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A Better Partnership
May 15, 2014

COA concludes that partial settlements may reduce jury awards while discounts for medical expenses may not

In the medical malpractice case of Greer v. Advantage Medical, the Michigan Court of Appeals reiterated that under the common-law rule of setoff among jointly liable defendants, when a settlement is paid by one defendant to all plaintiffs to settle all claims prior to trial, the amount of the settlement must reduce the amount of a jury verdict against the other jointly liable defendants pro tanto for identical claims.  In this case, three plaintiffs brought a suit against three separate defendants for a medical malpractice action arising out of a single act—the negligent delivery of a child.  One of the defendants settled with all plaintiffs prior to trial for all claims arising out of the delivery, but at trial the jury only found a cause of action for one of the plaintiffs and awarded damages accordingly.  The trial court did not reduce the jury verdict pro tanto by the entire settlement amount (instead, it only reduced the verdict by one-third of the settlement amount), reasoning that the settlement was for all three plaintiffs while the jury only found for one.  However, the Court reversed this decision, holding that jury awards must be reduced pro tanto by other awards for “injuries identical in nature, time, and place.”  To rule otherwise, the Court noted, would result in plaintiffs being overly compensated for their claims by receiving more than one recovery for a single injury.

The Court went on to hold that discounts on incurred medical expenses negotiated between medical service providers and health care insurers are excluded as “collateral source” benefits and may not be used to reduce jury awards for the medical expenses under MCL 600.6303.  The Court reasoned that insurance companies discharge plaintiffs’ medical expense debts in part by cash payments but also by discounts, therefore making the discount part of the benefits paid and payable by the insurance company and received and receivable by the policy holder under 6303.  Accordingly, the discounts are statutorily exempt from jury award reduction.   

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