United States District Court, D. Colorado
RECOMMENDATION OF UNITED STATES MAGISTRATE
T. Varholak United States Magistrate Judge.
matter comes before the Court on Plaintiff's Motion for
Determination of Law (the “Motion”) [#30], which
has been referred to this Court [#31]. This Court has
carefully considered the Motion and related briefing, the
entire case file, and the applicable case law, and has
determined that oral argument would not materially assist in
the disposition of the instant Motion. For the following
reasons, this Court respectfully RECOMMENDS
that the Motion be GRANTED and that the
Court hold that the amounts paid by Plaintiff's
workers' compensation insurance carrier, and the fact of
those payments, are inadmissible, including for demonstrating
the reasonable value of Plaintiff's medical care, or to
reduce Plaintiff's damages.
Zebedee Hall was involved in a three-vehicle collision in
November 2015. [#3 at ¶ 5] An unidentified driver of an
unknown vehicle (“Phantom Vehicle”) merged lanes,
striking a second vehicle, causing the second vehicle to
collide with Plaintiff's vehicle. [Id. at
¶¶ 6-10] The driver of the Phantom Vehicle fled the
scene. [Id. at ¶ 11] The parties dispute the
severity of Mr. Hall's physical injuries as a result of
the collision, but he ultimately underwent a four-level
cervical fusion surgery and other medical treatment.
[Id. at ¶ 16; #40 at 3-4] Mr. Hall incurred
over $184, 000 in medical expenses, some of which were
covered and paid for by his workers' compensation
carrier. [#3 at ¶ 17; see also #30 at 2; #40 at
5] The Denver County District Court determined that the
driver of the Phantom Vehicle was negligent and 100%
responsible for causing the collisions. [#3 at ¶ 20]
time of the collision, Mr. Hall was driving a vehicle insured
by Defendant Granite State Insurance Company (“Granite
State”) for Uninsured Motorist (“UM”)
Benefits under at least one insurance policy (the
“Policy”). [Id. at ¶¶ 24-25]
Mr. Hall alleges that Granite State has failed to tender any
UM Benefits owed to him under the terms of the Policy.
[Id. at ¶ 85] Mr. Hall filed the instant suit,
alleging violations of Colorado law for Granite State's
failure to provide UM Benefits, the unreasonable delay and
denial of those benefits, and also asserting breach of
contract and bad faith claims. [Id. at ¶¶
of Mr. Hall's initial disclosures pursuant to Federal
Rule of Civil Procedure 26(a)(1), Mr. Hall provided medical
bills, but has not disclosed the ledger or schedule of
workers' compensation benefits paid on behalf of Mr. Hall
for his medical treatment. [#30 at 2; #40 at 4-5] Mr. Hall
filed the instant Motion in February 2019, requesting the
Court to hold as a matter of law that amounts paid by Mr.
Hall's worker's compensation insurance carrier are
inadmissible under the collateral source rule. [#30] Granite
State has filed a response [#40] and Mr. Hall has replied
instant Motion, Mr. Hall argues that any amounts covered by
his Workers' Compensation Benefits for his medical
treatment are a collateral source and cannot be used to
determine the value of Mr. Hall's medical treatment.
[#30] Granite State responds that Mr. Hall's measure of
damages should be limited to amounts lawfully authorized and
paid under the Colorado Workers' Compensation Act,
because Mr. Hall cannot recover any amounts billed by medical
providers over the limits set by that statute. [#40] For the
following reasons, the Court agrees with Mr. Hall, and finds
that the Workers' Compensation Act fee limits have no
bearing on the reasonable value of Mr. Hall's medical
services, and that Mr. Hall's workers' compensation
coverage constitutes a contract that cannot be used to offset
any damages owed to him.
Colorado's collateral source rule, “compensation or
indemnity received by an injured party from a collateral
source, wholly independent of the wrongdoer and to which the
wrongdoer has not contributed, will not diminish the damages
otherwise recoverable [by the injured party] from the
wrongdoer.” Forfar v. Wal-Mart Stores, Inc.,
No. 17CA0663, 2018 WL 4016570, at *2 (Colo.App. Aug. 23,
2018) (quoting Colo. Permanente Med. Grp., P.C. v.
Evans, 926 P.2d 1218, 1230 (Colo. 1996)), cert.
denied, 2019 WL 1236858 (Colo. Mar. 18, 2019); see
also Colo. Rev. Stat. § 10-1-135(10)(a).
Accordingly, evidence of “any collateral source payment
or benefits” is inadmissible at trial “in any
action against an alleged third-party tortfeasor.”
Colo. Rev. Stat. § 10-1-135(10)(a). This is because
“making the injured plaintiff whole is solely the
tortfeasor's responsibility. Any third-party benefits . .
. obtained by the injured plaintiff accrue solely to the
plaintiff's benefit and are not deducted from the amount
of the tortfeasor's liability.” Volunteers of
Am. Colo. Branch v. Gardenswartz, 242 P.3d 1080, 1082-83
(Colo. 2010). Generally, “the correct measure of
damages is the necessary and reasonable value of the
[medical] services rendered, rather than the amount . . .
paid for such services, ” though amounts paid can give
“some evidence” of reasonable value. Kendall
v. Hargrave, 349 P.2d 993, 994 (Colo. 1960).
“Amounts paid” evidence, however, is inadmissible
in a collateral source case, including for determining
reasonable value of medical services, because of the
“unjustifiable risk that the jury will infer the
existence of a collateral source-most commonly an
insurer-from the evidence, and thereby improperly diminish
the plaintiff's damages award.” Wal-Mart
Stores, Inc. v. Crossgrove, 276 P.3d 562, 567 (Colo.
trial, however, the court must reduce a successful
plaintiff's verdict by the amount the plaintiff has been
compensated by a third party, i.e. by any collateral
source, unless the third party payment was the result of a
contract entered into and paid for by the plaintiff. Colo.
Rev. Stat. § 13-21-111.6. Colorado courts have
consistently found that various types of benefits programs,
including Medicaid, Medicare, and Social Security, constitute
contracts paid for by the plaintiff, and thus cannot offset
any amounts owed to a plaintiff. Forfar, 2018 WL
4016570, at *6-*7 (collecting cases). The Colorado Court of
Appeals has explicitly held that “workers'
compensation benefits are received as a result of an
employee's contract with its employer and therefore fall
within” the contract exception. Adamscheck v. Am.
Fam. Mut. Ins. Co., 818 F.3d 576, 584 (10th Cir. 2016)
(citing Combined Commc'ns Corp., Inc. v. Pub. Serv.
Co., 865 P.2d 893, 902 (Colo.App. 1993)) (rejecting
argument that plaintiff's workers' compensation
benefits could offset the underinsured motorist benefits owed
Granite State ostensibly recognizes the foregoing authority,
it nevertheless argues that the workers' compensation
context is “fundamentally different, ” because of
the statutorily-mandated fee schedule in the Colorado
Workers' Compensation Act, which prohibits medical
providers from billing beyond certain
thresholds. [#40 at 8]; see also Colo. Rev.
Stat. § 8-42-101(3)(a)(I) (“It is unlawful, void,
and unenforceable as debt for [providers] to contract with,
bill, or charge any party for services, rendered in
connection with injuries coming within the purview of this
article or an applicable fee schedule, which are or may be in
excess of said fee schedule.”). Because under the
statute Mr. Hall would never be responsible for any amounts
billed above the fee schedule, Granite State contends that
the only relevant measure of damages is the “amount
lawfully paid by [Mr.] Hall's workers' compensation
insurance carrier.” [#40 at 6] A recent decision by the
Colorado Court of Appeals on an identical issue, however,
forecloses Granite State's argument.
Forfar v. Wal-Mart Stores, Inc., the Colorado Court
of Appeals held that the reasonable value of plaintiff Mr.
Forfar's medical care was not limited to the statutory
Medicare limits, and that his damages could not be offset
based on those limits. 2018 WL 4016570 at *4-*7. First,
defendant Wal-Mart argued that the amounts paid by Mr.
Forfar's Medicare were dispositive of the reasonable
value of his medical services, since Mr. Forfar “never
incurred liability for any greater amounts.”
Id. at *4. The court disagreed, reiterating that
amounts paid are inadmissible in collateral source cases.
Id. The court explained that “the reasonable
value of Mr. Forfar's medical services was not limited to
amounts that Medicare paid his providers, even assuming that
[those providers] could receive no more from Mr. Forfar or
anyone who might be vicariously liable to them, ” and
any windfall should benefit plaintiff, who was the one to
procure the benefits. Id. at *5. The Court held that
amounts paid by Medicare were inadmissible at trial.
the court found that Medicare benefits fell within the
contract exception such that Mr. Forfar's damages could
not be reduced based on those benefits. Id. at *6.
Like Granite State here, Wal-Mart argued that the contract
exception should not apply to any of Mr. Forfar's medical
bills that exceeded Medicare fee limits, because he was not
liable for those charges. Id. at *7. The relevant
Medicare statutory provisions impose a nearly identical limit
on medical providers as the fee schedule in the Colorado
Workers' Compensation Act. See 42 U.S.C. §
1395u(b)(18)(B) (noting that practitioners “may not
bill (or collect any amount from) the individual . . . for
any service described in subparagraph (A), ” and
stating that “[n]o person is liable for payment of any
amounts billed” for services exceeding the fee limits);
see also Id. § 1395w-4(g)(1)(A)(ii). Wal-Mart
claimed that “application of the collateral source rule
effectively held Wal-Mart liable for ‘amounts
billed' by Mr. Forfar's providers in excess of
Medicare limits, which conflicts with the ‘no person is
liable' language” of the Medicare statutes. 2018 WL
4016570 at *8.
Colorado Court of Appeals rejected Wal-Mart's argument.
Citing to the Colorado Supreme Court, the court explained
that payments by a plaintiff's insurer constitute a
benefit paid under the contract exception, by discharging a
plaintiff's obligations to his medical providers.
Id. at *7 (citing Gardenswartz, 242 P.3d at
1086). If Mr. Forfar had not been Medicare eligible, he would
have been liable above the Medicare limits. Id. The
court reasoned that the Medicare statutes only limit
liability “for amounts billed by practitioners, ”
and Wal-Mart had not been billed for any of plaintiff's
medical services. Id. at *8. Instead, “and
consistent with the collateral source rule, the jury awarded
Mr. Forfar the reasonable value of [the providers']
services. And it did so without having seen any of the
providers' bills.” Id. At least one
Colorado district court has found Forfar to be
directly applicable to workers' compensation benefits,
and Granite State admits that Forfar addresses
“the exact issue raised” in Mr. Hall's Motion
[#40 at 9]. See Warembourg v. Excel Elec. Inc., No.