Wisconsin Supreme Court Upholds Lower Court Decision Involving Collateral Source Rule

In Weborg v. Jenny, et al., 2012 WI 67, the Wisconsin Supreme Court upheld a court of appeals decision finding that the circuit court committed “harmless error” by admitting evidence of collateral source payments in a medical malpractice case.

The 5-2 decision authored by Justice Annette Ziegler, joined by Justices Patrick Crooks, Patience Roggensack, David Prosser, and Michael Gableman, determined that evidence of collateral source payments is admissible in medical malpractice cases only when the evidence is “relevant.” Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley filed a joint dissenting and concurring opinion.

Background

The case involved a medical malpractice lawsuit filed against three physicians by family members of the patient who died of severe coronary artery disease due to the hardening of the arteries.

William Weborg visited his family physician – one of the defendants – after experiencing chest pains. Neither Weborg’s family physician, nor any of the other doctors he visited, detected that Weborg had heart disease. Instead, the physcians suggested Weborg suffered acid reflux or that the chest pain was musculoskeletal in nature. Weborg passed away from the heart disease shortly after visiting the doctors.

Trial Court Decision

At trial, the physicians’ attorney moved to introduce evidence of collateral source payments, specifically, life insurance proceeds and social security benefits received by Theresa Weborg, William Weborg’s widow, as a result of William’s death. The plaintiffs objected to the motion, but the trial court allowed the defendants to introduce the collateral source payments.

The physicians also requested the circuit court to modify the standard jury instruction on expert testimony by adding the following bolded language to Wis JI—Civil 269: “You are not bound by any expert’s opinion, except with regard to the standard of care exercised by medical doctors.” The physicians argued that this language was necessary to be consistent with the jury instruction (Wis JI—Civil 1023) on medical negligence, which provides that the standard of care, skill, and judgment exercised by medical doctors must be determined from expert testimony. The jury ultimately delivered its verdict in favor of the defendant-physicians finding that none of the doctors were negligent in their care and treatment of Weborg. The plaintiffs subsequently filed a motion seeking a new trial on the grounds that the circuit court erroneously admitted the evidence of life insurance proceeds and social security benefits (collateral source payments) and erroneously modified the standard jury instruction on expert testimony. The circuit court denied this motion, and the case was appealed.

Court of Appeals Decision

The court of appeals decided that the circuit court erred in admitting the evidence of collateral source payments but concluded that the error was harmless. The court of appeals further held that the circuit court erroneously exercised its discretion in modifying the standard jury instruction on expert testimony, but again ruled that this was a harmless error. As a result, the court of appeals upheld the circuit court’s judgment dismissing the claims against the three doctors. The case was appealed to the Supreme Court, which accepted review of the case.

Supreme Court Decision

In a 5-2 decision, the court upheld the court of appeals and circuit court, ruling on both the collateral source and jury instruction issues.

A. Admission of Collateral Source Payments (Life Insurance Proceeds and Social Security Benefits)

The high court agreed with the court of appeals that the admission into evidence of the collateral source payments was harmless error, and therefore upheld the jury’s verdict. According to the court:

In this case, we conclude that the circuit court applied an improper legal standard in admitting the evidence of life insurance proceeds and social security benefits and therefore erroneously exercised its discretion. Specifically, the circuit court admitted the evidence of life insurance proceeds and social security benefits without first determining in its discretion whether either piece of evidence was relevant to the jury’s determination of damages. In doing so, the circuit court adopted the physicians’ interpretation of Wis. Stat. § 893.55(7)—an interpretation that we reject today.

The court explained that evidence of collateral source payments is admissible under the statute only if the evidence is relevant. Because the lower court did not determine whether the collateral source payments admitted into evidence was relevant, it erred by allowing the physicians to introduce the evidence.

However, the court ruled that the circuit court’s error was harmless and therefore the court upheld the circuit court’s decision. As the court explained, a circuit court’s erroneous discretion in admitting or excluding evidence does not necessarily constitute reversible error. Instead, Wis. Stat. § 805.18(2) provides that the improper admission of evidence is not grounds for reversing a judgment or granting a new trial unless, after an examination of the entire action, it appears that the error “affected the substantial rights of the party” seeking to reverse the judgment or secure a new trial. The court determined that the admission of evidence of collateral source payments in this case did not affect the jury’s decision making in reaching its verdict in favor of the physicians.

B. Modification of the Standard Jury Instruction on Expert Testimony

Similarly, the majority held that the lower court erred by modifying the standard jury instruction on expert testimony, but nonetheless upheld the lower court decision. The court determined that that modification was harmless error in that once again the modification did not alter the plaintiffs’ substantial rights. As a result, the court upheld the circuit court’s decision to dismiss the negligence claims against the three physicians.

Dissenting Opinion

Chief Justice Abrahamson, joined by Justice Bradley, penned a dissent/concurring opinion. While the two justices agreed with the majority’s decision that the circuit court erred by admitting the evidence of collateral source payments, the dissenting justices disagree that the error was harmless.

The dissenting opinion argues that the amount of the life insurance proceeds are unusually large and therefore the jurors “would very likely remember these sums” when making its decision as to whether the physicians were negligent. As a result, the dissent argues that the error affected the plaintiffs’ substantial rights and therefore was not harmless.

This post, authored by Andy Cook, was cross-posted on the Wisconsin Civil Justice Council’s blog.

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