# Handy v. City of Lawton

> Supreme Court of Oklahoma · July 14, 1992 · 63 O.B.A.J. 2309

URL: https://www.frixlaw.com/law-library/cases/9529355

## Case

- **Full name:** Steve HANDY and Susan Handy, Appellees, v. the CITY OF LAWTON, a Municipal Corporation, Appellant
- **Court:** Supreme Court of Oklahoma
- **Decided:** July 14, 1992
- **Citations:** 63 O.B.A.J. 2309; 835 P.2d 870; 1992 OK 111; 1992 Okla. LEXIS 175; 1992 WL 167298
- **Precedential status:** Published
- **Opinion:** Dissent by Opala
- **Judges:** Hodges, Lavender, Hargrave, Wilson, Kauger, Summers, Opala, Simms
- **Cited by:** 45 later opinions in the Frix Law Library

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## Opinion text

OPALA, Chief Justice,
dissenting in part.
The court holds today that the “collateral source rule” 1 prevents the defendant-City, qua plaintiff’s employer, from securing credit on a tort recovery judgment for medical expenses paid the plaintiff from its comprehensive self-insurance fund. Insofar as the court (1) treats the credit issue as cognizable on a “motion for remittitur” 2 and (2) announces that payments made pursuant to a City-maintained, insurance fund are from a collateral source, 3 1 recede from the pronouncement as well as from today’s judgment. I would hold that the City’s quest for credit was prematurely pressed. Its plea presents neither a trial nor post-trial issue, but one that can be advanced only in an adversary postjudgment proceeding for release and satisfaction pro tanto. 4 The judgment should hence be affirmed without prejudice to the credit plea’s resolution in a post-remand adversary proceeding.
I
ANATOMY OF THE LITIGATION
The plaintiff [Handy] was a police officer for the City of Lawton [the City]. He was off duty when another officer’s gun discharged and wounded him. He sued the City for bodily injury from the shooting incident. A City fund for reimbursement of employee health expenses paid Handy’s doctor as well as his hospital expenses. The City sought credit for these payments.
The City initially raised the credit issue when it moved in pretrial stages to admit evidence that Handy’s medical expenses were paid by the City’s insurance fund. The plaintiff opposed the motion; he urged *876 that the insurance payments were from a “collateral source.” 5 The court deferred its ruling on the issue. At trial the defendant neither sought admission of the evidence tendered earlier by its motion nor made a voluntary offer of proof. 6
After a jury verdict for the plaintiff, the City moved for “remittitur,” 7 new trial 8 and for judgment notwithstanding the verdict [JNOV]. 9 The City’s “remittitur motion” 10 (a) urged that the medical payments for Handy are exempt from the collateral source rule and (b) sought allowance of credit upon the judgment. The court denied all three posttrial motions. On appeal the City urged that the trial court erred by denying its “remittitur motion.” The appellate court ruled for the City on other grounds and found no need to reach the credit issue. On certiorari, the issue stands re-presented. 11 Since the court now reinstates the nisi prius judgment for the plaintiff, we must reach the credit plea for review. 12
*877 ii
THE CITY’S CREDIT QUEST FOR PAYMENT OF HANDY’S MEDICAL BILLS PRESENTS A GENUINE POSTJUDGMENT CREDIT-ON-JUDGMENT PLEA
Although we measure the meaning and effect of any court-filed paper by its content rather than by the author-provided title, 13 1 cannot join in today’s consideration of the City’s credit quest as part of its “remittitur” plea. Appellate failure to flag an important procedural flaw invites sloppy legal practice and puts a premium on ambiguity. 14 A clearer understanding of the City’s credit plea emerges when the plaintiff’s tort action is divided, as it must be, into trichotomous stages: (a) trial, (b) posttrial but before judgment becomes executable 15 and (c) postjudgment.
Trial issues deal with the merits of a controversy. The word “merits” has a technical meaning. It comprises solely the real or substantial grounds of claim for relief or defense. The term does not include practice, procedure and evidence. 16 The City’s liability and the quantum of Handy’s damages raised the issues for trial in the case; the City’s quest for credit presented a question dehors the merits— i.e., a credit claimed to be due on the amount of adjudged liability. Injection into trial proceedings of the notion that the City or its insurance fund paid Handy’s doctor as well as the hospital bills might have been reversible error. 17 Credit to be given the City for its medical payments to the tort victim clearly is not invocable until both liability and damages have been settled by an executable judgment.
Posttrial issues are those that may be raised in quest of new trial, 18 remittitur, 19 or motion for JNOV. 20 “Remittitur” is not to be confused with a plea for credit on a judgment; the former is an alternative to new trial and affordable to a plaintiff when the verdict in his favor is judicially declared excessive. 21 The City did not suggest the evidence does not support the amount of the jury’s verdict nor call for its reduction; rather, it sought credit on a judgment that had not yet passed into executable stage.
Oklahoma jurisprudence fashions proper nisi prius procedure for consideration of postjudgment credit allowance. 22 A ruling on a quest for medical payments’ credit neither alters the terms of the verdict nor modifies the quantum of one’s *878 judgment. It merely defines the quantum that is the creditor’s due upon the adjudicated obligation 23 I would treat the City’s “remittitur motion” as a premature attempt to secure credit pro tanto on an as yet unexecutable recovery. I would accordingly allow the City to press its plea after this cause’s remand.
Ill
AFTER REMAND THE TRIAL COURT SHOULD CONDUCT AN ADVERSARY EVIDENTIARY HEARING TO SETTLE THE CREDIT-ON-JUDGMENT PLEA
The court assumes that the contested medical payments were made with Handy’s rather than the City’s money. It views the issue as settled because the parties refer to the City’s medical plan as a “fringe benefit” due under the collective bargaining agreement. I would require the trial court to hold an adversary eviden-tiary hearing and then rule on whether the medical payments in contest are Handy’s own money or will qualify for credit on the judgment. This procedure would assure that the plaintiff does not succeed in securing double recovery pro tanto. 24
The collateral source rule applies, at its maximum, when the tortfeasor claims credit for money paid by the victim or for the victim by a stranger. In that instance the source of the benefit is truly “collateral,” i.e., unconnected to the tortfeasor. This typically occurs when the tortfeasor claims credit for money paid by the victim’s own insurance policy. 25 Whenever the payor of claimed credit has no connection to the tortfeasor, the collateral source rule interposes itself to prevent the wrongdoer from benefiting from a “windfall.” 26
Extant jurisprudence views as a collateral source benefits from every fund to which the victim has contributed. 27 For example, a government tortfeasor may not reduce its liability by the victim’s Social Security 28 or Medicare 29 benefits. Funds from these programs come from a special pool to which the victim contributes. The payment is thus made from a “collateral source” — i.e., from a fund clearly separate from general government revenue. There is no double recovery if the plaintiff has contributed to, paid for, or is otherwise *879 entitled, to the benefit which is the source of received payments.
By contrast, payments made under an insurance policy are not a collateral source if the insurance was purchased or maintained by the defendant. This test is applicable whether payment is in the form of liability indemnity or under a medical payments clause. 30
The court rejects today these common-law norms and instead adopts the teaching of Folkestad v. Burlington Northern, Inc., 31 a case governed by federal statutory law. 32 I cannot accede to today’s espousal of federal legislation that contravenes our own common-law norms under which indemnity from insurance maintained by the defendant reduces his liability. Folkestad itself suggests that, were that case not governed by Section 5 of the Federal Employers Liability Act [FELA], 33 the common-law principle would allow credit to the judgment debt- or, once it was shown that premiums for the insurance were paid by the employer. 34
Employee health insurance, against which claims may be made without regard to the employer’s tort liability, is not per se part of the employee’s income. When an employer gratuitously provides health insurance to its employee, the latter’s labor has not purchased the coverage; the employer could discontinue the benefit at will. On the other hand, health insurance coverage conferred by individual contract or collective bargaining agreement is considered a “fringe benefit” in lieu of wages. The legal norm espoused today bars credit to the tortfeasor for benefits received from an employer’s fund for general hospital and medical coverage if the employee could have made a claim without regard to the employer’s tort liability. This test appears to make no distinction between gratuitous (non-contributory) health benefits and those that result from a contractual obligation. The court has thus crafted a rule which treats every employer’s health insurance indemnity as a collateral source. I must recede from the pronouncement’s overbroad parameters.
SUMMARY
The court holds today that medical payments from a self-administered health plan — paid exclusively by the employer— are within the employee’s collateral source shield. Neither the text of the self-insurance plan in question nor that of the collective bargaining agreement — both vaguely referenced by the parties’briefs— is part of the record before us. Both litigants would benefit from an orderly adversary hearing for a full-scale determination of the claimed credit.
The court must not abdicate its duty to guard against a tort plaintiff’s double recovery. The proper practice for resolution of this credit quest is to affirm the judgment without prejudice to post-remand redetermination of the defendant’s plea for a pro tanto satisfaction of judgment. If indeed it is shown that Handy had con *880 tributed to the premiums paid, either directly or indirectly, then nisi prius refusal to credit the City for the medical payments would not offend against the law’s prohibition of double recovery. 35
The result I counsel here, harsh though it may appear because it would prolong the contest, traces with fidelity the beaten path of long-established precedent. Fundamental fairness in litigation process cannot be afforded except within a framework of orderly procedure. No area of the law may lay claim to short-cut or exemption from the range of its basic strictures — not even the postjudgment process for partial release and satisfaction. Chaos, caprice and ad hoc pronouncements would inevitably follow the slightest departure.
“ * * * It is procedure that spells much of the difference between rule by law and rule by whim or caprice. Steadfast adherence to strict procedural safeguards is our main assurance that there will be equal justice under law. * * * ” 36 [Emphasis mine.]
In short, I would not allow the premature nisi prius ruling on the credit issue to bar a proper postremand inquiry into the status of the medical benefits in question under the collateral source rule. In my view, the City’s plea is properly to be entertained in post-affirmance proceedings. I would, as the court does today, affirm the plaintiff’s judgment, but would remand this cause without prejudice to the credit plea's resolution in a post-remand adversary proceeding to secure release and satisfaction pro tanto. 37
. Under the collateral source rule, benefits received by the plaintiff from any source other than the tortfeasor will not reduce the quantum of recoverable damages. Porter v. Manes, Okl., 347 P.2d 210, 212 (1959); Huey v. Stephens, Okl., 275 P.2d 254, 257 (1954). Huey was overruled on a different point of law in Hayward v. Ginn, Okl., 306 P.2d 320, 324 (1957).
. “Remittitur" means judicial reduction of the verdict voluntarily accepted by the plaintiff as an alternative to new trial. See Wells v. Max T. Morgan Co., 205 Okl. 166 , 236 P.2d 488, 490 (1951).
. Overturff v. Hart, Okl., 531 P.2d 1035, 1038 (1975). See Restatement (Second) of Torts § 920A comment a (1977), which states:
"Payments by or for defendant. If a tort defendant makes a payment toward his tort liability, it of course has the effect of reducing that liability. This is also true of payments made under an insurance policy that is maintained by the defendant, whether made under a liability provision or without regard to liability, as under a medical payments clause.” [Emphasis added.]
. Hart v. Jett Enterprises, Inc., Okl., 744 P.2d 561, 563 (1987) (Opala, J., concurring); Lambert v. Hill, 181 Okl. 225 , 73 P.2d 124, 126-127 (1937); Sneary v. Nichols & Shepard Co., 70 Okl. 133 , 173 P. 366, 368 (1918). For two recent examples of postconfirmation credit issue in a mortgage foreclosure setting, see Willis v. Nowata Land and Cattle Co., Okl., 789 P.2d 1282, 1285 (1990) and Founders Bank and Trust Company v. Upsher, Okl., 830 P.2d 1355 (1992); see also 63 OBJ 1048.
. See supra note 1 for the "collateral source rule’s" definition.
. An offer of proof is required to preserve for review a court’s error in excluding evidence. See Braden v. Hendricks, Okl., 695 P.2d 1343 , 1349-(1985). The City did not urge here the pretrial exclusion of the evidence as error. Rather, it resubmitted the credit issue after trial and then included its plea's posttrial rejection as one of the errors.
. See Wells, supra note 2 for the definition of "remittitur."
. The terms of 12 O.S.1991 § 651 provide in pertinent part:
"A new trial is a reexamination in the same court, of an issue of fact, or of law, either or both, after a verdict by a jury_’’ [Emphasis mine.]
. The terms of 12 O.S.1991 § 698 provide in pertinent part:
"When a motion for a directed verdict ... should have been granted, the court shall, at the request of the moving party, render judgment in his favor though a verdict has been found against him_ The request for judgment may be filed within ten (10) days after the verdict ... is rendered ... and the motion may be joined with a motion for new trial." [Emphasis mine.]
. A party seeks remittitur by motion for new trial.
. The terms of 12 O.S.1991 Ch. 15, App. 3, Rule 3.15, Rules on Practice and Procedure in the Court of Appeals and on Certiorari to that Court, provide in pertinent part:
"When a petition for writ of certiorari to review a decision of the Court of Appeals is granted, an order shall be entered to that effect. The case will then be decided on the reviewable issue or issues presented in the briefs theretofore filed....” [Emphasis mine.]
. The City urged on appeal that it is entitled to credit for the medical benefits extended to Handy. That issue became moot and correctly left unaddressed by the Court of Appeals when the judgment was reversed. We now reinstate the judgment, a conclusion in which I concur. The credit issue is hence properly before us.
An appellee may argue errors which result in the judgment’s correctness without counter appealing. Woolfolk v. Semrod, Okl., 351 P.2d 742, 745 (1960); see also Oklahoma Water Resources Bd. v. Texas County, Okl., 711 P.2d 38 & n. 48 (1984); Nilsen v. Tenneco Oil Co., Okl., 614 P.2d 36, 39 (1980); Short v. Guy Nall Trucking Co., Okl., 442 P.2d 497, 499 (1968); Great American Reserve Ins. Co. of Dallas v. Strain, Okl., 377 P.2d 583, 589 (1963). This is so because the appellee does not deem itself aggrieved by the judgment. Similarly, a party who does not petition for certiorari stands in virtually the same position as the appellee. That party can preserve for review without a certiorari petition all the arguments pressed on appeal which demonstrate the correctness of the Court of Appeals’ opinion.
We need ask only two questions: (1) Did the City argue the error on appeal? and (2) Does its argument support reversal of the nisi prius adverse ruling? The credit issue meets this test. The City urged the credit issue as an error on appeal. Its argument supports reversal of the nisi prius ruling even though it is not the same reason assigned by the Court of Appeals for its decision. The record and briefs are sufficient to present the City’s arguments.
The following cases, where the aggrieved party failed to appeal from the claimed error, are distinguishable from today’s case in which the error was raised on appeal and the victorious party on appeal had to defend against a petition for certiorari: Bane v. Anderson, Okl., 786 P.2d 1230, 1240 (1990) (Opala, J., concurring in part and dissenting in part); Price v. Reed, Okl., 725 P.2d 1254 (1986); Cleary Petroleum Corp. v. Harrison, Okl., 621 P.2d 528, 534 (1980); City of Frederick v. Elmore, Okl., 587 P.2d 1365, 1370 (1978) (Opala, J. dissenting). Teel v. Teel, Okl., 766 P.2d 994, 999 (1988); Matter of Estate of Bradshaw, Okl., 606 P.2d 578 (1980); May v. May, Okl., 596 P.2d 536, 540 (1979). Also distinguishable are those cases in which the court refused to review an issue that the party who petitioned for certiorari failed to raise, e.g., Mitchell v. Ford Motor Credit Co., 688 P.2d 42, 44 (1984); Johnson v. Wade, Okl., 642 P.2d 255, 258 (1982).
. Willis, supra note 4 at 1285 n. 9.
. Bane, supra note 12 at 1239 (Opala, J. concurring in part and dissenting in part). We do the Bar no favor by rescuing its practitioners from the consequences of their sloppy practice without providing an explanation of why they have gone astray.
. A judgment becomes executable when the motion for new trial is denied. See Rule 1.13(A), Rules of Appellate Procedure in Civil Cases, which provides in pertinent part:
“The effectiveness of a judgment ... shall stand suspended if a timely new trial motion ... is filed, and the enforcement of such judgment shall be stayed until ten days after the trial court's disposition of the motion....”
. Roark v. Shelter Mut. Ins. Co., Okl., 731 P.2d 389 , 390 n. 2 (1987) (Opala, J. concurring); Tidmore v. Fullman, Okl., 646 P.2d 1278, 1283 (1982) (Opala, J., dissenting); Flick v. Crouch, Okl., 434 P.2d 256, 261 (1967). But cf. Kimery v. Public Service Company of Oklahoma, Okl., 562 P.2d 858 (1977).
. The terms of 12 O.S.1991 § 2409 are:
“Evidence of furnishing, offering or promising to pay medical, hospital or similar expenses occasioned by an injury is not admissible to prove liability for the injury.
The terms of 12 O.S.1991 § 2411 provide in pertinent part:
"Evidence of the existence of liability insurance is not admissible upon the issue of negligence or wrongful action....” [Emphasis mine.]
See Tidmore, supra note 16 at 1281.
. See supra note 8 for the terms of 12 O.S.1991 § 651, which define “new trial.”
. See Wells, supra note 2 at 490, for the definition of “remittitur.”
. See supra note 9 for the terms of 12 O.S.1991 § 698, which explain JNOV procedure.
. See Wells, supra note 2 at 490, for the definition of "remittitur."
. See Hart, supra note 4 at 563 (Opala, J., concurring); Lambert, supra note 4 at 126-127; Sneary, supra note 4 at 368. See also Willis, supra note 4 at 1285 and Upsher, supra note 4 .
. See Hart, supra note 4 at 563 (Opala, J., concurring); Lambert, supra note 4 at 126-127; Sneary, supra note 4 at 368. See also Willis, supra note 4 at 1285 and Upsher, supra note 4 .
. “Double recovery" is the sum that represents more than the total maximum loss which a party has sustained. Briscoe v. Harper Oil Co., Okl., 702 P.2d 33, 40 (1985) (Summers, J. dissenting). See also Blake v. Delaware and Hudson Railway Company, 484 F.2d 204, 207 (2d Cir.1973) (Friendly, J. concurring), where Judge Friendly expressed the view that permitting the plaintiff to recover from the railroad the bulk of his hospital bills — previously paid by the railroad — seems a shockingly unjust double recovery. He concluded that the provisions of 45 U.S.C. § 55 , not the common law, required this result.
. Richardson v. Shaw, Okl., 313 P.2d 520, 522 (1957); Huey, supra note 1 at 257.
. Denco Bus Lines v. Hargis, 204 Okl. 339 , 229 P.2d 560 (1951).
. One authority suggests that trial courts should allow a credit against a judgment for only that percentage of the benefit which is traceable to the tortfeasor. Steckler v. United States, 549 F.2d 1372, 1379 (10th Cir.1977), applying Colorado law. Most extant jurisprudence rejects tracing as an undue burden. See Bradshaw v. United States, 443 F.2d 759 , 765 n. 12, 771 (D.C.Cir.1971); Smith v. United States, 587 F.2d 1013, 1016 (3rd Cir.1978), applying Pennsylvania law.
. See e.g., Jennings v. United States, 291 F.2d 880, 887-888 (4th Cir.1961), applying Maryland law to Civil Service Retirement Act benefits; United States v. Price, 288 F.2d 448, 450-451 (4th Cir.1961), applying Virginia law to Civil Service Retirement Act benefits; United States v. Brooks, 176 F.2d 482, 485 (4th Cir.1949), applying North Carolina law to National Service Life Insurance benefits. Cf., Eichel v. New York Central R. Co., 375 U.S. 253, 254 , 84 S.Ct. 316, 317 , 11 L.Ed.2d 307 (1963) (per curiam), where the Supreme Court held that since the Railroad Retirement Act is substantially "social security” for railroad employees, benefits received under that Act are not deductible from a judgment against the employer railroad.
. See, e.g., Mitchell v. Moore, 406 So.2d 347, 351 (Ala.1981); Our Lady of Mercy Hospital v. McIntosh, 461 S.W.2d 377, 379 (Ky.App.1970).
. Overturff, supra note 3 at 1038; Restatement (Second) of Torts § 920A supra note 3 at comment a.
. 813 F.2d 1377, 1381 (9th Cir.1987).
. Section 5 of the Federal Employers Liability Act (Railroads) [FELA], 45 U.S.C. § 55 , which ■' provides in pertinent part;
“Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this act [ 45 U.S.C. §§ 51 et seq.], shall to that extent be void; Provided, That in any action brought against any such common carrier under or by virtue of any of the provisions of this act [ 45 U.S.C. §§51 et seq.\ such corn-835 P.2d — 21
mon carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought.” [Emphasis mine.]
The Folkestad view was that an allowance of credit for the employee’s medical expenses would permit avoidance of FELA liability, a result prohibited by Section 5. The solution fashioned in Folkestad was designed to meet the Section 5 strictures. See Folkestad, supra note 31 at 1381.
. FELA, 45 U.S.C. § 55 , supra note 32.
. Folkestad, supra note 31 at 1380-1381.
. See supra note 24 for the definition of "double recovery."
. Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 179 , 71 S.Ct. 624, 652 , 95 L.Ed. 817 (1951) (Douglas, J., concurring).
. See supra note 4.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9529355. Public record. Not legal advice.