Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 09CA0689
The opinion of the court was delivered by: Justice Rice
Judgment Affirmed en banc April 30, 2012
JUSTICE EID dissents, and JUSTICE COATS and JUSTICE BOATRIGHT join in the dissent.
¶1 In this pre-verdict collateral source case, we determine whether the court of appeals erred when it held that the trial court incorrectly admitted evidence of the amount paid by an insurance provider for the medical expenses Respondent Larry Crossgrove incurred as a result of Petitioner Wal-Mart's negligence. We hold that the court of appeals correctly held that the trial court should have excluded evidence of the amounts paid because the common law evidentiary component of the collateral source doctrine requires the exclusion. We thus affirm the judgment of the court of appeals.
I. Facts and Procedural History
¶2 An overhead garage door struck Crossgrove on the head while he delivered cookies to a Wal-Mart store in Trinidad, Colorado. Crossgrove required medical treatment for injuries suffered in the accident. Crossgrove's healthcare providers billed almost $250,000 for their services. Crossgrove's insurer, however, paid the providers $40,000 in full satisfaction of the bills.
¶3 Crossgrove brought a negligence action against Wal-Mart in Las Animas County District Court. Prior to trial, the parties submitted written arguments concerning the admissibility of evidence of the amounts paid by Crossgrove's insurer to satisfy the medical bills. The trial court ruled that the amounts paid should be admitted "in regards to the reasonable and necessary value of [medical] services rendered." In so ruling, the trial court relied on the court of appeals' holding in Lawson v. Safeway, Inc., 878 P.2d 127 (Colo. App. 1994), which states that the amount paid for medical expenses is "some evidence of their reasonable value."*fn1
¶4 After Crossgrove's counsel raised an ongoing objection to the trial court's ruling, the parties stipulated that Crossgrove's healthcare providers accepted $40,000 in satisfaction of Crossgrove's medical bills. The case proceeded to trial, during which Crossgrove testified that his healthcare providers billed about $250,000 for their services. The trial court instructed the jury to consider Crossgrove's past and future losses, including his "reasonable and necessary medical, hospital, and other expenses" when determining economic damages. The jury returned a verdict in Crossgrove's favor. It awarded him $50,000 in economic damages and $27,375 in noneconomic damages. It also determined that Crossgrove was 20 percent at fault for his injuries.
¶5 Crossgrove moved for a new trial, arguing that the trial court erred by admitting evidence of payments made on his behalf by his insurer, a collateral source. Wal-Mart simultaneously moved the trial court to reduce Crossgrove's $50,000 economic damages award by $40,000 under section 13-21-111.6, C.R.S. (2011) -- Colorado's post-verdict collateral source statute. The trial court denied Crossgrove's motion for a new trial and granted Wal-Mart's motion for reduction of the verdict. It reduced the jury's $77,375 award by 20 percent to account for Crossgrove's attributed fault, and by $40,000 for the medical expense coverage that Crossgrove received from his insurer. The trial court then entered judgment in favor of Crossgrove in the amount of $21,900, plus interest.
¶6 Crossgrove appealed the judgment to the court of appeals on the grounds that the trial court erred by admitting evidence of the amounts paid by Crossgrove's insurer. Based on its application of Colorado's collateral source rule, the court of appeals reversed the trial court's ruling regarding the admissibility of the amounts paid evidence and remanded the case for a new trial. We granted Wal-Mart's subsequent petition for certiorari.*fn2
¶7 We review evidentiary rulings for an abuse of discretion. Hock v. New York Life Ins. Co., 876 P.2d 1242, 1251 (Colo. 1994). A trial court necessarily abuses its discretion if its ruling is based on an incorrect legal standard. BP Am. Prod. Co. v. Patterson, 263 P.3d 103, 108 (Colo. 2011). Whether the trial court applied the correct legal standard is a question of law we review de novo. Corsentino v. Cordova, 4 P.3d 1082, 1087-88 (Colo. 2000).
III. Collateral Source Rule
¶8 We hold that the court of appeals correctly determined that the trial court abused its discretion by admitting evidence of the amounts paid by a collateral source because the trial court did not apply the correct legal standard when it ordered the admission of the evidence. The trial court should have applied the pre-verdict evidentiary component of Colorado's collateral source rule which requires the exclusion of evidence of the amounts ...