party received from sources other than the defendant to compensate him or her for the injury." This sentence does not appear in the enacted statute.

¶ 39. Four documents in the legislative history files cast some light on the deletion of the sentence requiring reduction of an award by collateral source payments and the addition of the sentence protecting subrogation rights.

¶ 40. First, a communication from Employers Health Insurance to Representative Sheryl Albers, Chair of the Assembly Committee on Insurance, Securities and Corporate Policy, in the Legislative Council bill file for 1995 Assembly Bill 36 explains the need to protect subrogation. The communication requested the addition of the last sentence of § 893.55(7). Representative Albers forwarded the communication to Gordon Anderson, Senior Staff Attorney at the Wisconsin Legislative Council. The communication explains Employers Health Insurance's request to protect subrogation as follows:

ASSEMBLY BILL 36 (LRB 1913/3)

After discussions with the author and staff counsel, we reviewed the language again and consulted with our attorneys. Although the language itself does not pose the problem since the collateral source rule and those who have subrogation rights function independently, we continue to have concerns about future interpretations based on a creative application of the "made whole" doctrine.

Therefore, we would appreciate your consideration of the following two options for modifications.

1. Insert within the committee record a reference, which would be included in the comment section of the annotation to the statute, the following reference:

"This section (section 7) relates to the collateral source rule. It does not limit the substantive or procedural rights of persons who have claims based upon subrogation."

2. The alternative would be to amend the bill.. . through the addition of the following language:

"This section does not limit the substantive or procedural rights of persons who have claims based upon subrogation."

It is critical that the reference contained in option one appear within the annotated statutes. If there is a possibility that reference would not appear in comments section, we believe it is necessary to include the statutory language outlined in option two.¹³

¶ 41. It is far from clear what this memorandum means by "creative application" of the made whole doctrine.¹⁴ Employers Health Insurance gives no explanation or examples. Nothing else in the bill file or the drafting records in the Wisconsin Legislative Reference Bureau or Wisconsin Legislative Council explains "creative application" of the made whole doctrine. Thus the memorandum provides no insight about the application of the last sentence of Wis. Stat. § 893.55(7) other than that an insurance company wanted subrogation rights to be protected.¹⁵

¶ 42. Second, a one-page document entitled Explanation for Proposed Amendment to Engrossed Assembly Bill 36: Admissibility of Evidence of Other Sources explains that the mandatory reduction language was deleted to protect subrogation rights of insurance companies. The author and source of this document are not identified and the document is not dated. The document explains that Wis. Stat. § 893.55(7) as proposed and adopted does not require an offset or reduction because some health insurers were concerned that they not lose subrogation rights. The document reads in pertinent part as follows:

Explanation: The first sentence .. . modifies the "collateral source" rule by merely allowing evidence regarding other sources of compensation to be presented to the jury in a medical malpractice action. It does not require an offset or reduction of any malpractice award by the amount of any other payments. Some health insurers expressed concern that this might affect their ability to exercise their subrogation rights whereby they pay for an injury, then seek to recover from the plaintiff if the plaintiff receives compensation again through the malpractice award. Accordingly, the last sentence clarifies that subrogation rights (which are seldom exercised) are unaffected.¹⁶

¶ 43. Not all insurance companies have the same interests in regard to the collateral source rule and subrogation, as this memorandum demonstrates. Insurance companies insuring a victim of medical malpractice for the victim's medical expenses want to retain the collateral source rule and subrogation rights so that they can be reimbursed by the tortfeasor for the payments they made for the victim's medical expenses. In contrast, insurance companies insuring a health care provider tortfeasor want to eliminate the collateral source rule so that they can pay a victim less money for the victim's medical expenses; these insurance companies want to eliminate subrogation so that they need not pay a victim's insurance company for medical expenses the victim's insurance company paid.¹⁷ The legislature apparently added the last sentence of the statute as some sort of compromise to take into account the divergent interests of different insurance companies. The compromise is, however, unintelligible in the context of Wis. Stat. § 893.55(7).

¶ 44. Third, the legislative files have references to an American Law Institute Reporter's Study that recommended, among other things, that statutory modifications of the collateral source rule should include a provision providing for mandatory reduction of a plaintiffs tort award "by the amount of present and estimated future payments from all sources of collateral benefits except life insurance."¹⁸ The proponents of the bill thus were well aware of the Reporter's Study and deliberately did not adopt the Study's proposed approach.

¶ 45. Fourth, a January 27, 1995 memorandum from Gordon A. Anderson, a Wisconsin Legislative Council staff attorney, to Representative Sheryl Albers (co-chair) and other members of the Assembly Committee on Insurance, Securities and Corporate Policy reinforces that the purpose of Wis. Stat. § 893.55(7) is to alter the admissibility of collateral source payments, not to change the substantive application of the collateral source rule. The memorandum candidly admits, and highlights, that § 893.55(7) does not explain the consequences of the admissibility of the collateral source payments. The memorandum reads in relevant part:

5. Collateral Sources

Currently, if an injured party brings an action against a person who allegedly caused that injury, information that the insured party has received benefits for that injury from another source, such as a health insurer or disability income insurer, is not admissible as evidence in the action.

Under SECTION 7 of Assembly Bill 36, evidence of any compensation for bodily injury received from sources other than the defendant to compensate for [sic] the claimant for the injury is admissible in an action to recover damages for medical malpractice. The provision does not state the consequences of that admissibility (i.e., is the trier of fact expected to award damages based on the difference between the actual damages and the amounts received or to award damages which include the amounts paid by the "collateral sources").¹⁹

¶ 46. The most reasonable explanation of the statute on the basis of the legislative history is that Wis. (7) became simply a modification of the evidentiary aspect of the collateral source rule, not the substantive aspect.²⁰

¶ 47. Although the legislative history indicates the legislature intended to modify what evidence is admissible in a medical malpractice action, it is not clear how that modification impacts our case law defining "reasonable value of medical services" as the reasonable value of medical services rendered, without limitation to amounts paid, or how that modification affects the collateral source rule and subrogation.

¶ 48. The key concepts that emerge from this legislative history are as follows: the collateral source rule is modified, not abrogated; the modification of the collateral source rule is a modification of the rules of evidence to allow evidence of the other payments; the modification is not an explicit modification of the substantive collateral source rule that a collateral source payment does not reduce an award of medical expenses; and subrogation rights are preserved and seem to trump other considerations.

C

¶ 49. The legislative goals are not explicitly set forth in the statute. Section 893.55(7) was adopted in the 1995-96 session to modify the 1975 Liability and Patients Compensation Act, which created chapter 655 in the Wisconsin Statutes, along with other provisions governing medical malpractice actions, effective July 1975. Chapter 655 was adopted in reaction to a perceived crisis in medical malpractice.²¹

¶ 50. The immediate goal of Wis. Stat. § 893.55(7) was arguably to provide fact-finders with information about the collateral source payments in the hope that victims would not obtain double recovery as a result of the increased prevalence of both publicly and privately provided medical expense insurance.²² The ultimate goal of § 893.55(7) would be to reduce health care providers' insurance premiums as a result of a reduction of victims' recoveries.

¶ 51. We therefore examine possible interpretations of Wis. Stat. § 893.55(7) with the legislative history and goals in mind, along with three key legal concepts implicated in Wis. Stat. § 893.55(7): the valuation of reasonable medical expenses; the common law collateral source rule; and subrogation. We shall discuss these three concepts in turn and then finally set forth our interpretation of § 893.55(7) in light of the text, the legislative history, the legislative goal and these concepts.

D

¶ 52. In calculating damages, a person injured by medical malpractice may recover the reasonable value of the medical services reasonably required by the injury.²³ We have recognized that in "most cases [the reasonable value of medical services] is the actual expense, but in some cases it is not. But the test is the reasonable value, not the actual charge, and therefore there need be no actual charge."²⁴ It is not a controversial proposition that the recovery is for the value of the services, not for the expenditures actually made or the obligations incurred.²⁵ That medical and nursing services are rendered gratuitously "should not preclude the injured party from recovering the value of the services as part of his compensatory damages."²⁶

¶ 53. The defendants argue that Wis. Stat. § 655.009(2), enacted in 1975, changed the standard for determining the reasonable value of medical services in medical malpractice cases. Section 655.009(2) provides that "[t]he court or the jury, which ever is applicable, shall determine the amounts of medical expense payments previously incurred and for future medical expense payments."

¶ 54. We are not persuaded that this statute changes the long-standing rule that the "reasonable value of medical services" is the reasonable value of medical services rendered, without limitation to amounts paid. This long-standing rule has been applied in both chapter 655 medical malpractice actions and in other actions as the method for determining the reasonable value of medical services.

¶ 55. The most logical interpretation of Wis. Stat. § 655.009(2) is that the court or jury should determine past and future medical expenses based on the common-law standard for determining such damages. We agree with the amicus curiae brief of the Wisconsin Academy of Trial Lawyers that if the legislature had intended in 1975 to make the measure of damages in medical malpractice actions "payments" for medical services actually made by the victim, it need not have adopted Wis. Stat. § 893.55(7) to modify the collateral source rule.

E

¶ 56. We next examine the second, related principle implicated by Wis. Stat. § 893.55(7), the well-recognized common law collateral source rule. The collateral source rule helps claimants recover the "reasonable value of the medical services, without limitation to the amounts paid."²⁷ Regardless of the method of financing the victim's medical expenses, a tortfeasor's liability is the reasonable value of the treatment rendered without limitation to the amounts actually paid by the victim. "Under the collateral source rule, the amount of damages awarded to a person injured because of another individual's tortious conduct is not reduced when the injured party receives compensation from another source . . . ."²⁸

¶ 57. The policy basis for the collateral source rule is that a tortfeasor who is legally responsible for causing an injury should not be relieved of his or her obligation to compensate the victim simply because the victim has the foresight to arrange, or good fortune to receive, benefits from a collateral source for injuries and expenses.²⁹ An underlying justification for the rule is that should a windfall arise because of an outside payment, the party to profit from that collateral source should be the injured person, not the tortfea-sor.³⁰ The collateral source rule also ensures that the liability of similarly situated tortfeasors is not dependent on the relative fortuity of the manner in which each victim's medical expenses are financed.³¹ Moreover, although some plaintiffs may get duplicate recovery, many successful plaintiffs are far from fully compensated, considering, for example, attorney fees and costs.

¶ 58. Furthermore, the collateral source rule is designed to deter wrongdoing; the rule "deter[s] negligent conduct by placing the full cost of the wrongful conduct on the tortfeasor."³²

¶ 59. Those critical of the collateral source rule argue that the rule allows a victim a double recovery: a payment by the tortfeasor and a payment by a collateral source.

¶ 60. This court has applied the collateral source rule in recent cases. For example, in Koffman v. Leichtfuss, 2001 WI 111, 246 Wis. 2d 31, 630 N.W.2d 201, an automobile accident case, the tortfeasor argued that because the plaintiffs insurer had subrogation rights against the defendant tortfeasor, the plaintiff was entitled only to amounts he actually paid for medical services. The circuit court allowed the plaintiff to argue for the full amount of medical expenses while simultaneously allowing the defendants to argue that the plaintiff should recover only for the amount he actually paid. The jury reduced its award to the plaintiff for medical services by the amount of the collateral source payments, and in response to post-verdict motions, the circuit court further reduced the award to the amounts actually paid by the plaintiff.

¶ 61. We recognized in Koffman that the plaintiff often does not incur out of pocket expenses for medical services, stating:

The modern health care system employs a myriad of health care finance arrangements. As part of the system, negotiated and contracted discounts between health care providers and insurers are increasingly prevalent. Pursuant to these agreements, an insurer's liability for the medical expenses billed to its insured is often satisfied at discounted rates, with the remainder being "written-off¹ by the health care provider.³³

Wisconsin Stat. § 893.55(7) was not at issue in Koff-man, and the collateral source rule was fully operational in that case. The plaintiff in that case was entitled to seek recovery of the reasonable value of the medical services without limitation to the amounts paid.³⁴

¶ 62. The collateral source rule works in conjunction with subrogation and reimbursement. Plaintiffs do not necessarily actually receive a double recovery even if they collect fully from both the tortfeasor and the collateral source, because a collateral source may have a right of subrogation or reimbursement.³⁵

¶ 63. Wisconsin Stat. § 893.55(7) explicitly provides that it does not limit the substantive or procedural rights of persons who have claims based upon subrogation. As we explained previously, the legislature did not mandate that a fact-finder offset collateral source payments in determining the reasonable value of medical services to protect subrogation. Subrogation helps reduce an insurer's losses and makes it at least theoretically possible for an insurer to limit premium charges accordingly. The protection of subrogation has therefore been used to justify the collateral source rule.³⁶ The relationship of § 893.55(7) to the collateral source rule and subrogation dictates to a large extent the interpretation of the statute.

F

¶ 64. We turn now to the third legal principle embodied in the statute, subrogation. By virtue of payments made on behalf of the victim (the subrogor), a payor (subrogee) sometimes obtains a right to recover these payments in an action against a tortfeasor and is a necessary party in an action against the tortfeasor.³⁷ Subrogation exists to ensure that the loss is ultimately placed upon the wrongdoer and to prevent the victim (the subrogor) from being unjustly enriched through a double recovery, namely recovering from both the paying party (the subrogee) and the tortfeasor.³⁸ An entity with a subrogation right can waive the right to subro-gation in favor of reimbursement.³⁹ Successful plaintiffs thus must sometimes reimburse sources of collateral payments out of tort recoveries. The principles of subrogation therefore are applicable when the right is asserted as a reimbursement.

¶ 65. Subrogation ordinarily works in tandem with the collateral source rule to further the goals of both rules.⁴⁰ The collateral source rule prevents benefits received by the victim from inuring to the tortfea-sor, and subrogation prevents the victim from receiving a double recovery because the payor of the benefits may recover the payments from the tortfeasor or the victim.⁴¹ In other words, when the risk of double recovery on the part of the victim does not exist because the payor may seek subrogation, the collateral source rule applies.⁴²

¶ 66. In other states with statutes admitting collateral source payments in evidence, subrogation rights are explicitly not protected, and the payor of the collateral source payments (the subrogee) is prohibited from receiving reimbursement.⁴³ In contrast, the Wisconsin legislature chose in Wis. Stat. § 893.55(7) to protect the substantive or procedural rights of persons who have claims based upon subrogation.⁴⁴ This choice is clear on the face of the statute and in the legislative history, as we previously explained.

¶ 67. Any interpretation of § 893.55(7) must therefore take into account that the statute does not limit the rights of claims based on subrogation.

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¶ 68. With these principles in mind, we interpret Wis. Stat. § 893.55(7).

¶ 69. The text of § 893.55(7) renders admissible evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant for bodily injury in a medical malpractice damage action. The text does not direct the fact-finder how to consider or use evidence of collateral source payments. The Wisconsin statute, unlike statutes in other states, does not require an offset or reduction of any malpractice award by the amount of collateral source payments.

¶ 70. According to the legislative history, the first sentence of Wis. Stat. § 893.55(7) modifies the collateral source rule by merely allowing evidence regarding other sources of compensation to be presented to the jury in a medical malpractice action. Wisconsin Stat. § 893.55(7) modified, but did not abrogate, the longstanding common-law collateral source rule that the reasonable value of medical services is the full value of the medical services, not limited by any collateral source payments.

¶ 71. The rights of persons whose claims are based on subrogation are not limited by Wis. Stat. § 893.55(7), as the last senten'ce in the statute makes clear. The sentence in the original draft of the statute requiring that damages under ch. 655 shall be reduced by any compensation the injured party received from sources other than the defendant made insurance companies worry that their subrogation rights would be adversely affected, and the sentence was therefore eliminated.

¶ 72. In order for subrogation (or reimbursement) and the collateral source rule to work in tandem to prevent a victim's double recovery and protect subrogation, Wis. Stat. § 893.55(7) must be interpreted to require courts to instruct juries to consider the collateral source payments only in determining the reasonable value of the medical services rendered.

¶ 73. An alternative interpretation of Wis. Stat. § 893.55(7), that is, to allow a fact-finder to offset the collateral source payments, leaves many questions unanswered that the legislature could not have intended this court to answer. The statute is silent about the parties' ability to introduce evidence or argue about the obligation to repay collateral sources. The statute is silent about the admissibility and consideration by the fact-finder of expenses the victim incurred to acquire the collateral source payments. The statute is silent about the ability of the parties to argue to the fact-finder the public policies underlying the collateral source rule and subrogation. The statute is silent about the ability of the parties to argue about the inequity resulting to health care providers who receive reduced payments for the care they provide to patients as a result of rules governing Medicare and other programs, while the reasonable value of medical services is valued at the full reasonable value. With so many unresolved issues regarding a fact-finder's ability to make discretionary off-sets, we must conclude that the legislature intended that the jury not do so.

¶ 74. We conclude that the text of § 893.55(7) explicitly allows evidence of collateral source payments to be introduced in medical malpractice actions. We further conclude that if evidence of collateral source payments from sources including Medicare, other state or federal government programs, medical insurance or write-offs, and discounted or free medical services is presented to the fact-finder, then the parties must be allowed to furnish the jury with evidence of any potential obligations of subrogation or reimbursement. Because the text does not inform a fact-finder what to do with the evidence, in interpreting the statute and determining what a fact-finder must do with the evidence we consider the text of the statute, the legislative history, the legislative goal, and three common-law concepts encompassed in medical malpractice actions and Wis. Stat. § 893.55(7), namely reasonable value of medical services, the collateral source rule, and subro-gation. We conclude that the circuit court must instruct the fact-finder that it must not reduce the reasonable value of medical services on the basis of the collateral source payments. Although the jury is instructed not to use the evidence of collateral source payments to reduce the award for medical services, evidence of collateral source payments may be used by the jury to determine the reasonable value of medical services.

¶ 75. The facts of this case illustrate that our interpretation of Wis. Stat. § 893.55(7) fulfills the legislative policies and objectives. In this case, Medicare was not a party but has rights of reimbursement from the parties. The concepts of reimbursement and subro-gation are similar.

¶ 76. If the estate recovers an award for the value of the medical services rendered, the estate would not necessarily have a double recovery because it would have an obligation to reimburse Medicare. In the instant case, the attorney for the estate received three lengthy letters (dated July 30, 2001; December 12, 2001; and January 22, 2002 respectively) from Medicare, each advising the attorney in boldface type of the estate's obligation to reimburse Medicare for Medicare payments out of any recovery or settlement it receives as a result of the litigation. Because Medicare may seek reimbursement, to protect Medicare's right of reimbursement the collateral source rule should apply. That is, the fact-finder should be advised of the estate's potential obligation to Medicare and the fact-finder should not reduce an award to the estate by the collateral source payments by Medicare because of the potential obligation to repay Medicare.⁴⁵ The defendants assert that they, too, may be liable to Medicare. It does not appear that § 893.55(7) can at the same time allow an offset for collateral source payments, protect the parties to the action, and protect the rights of Medicare, which provided collateral source payments. Accordingly, the jury may hear evidence of collateral source payments and evidence relevant thereto to determine the reasonable value of the medical services but must not use the collateral source payments as an offset to determine the reasonable value of the medical services.

¶ 77. Because the circuit court failed to advise the jury that it must not reduce its award for the reasonable value of medical expenses by the amount of the collateral source payments, we reverse the circuit court's judgment and order and remand the cause for a new trial in accordance with this decision on the issue of the hospital and medical expenses.

IV

¶ 78. Irrespective of the interpretation of Wis. Stat. § 893.55(7) adopted, the circuit court committed prejudicial error and a new trial must be held on the issue of the hospital and medical expenses.

¶ 79. In this case the estate's counsel requested an instruction informing the jury that the estate was obliged to reimburse Medicare. The estate's proposed jury instruction would have allowed the jury to hear and consider evidence of collateral source payments in determining the reasonable value of medical services. The proposed instruction would also have allowed the jury to consider the estate's potential obligation to reimburse Medicare. The estate's proposed instruction read as follows:

Collateral Source Payments

Under the law in the State of Wisconsin, an injured party, or that party and Medicare, is usually entitled to recover the reasonable value of medical services of which the negligence of a person is a cause, whether or not the services are provided for free, and regardless of whether or not an insurer or Medicare pays the bill. The purpose of this rule is to hold the negligent parties accountable for their acts by holding them responsible for the value of the damages they have caused.

However, in medical negligence cases such as this one, Wis. Stat. § 893.55(7) allows you to hear testimony regarding payments made by Medicare and insurance sources. The statute does not require you to reduce the sum found by you to be the reasonable value of the medical services of which the negligence of the defendants was a cause by any payment made by any such source. You may do so.

You are instructed, however, that the Estate of Vance Lagerstrom is obligated to reimburse Medicare for expenditures made by it.

The circuit court did not use this proposed jury instruction.

¶ 80. The circuit court did not even allow the estate to tell the jury that it might have a potential obligation to reimburse Medicare.⁴⁶ The circuit court ruled that the estate could, if it wished, argue that the estate "could reimburse Medicare." It could not argue that the estate might be required to do so.

¶ 81. The instruction given did not advise the jury of the estate's potential obligation to reimburse Medicare. The jury was instructed as follows:

ESTATE'S RECOVERY FOR MEDICAL, HOSPITAL, AND FUNERAL EXPENSES

Subdivision (b) of question 4 asks what sum of money will fairly and reasonably compensate the Estate of Vance Lagerstrom for the reasonable value of the medical and hospital expenses necessarily and reasonably incurred in the care of him from the date of the Ensure infusion incident to the time of his death, because of the injuries resulting to him as a result of the Ensure incident.

In medical negligence cases such as this one, you are allowed to hear testimony regarding payments made by Medicare, insurance and other sources. The law does not require you to reduce the sum found by you to be the reasonable value of the medical services of which the negligence of the defendants was a cause by any payment by any such source. You may do so. It is for you the jury to decide.

¶ 82. This jury instruction is infirm, aside from any consideration of Wis. Stat. § 893.55(7). The instruction given to the jury is deficient because it does not alert the jury that the estate is potentially obligated to reimburse Medicare.

¶ 83. The estate contended at trial that it had a legal obligation to reimburse Medicare for Medicare's payments for medical expenses. According to the record, Medicare explicitly asserted its intention to seek reimbursement for its payments.

¶ 84. Nevertheless, the circuit court barred the estate from introducing evidence of its potential obligation to reimburse Medicare and further barred the estate from arguing to the fact-finder that it would not be getting a double recovery if the fact-finder awarded it the full reasonable value of medical services.

¶ 85. According to the calculation of the reasonable value of medical services rendered, the collateral source rule and subrogation (or reimbursement), the risk of double recovery on the part of the estate did not necessarily exist in the present case. The circuit court forced the defense counsel to argue an incorrect interpretation of law to the jury, namely that the estate merely had the option to repay Medicare. Under these circumstances the jury did not have full information to decide the value of reasonable medical services, and any decision was erroneous. The real controversy has not been fully tried.⁴⁷

¶ 86. The estate was clearly prejudiced when the circuit court barred the estate from introducing evidence about its potential obligation to Medicare and gave an instruction that did not refer to the estate's potential obligation to reimburse Medicare. The result was that the estate recovered only $755 for medical expenses although it may have to reimburse Medicare for a significantly larger sum.⁴⁸

¶ 87. The defendants argue that much of the decedent's medical treatment did not relate to the medical malpractice and that the estate failed to prove what specific charges Medicare paid for services that related to the medical malpractice. The defendants also argue that the difficulties facing the estate stem not from Wis. Stat. § 893.55(7) or the instructions but from the estate's failure to name Medicare as a party. The defendants contend that had Medicare been named as a party, the statute presumably would have worked as intended: Evidence of Medicare's payments would have been admitted and subject to cross-examination; Medicare would have been on the verdict and the issue of the estate's obligation to Medicare would no longer exist. The defendants assert that they too have a potential liability to Medicare, and that they would be subject to double liability if the jury awarded greater medical expenses to the estate than the $755 awarded. In sum, according to the defendants, neither party should have been allowed to argue specifically about Medicare because Medicare was not a party. Yet Medicare considerations were important, once its payments were submitted to the jury.

¶ 88. The effect of the circuit court errors on the estate was significant. The jury was not informed of the crucial fact that the estate may be responsible to Medicare for all or part of $89,000. By not allowing the jury to hear evidence that Medicare could recover a sum in excess of $755 from the estate, the circuit court committed reversible error.

¶ 89. Irrespective of the proper interpretation of Wis. Stat. § 893.55(7), we conclude that the circuit court erred in not admitting evidence of the estate's potential obligation to reimburse Medicare. Accordingly, we reverse the circuit court's judgment and order and remand the cause for a new trial on the issue of the hospital and medical expenses.

V

¶ 90. We turn next to the issue of funeral expenses. At the close of the five-day trial, in response to Question Number 4 on the special verdict,⁴⁹ the jury declined to award the estate any compensation for funeral expenses. Undisputed evidence at trial established that the funeral expenses totaled $7,610.10. The jury found the defendants' negligence was a cause of the decedent's death.⁵⁰

¶ 91. After trial the estate moved, pursuant to Wis. Stat. § 805.14(5) (c), to have the answers in the verdict changed on the ground that the evidence was insufficient to sustain the answer.⁵¹ In response to the estate's post-verdict motion on the issue of funeral expenses, the defendants argued that under Wis. Stat. § 895.04, the jury "may" award funeral expenses, but that a jury is not required to do so. The defendants argued that "[t]he evidence in this case establishes that the jury could have concluded that the decedent was going to die anyway .. .," and that the estate was going to incur funeral expenses regardless of what illness eventually killed the decedent.

¶ 92. The circuit court denied the estate's motion for a change in the verdict to award funeral expenses and entered judgment reflecting the jury's award of $0 for funeral expenses.

¶ 93. Like the circuit court, "when [this court is] requested to change an answer [or answers] in a jury verdict,. . . [we will view] the evidence ... in the light most favorable to the verdict and the verdict will be affirmed if supported by any credible evidence."⁵² In the alternative, the estate argues that this court should determine the reasonable value of the funeral expenses and order the defendants to accept additur under Wis. Stat. § 805.15(6)⁵³ or retry the issue of the funeral expenses.

¶ 94. The instruction to the jury read in relevant part: "Subdivision (c) of question 4 asks what sum of money will fairly and reasonably compensate the Estate of Vance Lagerstrom for the funeral and burial expenses of Mr. Lagerstrom."⁵⁴

¶ 95. Eventually, we all must die.⁵⁵ But that fact does not mean that a fact-finder may refuse to award funeral and burial expenses when the victim of the medical malpractice is elderly and, in the absence of medical malpractice, was likely to die sooner than a younger victim. The malpractice was a cause of the death and the tortfeasor is liable, as a matter of law, for reasonable funeral and burial expenses.

¶ 96. It is the role of the circuit court to change an answer on the verdict if there is a complete lack of any evidence to support the answer, and it was error here for the circuit court to deny the estate's motion to change the answer regarding the fair and reasonable amount of funeral expenses. The undisputed evidence was that funeral expenses totaled $7,610.10. The defendants offered no evidence, credible or otherwise, to dispute this figure. Upon a finding of negligence and causation, the fair and reasonable amount necessary to compensate the estate for the funeral expenses in the absence of any evidence to the contrary was $7,610.10.

¶ 97. The circuit court should have entered the sum of $7,610.10 on the special verdict form in response to the question asking what amount would fairly and reasonably compensate the estate for the funeral expenses. In fact, the parties contemplated having the circuit court do just that, although because of the timing of the estate's request, it was decided to let the question go to the jury.⁵⁶ Nevertheless, it is the longstanding rule that:

In drafting a special verdict the trial court must first consider the issues raised by the pleadings. [The court] should then eliminate from the issues so raised those that are determined by the evidence on the trial by admissions, by uncontradicted proof, or by failure of proof⁵⁷

Here there the undisputed amount of the funeral expenses was $7,610.10. Defendants offered no evidence that this amount was unreasonable or otherwise unwarranted. They implicitly conceded as much in the colloquy before submission of the special verdict form to the jury.

¶ 98. For the foregoing reasons, we reverse the circuit court's order denying the estate's motion for a change of the answer on the special verdict form and order the circuit court on remand of the cause to enter the amount of $7,610.10 on the special verdict form for reasonable funeral expenses.

¶ 99. For the foregoing reasons, we conclude that although the text of Wis. Stat. § 893.55(7) renders admissible evidence of any compensation for bodily injury received from sources other than the defendant to compensate the claimant in a medical malpractice damage action, § 893.55(7) requires that a jury be instructed not to reduce the award for medical services in the amount of the collateral source payments; the jury may consider, however, collateral source payments in determining the reasonable value of the medical services rendered.

¶ 100. We therefore reverse the judgment of the circuit court relating to the award to the estate for hospital and medical expenses and remand the cause to the circuit court for a new trial on the issue of hospital and medical expenses. We further order the circuit court on remand of the cause to enter the amount of $7,610.10 on the special verdict form for reasonable funeral expenses.

By the Court. — The judgment and order of the circuit court are reversed and the cause is remanded.

1 Lagerstrom v. Myrtle Werth Hosp., 2004 WL 1057849 (Wis. Ct. App. May 11, 2004).

2 All references to the Wisconsin Statutes are to the 2001-02 version unless otherwise noted.

3 Wisconsin Stat. § 805.14(5)(c) provides: "Motion to change answer. Any party may move the court to change an answer in the verdict on the ground of insufficiency of the evidence to sustain the answer."

4 Wisconsin Stat. § 895.04(5) reads:

If the personal representative brings the action [for wrongful death], the personal representative may also recover the reasonable cost of medical expenses, funeral expenses, including the reasonable cost of a cemetery lot, grave marker and care of the lot.

If a relative brings the action [for wrongful death], the relative may recover such medical expenses, funeral expenses, including the reasonable cost of a cemetery lot, grave marker and care of the lot, on behalf of himself or herself or of any person who has paid or assumed liability for such expenses.

5 Wis JI — Civil 1750.1 Comment (1998). These instructions are designed for all cases, including medical malpractice cases, involving personal injuries. The Committee recommends the following subdivided verdict format: (1) past medical; (2) future medical; (3) past loss of earning capacity; (4) future loss of earning capacity; (5) past pain, suffering, and disability; and (6) future pain, suffering, and disability. This format was used in the present case.

6 Wisconsin Stat. § 893.55(5) reads as follows:

(5) Every award of damages under ch. 655 shall specify the sum of money, if any, awarded for each of the following for each claimant ■ for the period from the date of injury to the date of award and for the period after the date of award, without regard to the limit under sub. (4)(d):

(a) Pain, suffering and noneconomic effects of disability.

(b) Loss of consortium, society and companionship or loss of love and affection.

(c) Loss of earnings or earning capacity.

(d) Each element of medical expenses.

(e) Other economic injuries and damages.

7 Two jurors dissented on the question of whether the negligent placement of the feeding tube was a cause of the decedent's death and the question of what amount of money would fairly and reasonably compensate Klover Lagerstrom for the loss of society and companionship.

8 State courts are divided about the constitutionality of legislative enactments declaring collateral source payments admissible as evidence. For state courts declaring such laws constitutional, see, e.g., Marsh v. Green, 782 So. 2d 223 (Ala. 2000); Barme v. Wood, 689 P.2d 446 (Cal. 1984). For state courts declaring such laws unconstitutional, see, e.g., O'Bryan v. Hedgespeth, 892 S.W.2d 571, 576-78 (Ky. 1995) (violation of separation of powers); Carson v. Maurer, 424 A.2d 825, 835-36 (N.H. 1980) (violation of equal protection); State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 715 N.E.2d 1062, 1088-90 (Ohio 1999) (violation of due process).

9 See, e.g., Delaware Code Ann. Tit. 18, § 6862 (introduction of evidence of collateral sources limited to public collateral source of compensation or benefits; statute not applicable to life insurance or private collateral sources of compensation or benefits).

10 Dan B. Dobbs, Dobbs Law of Remedies: Damages, Equity, Restitution § 8.6(3), at 493 (2d ed. 1993). Many states abrogating the collateral source rule by statute require the fact-finder or court to reduce the reasonable value of medical services by the amount of collateral source payments. See, e.g., Reid v. Williams, 964 P.2d 453 (Alaska 1998) (under terms of the statute, the circuit court makes a mandatory reduction of the award to reflect collateral source payments not provided by government program); Rudolph v. Iowa Methodist Med. Ctr., 293 N.W.2d 550 (Iowa 1980) (statute requires mandatory reduction in award to account for collateral source payments); Arneson v. Olson, 270 N.W.2d 125 (N.D. 1978) (statute requires mandatory reduction of award to reflect nonrefundable medical reimbursement benefits received less premiums paid over the five years prior to the medical malpractice).

11 For example, the Arizona statute that allows evidence of certain collateral source payments also allows the plaintiff to introduce evidence of expenses paid to secure the collateral source payments. The plaintiff may also introduce evidence of the collateral source provider's right to recovery against the plaintiff as reimbursement or under subrogation. The statute further provides that "unless otherwise expressly permitted to do so by statute, no provider of collateral benefits... shall recover any amount against the plaintiff as reimbursement for such benefits nor shall such provider be subrogated to the rights of the plaintiff." Ariz. Rev. S'tat. Ann. § 12-565 (West 2003).

12 For example, Indiana's statute that allows the admission of proof of collateral source payments other than certain enumerated payments allows admission into evidence of proof of the amount of money the plaintiff is required to repay. See Ind. Code Ann., § 34-44-1-2 (West 1998).

13 Memorandum from Representative Albers to Gordon Anderson, Senior Staff Attorney, Wisconsin Legislative Council, January 23, 1995 (available at Wisconsin Legislative Council, Madison, Wisconsin) (emphasis added).

14 The "made whole doctrine" in Wisconsin, also called the Rimes doctrine, prevents subrogation by acting as a "rule of priority, such that only where an injured party has received an award .. . which pays all of his elements of damages, including those for which he has already been indemnified by an insurer, is there any occasion for subrogation." Petta v. ABC Ins. Co., 2005 WI 18, ¶ 28, 278 Wis. 2d 251, 692 N.W.2d 639 (internal quotation and citation omitted).

15 The collateral source rule has blocked the assertion of subrogation rights even when the insurance policy expressly reserves subrogation rights. See Ruckel v. Gassner, 2002 WI 67, ¶ 43, 253 Wis. 2d 280, 646 N.W.2d 11 ("[W]e hold that pursuant to this court's [made whole doctrine cases], an insurer is not entitled to subrogation against its insured unless and until the insured is made whole, regardless of contractual language to the contrary.").

16 The Explanation for Proposed Amendment to Engrossed Assembly Bill 36 goes on to describe the comments of an American Law Institute Reporter's Study relating to modification of the collateral source rule. These comments were not made in regard to the Wisconsin bill.

According to a study commissioned by the American Law Institute [Reporters' Study of Enterprise Liability and Personal Injury, April 1991, vol. II, p. 167], nearly half of all states ... have modified the "collateral source" rule to either allow admissibility of other payments made, or, going one step further, to require mandatory offsets to assure there is no double recovery. There are two main reasons for this modification of the collateral source rule. First, economists who have studied the effects of various tort reforms have concluded that collateral source rule modification yields substantial savings in the long run, second only to caps on damages in terms of effect on overall costs. Second, fairness is enhanced by reducing the likelihood of double recoveries and allowing juries to take other compensation into account in determining the amount of an award.

Explanation for Proposed Amendment to Engrossed Assembly Bill 36: Admissibility of Evidence of Other Sources, in Drafting Records, Assembly Bill 36 (available at the Wisconsin Legislative Reference Bureau, Madison, Wisconsin).

17 The abolition of the collateral source rule (and subrogation) results in an anomaly: The victim's insurance company compensates the victim for medical expenses and the tortfeasor's insurance company is relieved of paying the victim's medical expenses.

18 The American Law Institute, II Reporters' Study: Enterprise Responsibility for Personal Injury 182 (1991).

19 Wisconsin Legislative Council Staff Memorandum from Gordon A. Anderson, Senior Staff Attorney, to Representative Albers and Members of the Assembly Committee on Insurance, Securities and Corporate Policy, January 27, 1995 (available at the Wisconsin Legislative Council, Madison, Wisconsin).

20 See Linda J. Gobis, Note, Lambert v. Wrensch: Another Step Toward Abrogation of the Collateral Source Rule in Wisconsin, 1988 Wis. L. Rev. 857, 861 ("As a rule of evidence, [the collateral source rule] precludes introduction of evidence regarding any benefits the plaintiff obtained from sources collateral to the defendant. As a rule of damages, it precludes the defendant from offsetting the plaintiffs receipt of collateral compensation against the ... judgment.").

21 Larry Stephen Milner, Comment, The Constitutionality of Medical Malpractice Legislative Reform: A National Survey, 18 Loy. U. Chi. L.J. 1053, 1053 (1986-87); Pamela Mathy, Comment, Testing the Constitutionality of Medical Malpractice Legislation: The Wisconsin Medical Malpractice Act of 1975, 1977 Wis. L. Rev. 838, 839-40.

22 The Delaware Supreme Court declared that the purpose of a similar statute was "to prevent the collection of a loss from a collateral public source (such as Social Security) and then the collection for the same loss from the party or hospital being sued." Nanticoke Mem'l Hosp., Inc. v. Uhde, 498 A.2d 1071, 1075 (Del. 1985).

The Arizona supreme court declared that the purpose of its statute is

to inform the fact finder of the true extent of the plaintiffs economic loss in order to avoid the inequity of windfall recoveries. The resulting judgments will no doubt reflect a set-off for the benefits the plaintiff has already received and these lower judgments would be reflected in lower malpractice insurance premiums, one of the objectives of the legislation. It should be noted that admission into evidence of plaintiffs' collateral benefits in no way guarantees any reduction in the damages awarded by the trier of fact.

Eastin v. Broomfield, 570 P.2d 744, 753 (Ariz. 1977).

See also Milner, supra note 21, at 1068 ("An increase in insurance protection nationwide, combined with utilization of this [collateral source] rule, however, has resulted in multiple recoveries.").

23 Thoreson v. Milwaukee & Suburban Transp. Co., 56 Wis. 2d 231, 243, 201 N.W.2d 745 (1972).

24 Id. See also Koffman v. Leichtfuss, 2001 WI 111, ¶ 56, 246 Wis. 2d 31, 630 N.W.2d 201 ("[W]e have determined that the plaintiff was entitled to seek recovery of the reasonable value of the medical expenses rendered without limitation to the amounts paid by the plaintiff and his insurers."); Ellsworth v. Schelbrock, 2000 WI 63, 235 Wis. 2d 678, 611 N.W.2d 764 (court concluded that the collateral source rule applies to medical assistance benefits; rejected argument that recipient of public assistance did not incur liability for medical expenses and was not entitled to award of damages or benefit of collateral source rule). See also I The Law of Damages in Wisconsin § 9.9, at 8 (Russell Ware ed., 4th ed. 2005).

25 See I The Law of Damages in Wisconsin, supra note 24, § 9.9, at 8 n.32 ("Several Wisconsin cases have reaffirmed the general rule that the plaintiff, on the basis of the collateral source rule and principles of subrogation, is entitled to recover the reasonable value of the health care services rendered rather than the amount actually paid to the provider." (citing Koffman and Ellsworth)).

26 Thoreson, 56 Wis. 2d at 243.

27 Koffman, 246 Wis. 2d 31, ¶ 2.

28 Ellsworth, 235 Wis. 2d 678, ¶ 1. We cited Restatement (Second) of Torts § 920A adopting the collateral source rule with approval in Ellsworth at ¶ 8.

29 Koffman, 246 Wis. 2d 31, ¶ 29.

30 Id. (citing Campbell v. Sutliff, 193 Wis. 370, 374, 214 N.W. 374 (1927), overruled on other grounds by Powers v. Allstate Ins. Co., 10 Wis. 2d 78, 92, 102 N.W.2d 393 (1960).

31 Koffman, 246 Wis. 2d 31, ¶ 31.

32 Ellsworth, 235 Wis. 2d 678, ¶ 7 (quoted source omitted).

33 Koffman, 246 Wis. 2d 31, ¶ 21.

34 Id., ¶¶ 2, 31.

35 Dobbs, supra note 10, § 8.6 at 496.

36 Id., §8.6(3), at 496-97.

37 Koffman, 246 Wis. 2d 31, ¶ 33 (citations omitted).

38 Id.

39 Jindra v. Diederich Flooring, 181 Wis. 2d 579, 596, 511 N.W.2d 855 (1994).

40 Koffman, 246 Wis. 2d 31, ¶ 40.

⁴¹

⁴²

43 This alternative is recommended by the American Law Institute, II Reporters' Study of Enterprise Responsibility for Personal Injury 161-82 (1991).

For other states' treatment of subrogation, see, e.g., Ala. Code § 12-21-45 (2001)(upon proof by plaintiff that the plaintiff is obligated to repay the medical expenses which have been reimbursed, evidence of plaintiffs reimbursement or payments is admissible); Cal. Civ. Code § 3333.1(b) (2005) (no source of collateral benefits introduced in evidence shall recover any amount against the plaintiff nor be subrogated to the rights of the plaintiff against a defendant).

44 The Wisconsin statute does not explain how the subrogee's rights are to be protected. In contrast, the Kentucky statute provides that a plaintiff must notify subrogees that their failure to assert subrogation rights by intervention in that lawsuit will result in loss of those rights with respect to the final award the plaintiff receives. See Ky. Rev Stat. Ann. § 411.188 (2004). This statute was declared unconstitutional on grounds unrelated to this provision. See O'Bryan v. Hedgespsth, 892 S.W.2d 571 (Ky. 1995).

⁴⁵

⁴⁶

R. 127:125-26.

47 Morden v. Cont'l AG, 2000 WI 51, ¶ 89, 235 Wis. 2d 325, 611 N.W.2d 659.

48 See, e.g., 42 C.F.R. 411.24, 411.37.

49 Special Verdict Question Number 4 read: "What sum of money will fairly and reasonably compensate the Estate of Vance Lagerstrom for damages in each of the following respects: a. His pain and suffering: $20,000. b. Ambulance, medical, hospital, nursing home, rehabilitation, and bed hold expenses: $755. c. Funeral Expenses: $0."

50 Special Verdict Question Number 3 read: 'Was the negligence of such agents and employees of Myrtle Werth and Red Cedar Clinic a cause of Vance Lagerstrom's death? Answer: Yes."

51 Wisconsin Stat. § 805.14(5)(c) reads: "Motion to Change Answer. Any party may move the court to change an answer in the verdict on the ground of insufficiency of the evidence to sustain the answer."

The defendants also moved for a change in the verdict answer on the ground that evidence at trial did not support the jury's finding of negligence.

52 Nelson v. Travelers Ins. Co., 80 Wis. 2d 272, 282-83, 259 N.W.2d 48 (1977) (citing Roach v. Keane, 73 Wis. 2d 524, 536, 243 N.W.2d 508 (1976)).

53 Wisconsin Stat. § 805.15(6) reads in relevant part:

Excessive or inadequate verdicts. If a trial court determines that a verdict is excessive or inadequate, not due to perversity or prejudice or as a result of error during trial (other than an error as to damages), the court shall determine the amount which as a matter of law is reasonable, and shall order a new trial on the issue of damages, unless within 10 days the party to whom the option is offered elects to accept judgment in the changed amount.

54 Richards v. Mendivil, 200 Wis. 2d 665, 671-72, 548 85 (Ct. App. 1996) ("However, an appellate court may overturn the trial court's decision to change the jury's answers if the record reveals that the trial court was 'clearly wrong.'") (citing Weiss v. United Fire & Cas. Co., 197 Wis. 2d 365, 389, 541 N.W.2d 753 (1995)).

55 Horace, We All Must Die (Samuel Johnson trans. 1760).

The circuit court reasoned as follows: "And I think I'll apply my common sense. [The jurors'] belief was that even without the negligence of the defendants this family and the estate of Vance Lagerstrom were in a very short period of time going to be required to pay those expenses, even without the negligence of the defendants."

56 Just before submitting the special verdict form to the jury, the circuit court and counsel discussed having the court enter the amount of funeral expenses:

THE COURT: All right. Any other comments or concerns about the verdict form?

MR. HARRIS [Counsel for estate]: I don't have a strong feeling, your Honor. I would think, that question 4 C, funeral expenses, could he answered by the Court. But — 4 C, funeral, 7610.10 on Exhibit 11.

MR. DUBEAU [Co-Counsel for the defendants]: Yeah. I guess I don't have a problem with that. I don't know if the Court then needs to do the "I've answered the damage question" instruction as well, too.

MR. HARRIS: That's fine. Just leave it the way it is.

THE COURT: Thank you.

MS. LUBINSKY [Co-Counsel for the defendants]: That might be too confusing at this point.

THE COURT: Yep.

57 Allen v. State Farm Fire & Cas. Co., 71 Wis. 2d 212, 216, 238 N.W.2d 104 (1976) (emphasis added) (quoting Bell v. Duesing, 275 Wis. 47, 53, 80 N.W.2d 821 (1957)); see also Dahl v. K-Mart, 46 Wis. 2d 605, 609, 176 N.W.2d 342 (1970).

1 Under the collateral source rule, the damages that a plaintiff is entitled to recover from a defendant cannot be reduced by payments or benefits from other sources. Koffman v. Leichtfuss, 2001 WI 111, ¶ 29, 246 Wis. 2d 31, 630 N.W.2d 201.