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Lebsack v. Rios

United States District Court, D. Colorado

November 14, 2017

ERIN L. LEBSACK, Plaintiff,
v.
JORGE L. RIOS, SEABOARD FOODS, LLC, a Limited Liability Company d/b/a Seaboard Farms, SEABOARD CORPORATION, a Foreign Corporation, Defendants.

          ORDER

          R. Brooke Jackson United States District Judge.

         This matter is before the Court on the parties' respective motions for a determination of law. See ECF Nos. 20, 21.[1] Specifically, they ask this Court to address two basic questions: (1) which claims does Ms. Lebsack have standing to bring in light of a settlement between defendants and her workers' compensation carrier; and (2) what medical expense evidence is admissible in light of the collateral source rule and Colorado workers' compensation law. I answer those questions in this order.

         BACKGROUND

         Plaintiff Erin Lebsack alleges that on September 27, 2013, while driving her employer's vehicle, she was struck by a vehicle driven by defendant Jorge L. Rios. ECF No. 1 at ¶ 14. Like Ms. Lebsack, Mr. Rios was driving his employer's vehicle and performing company business at the time of the crash. Id. at ¶ 11-12. As a result of the crash, Ms. Lebsack required medical treatment and missed some work. Id. at ¶ 61.

         Ms. Lebsack claimed and received workers' compensation benefits from her employer, TMB Corporation, through its insurer, Pharmacist Mutual Insurance Company (PMI). ECF No. 20-1. PMI covered Ms. Lebsack's medical treatment costs, lost wages, and physical impairment claims from the date of the crash until June 7, 2016. ECF No. 20-3. Ms. Lebsack's medical treatment was billed at $152, 575.62, but PMI satisfied these medical bills by paying the healthcare providers a total of $67, 434.46. Id. Further, PMI paid Ms. Lebsack $19, 270.92 for lost wages and physical impairment. Id.

         On September 19, 2016 Ms. Lebsack sued Mr. Rios and his employers, Seaboard Foods, LLC, and Seaboard Corporation, (together, “defendants”). ECF No. 1. Ms. Lebsack seeks damages including past and future healthcare expenses, wage losses, permanent impairments and disfigurements, and non-economic losses. Id. Relevant to the pending motions, she is specifically seeking to recover for medical treatment at the billed amount of $152, 575.62, lost wages totaling $10, 000, and an unidentified amount for physical impairment. ECF No. 20 at 2 (referencing Plaintiff's Initial Disclosure Ex. E).

         One week after Ms. Lebsack filed her suit against defendants, PMI sued defendants in Colorado state court pursuant to its subrogation right as Ms. Lebsack's workers' compensation carrier. ECF No. 20-6. PMI sought the full amount of all benefits it paid to or on behalf of Ms. Lebsack, totaling $90, 167.81. Id. Later, PMI and defendants settled these claims on March 9, 2017 under confidential terms. ECF No. 20-7.

         Shortly thereafter, Ms. Lebsack filed an unopposed motion for a telephonic hearing to discuss the effect of the settlement between PMI and defendants on this case. ECF No. 18. On March 21, 2017 I ordered that in lieu of a hearing, the parties should submit briefing on the issues raised in Ms. Lebsack's motion. ECF No. 19. The motions have been fully briefed. ECF Nos. 20-25.

         ANALYSIS

         This Court has subject matter jurisdiction over this case by reason of diversity of citizenship. 28 U.S.C. § 1332. In diversity actions, a federal court must “apply the substantive law of the forum state, ” Macon v. United Parcel Serv., Inc., 743 F.3d 708, 713 (10th Cir. 2014), which, in this case, is Colorado. Because the Colorado Supreme Court has not addressed the precise questions presented here, this Court must “attempt to predict how [Colorado's] highest court would interpret [the issue].” Squires v. Breckenridge Outdoor Educ. Ctr., 715 F.3d 867, 875 (10th Cir. 2013); see also Pehle v. Farm Bureau Life Ins. Co., 397 F.3d 897, 901 (10th Cir. 2005) (“Because [Colorado] has not directly addressed this issue, this court must make an Erie-guess as to how the [Colorado] Supreme Court would rule.”). This Court may “consider all resources available” in doing so, “including decisions of [Colorado] courts, other state courts and federal courts, in addition to the general weight and trend of authority.” In re Dittmar, 618 F.3d 1199, 1204 (10th Cir. 2010) (internal quotation marks omitted).[2]

         A. Ms. Lebsack's Claims Post-Settlement.

         When a workers' compensation carrier pays an injured employee's expenses that are covered under the workers' compensation statute it is subrogated for the amount of the benefits paid.[3] One option for pursuing its subrogation right is to place a lien on any settlement or judgment the employee might obtain from the tortfeasor. After the employee obtains a settlement or judgment, the employee reimburses the workers' compensation carrier for benefits paid (sometimes negotiated downward for various reasons including to account for a proportionate share of the employee's litigation costs).

         Here, however, PMI did not wait for Ms. Lebsack's case against the defendants to run its course. Rather, it filed a state court suit directly against the defendants seeking reimbursement of the benefits it paid to or on behalf of Ms. Lebsack and then settled that claim. The terms of that settlement have not been revealed, but presumably defendants paid less than 100% of the benefits for which PMI sought reimbursement. While defendants agree that initially both PMI and Ms. Lebsack had the right to pursue claims against defendants for the amount that PMI paid on Ms. Lebsack's behalf, they argue that after PMI settled with defendants both PMI's and Ms. Lebsack's claims were extinguished. Ms. Lebsack, in contrast, argues that the timing of defendants' settlement with PMI was a strategic “trick” hatched by defendants to reduce her potential damage recovery, and that it contravened established law. ECF No. 21 at 10 (“It is a trick to manipulate one measure of Lebsack's damages in a manner that the Colorado state and federal courts have disapproved.”).

         The established law to which she refers is the “collateral source rule.” Under that rule, codified at C.R.S. § 13-21-111.6, a plaintiff's damage claim must be reduced by the amount by which she has been compensated by a third party unless the third party payment was the result of a contract entered into and paid for by the plaintiff. Thus, if an injured plaintiff's medical expenses were paid by her own health insurance carrier, her claim against the tortfeasor who caused her injuries is not reduced by her insurer's payment of those expenses. Moreover, the plaintiff may recover the full amount of the medical expenses billed by the healthcare providers, not the discounted amount to which the providers agreed as a result of negotiations with plaintiff's health insurer. See Volunteers of America Colorado Branch v. Gardenswartz, 242 P.3d 1080, 1085-88 (Colo. 2010). Indeed, the amount actually paid by her health insurer to settle the bills of the healthcare provider is not even admissible in evidence. Wal-Mart Stores, ...


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