Narayen v. Bailey

WENNER, Judge. This is an appeal by Yijay Narayen, M.D., from a judgment entered by the Circuit Court for Baltimore City in favor of appellee, Ann. H. Bailey. On appeal Doctor Narayen presents us with two questions: 1. Did the trial court err in denying the Appellant’s Motion for Remittitur, or in the Alternative, for New Trial, by failing to make specific findings whether the jury’s verdict for “past medical expenses — bills” was “excessive” within the parameters set forth in Section 3-2A-05(h) and 3-2A-06 (f), Courts and Judicial Proceedings Article, Maryland Code? 2.

Did the trial court err in denying the Motion for Remit-titur, or in the Alternative,- for New Trial, on the ground that the Appellee’s health insurance payments were not “indemnification” because her health insurance policy provided for subrogation in the event of a judgment against a tortfeasor for damages covering the amounts originally paid by the health insurer? We shall answer the second question in the affirmative, and remand the case to the Circuit Court for Baltimore City for further proceedings consistent with this opinion. Facts 1 The genesis of this appeal is a medical malpractice claim entered by appellee with Maryland’s Health Claims Arbitration Office in accordance with Md.Code (1974, 1998 Repl.Vol.), ⁴⁶¹ § 3-2A-02 of the Courts and Judicial Proceedings Article (CJP). 2 The parties waived arbitration and appellee filed an action in the Circuit Court for Baltimore City, which was tried before a jury. Appellee’s medical expenses, which totaled $399,539.00, were stipulated to, and the jury returned a verdict in favor of appellee for $787,613.20.

The jury had been given a special verdict sheet, pursuant to CJP § 3-2A-06(f), on which it itemized damages as follows: A. Past Medical Expenses (1) Bills $399,539.00 (2) Supplies & Expenses $6,535.00 B. Lost Wages $31,539.00 C. Non-Economic Losses $350,000.00 Following return of the verdict, Dr. Narayen filed a Motion for Remittitur, or in the Alternative, for New Trial, requesting a reduction of damages because appellee’s medical expenses of $399,539.00 had been paid by Blue Cross and Blue Shield of Maryland (“BCBSM”). Moreover, Dr. Narayen claimed the damages were excessive and requested a reduction pursuant to CJP § 3-2A-06(f). It was determined at a hearing on the doctor’s motion for remittitur that, as BCBSM had paid appellee’s medical expenses, it retained a subrogation lien for that amount against any judgment entered in favor of appellee. This appeal followed the trial judge’s denial of Dr. Narayen’s post-trial motion for remittitur or new trial.

Standard of Review When an appeal is from an action tried without a jury, such as the matter now facing us, we are required by Md. Rule 8 — 131(c) to “review the case on both the law and the evidence” and “not set aside the judgment of the trial court on the evidence unless clearly erroneous ...” Our standard of review is more expansive, however, when considering conclu ⁴⁶² sions of law. In re Michael G., 107 Md.App. 257, 265 , 667 A.2d 956 (1995). We are not aware of, nor have we been referred to a Maryland case involving CJP §§ 8-2A-05(h) or 3-2A-06(f). Hence, this is a case of first impression.

As the Court of Appeals has often said, “the cardinal rule of statutory construction is to ascertain and effectuate legislative intent,” Motor Vehicle Admin. v. Seidel, 326 Md. 237, 248 , 604 A.2d 473 (1992), and that ... the beginning point of statutory construction is the language of the statute itself ... When we look at the statutory language, we attempt to give effect to all the words in the statute ... But our endeavor is always to seek out the legislative purpose, the general aim or policy, the ends to be accomplished ... we are not ‘precluded from consulting legislative history as part of the process of determining the legislative purpose or goal’ of the law. Morris v. Prince George’s County, 319 Md. 597, 603-04 , 573 A.2d 1346, 1349 (1990) (citations and footnote omitted).

Accordingly, in interpreting §§ 3-2A-05(h) and 3-2A-06(f), we can consider similar provisions in our sister jurisdictions, in addition to §§ 3-2A-05(h) and 3-2A-06(f)’s legislative history. Discussion We begin by setting forth §§ 3-2A-05(h) and 3-2A-06(f) as enacted by the General Assembly: CJP § 3-2A-05 Arbitration of claim (h) Application for modification or correction; request for reduction of damages. — A party may apply to the arbitration panel to modify or correct an award as to liability, damages, or costs in accordance with § 3-222 of this article. The application may include a request that damages be reduced to the extent that the claimant has been or will be paid, reimbursed, or indemnified under statute, insurance, or contract for all or part of the damages assessed. The panel chairman shall receive such evidence in support and opposition to a request for reduction, including evidence ⁴⁶³ of the cost to obtain such payment, reimbursement, or indemnity.

After hearing the evidence in support and opposition to the request, the panel chairman may modify the award if satisfied that modification is supported by the evidence. The award may not be modified as to any sums paid or payable to a claimant under any workers’ compensation act, criminal injuries compensation act, employee benefit plan established under a collective bargaining agreement between an employer and an employee or a group of employers and a group of employees that is subject to the provisions of the federal Employee Retirement Income Security Act of 1974, program of the Department of Health and Mental Hygiene for which a right of subrogation exists under §§ 15-120 and 15-121.1 of the Health General Article, or as a benefit under any contract or policy of life insurance or Social Security Act of the United States .. . Except as expressly provided by federal statute, no person may recover from the claimant or assert a claim of subrogation against a defendant for any sum included in the modification of an award. CJP § 3-2A-06 Judicial Review (f) Itemization of certain damages; remittitur. — Upon timely request, the trier of fact shall by special verdict or specific findings itemize by category and amount any damages assessed for incurred medical expenses, rehabilitation costs, and loss of earnings.

Damages assessed for any future expenses, costs, and losses shall be itemized separately. If the verdict or findings include any amount for such expenses, costs, and losses, a party filing a motion for a new trial may object to the damages as excessive on the ground that the claimant has been or will be paid, reimbursed, or indemnified to the extent and subject to the limits stated in § 3-2A-05(h) of this subtitle. The court shall hold a hearing and receive evidence on the objection. If the court finds from the evidence that the damages are excessive on the grounds stated in § 3-2A-05(h) of this subtitle, subject to the limits and conditions stated in § 3-2A-05(h) of this subtitle, it may grant a new trial as to such ⁴⁶⁴ damages or may deny a new trial if the claimant agrees to a remittitur of the excess and the order required adequate security when warranted by the conditions stated in § 3-2A-05(h) of this subtitle.

In the event of a new trial granted under this subsection, evidence considered by the court in granting the remittitur shall be admissible if offered at the new trial and the jury shall be instructed to consider such evidence in reaching its verdict as to damages. Upon a determination of those damages at the new trial, no further objection to damages may be made exclusive of any party’s right of appeal. Except as expressly provided by federal law, no person may recover from the claimant or assert a claim of subrogation against a defendant for any sum included in a remittitur or awarded in a new trial on damages granted under this subsection. Nothing in this subsection shall be construed to otherwise limit the common law grounds for remittitur.

Dr. Narayen first contends the trial court erred in making the findings required by CJP § 3-2A-06(f), without complying with CJP § 3-2A-06(f). In other words, Dr. Narayen believes that once evidence has been received that the opposing party has or will be “paid, reimbursed or indemnified under statute, insurance or contract,” 3 the trial court must declare the damages excessive. We disagree. § 3-2A-06(f) provides in relevant part: The court shall hold a hearing and receive evidence on the objection. If the court finds from the evidence that the damages are excessive ... it may grant a new trial as to such damages or may deny a new trial if the claimant agrees to a remittitur of the excess ...

(emphasis added.) Thus, after receiving evidence from the parties, it is within the discretion of the trial court to determine whether the damages are excessive. Nonetheless, the trial court is not required by subsection (f) under such circumstances to declare the damages to be excessive simply because the claimant has been or ⁴⁶⁵ will be reimbursed or indemnified for medical expenses by a collateral source. Our conclusion is supported by § 3-2A-06’s legislative history. House Bill 1593 was enacted by the General Assembly as Chapter 596 of the Acts of 1987 to modify §§ 3-2A-05(h) and 3-2A-06(f).

The Senate Judicial Proceedings Committee said: The bill simply makes the recovery for damages that have been or will be paid to the claimant under certain benefit plans an additional ground for modification of an alleged excessive award. In a case before an arbitration panel, the panel retains completé discretion to accept the motion, hear the evidence in support and opposition to the motion, and determine if a reduction is appropriate. If a reduction is sought in a trial by way of remittitur, the trial judge again has discretion to (1) grant or deny the motion; (2) grant or deny the reduction in award as the evidence presented shall dictate; or (3) grant or deny any other appropriate motion. The plaintiff can reject any proposed offset and obtain a new trial on the issue of damages.

The purpose of this bill is to assure procedural fairness to the plaintiff while allowing a defendant the opportunity to show that the plaintiff may be excessively compensated under a damage award. Senate Judicial Proc. Comm., Summ. Of Comm.

Report for House Bill 1593 (1987). Accordingly, § 3-2A-06(f) does not require an automatic reduction of damages simply because appellee has received payment of medical expenses from a collateral source. This is but one factor to be considered. The Collateral Source Rule Before proceeding with the second issue, we will explore the background and evolution of similar legislation in other jurisdictions, which appear in one way or another to affect the common law collateral source rule.

The collateral source rule was adopted by us in about 1854 from the English common law. See Michael F. Flynn, Private Medical Insurance and the Collateral Source Rule.- A Good Bet? 22 U.ToLL.Rev. 39 (1990). ⁴⁶⁶ “Since 1899, the collateral source rule has been applied in [Maryland] to permit an injured person to recover in tort the full amount of his provable damages regardless of the amount of compensation which the person has received for his injuries from sources unrelated to the tortfeasor.” Motor Vehicle Admin. v. Seidel, 326 Md. at 253 , 604 A.2d 473 (footnote omitted). “The purpose of the Collateral Source Rule is to preserve an injured party’s right to seek tort recovery from a tortfeasor without jeopardizing his or her right to receive insurance payments for medical care.” Flynn, supra, 22 U.ToLL.Rev. at 41 The collateral source rule prohibits a defendant in a medical malpractice action from introducing evidence that the plaintiff has or will recover his medical expenses from sources unrelated to the tortfeasor, such as a private insurer, government insurance (Medicare), liability insurance, worker’s compensation, and the like. Consequently, actual or possible recovery of medical expenses from a collateral source may not be considered in awarding damages. There has long been a continuing debate over the merits of this common law rule, as summarized by Professor Flynn: Proponents of the Collateral Source Rule primarily argue that an injured plaintiff under tort law is entitled to recover the full value of the harm caused by the culpable defendant.

Proponents reason that without the Rule a guilty defendant would be relieved of liability to the extent of the injured plaintiffs insurance coverage ... Moreover, allowing collateral sources to reduce a wrongdoer’s liability penalizes an injured party for purchasing insurance ... The insured party does pay a cost ... the prospect of increased premiums. Opponents of the Collateral Source Rule primarily contend that the Rule sanctions a double recovery for an injured, insured party.

By allowing a plaintiff to recover from a wrongdoer for injuries fully compensated by insurance coverage, the plaintiff is paid twice for a single harm ... They further reason that the Rule defeats the purpose ⁴⁶⁷ of tort litigation by compensating an injured party for more than the actual loss sustained. 22 U.ToLL.Rev. at 43-45. The Insurance “Crisis” Beginning in the 1970’s, we were faced with what has been referred to as a medical malpractice insurance crisis, which was described as follows by the Supreme Court of California: [T]he insurance companies which issued virtually all of the medical malpractice insurance policies in California determined that the costs of affording such coverage were so high that they would no longer continue to provide such coverage as they had in the past. Some of the insurers withdrew from the medical malpractice field entirely, while others raised the premiums which they charged to doctors and hospitals to what were frequently referred to as “skyrocketing” rates.

As a consequence, many doctors decided either to stop providing medical care with respect to certain high risk procedures or treatment, to terminate their practice in this state altogether, or to “go bare,” i.e., to practice without malpractice insurance. The result was that in parts of the state medical care was not fully available, and patients who were treated by uninsured doctors faced the prospect of obtaining only unenforceable judgments if they should suffer serious injury as a result of malpractice. American Bank & Trust Co. v. Community Hospital, 36 Cal.3d 359, 371 , 204 Cal.Rptr. 671 , 683 P.2d 670, 677-78 (1984); see also Barme v. Wood, 37 Cal.3d 174 , 207 Cal.Rptr. 816 , 689 P.2d 446 (1984). Maryland also suffered from this insurance crisis.

In the mid 70’s Maryland physicians found it more difficult to obtain medical malpractice insurance. As the Court of Appeals noted: The General Assembly created Medical Mutual in 1975 when St. Paul Fire and Marine Insurance Company withdrew from the Maryland medical malpractice market, leaving many doctors without access to liability insurance. The General Assembly established Medical Mutual so that the ⁴⁶⁸ victims of medical malpractice could receive compensation for their injuries ... While a few wholly private insurance carriers accepted some Maryland business between 1975 and 1985, they withdrew from Maryland in 1985, again leaving Medical Mutual as the sole source of malpractice liability insurance for doctors in the State.

Medical Mutual Liability Society of MD. v. B. Dixon Evander and Associates, Inc., 339 Md. 41, 43, n. 1 , 660 A.2d 433 (1995). The Nationwide Response In response to this crisis, many states enacted legislation to modify or abrogate the collateral source rule in medical malpractice cases. Such legislation permits a medical malpractice defendant to present evidence that the injured party received or will receive benefits from a collateral source. Its purpose was to reduce the award of damages when payments from a collateral source were available to the plaintiff, spreading costs between the malpractice insurer and the collateral source.

In other words, the intent of the legislatures was to reduce the financial impact of medical malpractice awards, and thus soften the blow to malpractice insurers, and reduce the expense to doctors of purchasing liability insurance. In reviewing similar legislation in several jurisdictions, we note both substantive and procedural similarities and differences. Several states permit introduction of collateral source evidence in all personal injury tort cases, and others in only medical malpractice cases. Some states