Thomas Watson and Karen M. Bray are Partners, and Sarah E. Hamill is an Appellate Fellow, with Horvitz & Levy LLP in Burbank, CA.

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As explained in our March 6, 2020 WLF Legal Backgrounder, the Colorado Supreme Court granted review in Scholle v. Delta Air Lines, Inc., Nos. 18CACO49 & 18CAA0760, __P.3d__, 2019 WL2219704 (Colo. App. May 23, 2019) to decide the following:

“Whether, in an action brought by an injured worker against a third-party tortfeasor, the collateral source rule as codified at 13-21-111.6, C.R.S. (2019), precludes admission of the amount of medical expenses paid by the plaintiff’s workers’ compensation insurer, where (1) amounts billed in excess of scheduled healthcare fees and rates allowed under the Workers’ Compensation Act are unlawful, void, and unenforceable, and (2) the third-party defendant has already extinguished the workers’ compensation insurer’s subrogated interest in the medical expenses paid by settling the insurer’s claim.”

In Scholle, a United Airlines employee was injured in a luggage tug collision with a Delta Air Lines employee.  United paid for the employee’s medical expenses under Colorado’s workers’ compensation system, and settled a subrogation claim against Delta.  Then the injured employee sued Delta to recover medical expense damages for the amount billed by the healthcare providers, not for the amount actually paid by the worker’s compensation or paid by the employee himself.  The Court of Appeal held that the plaintiff was permitted to recover these billed amounts under the collateral source rule.  The Colorado Supreme Court granted review.

The Colorado Supreme Court heard oral argument on September 22, 2020.  The argument focused heavily on whether the settlement between Delta and United extinguished plaintiff’s claim for medical expenses.  The justices asked questions relating to various sections of Colorado’s workers’ compensation code.  The Court seemed to lean toward resolving the case without deciding whether a plaintiff may recover medical expense damages measured by “billed” amounts far exceeding amounts actually paid.  For example, Justice Samour posed the question whether the Court needed to resolve the “billed versus paid” issue if the Court rules that plaintiff’s claim for medical expenses was extinguished.  Delta’s counsel agreed that the Court would not need to reach the “billed versus paid” issue under those circumstances.

Based on the oral argument, it appears the Colorado Supreme Court may not resolve the question whether personal-injury plaintiffs in Colorado may recover inflated amounts typically “billed” by healthcare providers as opposed to the amounts actually pay for medical services.  The Court may instead conclude that the plaintiff in Scholle does not have any viable claim for medical-expense damages.