Western New England Law Review Western New England Law Review
Volume 43
43
Issue 1
Article 6
2021
INSURANCE LAW—COLLATERAL SOURCE REDUCTIONS IN INSURANCE LAW—COLLATERAL SOURCE REDUCTIONS IN
CONNECTICUT: HOW INSURANCE “WRITEOFFS” NOW LEADS TO CONNECTICUT: HOW INSURANCE “WRITEOFFS” NOW LEADS TO
WINDFALL JUDGMENTS – AN ANALYSIS OF THE MARCIANO WINDFALL JUDGMENTS – AN ANALYSIS OF THE MARCIANO
DECISION AND ITS IMPACT DECISION AND ITS IMPACT
Frank J. Garofalo III
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INSURANCE LAW—COLLATERAL SOURCE REDUCTIONS IN CONNECTICUT: HOW
INSURANCE “WRITEOFFS” NOW LEADS TO WINDFALL JUDGMENTS – AN ANALYSIS OF THE MARCIANO
DECISION AND ITS IMPACT
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WESTERN NEW ENGLAND LAW REVIEW
Volume 43 2021
Issue 1
INSURANCE LAW—COLLATERAL SOURCE
REDUCTIONS IN CONNECTICUT: HOW INSURANCE “WRITE-
O
FFS” NOW LEADS TO WINDFALL JUDGMENTS – AN
ANALYSIS OF THE MARCIANO DECISION AND ITS IMPACT
F
RANK J. GAROFALO III
The purpose of the tort compensation system is to make an injured
party whole; no less, but no more. With that concept in mind,
Connecticut first codified its “collateral source” reduction rules in
1985, which were designed to prevent an injured party from obtaining
a “double recovery” of economic damages already paid to the injured
party, or paid on the injured party’s behalf through an outside source,
such as insurance.
1
In Marciano v. Jimenez, however, the Connecticut
Supreme Court interpreted section 52-225a to declare that when
“any” right of reimbursement or subrogation exists to any portion of
the claimed economic damages, there should be no collateral source
reduction.
2
As a result of this precedent, trial courts now routinely
deny collateral source reductions in an overbroad manner. As of
today, in any case involving the presence of a lien placed on the
lawsuit for medical expenses paid, such as in cases with plaintiffs
covered by Medicare or Medicaid, the Marciano decision has been
interpreted to require the denial of any collateral source reduction.
This includes the portions of the bill that were contractually written
off by the provider and were never incurred by plaintiff. Judicial
interpretation of section 52-225a in this manner, however, is
inapposite with the legislative intent behind the statute’s enaction. A
plaintiff’s recovery of financial damages for medical expenses that
were never incurred or owed is the type of windfall benefit section 52-
225a was designed to avoid. In light of such harsh results, the
Marciano decision needs to be rectified upon reconsideration of the
1
. 1985 Conn. Acts 574 (Reg. Sess.) (codified as CONN. GEN. STAT. §§ 52-225a to 225c).
2
. Marciano v. Jimenez, 151 A.3d 1280 (Conn. 2016) (citing CONN. GEN. STAT. § 52-
225a).
144
145
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decision by the Connecticut Supreme Court or through legislative
action.
INTRODUCTION
The concept of awarding damages in a civil lawsuit for personal
injuries is to make the injured party “whole,” i.e., in the same position as
if the defendant’s negligence never happened.
3
The United States
Supreme Court has firmly defined “compensatory damages” as “intended
to redress the concrete loss that the plaintiff has suffered by reason of the
defendant’s wrongful conduct.”
4
Indeed, every juror sitting on a civil trial
in Connecticut is instructed that he or she must “attempt to put the plaintiff
[back] in the same position . . . that [the plaintiff] would have been in had
the defendant not been negligent” by virtue of any award of damages.
5
Striving to make an injured party whole, however, is complicated by
the complex world of health insurance. In civil lawsuits for personal
injuries, a plaintiff is permitted to—and in nearly all cases will—seek
reimbursement for his “economic damages,” which include medical
expenses incurred due to injuries sustained as a result of the defendant’s
negligence.
6
Many plaintiffs, however, have health insurance that pay
some, if not all, of their medical expenses. A damage award that fails to
account for these payments creates a situation where the plaintiff is paid
twice for their medical expenses: first by their insurer, and again by the
defendant.
In order to prevent the plaintiff from receiving a “double recovery”
for payments already made to the plaintiff from a “collateral source”
independent from the defendant (e.g., an insurer), the legislature has
specifically adopted Connecticut General Statutes section 52-225a et seq.,
commonly referred to as Connecticut’s “collateral source” rule.
7
The
collateral source rule requires that after a trial in which “damages are
awarded to compensate the [plaintiff],” the trial judge is mandated to
reduce the awarded “economic damages” in an amount equal to the total
amount determined to have been paid by collateral sources, less any
3
. Langs v. Harder, 338 A.2d 458, 461–62 (Conn. 1973).
4
. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003) (emphasis
added).
5
. CIV. JURY INSTRUCTION COMM., CONNECTICUT JUDICIAL. BRANCH CIVIL JURY
INSTRUCTIONS 3.4-1, https://jud.ct.gov/JI/Civil/Civil.pdf (last modified Sept. 23, 2019)
[https://perma.cc/52AU-LG3SCiv].
6
. See CONN. GEN. STAT. § 52-572h (2020) (defining “economic damages” as
“compensation determined by the trier of fact for pecuniary losses including, but not limited to,
the cost of reasonable and necessary medical care”).
7
. Jones v. Kramer, 838 A.2d 170, 177–78 (Conn. 2004).
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credits for the amount paid “to secure [the plaintiff’s] right to any
collateral source benefit.”
8
To illustrate, consider the following hypothetical: a personal injury
plaintiff, John Doe, is awarded a $100,000 verdict at trial, $50,000 of
which represents economic damages. In this hypothetical, also assume
that the entire amount of the $50,000 awarded in economic damages
represents medical bills, that were fully paid by John Doe’s private health
insurance. Further, assume that John Doe paid $20,000 in premiums for
this coverage. Under these facts, the application of the collateral source
rule in a post-verdict hearing would result in a collateral source reduction
of $30,000. Otherwise, Doe would recover “twice.” First, through his
indemnification by his insurer for those expenses; second, by receiving
compensation from the defendant for those same expenses.
In addition to direct payments or reimbursement for medical
expenses, health insurance beneficiaries also receive the benefit of
“contractual adjustments” and “write-offs” for amounts billed by a
healthcare provider that are beyond an insurance carrier’s agreed-upon
rate for the item or service billed. Each health insurance carrier, including
Medicare and Medicaid, sets a pre-determined “physician fee schedule,”
which indicates the maximum reimbursable amount for each specific
service for healthcare providers in their network.
9
Any amounts billed by
healthcare providers in excess of these “fee schedules” cannot be billed to
the patient and must be written off or adjusted.
10
Returning to the example with John Doe, assume instead that of the
$50,000 awarded for economic damages, the insurance carrier only paid
8
. CONN. GEN. STAT. § 52-225a (2020); see also § 52-225b (defining a “collateral source”
as: “any payments made to the claimant, or on his behalf, by or pursuant to: (1) Any health or
sickness insurance, automobile accident insurance that provides health benefits, and any other
similar insurance benefits, except life insurance benefits available to the claimant, whether
purchased by him or provided by others; or (2) any contract or agreement of any group,
organization, partnership or corporation to provide, pay for or reimburse the costs of hospital,
medical, dental or other health care services”); and § 52-572h (defining “economic damages”
as “compensation determined by the trier of fact for pecuniary losses including, but not limited
to, the cost of reasonable and necessary medical care, rehabilitative services, custodial care and
loss of earnings or earning capacity excluding any noneconomic damages.”).
9
. 42 C.F.R. § 413.30(a)(2) (2020) (the U.S. Centers for Medicare & Medicaid Services
(CMS) is given the authority to establish “estimated cost limits for direct or indirect overall
costs or for costs of specific services or groups of [services],” and generally, “[r]eimbursable
provider costs may not exceed the costs CMS estimates to be necessary for the efficient delivery
of needed health care costs”). See also An Act Concerning the Reduction of Economic Damages
in a Personal Injury or Wrongful Death Action for Collateral Source Payments: Public Hearing
on S.B. 969 Before the Judiciary Comm., 2019 Reg. Sess. 169–77 (Conn. 2019) [hereinafter
S.B. 969 Public Hearing] (statement of Omar Ibrahimi, M.D.).
10
. See S.B. 969 Public Hearing, supra note 9, at 170–71 (statement of Omar Ibrhimi,
M.D.).
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$35,000 towards the claimed medical bills, while the physician wrote-off
the remaining $15,000. Thus, in this scenario, both the $15,000 write-off
as well as the $35,000 payment by Doe’s insurance carrier are considered
collateral source payments subject to reduction.
11
The caveat, however, with the collateral source reduction comes with
the rule’s application to amounts awarded to the plaintiff that are subject
to a “right of subrogation.” Generally, under section 52-225c, an insurer
is prohibited from recovering the amount of “collateral source” benefits it
paid on a plaintiff’s behalf from the defendant or any other person.
12
In
the earlier hypothetical involving John Doe, the plaintiff’s insurer could
not seek to recover from the defendant the $35,000 it paid to Doe for his
medical expenses. But, as federal law preempts state law, certain plans,
including Medicare, Medicaid, and Employee Retirement Income
Security Act (ERISA) plans, are permitted by federal statute to seek
reimbursement for amounts paid.
13
Another question presents itself upon a slight modification of the
John Doe hypothetical. Instead of paying premiums for his health
insurance, assume that Doe was a Medicaid beneficiary who paid no
premiums towards his healthcare. Further, assume that the Department of
Administrative Services placed a lien on the lawsuit for the $35,000 it paid
for Doe’s medical expenses. As $35,000 is subject to a right of
subrogation, there would be no collateral source reduction of this amount.
However, the question then becomes what to do with the $15,000 write-
off since a right of subrogation had been asserted.
Our tort system is designed to make a plaintiff “whole” after suffering
a loss caused by the defendant’s wrong. Thus, it seems logical that a
plaintiff should not be permitted to recover written-off amounts despite
the right of subrogation existing to the actual amounts paid to the
plaintiff’s medical providers. In the third version of the hypothetical, Doe
was never charged any portion of the $15,000 that was written off and will
never become liable for these expenses, so the written-off amounts are not
pecuniary losses that Doe ever sustained due to the defendant’s
11
. See CONN. GEN. STAT. § 52-225a(b) (2020).
12
. See id.
13
. See 29 U.S.C. § 1144(a) (declaring that ERISA supersedes state law); 42 U.S.C. §
1395y(b)(2) (2020); 42 C.F.R. § 411.24(b) (2021) (authorizing CMS to recover monies paid for
items or services when payment is made, or could be made, under a worker’s compensation plan
or by a liability insurer); see also Friedman v. Stackhouse, No. CV095022942, 2009 WL
4068706, at *3 (Conn. Super. Ct. Oct. 29, 2009) (the Employment Retirement Income and
Security Act of 1974, or “ERISA,” exempts self-funded ERISA plans from state laws that
prohibit subrogation of personal injury claims); McInnis v. Hosp. of St. Raphael, No.
CV030480767, 2008 WL 4150056, at *2 (Conn. Super. Ct. Aug. 15, 2008).
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negligence. From this perspective, awarding these “written-off” amounts
makes a person more than whole, and—at least financially—in an even
better position than he or she was before; in essence, a “windfall.”
Precluding a plaintiff for recovering insurance write-offs—whether a right
of subrogation exists or not—seems to be precisely what the legislature
envisioned when section 52-225a was enacted.
14
Prior to the Connecticut Supreme Court’s 2016 decision in Marciano
v. Ji
menez, it was widely accepted, starting with Hassett v. City of Ne
w
Ha
ven¸
15
that contractual write-offs should be reduced from awarded
economic damages in accordance with section 52-225a and the legislative
intent behind the abrogation of the common law rule.
16
However,
Marciano interpreted the statute without resorting to the legislative intent,
concluding that the “plain text” of the statute precludes any collateral
source reduction when any right of subrogation exists.
17
As a result of this
overbroad interpretation of the “right of subrogation” exception of section
52-225a, the $15,000 write-off in the hypothetical case of John Doe
almost certainly would not be reduced from a verdict as of today.
This Article will further explore the legislative intent behind the
“collateral source” rule and will provide a more detailed analysis of the
Hassett decision and the reasoning of pre-Marciano cases as to how write-
offs were handled during collateral source hearings. This Article will then
closely examine the reasoning of Marciano. Suggestions for clarifications
and a reconsideration of the opinion by the Connecticut Supreme Court
will be offered in light of the text of the statute, the legislative intent, and
the negative policy implications this decision has had. In addition, a call
to the legislators will be made to expressly amend the text of the law in
light of Marciano. As it currently stands, the Marciano decision unfairly
results in a windfall for plaintiffs and has shattered the “equitable balance”
the legislature sought to achieve when it enacted section 52-225a.
18
This
inequity will continue if the present situation remains the status quo and it
should be rectified, whether it be by the Connecticut Supreme Court or
14
. See Joint Standing Committee Hearing, Judiciary, Pt. 6, 1985 Reg. Sess. 1908 (Conn.
1985) (statement of Sen. Richard B. Johnston).
15
. Hassett v. City of New Haven, 880 A.2d 975 (Conn. App. Ct. 2005). See discussion
infra Section I.B.2.
16
. See Perillo v. Jacobs, No. CV066000215S, 2009 WL 1333920, at *11 (Conn. Super.
Ct. Apr. 20, 2009) (“[O]ther trial courts have examined Hassett and taken away from it a clear
implication; namely, that where a medical provider writes off a plaintiff’s medical bills pursuant
to a contract or agreement, those write-offs do qualify as collateral source payments capable of
reducing the plaintiff’s recoverable economic damages.”).
17
. Marciano v. Jimenez, 151 A.3d 1280, 1284–85 (Conn. 2016).
18
. Jones v. Riley, 818 A.2d 749, 756 (Conn. 2003).
149
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the legislature.
I. THE LEGISLATIVE HISTORY AND JURISPRUDENCE OF § 52-225A
PRIOR TO MARCIANO
A. Initial Enaction of the Statutory Collateral Source Rule in
Connecticut
1.
The Enactment of a “Collateral Source” Statute in 1985
Prior t
o 1985, a plaintiff was entitled to collect the full amount of his
or her claimed medical bills regardless of any payments made by an
insurer on behalf of the plaintiff.
19
This included the full amount of the
bill before any contractual adjustments were applied.
20
However,
awarding the plaintiff damages in this manner permitted insured plaintiffs
to obtain a “double recovery” for damages awarded for medical bills; once
from an insurance carrier that paid the medical bills directly or reimbursed
the plaintiff for the bills, and then a second time from the defendant. Such
a scenario created a windfall for plaintiffs to be paid twice and to be
compensated more than what was required to restore them to their prior
position. Recognizing the inequity of allowing a plaintiff to receive
“double recoveries” in such a circumstance, Connecticut first adopted a
statutory “collateral source” rule as part of tort reform in 1985.
21
In a Joint
Standing Committee Hearing on April 12, 1985 concerning the proposed
collateral source rule, House Bill No. 5364, Senator Richard Johnston
remarked: “No one is talking of not fully compensating a victim, isn’t that
right? I mean the plaintiff would be fully compensated for injuries. What
the legislative intent is to ensure that a plaintiff would not suffer a windfall
judgment.”
22
2.
The Amendment of Section 52-225a in 1986
Initially, the codified collateral source rule was meant solely to apply
in medical malpractice cases, but that issue was revisited in 1986, at which
time the legislature extended the statutory collateral source rule to all
19
. Jones v. Kramer, 838 A.2d 170, 176 (Conn. 2004) (“Prior to the enactment of § 52–
225a in 1985, Connecticut adhered to the common-law collateral source rule, which provides
that a defendant is not entitled to be relieved from paying any part of the compensation due for
injuries proximately resulting from his act where payment [for such injuries or damages] comes
from a collateral source, wholly independent of him.”) (internal quotation marks omitted).
20
.
Id.
21
.
S
ee id. at 176.
22
. Joint Standing Committee Hearing, Judiciary, Pt. 6, 1985 Reg. Sess. 1908 (Conn.
1985) (statement of Sen. Richard B. Johnston).
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personal injury actions.
23
In a debate over House Bill 6134 before the
Connecticut House of Representatives on May 6, 1986, Representative
Robert Jaekle perfectly illustrated the spirit of the rule:
We are saying that if somebody gets maybe a $50,000 judgment and
$10,000 of medical bills have been paid for under a medical or
accident policy, that if I bought my own insurance policy out of my
pocket, I’d get $10,000 reduced from my judgment and that’s fair
because I already had it in this pocket and what have you, and I’d end
up with a $40,000 judgment which made me whole . . . . And the
whole idea of collateral source was to make sure there wouldn’t be
double recoveries. Make sure that somebody is still whole for their
damages. They get from the defendant what wasn’t compensated or
paid for, or reimbursed for under some type of an insurance contract,
and isn’t that fair?
24
These remarks make clear that the legislative intent was to ensure that the
plaintiff was fully compensated for his losses while also prohibiting the
plaintiff from receiving any additional damages that would make him
more than whole. From 1986 through 2012, there were some minor
modifications to the collateral source rule, though the rule was largely left
intact as it existed originally.
25
B. Hassett and the Pre-Marciano Era
1.
The Medical Bill: How Healthcare Providers Set Their Charges
and Why Write-Offs Occur
It is im
perative to understand how medical providers set their bills
when considering how a “write-off” amounts to a windfall and why these
amounts should be included in collateral source reductions. This scenario
occurs, in large part, due to a physician’s pay structure. Rather than
receive a salary, most physicians and healthcare providers are paid on a
“fee-per-service” basis.
26
In a fee-per-service model, a physician is paid
23
. Jones, 838 A.2d at 176.
24
. An Act Concerning Tort Reform: Hearing Before the House of Representatives, 29
H.R. Proc, Pt. 16, 1986 Reg. Sess. 8074–76 (Conn. 1986) (statement of Rep. Robert G. Jaekle).
25
. In 1987, the statute was amended to delete settlements from the definition of collateral
sources. 1987 Conn. Acts 227, sec. 5 (Reg. Sess.) (codified at CONN. GEN. STAT. § 52-225b).
In 2007, the statute was rephrased, and the collateral reduction exceptions were further
emphasized with subheadings, but no substantive changes were made. 2007 Conn. Acts 217,
sec. 191 (Reg. Sess.). In 2010, the statute was amended to also include amounts “contributed
or forfeited,” in addition to amounts “paid,” to be collateral sources. 2010 Conn. Acts 36, sec.
9 (Reg. Sess.).
26
. Samuel H. Zuvekas & Joel W. Cohen, Fee-For-Service, While Much Maligned,
Remains the Dominant Payment Method for Physician Visits, 35 HEALTH AFFS. 411, 411
151
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for each service performed on a particular visit by a patient.
27
For
example, under the fee-per-service arrangement, if a patient visited a
doctor for a check-up, during which an x-ray and an EKG are also
performed, the provider would bill and be paid for: (1) the x-ray, (2) the
EKG, and (3) the provider’s examination.
Under the fee-per-service model, healthcare providers set their rates
for each of their services in order to ensure the maximum reimbursement
possible.
28
The reality of our current healthcare system is that most
doctors do not know how much they are paid to see a patient due to the
varying nature of health insurance payments.
29
Different insurance
companies will approve and disapprove of different services and may pay
a different amount for the same billing code.
30
In some instances, the same
insurance company may even pay different amounts for the same billing
code depending on the type of policy a patient has.
31
There is also no way
to find out in advance how much an insurance company will pay for a
patient visit, and it is difficult to ascertain how much particular insurance
companies have paid in the past due to the multitude of different policy
types.
32
Furthermore, the provider’s computer billing system uses one
billable amount for each code and for each insurer, despite the variety of
different plans that may exist.
33
As a result, providers face significant challenges when determining
how much to charge for each service. Providers cannot bargain or
negotiate the rates in an insurance carrier’s fee schedule; the rates are set
solely by each individual insurance carrier and the providers can either opt
in or opt out.
34
Moreover, providers cannot communicate with one
another to determine a “fair market value” for each specific charge
because doing so would violate anti-trust laws.
35
Accordingly, the strategy healthcare providers utilize is to bill for
(2016).
27
. Fee for Service, HEALTHCARE.GOV, https://www.healthcare.gov/glossary/fee-for-
service/ (last visited Nov. 1, 2020) [https://perma.cc/M32N-DF5L].
28
. See David Belk, Office Billing, TRUE COST OF HEALTH-CARE,
https://truecostofhealthcare.org/outpatient_charges/ (last visited Nov. 1, 2020)
[https://perma.cc/N75E-A2FV].
29
. Id.
30
. Id.
31
. Id
32
. Id.
33
. See S.B. 969 Public Hearing, supra note 9, at 170–71 (statement of Omar Ibrahimi,
M.D.).
34
. Id.
35
. Id.
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more than what they expect in payment.
36
Providers will set fees in this
manner to prevent shorting themselves from a reduced reimbursement.
37
As a result, billing charges have exploded in healthcare because the best
strategy is to “bill high for every service,” then take whatever is given.
38
“Discounting is the rule rather than the exception in healthcare today.
‘[O]nly a small fraction of persons receiving medical services actually pay
original amounts billed for those services.’”
39
As billing rates are set only
to ensure the maximum amount of reimbursement, healthcare providers
do not expect that the full amount of their bill will be paid or incurred by
an insurance carrier, or by their patients.
40
Looking at contractual write-offs from this backdrop, a double
recovery would occur if these amounts are awarded. For example, the
plaintiff receives compensation for his charged medical expenses, in part,
by amounts subtracted out of his bill due to the write-off. But he would
then recover for it again if the defendant is ordered to pay these sums. For
that reason, some have dubbed an award of economic damages that
includes amounts that were contractually written off as “phantom
damages,” as these amounts were awarded despite being written off by the
physician and not paid by anyone else.
41
Thus, it seems intuitive that a
windfall would result if the plaintiff was entitled to retain these “phantom
damages” and that they should be reduced from any verdict.
2.
How Collateral Source Reductions for Write-offs Were
Handled Prior to Marciano
Despi
te clear legislative guidance on the prevention of double
recoveries, some superior court judges initially balked at declaring an
insurance write-off as a collateral source, arguing that that the term “write-
off” was not explicitly listed in the text of the statute defining a “collateral
source.”
42
A seminal case in this area which ultimately provided guidance
on this issue, up to the time of the Marciano decision, was Hassett v. City
36
. See id.; see also Belk, supra note 28 (“Insurance companies will always pay what
ever [sic] a medical provider bills up to the maximum amount they’re willing to pay for any
service.”).
37
.
Id.
38
.
Belk, supra note 28
.
39
.
Stayton v. Del. Health Corp., 117 A.3d 521, 530 (Del. 2015).
40
.
Belk, supra note 28
.
41
.
See S
.B. 969 Public Hearing, supra note 9, at 177–79 (statement of M. Karen Noble).
42
. See, e.g., Zhuta v. Zhuta, No. CV0440182768S, 2007 WL 2363387 (Conn. Super. Ct.
July 27, 2007); Linhard v. Miranda, No. CV020172920S, 2005 WL 2360463, at *3 (Conn.
Super. Ct. Aug. 23, 2005); Hernandez v. Marquez, No. 377482, 2004 WL 113616, at *12 (Conn.
Super. Ct. Jan. 5, 2004); Sackman v. Sullivan, No. CV970159227S, 2002 WL 31374777, at *1
(Conn. Super. Ct. Sept. 30, 2002).
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of New Haven.
43
In Hassett, the plaintiff, a police officer for the city of
New Haven, sought uninsured motorist benefits stemming from an
automobile accident he was involved in with an uninsured motorist while
on duty.
44
At trial, the parties stipulated that the plaintiff’s related medical
expenses amounted to $4,130.50.
45
However, the plaintiff received
$3,009.03 in reimbursement for those expenses, and his medical
providers, upon receiving payment in that amount, wrote off the remainder
off their bills.
46
The collateral source dispute in Hassett centered on whether the
amounts written off by plaintiff’s treating providers should be subject to
a collateral source reduction.
47
In examining the plain text of section 52-
225b, the court denied the defendant’s collateral source request, finding
that the amounts written off by the plaintiff’s providers did not fit within
the definition of a “collateral source.”
48
The court aptly reasoned that the
subsequent forgiveness of debt incurred for medical care qualifies as a
“payment” to the same extent as a reimbursement or a direct payment of
medical bills.
49
The logic in considering the discharge of a debt as a payment is
certainly compelling, especially since both the State of Connecticut and
the federal government consider the “discharge of indebtedness” or “debt
forgiveness” as “income.”
50
However, the critical distinction in Hassett
in determining whether written-off medical bills constituted collateral
sources was whether the write-offs were voluntary or involuntary.
51
Ultimately, the court in Hassett noted that in order for the write-off to be
considered a collateral source in accordance with section 52-225b, the
write-off must have been made pursuant to a contract and not merely
gratuitous or voluntary.
52
In Hassett, however, the plaintiff’s medical
providers voluntarily wrote off the balance of the bills, so the court
concluded that the write-off did not meet the statutory definition of a
43
. Hassett v. City of New Haven, 880 A.2d 975 (Conn. App. Ct. 2005).
44
. Hassett v. City of New Haven, 858 A.2d 922, 923–24 (Conn. Super. Ct. 2004).
45
. Id. at 925–26.
46
. Id.
47
. Id. at 923.
48
. Id. at 924. See also CONN. GEN. STAT. § 52-225b.
49
. Hassett, 858 A.2d at 924. “‘Payment’ is not a talismanic word. It may have many
meanings depending on the sense and context in which it is used.” Id. (quoting United States
v. Consolidated Edison Co. of New York, Inc., 366 U.S. 380, 391 (1961)).
50
. Treas. Reg. § 1.61-12 (2020); CONN. AGENCIES REGS. § 1-81-5 (2009).
51
. Hassett, 858 A.2d at 926.
52
. Id.
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collateral source.
53
The defending party appealed, in part, because of the court’s decision
on the collateral source reduction request. On appeal, the appellate court
affirmed and adopted the trial court’s reasoning as the “proper statement
of the issues and the applicable law concerning [collateral source
reductions].”
54
After Hassett had been affirmed by the appellate court,
other superior court judges expanded upon the application of collateral
source reductions in the context of involuntary write-offs.
55
In McInnis v. Hospital of St. Raphael, the court applied the Hassett
reasoning to Medicare and Medicaid write-offs.
56
In McInnis, the plaintiff
was awarded $903,240.91 in economic damages for medical expenses.
57
Of that amount, the parties stipulated, and the court accepted, “that a total
of $430,534.20 worth of economic damages were not collateral sources
because the payments were either subject to a right of subrogation or paid
directly by the plaintiff.”
58
The dispute for a collateral source reduction
centered around the remaining portion of the awarded economic damages
of $472,706.71, which had been contractually written off.
59
Applying Hassett, the court reasoned that because healthcare
providers participating in Medicare and Medicaid are required to write-
off unpaid portions of their bill pursuant to federal law, these write-offs
are “involuntary” and thus meet the definition of a collateral source under
section 52-225b.
60
Furthermore, in a case involving Medicare and
Medicaid write-offs, the court noted that the defendant need not produce
a copy of the contract into evidence as courts may judicially notice the
statutory obligation that Medicare and Medicaid providers have to write
unpaid expenses.
61
As a result, the court ordered a collateral source
reduction of $472,706.71 from the awarded economic damages,
representing the portion of the damages awarded for written-off medical
53
. Id.
54
. Id. at 977.
55
. See, e.g., McInnis v. Hosp. of St. Raphael, No. CV030480767, 2008 WL 4150056
(Conn. Super. Ct. Aug. 15, 2008); Bonsanti v. Newman, No. CV030401098, 2006 WL 413011
(Conn. Super. Ct. Feb. 3, 2016).
56
. McInnis, 2008 WL 4150056 at *1.
57
. Id.
58
. Id.
59
. Id.
60
. Id. Though the plaintiff argued that the analysis in Hassett regarding involuntary
write-offs was merely dictum, the court in McInnis disagreed, noting that the strong language
utilized in Hassett was “intended to lay down positive law” and that the analysis was also
affirmed by the appellate court and uniformly adhered to in subsequent decisions by other judges
of the superior court. See id. at *3–4.
61
. Id. at *3.
155
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bills.
62
Similarly, in Bonsanti v. Newman, the Hassett opinion was applied in
a post-verdict collateral source hearing to the portion of the economic
damages awarded representing contractual adjustments made in
accordance with an ERISA plan.
63
In Bonsanti, the jury awarded the
plaintiff $215,702.23 in medical bills, though the ERISA plan paid only
$139,619.16 of the bills and the plaintiff’s medical care providers adjusted
their billing by $76,083.07.
64
The court held that $139,619.16 of the
economic damages were not collateral sources, as that amount was subject
to a federal right of subrogation by the ERISA plan.
65
The court noted
that “[t]he remaining $76,083.07 in medical special damages awarded by
the jury is free from any right of subrogation.”
66
The court in Bonsanti artfully reasoned why such amounts should be
deemed collateral sources. To start, the court noted that Hassett was
“Appellate Court authority,” and under Hassett, the involuntary
adjustments by the plaintiff’s treating providers in Bonsanti was an
involuntary forgiveness of debt and, accordingly, a “collateral source”
under section 52-225b.
67
The court also rejected the plaintiff’s arguments
that the write-offs were not collateral sources because they were not
“specifically included” in section 52-225b.
68
Accepting such a contention
would “undermine[] the purpose of the statute ‘to prevent plaintiffs from
obtaining double recoveries . . . .’”
69
The court in Bonsanti further declared that “[i]n determining the
proper amount for a collateral source reduction, consideration should be
given to what the plaintiff is actually entitled to recover.”
70
The court
stated that a plaintiff can only recover “[t]he actual cost of medical care
which was both reasonable and necessary based on the injury sustained.”
71
Thus, the court declared that the “$139,619.16 paid by [the ERISA plan]
after contractual adjustments represents the true cost of the plaintiff’s
medical care.”
72
This is because, while the plaintiff will have to reimburse
62
. Id.
63
. Bonsanti v. Newman, No. CV030401098, 2006 WL 413011, at *1 (Conn. Super. Ct.
Feb. 3, 2006).
64
. Id.
65
. Id. at *3.
66
. Id.
67
. Id.
68
. Id. at *4.
69
. Id.
70
. Id.
71
. Id. (emphasis added) (citing CONN. GEN. STAT. § 52-572h(a)(1)).
72
. Id. at *5.
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the ERISA plan for this sum, he will “never become responsible for the
$76,083.07 forgiven by his medical providers.”
73
Emphatically, the court
held that the verdict was to be reduced by $76,083.07 “because that
amount represents a potential windfall for the plaintiff in excess of his cost
of reasonable medical care and contrary to the purpose of section 52-
225a.”
74
McInnis and Bonsanti are illustrative of the large disparity that may
exist between the amounts that Medicare or an ERISA plan may pay
versus the amounts charged by healthcare providers. These cases are
demonstrative of the spirit of the rule as it was intended to function.
75
Not
only in light of the text of section 52-225b, but also in regard to the
legislative intent of preventing a double recovery.
76
Up until the
Marciano decision, Hassett was widely accepted as binding authority by
multiple superior court judges for the collateral source reduction of
contractual write-offs.
77
3. The 2012 Amendment to the Collateral Source Rule
In
2012, the legislature passed Public Act 12-142, which amended
section 52-225a in light of Hassett to explicitly permit evidence that a
medical provider accepted less than the full amount of the charges when
determining a collateral source reduction.
78
However, along with
amending section 52-225a, Public Act 12-142 also amended section 52-
174 to exclude any collateral source information from going to the jury.
79
Instead, in all cases going forward, the jury would only be permitted to
learn the “full sticker price” of the medical bills without any contractual
73
. Id.
74
. Id.
75
. See Bonsanti, 2006 WL 413011 at *5; McInnis v. Hosp. of St. Raphael, No.
CV030480767, 2008 WL 4150056, *3 (Conn. Super. Ct. Aug. 15, 2008).
76
. See cases cited supra note 75.
77
. See, e.g., Baldwick v. McRedmond, No. LLICV156012149S, 2016 WL 5339556, at
*2 (Conn. Super. Ct. Aug. 23, 2016); Ventura v. Town of E. Haven, No. CV085024235S, 2015
WL 1588816, at *9 (Conn. Super. Ct. Mar. 13, 2015), rev’d on other grounds, 170 Conn. App.
388, 154 A.3d 1020 (2017), aff’d, 330 Conn. 613, 199 A.3d 1 (2019); Cima v. Sciaretta, No.
UWYCV0096001772, 2011 WL 4509917, at *11 (Conn. Super. Ct. Sept. 14, 2011), aff’’d, 140
Conn. App. 167 (2013); Olivero v. Ferrante, No. CV044001161S, 2010 WL 1629993, at *2
(Conn. Super. Ct. Mar. 22, 2010); Perillo v. Jacobs, No. CV066000215S, 2009 WL 1333920,
at *11 (Conn. Super. Ct. Apr. 20, 2009); McInnis, 2008 WL 4150056, at *4; Furlong v.
Merriman, No. HHBCV044000416S, 2006 WL 1461112, at *10 (Conn. Super. Ct. Mar. 5,
2013); Bonsanti, 2006 WL 413011, at *3.
78
. See Hearing on H.B. 5545 Before the Joint Standing Comm. on Judiciary, 2012 Leg.,
4346–68 (Ct. 2012) (statement of Susan Giacalone, Ins. Ass’n of Conn.).
79
. See Hearing on H.B. 5545 Before the Joint Standing Comm. on Judiciary, 2012 Leg.,
4271–72 (Ct. 2012) (statement of Sen. Eric D. Coleman).
157
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adjustments or insurance payments.
80
Prior to the enaction of Public Act 12-142, evidence of collateral
source payments was admissible for the purpose of assisting the jury in
determining the reasonable value of the medical services if the evidence
demonstrated that a “windfall recovery” would result.
81
Therefore, the
modification to section 52-174 vis-à-vis the enaction of Public Act 12-142
made the post-verdict collateral source hearing substantially more
significant. The effect of this legislation was to make the trial judge the
only gatekeeper in ensuring the plaintiff did not obtain a windfall
judgment.
II.
THE MARCIANO DECISION AND ITS REASONING TO BROADE
N THE
“RIGHT OF SUBROGATION” EXCEPTION TO COLLATERAL OFFSETS
The collateral source rule, however, would become severely
constrained after the Connecticut Supreme Court’s decision in Marciano
v. Jimenez. At the trial level, the court ordered a collateral source
reduction for the portion of the awarded economic damages that were not
subject to reimbursement or any other credit. On appeal, the supreme
court, however, took an overly broad approach to the “right of
subrogation” provision within section 52-225a that has had the effect of
nullifying any collateral source reduction in cases involving Medicare,
Medicaid, and ERISA-plan beneficiaries.
A. The Procedural History of Marciano
The Mar
ciano case was a personal injury action in which the plaintiff
sought injuries in connection with a motor vehicle accident.
82
At trial, the
jury awarded the plaintiff $84,283.67 in economic damages and $40,000
in non-economic damages, for a total verdict of $124,283.67.
83
Following
the trial, the defendants moved for a collateral source reduction of the
plaintiff’s economic damages pursuant to section 52-225a, as the plaintiff
had only paid $1,941.49 towards his claimed expenses.
84
In determining the amount of the collateral offset, the trial court found
that the plaintiff was entitled to a credit under section 52-225a(c) totaling
$51,102.24 for contributions he and his employer paid to procure the
insurance coverage over the three-year span of his claimed medical
80
.
Id.
81
.
Madsen v
. Gates, 857 A.2d 412, 418 n.4 (Conn. App. Ct. 2004).
82
.
Marciano v
. Jimenez, 151 A.3d 1280, 1281–82 (Conn. 2016).
83
.
Id.
84
. Marciano v. Jiminez, No. CV126019643, 2015 WL 2458076, at *1 (Conn. Super. Ct.
May 6, 2015), rev’d sub nom. Marciano,151 A.3d 1280.
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treatment.
85
The major dispute, unlike in Bonsanti, was regarding a lien
placed on the plaintiff’s lawsuit by his insurance carrier, which was a self-
funded ERISA plan.
86
A letter was submitted into evidence that the
plaintiff’s employer agreed to accept $6,940.19 in full and final
satisfaction of the employer’s subrogation claim.
87
Accordingly, finding
that $51,102.24 was paid to procure the benefits in question and that there
was no right of reimbursement to any of the remaining sums awarded to
the plaintiff other than $6,940.19, the trial court applied a collateral offset
to the awarded economic damages in the amount of $24,299.75.
88
B. The Parties’ Arguments on Appeal
The plaintiff in Marciano appealed the trial court’s decision to order
a col
lateral source reduction.
89
In his attempt to recoup the amount offset
by the trial court, the plaintiff argued for the court to reverse the decision
solely on the basis that a “right of subrogation,” did exist, while
acknowledging that his employer indicated a “willingness to accept a
lesser amount than full reimbursement.”
90
In essence, the plaintiff tacitly
acknowledged that he was not going to incur any subrogation demands
from his employer for anything beyond $6,940.19, but nonetheless was
still seeking the full award.
The defendants pointed out the inequity in such a scenario. Noting
that the plaintiff, who already received the benefit of having his claimed
medical expenses paid for by his employer, would then obtain a “double
recovery” by receiving an additional $24,299.75 for economic damages
that he never personally bore.
91
The defendant also argued that the court’s
interpretation of section 52-225a should be guided by the legislative intent
behind the passage of the statute, which the defendant claimed would lead
85
. See id. at *2 n.4 The trial court, citing Alvarado v. Black, 728 A.2d 500, 503 (Conn.
1999), noted that the “payments an employer makes to purchase health insurance for an
employee are not gratuitous” and are “made as part of the employee’s compensation,” so all
contributions paid by the plaintiff’s employer were also encompassed in calculating the
plaintiff’s credit against a collateral source reduction pursuant to Connecticut General Statutes
§ 52-224a(c). Id. at *2.
86
. Id. at *1. ERISA plans are typically self-funded and have been permitted to assert a
right of subrogation despite the “anti-subrogation” language of Connecticut General Statutes
§ 52-225c. See, e.g., Bonsanti v. Newman, No. CV030401098, 2006 WL 413011 (Conn. Super.
Ct. Feb. 3, 2006); Gauntlett v. Dean Webb, No. CV980352842, 2003 WL 22079536, at *1
(Conn. Super. Ct. Aug. 13, 2003).
87
. ) Marciano, 2015 WL 2458076, at *1.
88
. ) Id. at *2 n.4.
89
. ) Marciano, 151 A.3d at 1281–82.
90
. ) Id.
91
. ) Id. at 1284–85.
159
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to a partial reduction of the economic damages awarded for any portion
of the lien that had been forgiven.
92
C. The Supreme Court’s Decision
The Connecticut Supreme Court reversed the trial court’s collateral
sou
rce reduction based on its interpretation of section 52-225a.
93
The
court argued that under the “strict interpretation” of the statute and
applying the “plain meaning rule,” the statute was clear that if there is a
right of reimbursement, whether for all or part of the collateral source
amount, that there shall be no collateral source reduction.
94
In the court’s
opinion, the fact alone that a right of subrogation had been asserted
nullified the court’s ability to order any reduction.
95
The court defended
this over-expansive approach by stating that there was no “restrictive or
qualifying language” that would permit a partial reduction of any sort, and
further stated that the legislature’s use of the modifier “a” before right of
reimbursement supports its interpretation.
96
Additionally, pursuant to Connecticut General Statutes section 1-2z,
the court declined to consult the legislative history holding that its
application of the statute did not yield an absurd result.
97
The court noted
that the legislature strived to reach an “equitable balance” between
preventing plaintiffs obtaining a double recovery on the one hand and
preventing defendants from benefiting from reduced judgments due to
collateral source payments on the other.
98
The court reasoned that denying
a collateral offset in that particular matter was not an “absurd result”
because under the common law, a defendant was not entitled to any
collateral offset, and it declared insurance proceeds are not “pure double
recoveries” since premiums must be paid to obtain the proceeds.
99
92
. ) Id. at 1284.
93
. ) Id.
94
. ) Id. at 1283–84.
95
. ) Id. at 1284.
96
. ) Id.
97
. See id. at 1284–85; see also CONN. GEN. STAT. § 1-2z (“The meaning of a statute
shall, in the first instance, be ascertained from the text of the statute itself and its relationship to
other statutes. If, after examining such text and considering such relationship, the meaning of
such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual
evidence of the meaning of the statute shall not be considered.”).
98
. ) Marciano, 151 A.3d at 1285.
99
. ) Id.
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III. THE AFTERMATH OF MARCIANO: SUPERIOR COURTS NOW APPLY
§ 52-225A INCONSISTENT WITH LEGISLATIVE INTENT AND THE
“EQUITABLE BALANCE” BETWEEN LITIGANTS HAS BEEN
DISMANTLED
Since Marciano, unfair results have been pronounced in light of the
award of “phantom damages,” which has become commonplace. Citing
Marciano, lower-level courts have refused the entry of a collateral source
reduction in any case involving the presence of a lien, regardless of the
amount. As of today, even sums awarded as economic damages that are
not encapsulated by a lien are not being reduced from verdicts, severely
tipping the equitable balance between litigants almost back to the way
things existed prior to the enaction of section 52-225a.
A. The Trial Courts Have Interpreted Marciano in an Overbroad
Manner
The
holding of Marciano, though involving an ERISA plan and a
provisional agreement to reduce the lien amount for purposes of
settlement, has resonated in nearly all subsequent trial court decisions in
collateral source hearings in cases upon which a federal lien has been
asserted.
100
The clear implication that these judges have taken from
Marciano is that if there is any right of subrogation, there can be no
collateral source reduction for any amount, even for write-offs that are not
subject to any right of subrogation.
101
For example, in Zogai v. Jacobs,
the defendants sought to reduce the portions of the plaintiff’s claimed
economic damages that represented amounts that were contractually
written off by Medicare or Medicaid.
102
The court clearly expressed its
opinions on the matter and further discussed the constraint placed by the
precedence of Marciano:
I would agree . . . that the write-offs are properly addressed in
remittitur to reduce economic damages to the true cost of medical
services incurred by plaintiff. I would disagree with the argument that
100
. See Hanley v. Simbus Café, No. CV136012228S, 2020 WL 4815863 (Conn. Super.
Ct. July 23, 2020); Zogai v. Jacobs, No. FSTCV186034735S, 2019 WL 7630765 (Conn. Super.
Ct. Dec. 4, 2019); Roberto v. Boehringer Ingelheim Pharm., No. HHDCV166068484S, 2019
WL 5068452 (Conn. Super. Ct. Sept. 11, 2019); Sutera v. Nathiello, No. KNLCV146022399,
2017 WL 6417801, at *2 (Conn. Super. Ct. Nov. 20, 2017).
101
. See generally cases cited supra note 100. But see Memorandum of Decision RE:
Motion For Remittitur (#191), Doucet v. Jameson, No. UWY-CV15-6028456-S (Conn. Super.
Ct. Oct. 1, 2019), Entry No. 199.00 (distinguishing Marciano and holding that Medicare write-
offs were to be reduced from the verdict not due to the collateral source, but because the write-
offs exceeded the scope of recoverable economic damages as defined by section 52-572h(a)(1)).
102
. Zogai, 2019 WL 7630765, at *1–2. Though the defendants filed a Motion for
Remittitur, the court treated it as a Motion for Collateral Source Reduction. Id.
161
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because subrogation rights exist for Medicaid payments actually made
there is no valid basis for reducing the award of economic damages by
write-offs required as a benefit of the federal programs that will never
actually be paid or collected by anyone and so are not subject to
subrogation. . . . Nevertheless, the Supreme Court made very clear in
Marciano that “when any right of subrogation exists, whether in full
or in part, for a collateral source, § 52-225a precludes the trial court
from ordering any collateral source reduction at all. . . . The collateral
source here is Medicaid and there is a right to
subrogation. . . . Although Marciano dealt with deductions for
payments from collateral sources not write-offs, the broad prohibition
by the Supreme Court against collateral source reductions if there is a
right to subrogation “in full or in part,” leaves no room for this Court
to grant the remittitur requested.
103
In another post-Marciano case, Sutera v. Nathiello, the plaintiff was
awarded $608,534.66 for medical expenses despite his Medicaid coverage
paying out only $245,669.53 and the remainder was written off by the
providers.
104
As it stood, the plaintiff was set to recover more than
$350,000 for medical expenses he never personally incurred.
105
However,
the court denied the defendant’s request to reduce the portion of the
plaintiff’s awarded economic damages that represented amounts written
off by medical providers, ruling that under Marciano “[the] court is
precluded from ordering any collateral source reduction” because the
State of Connecticut had a right of subrogation for accident-related
medical bills.
106
Similarly, in Roberto v. Boehringer Ingelheim Pharmaceuticals, Inc.,
the jury awarded the plaintiff $42,464.45 in medical expenses, though the
plaintiff’s Medicare coverage paid only $7,911.39 of the bills and the
plaintiff paid $10.67, while the remaining portions were adjusted or
written off.
107
In ruling on the defendant’s motion for a collateral source
reduction, the court acknowledged the historical approach of superior
court judges in ordering collateral source reductions for write-offs, citing
specifically to Bonsanti, but declared that the Connecticut Supreme
Court’s decision Marciano was its binding precedent.
108
Ultimately, the
103
. Id. at *4–5 (internal citations omitted) (emphasis added).
104
. Sutera v. Nathiello, No. CV146022399, 2017 WL 6417801 at *1 (Conn. Super. Ct.
Nov. 20, 2017).
105
. See id.
106
. Id. at *2.
107
. Roberto v. Boehringer Ingelheim Pharm., Inc., No. HHDCV166068484S, 2019 WL
5068452 at *27 (Conn. Super. Ct. Sept. 11, 2019).
108
. Id.
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court in Roberto, citing Marciano and Sutera, denied the request for a
collateral source reduction for the amount of the write-offs pursuant to
Medicare on the basis that a right of subrogation existed, which precluded
it from making any collateral source reduction.
109
In another recent case, Hanley v. Simbus Café, the plaintiff was
awarded $251,641 for her past medical bills.
110
Post-verdict, the
defendant sought a collateral source reduction on the basis of the
plaintiff’s Medicare coverage for her claimed bills.
111
The court in Hanley
noted that “under the federal statutory scheme governing Medicare, a right
to subrogation exists either in part or in full.”
112
Accordingly, the court in
Hanley, citing Marciano, also struck down the defendant’s request for a
collateral source reduction as it found a right of subrogation existed.
113
B. The Equitable Balance between
Litigants Has Been Dismantled in
Light of Marciano
The “
equitable balance” upon which Marciano refers is the notion
that, on the one hand, while plaintiffs should not get the windfall of a
“double recovery,” defendants should not get the windfall of a “reduced
judgment” due to the plaintiff’s insurance.
114
Moreover, the court
declared that “[i]f there must be a windfall[,] certainly it is more just that
the injured person shall profit therefrom, rather than the wrongdoer shall
be relieved of his full responsibility for his wrongdoing.”
115
This
argument, however, is wholly incompatible with the nature of
compensatory damages, which is intended to make the plaintiff whole.
116
Rather, requiring that a defendant pay damages to the plaintiff for medical
expenses that the plaintiff never incurred is punitive in nature because its
only purpose is to punish the defendant.
117
109. Id. at *
28.
110
. Hanley v. Simbus Café, CV CV136012228S, 2020 WL 4815863 at *1 (Conn. Super.
Ct. Jul. 23, 2020).
111. Id. at *
2.
112. Id. at *3.
113. Id.
114. Marciano v. Jimenez, 151 A.3d 1280, 1285 (Conn. 2016).
115. Id.
116. See Gary M. Langlois, Jr., Louisiana’s Collateral Source Rule: Eliminating the
“Windfall” Arising from Medical Expense Write-Offs, 63 LOY. L. REV. 291, 316 (2017).
117
. See id. See also Iino v. Spalter, 192 Conn. App. 421, 468 n. 14 (2019).
[P]unitive damages are damages awarded not to compensate the plaintiff for any
injury or losses but to punish the defendant for outrageous conduct. . . . Punitive
damages may be awarded for conduct that is outrageous, because of the
defendant’s reckless indifference to the rights of others or an intentional and
wanton violation of those rights.
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Awarding punitive damages on this basis, when they otherwise would
not be available, is wholly inappropriate.
118
In these circumstances, the
plaintiff is not just made whole, but is placed in a better financial position
than he or she was before the accident. The Marciano decision has led,
and will continue to lead, to inflated verdicts and settlements. That is
shown by the Sutera decision above, where the Marciano holding
permitted the plaintiff to retain $350,000 of the awarded economic
damages that most certainly would have been reduced at a collateral
source hearing prior to Marciano.
As a result, plaintiffs are incentivized to “rack up their damages.” In
2012, during debate on the Senate Floor regarding Public Act 12-142,
State Senator Kevin Witkos, while discussing the impact an amendment
to section 52-174 to allow the “full medical bills” as evidence at trial, gave
remarks that are equally applicable to the situation now in which write-
offs are not subject to collateral source reduction:
I think in our society . . . we set things up for lawsuits so somebody
can make money. . . . If you know that you, in your mind, as you’re
going through you say I’m going to file a lawsuit, well, guess what, I
want a private room. I want 24 hour care. I want—I want, I want, I
want because you know you want to build up that dollar amount. You
might not be reimbursed for it all because insurance is only going to
pay for part of it. But you can boost up that bill in—because you’re
going to benefit by that later on down the road. But then everybody
else suffers.
119
That is the situation we presently find ourselves in. In cases where a
lien has been asserted, plaintiffs have every incentive to inflate these types
of expenses. Under Marciano, they can now profit off of these additional
bills, for while their insurance pays for their treatment, they will profit
when defendant has to pay them for the amounts written off. Moreover,
since section 52-174 was amended in 2012 to prohibit the jury from seeing
collateral source information, the defendant is left without any recourse to
remedy the jury’s award of damages for the amounts of physician write-
offs when any right of subrogation has been asserted.
Accordingly, settlement demands (and verdicts, if matters do make it
to trial) are now inflated, as plaintiffs have no incentive to settle a matter
unless the settlement encompasses the write-offs.
120
Therefore, a
Id.
118
. See generally Langlois supra note 116.
119
. Hearing before the Senate, 55 Sen. Proc., Pt. 14, 2012 Sess., 4264-65 (statement of
Sen. Kevin D. Witkos).
120
. See S.B. 969 Public Hearing, supra note 9, at 177–79 (statement of M. Karen
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significant effect of Marciano is that it has crippled the public policy of
resolving disputes via settlement, which has the secondary effect of
forcing the State of Connecticut to expend judicial resources on trials
when those resources could otherwise be put to better use.
121
Moreover, some are concerned that insurance companies will raise
premiums in response to these inflated verdicts and settlements.
122
Indeed,
at least one physician has stated that the effect of Marciano is to
discourage physicians from taking on Medicare and Medicaid patients out
of concern for increased medical liability premiums in the event of a
malpractice suit which could result in an inflated verdict or settlement.
123
As a result, Connecticut may have a difficult time recruiting talented
physicians to come to the state.
124
IV.
THE MARCIANO HOLDI
NG SHOULD BE RECONSIDERED IN ORDER TO
RESTORE THE EQUITABLE BALANCE BETWEEN LITIGANTS
As the equitable balance has been completely tipped in the plaintiff’s
favor, the Connecticut Supreme Court should reconsider its holding. The
court should reexamine the statute and should consult the legislative intent
of section 52-225a, as doing so should compel a different result and should
restore the “right of subrogation” exception of section 52-225a to its
original meaning. In any event, the court should clarify whether its
holding was meant to encompass contractual “write-offs.”
A. The Court’s Reasoning in Marciano Should Be Reconsidered as It Is
Not in Line with the Text of the Statute or Legislative Intent
The court
’s reasoning in Marciano should be reconsidered as its
construction of the plain meaning of section 52-225a is flawed. The court
also did not review the legislative history behind section 52-225a, and its
holding seems to defy the basic legislative intent behind the law’s passage.
As such, the court should reconsider its decision in Marciano in order to
correct the shortcomings of its decision.
1.
The Court’s Interpretation of the Statute Is Lacking
The court
’s interpretation of section 52-225a in Marciano is an overly
broad reading of the narrow exception that the legislature placed into the
Noble).
121. Linda Cheng and Eric Nied
erer, Marciano v. Jimenez: The Plaintiff’s Windfall, 30
J. CONN. DEF. LAWS. ASS’N 1, 6 (2017).
122. See S
.B. 969 Public Hearing, supra note 9, at 169–79 (statements of Omar Ibrahimi,
M.D., and M. Karen Noble).
1
23. See id. at 169–77.
124. See id. at 171–72.
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statute. What the court fails to address in its opinion is that under the plain
text of the statute, collateral source reductions are precluded only in two
distinct circumstances, labeled as exception “(A)” regarding amounts
subject to subrogation and exception “(B)” regarding amounts subject to
reduction due to the plaintiff’s percentage of negligence.
125
Exception “(A),” upon which the court bases its decision, states
explicitly that a court is precluded from ordering a reduction for “a
collateral source for which a right of subrogation exists.”
126
It has to be
presumed that the statutorily defined term “collateral source” was
deliberately put into this exception in order to limit the scope of the
exception’s application.
127
Furthermore, as the court noted in Marciano,
the use of the modifier “a” before “collateral source” encapsulates any and
all of the collateral sources in the case, not just one.
128
The superior court’s opinion in Hassett, which was affirmed and
adopted by the appellate court and remains good law, declared that
contractual physician write-offs are collateral sources pursuant to section
52-225b.
129
These write-offs are not subject to reimbursement or
subrogation. Thus, exception “(A)” contained within section 52-225a(a)
does not apply to these amounts because they are “collateral sources” for
which “no right of subrogation exists.”
130
Therefore, the plain text of the statute indicates that the legislature
intended to exempt only those collateral reductions that are subject to a
right of reimbursement. Had the legislature intended that there would be
no collateral source reductions when there is any right of reimbursement,
it would have said so and would not have included the phrase “a collateral
source for which” in exception “(A).”
131
Ultimately, the holding in Marciano fails to consider this crucial
phrase. Consequently, the lower-level courts are left with an overly broad
exception to the collateral source rule that is leading to inequitable results.
Its broad holding that “any right of subrogation” nullifies all collateral
source reductions should be reconsidered to address the legislature’s
inclusion of the phrase “a collateral source” in the exception it relies on to
make such a declaration.
125
. See CONN. GEN. STAT. § 52-225a(a) (2014).
126
. Id. (emphasis added).
127
. See Cruz v. Montanez, 984 A.2d 705, 713 (Conn. 2009).
128
. Marciano v. Jimenez, 151 A.3d 1280, 1284 (Conn. 2016).
129
. See Hassett v. City of New Haven, 858 A.2d 922, 923–24 (Conn. Super. Ct. 2004),
aff’d, 880 A.2d 975 (Conn. App. Ct. 2005).
130
. See CONN. GEN. STAT. § 52-225a(a) (2014).
131
. Id.
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2.
The Legislative History Should Have Been Consulted
Despite the “historical underpinnings” of the common-law collateral
source rule, the Connecticut Supreme Court had previously acknowledged
that section 52-225a abrogated the common-law collateral source rule,
meaning that the application and policy of the common law collateral
source rule has no bearing on whether the court’s construction of section
52-225a would yield an “absurd” result.
132
Moreover, the court’s
argument that insurance proceeds do not constitute “pure double
recoveries” due to a plaintiff’s payments of premiums is not compelling.
Any amount a plaintiff recovers beyond the amounts he expended or
incurred would still amount to a windfall, whether it is “pure double
recovery” or not.
133
Thus, the court’s argument that an “absurd result”
does not arise from denying a collateral source reduction for write-offs
merely because the plaintiff has paid premiums is weak.
3.
The Court Should Declare That Its Holding in Marciano Does
Not Apply to Contractual Write-Offs
The
overbreadth of the application of the court’s ruling on the “right
of subrogation” exception to section 52-225a in Marciano by superior
court judges should cause the court to clarify whether its holding was
meant to extend to anything beyond a voluntarily reduced lien. Since the
question in Marciano was whether a collateral source reduction exists for
the portion of the lien that was subsequently forgiven—not whether
collateral sources not subject to the lien could be reduced—the
Connecticut Supreme Court should provide clarification on this point.
134
Hassett and Marciano can be reconciled with one another in that both
cases stand for the proposition that the full amount of the lien, whether
forgiven or not, will not be subject to a collateral source reduction.
However, these holdings should not preclude a collateral source reduction
to other portions of the economic damages awarded that qualify as a
“collateral source” and are not themselves subject to a right of
subrogation.
135
Rather, the holding of Hassett that involuntary write-offs
constitute a collateral source should be endorsed rather than an all-out
“ban” on collateral source reductions when any lien is present. In the
appropriate case, the court should consider Hassett, as well as McInnis
132
. Jones v. Kramer, 838 A.2d 170, 177 (Conn. 2004) (“The legislature clearly enacted
§ 52–225a in derogation of the common-law collateral source rule.”).
133. CONN. GEN. STAT. §
52-225a(a) (2014).
134. See generally Marciano v. Jimenez, 151 A.3d 1280 (Conn. 2016).
135. See id. at 1284–85; see also Hassett v. City of New Haven, 858 A.2d 922, 924 (Conn.
Super. Ct. 2004), aff’d, 880 A.2d 975 (Conn. App. Ct. 2005).
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and Bonsanti, to clarify that its holding in Marciano does not prohibit the
collateral source reductions of contractual “write-offs,” if the court is
otherwise inclined to not overrule Marciano in its entirety.
C
ONCLUSION
In light of the Marciano holding, inequitable and fundamentally
unfair results have occurred. Plaintiffs can now receive “double
recoveries” when a “right of subrogation” exists as to their claimed
medical bills. This occurs despite the legislative intent of section 52-225a
to prevent “double recoveries” because plaintiffs are now permitted to
recover amounts written off contractually by their treating providers,
though these amounts were never paid and not subject to subrogation. The
current state of jurisprudence as to section 52-225a is inapposite—not
only to the text of, and legislative intent behind the statute—but also to
the prior statutory application of the collateral source rule starting with
Hassett. As such, the Connecticut Supreme Court should reconsider the
Marciano ruling for the reasons expressed above.
In addition, the legislature should also take action in light of the harsh
results of Marciano. The Connecticut Legislature should want to clarify
the court’s overly broad expansion of the “right of subrogation” exception
to section 52-225a. Presently, a bill has been introduced in the 2021
Session, House Bill No. 6465, that would rectify the Marciano holding by
amending section 52-225a to declare that only an “amount . . . subject to
a right of subrogation” would be exempted.
136
Therefore, in order to
clarify the true “right of subrogation” exception consistent with the
legislative intent behind the initial enaction of the statute, House Bill 6465
should be considered.
137
136
. H.B. 6465, 2021 Leg., Reg. Sess. (Conn. 2021),
https://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&which_year=202
1&bill_num=6465.
137
. Id.
