Personal injury law firm Murphy & Prachthauser recently won a Wisconsin Supreme Court case that reinforced the Collateral Source Rule for uninsured or underinsured motorist coverage. The court ruled on March 7 that the plaintiff, Linda Orlowski, was allowed to recover the reasonable value of her medical services—including those amounts that were written off by the medical provider—for her underinsured motorist claim.
Orlowski v. State Farm’s conclusion before Wisconsin’s highest court is a significant case with broad potential impact. The ruling will apply to the hundreds of underinsured motorist cases pending in Wisconsin, as well as—by implication—all uninsured motorist cases, according to Attorney Keith Stachowiak, of the law firm of Murphy & Prachthauser s.c., who represented the plaintiff. “This case put an end to a rule that permitted an insurance company to limit the amount it was required to pay to policy holders—under both uninsured and underinsured motorist coverages in Wisconsin—for medical expenses policy holders incurred to treat their injuries,” said Stachowiak, the Milwaukee auto accident lawyer who authored the Wisconsin Supreme Court brief and made an oral argument before the court in late January 2012. Kevin Kukor and Josef Zimmerman of Murphy & Prachthauser also participated in the case.
The case represents a reaffirmation by the Wisconsin Supreme Court of an important principal of law known as the Collateral Source Rule. Traditionally, under the collateral source rule, a defendant couldn’t seek to reduce its liability by introducing evidence that the plaintiff had received compensation from other sources, such as the plaintiff's own insurance coverage. This ensured that a person responsible for injuring someone in an auto accident could not get off the hook by claiming he didn’t have to pay the injured party’s medical expenses or lost wages because the injured person had health insurance or an employer continued to pay his wages when he missed work. The amount a negligent person owed would not be reduced because of payments made by the injured person’s health insurance or employer.
The Collateral Source Rule applied to all auto accident cases until 2001, when the Wisconsin Court of Appeals held in Heritage Mutual Insurance Co. v. Graser that it would no longer apply to uninsured and underinsured motorist claims. After that, insurance companies began agreeing in uninsured or underinsured motorist claims to compensate injured parties only for the amount their health insurance paid—not the amount their doctors charged.
The March ruling is long-overdue vindication for Orlowski, who was not satisfied with $11,498 in medical expenses previously awarded by an arbitration panel for damages resulting from an auto accident several years ago. The reasonable value of Orlowski’s medical services was $72,985, and her medical provider chose to write off/waive $61,487. Arbitrators decided to award Orlowski only the difference between the two amounts—$11,498. So Orlowski sued in the Milwaukee County Circuit Court for a modification of the award. Ultimately, the court sided with Orlowski and modified the award to include the written-off figure, which required State Farm to reimburse her for $61,487. State Farm appealed the decision, and the case was elevated to the state supreme court for resolution.
The Wisconsin Supreme Court’s unanimous March ruling is the final word on Orlowski’s right to receive the full reasonable value of the written-off medical expenses in her underinsured motorist case. It created a blanket directive that the Collateral Source Rule applies to an injured part’s underinsured motorist action. For more information, please visit www.murphyprachthauser.com or call Keith Stachowiak at 414-271-1011.