S056015, Opinion — White v. Jubitz Corp.

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Argued and submitted January 13, decision of Court of Appeals and judgment of
circuit court affirmed October 15, 2009

George WHITE,
Respondent on Review,
v.
JUBITZ CORPORATION,
an Oregon corporation,
dba Ponderosa Lounge,
Petitioner on Review.
(CC 040302468SC; CA A128617; S056015)
219 P3d 566

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CJS, Damages § 99.

# En Banc

On review from the Court of Appeals .*

Michael T. Stone, Brisbee & Stockton LLC, Hillsboro,
argued the cause and filed the briefs for petitioner on review.

\* Appeal from Multnomah County Circuit Court, Henry Kantor, Judge. 219
Or App 62, 182 P3d 215 (2008).

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Mark G. McDougal, Portland, argued the cause and filed
the brief for respondent on review. With him on the brief was
Gregory Kafoury.

C. Robert Steringer, Portland, filed a brief for amicus
curiae Oregon Association of Defense Counsel.

Barry J. Goehler, Portland, filed a brief for amicus curiae
Donald McGee. With him on the brief was Michael A.
Lehner.

Charles Robinowitz, Portland, filed a brief for amicus
curiae Oregon Trial Lawyers' Association. With him on the
brief was Maureen Leonard.

WALTERS, J.

The decision of the Court of Appeals and the judgment of
the circuit court are affirmed.

Kistler, J., dissented and filed an opinion in which
Balmer, J., joined.

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## WALTERS, J.

Plaintiff walked into a bar. He was injured when the
stool he sat on collapsed beneath him and he sued defendant,
the bar owner and operator, for the injuries that he incurred.
A jury awarded plaintiff $37,600 in economic damages,
approximately the amount that plaintiff's medical providers
had billed him for their services. Plaintiff was over 65 years
old and, pursuant to the federal Social Security Act, qualified
for Medicare benefits. 42 USC §§ 1395 - 1395hhh. In accor-
dance with that federal law and the applicable formula for
determining permitted payments, Medicare had paid plain-
tiff's medical providers a total of $13,400. Also in accordance
with that law, the providers had accepted that sum as pay-
ment in full for their services and had "written off" the
remainder of their charges. The question that this case pres-
ents is whether plaintiff may recover from defendant the
total amount of the medical providers' reasonable charges or
whether his recovery must be limited to the amount that
Medicare paid to those providers. Both the trial court and the
Court of Appeals ruled that plaintiff is entitled to recover the
full amount of his judgment. For the reasons that follow, we
affirm.

Alleging negligence on the part of defendant for fail-
ure to inspect and maintain the bar stool, plaintiff com-
menced a tort action, seeking as economic damages the total
amount that his healthcare providers had billed him, as well
as noneconomic damages.1 Before trial, defendant moved to
limit plaintiff's economic damages to "what was paid." Defen-
dant argued that, under ORS 31.710(2)(a), the medical pro-
viders' "write-offs" were not "economic damages" that plain-
tiff had "necessarily incurred."2 Defendant contended that

1 In addition to the amount that medical providers had billed him ($38,977),
plaintiff sought economic damages for future medical expenses. Plaintiff's claim for
future medical expenses has no bearing on the issues presented on review.

2 ORS 31.710(2) provides, in part:

"As used in this section:

"(a) 'Economic damages' means objectively verifiable monetary losses
including but not limited to reasonable charges necessarily incurred for medi-
cal, hospital, nursing and rehabilitative services and other health care serv-
ices, burial and memorial expenses, loss of income and past and future impair-
ment of earning capacity, reasonable and necessary expenses incurred for

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"Medicare paid $13,000, and that was what was incurred.
\* \* \* [The amount 'written off'] wasn't paid to the doctors.
The doctors have no claim for that money that wasn't paid
to them. They accepted the money from Medicare, and the
plaintiff has no obligation to reimburse Medicare any other
money than what they paid."

In the alternative, defendant argued that, to establish "the
reasonable amount, * * * the market value" of the medical
treatment that plaintiff had received, defendant should be
permitted to present to the jury evidence of the amount that
Medicare had paid for that treatment.

The trial court ruled that "the jury [wa]s not going to
hear any reference to * * * Medicare[,]" and that plaintiff was
entitled to claim the entire amount of the bills that he had
received. However, the court granted defendant leave to file a
post-verdict motion, under Oregon's collateral source statute,
ORS 31.580, to reduce the jury award, "if it bec[ame] neces-
sary."3 At trial, plaintiff offered the medical bills that he had
received as evidence of his reasonable medical expenses.

substitute domestic services, recurring loss to an estate, damage to reputation
that is economically verifiable, reasonable and necessarily incurred costs due
to loss of use of property and reasonable costs incurred for repair or for replace-
ment of damaged property, whichever is less."

ORS 31.710 originally was enacted as former ORS 18.560 and was renumbered in
2003 without substantive changes. We refer to it by its current number.

3 ORS 31.580 provides:

"(1) In a civil action, when a party is awarded damages for bodily injury or
death of a person which are to be paid by another party to the action, and the
party awarded damages or person injured or deceased received benefits for the
injury or death other than from the party who is to pay the damages, the court
may deduct from the amount of damages awarded, before the entry of a judg-
ment, the total amount of those collateral benefits other than:

"(a) Benefits which the party awarded damages, the person injured or
that person's estate is obligated to repay;

"(b) Life insurance or other death benefits;

"(c) Insurance benefits for which the person injured or deceased or mem-
bers of that person's family paid premiums; and

"(d) Retirement, disability and pension plan benefits, and federal Social
Security benefits.

"(2) Evidence of the benefit described in subsection (1) of this section and
the cost of obtaining it is not admissible at trial, but shall be received by the
court by affidavit submitted after the verdict by any party to the action."

ORS 31.580 originally was enacted as former ORS 18.580 and was renumbered in
2003 without substantive changes. We refer to that statute by its current number.

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Without waiving its pretrial legal arguments, defendant
stipulated that those charges were both reasonable and
necessary.

The jury found for plaintiff, awarding him $37,600
for economic damages and $100,000 for noneconomic dam-
ages. In a post-verdict motion, defendant requested "that the
portion of the medical bills which were written-off be
deducted from the amount of the verdict." As it had argued in
its motion in limine, defendant asserted that plaintiff had not
"necessarily incurred" those charges. As a consequence,
defendant further argued, the jury verdict granted plaintiff a
"double recovery" to which he was not entitled and that the
collateral source statute, ORS 31.580, had been designed to
prevent.

In a written order, the trial court noted, as an undis-
puted fact, that plaintiff contractually had agreed to pay the
full amount that his providers billed him.4 The court con-
cluded that the satisfaction of those obligations by Medicare
through payment and provider "write-offs" were "federal
Social Security benefits" that ORS 31.580(1)(d) precluded the
court from deducting. The trial court therefore denied defen-
dant's motion and entered judgment for plaintiff in the full
amount of the jury verdict.

Defendant timely appealed to the Court of Appeals,
renewing the arguments that it had made to the trial court in
its pretrial and post-verdict motions. In a written opinion,
that court affirmed the judgment of the trial court. White v.
Jubitz Corp., 219 Or App 62, 182 P3d 215 (2008). The Court
of Appeals applied the definition of economic damages found
in ORS 31.710(2)(a) and held that " 'reasonable charges nec-
essarily incurred * * * are those charges to which a plaintiff
becomes liable or subject when the plaintiff receive[s] treat-
ment, without regard to amounts that a medical provider

4 One agreement that plaintiff signed provided that, in consideration for med-
ical treatment, plaintiff was obligated "to pay the account of [the provider] in accor-
dance with its regular rates and terms." In a separate, signed agreement with
another provider, plaintiff acknowledged that, "you (or the responsible party in the
case of a minor) are responsible for payment of your bill even if not covered in full
or in part by your insurance." While the terms of the agreements with other provid-
ers do not appear in the record, defendant did not contest plaintiff's contractual
obligation to pay the full amount that his providers had billed him.

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subsequently writes off." Id. at 70. The court also agreed with
the trial court that the providers' "write-offs," as well as their
Medicare payments, fell into the category of "federal Social
Security benefits" that the trial court could not deduct. Id. at
76.

We granted defendant's petition for review. In this
court, defendant assigns as error three rulings of the trial
court, each of which challenges plaintiff's recovery of the
medical expenses that his providers billed to him that
exceeded the amounts that Medicare paid those providers.
Defendant asserts that the trial court erred in (1) refusing to
deduct those amounts from plaintiff's jury verdict; (2) allow-
ing plaintiff to seek a jury award of those amounts; and
(3) denying defendant's request to adduce evidence of those
amounts.

Before we begin our analysis of defendant's legal
arguments, it is important that we distinguish them from a
factual argument that defendant does not make here and did
not make below. Defendant does not contend that the total
charges that the medical providers billed to plaintiff were
excessive, inflated, or unreasonable. Nothing in this record
suggests that, had plaintiff not been an eligible Medicare
beneficiary, defendant would have contested plaintiff's right
to recover those charges. Indeed, defendant stipulated at
trial that, as a factual matter, the providers' charges were
both reasonable and necessary. The arguments that defen-
dant advances instead challenge plaintiff's right, as a
Medicare beneficiary, to recover those expenses, thereby, in
defendant's view, wrongfully granting plaintiff a "windfall"
or "double recovery."

For reasons that we explain, the collateral source
statute, ORS 31.580, compels our conclusion that the trial
court and the Court of Appeals ruled correctly. However,
because it assists in an understanding of that statute and
each of defendant's legal arguments, we begin our analysis
with a discussion of the common-law collateral source rule
and the "double recovery" that it countenances. We then
describe ORS 31.580 and analyze how it affects each of defen-
dant's legal arguments.

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## I. THE COMMON-LAW COLLATERAL SOURCE RULE

Whenever a plaintiff seeks from a defendant a sum
that the plaintiff also is entitled to recover from a third party,
the specter of "double recovery" is presented. In 1942, this
court first considered how to address such circumstances and
adopted what came to be known as the "collateral source
rule." In Cary v. Burris, 169 Or 24, 127 P2d 126 (1942), the
plaintiff, a federal employee injured in the performance of
official duties, was entitled to the benefits of a federal law
that required the government to provide him with medical
and hospital services either by furnishing him with govern-
ment physicians and hospitals, or if impracticable, by paying
for commensurate private services. When the plaintiff, who
had received the benefits of that government program, also
sought to recover medical expenses from the tortfeasor who
caused his injuries, the trial court prohibited the jury from
making such an award. Id. at 26. This court held that,
although the "benefits of the United States Government com-
pensation act," id. at 25, were provided to the plaintiff as a
"mere gratuity," id. at 28, those benefits did not preclude the
plaintiff from recovering the full amount of his special dam-
ages from the defendant, id. at 29. The court quoted
1 Sedgwick on Damages § 67 (9th ed 1912), for the following
proposition:

"Damages cannot be reduced by an amount which the plain-
tiff may have received from third parties, acting indepen-
dently of the defendant, though it is given to the plaintiff on
account of the injury. For it is given either as a pure gift, not
intended by the giver to be in lieu of damages, or else it is
given in performance of a contract, the consideration of
which was furnished by the plaintiff. In neither case has
the defendant any equitable or legal claim to share in the
benefit."

Id. at 28 (internal quotation marks omitted).

The court also quoted 1 Sutherland on Damages
§ 158 (3d ed 1903), for the principle that:

"Generally there can be no abatement of damages on the
principle of partial compensation received for the injury
where it comes from a collateral source, wholly independent
of the defendant, and is as to him res inter alios acta.

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[N]or does the gratuitous care and nursing of an injured
plaintiff relieve the party who caused the injury from liabil-
ity for their worth."

Id. at 28-29 (internal quotation marks omitted).

In 1974, in considering the evidentiary ramifications
of the collateral source rule, this court declared:

"The salutary policy underlying the collateral source rule is
simply that if an injured party received some compensation
from a source wholly independent of the tortfeasor, such
compensation should not be deducted from what he might
otherwise recover from the tortfeasor."

Reinan v. Pacific Motor Trucking Co., 270 Or 208, 213, 527
P2d 256 (1974).

The term "double recovery" implies that a plaintiff
has received and will retain the same remuneration from two
outside sources-the defendant and a third-party benefit
provider-to compensate for a single harm. However, rarely
will that assumption prove entirely accurate. A plaintiff who
receives life or medical insurance benefits from a third-party
provider generally will have paid premiums for those bene-
fits or will have earned them as compensation for employ-
ment. Similarly, a plaintiff who receives retirement benefits,
whether from a private corporation or a government pro-
gram, generally will have earned or invested those funds. In
addition, there are many instances in which the third-party
benefit provider retains a right of subrogation for any tort
award that beneficiaries recover. As a result, the collateral
benefits paid by a third party may only reimburse the plain-
tiff for his or her prior labor or investment or may be returned
to that third party. See, e.g., ORS 742.538 (providing insurers
with right to subrogate insured's proceeds in tort actions);
William M. Landes and Richard A. Posner, The Economic
Structure of Tort Law 252 (1987) (noting that plaintiff who
recovers insurance benefits and damages from defendant
does not receive double recovery because "the plaintiff paid
for the benefit in his insurance premium").

The common-law collateral source rule does not con-
cern itself with whether a plaintiff actually obtains a "double
recovery." The rule permits a plaintiff to recover damages

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from a tortfeasor and concomitant sums from a third party
and to do so without regard to whether the plaintiff has pur-
chased, earned, or must repay those third-party benefits. In
Peterson v. State Farm Ins. Co., 238 Or 106, 393 P2d 651
(1964), this court recognized that plaintiffs who were injured
by insured motorists could recover damages from those tort-
feasors and also could recover third-party workers' compen-
sation benefits. By the terms of the workers' compensation
statute then in existence, injured plaintiffs could retain
40 percent of the duplicate payments. Therefore, the court
concluded, plaintiffs who were entitled to statutory unin-
sured motorists' benefits also were entitled to the same
"double recovery." Id. at 112-15. The court held that, "in the
absence of a statutory provision to the contrary, the policy in
Oregon under the common law is to allow such recoveries."
Id. at 115.

In the context of a claim for contractual damages,
this court has explained that whether a plaintiff who recov-
ers from a tortfeasor and also from a third party is entitled to
retain both sets of benefits depends, just as it did in Peterson,
on the relationship between the plaintiff and the third-party
provider and on the law that governs that relationship:

"It is argued that to disregard payments of social benefits in
the action against the employer gives a successful plaintiff
an unjustified windfall. But whether to save or recapture
those costs is properly an issue between the provider of the
benefits and its beneficiaries, a policy choice in the design of
the program."

Seibel v. Liberty Homes, Inc., 305 Or 362, 369, 752 P2d 291
(1988) (emphasis added). See also Dickson v. Hollinger, 262
Or 113, 115 n 1, 496 P2d 912 (1972) (noting that legislature
addressed criticism of collateral source rule by providing
insurers with reimbursement and subrogation rights).

Therefore, under the common-law collateral source
rule, the extent of a tortfeasor's liability to a plaintiff is not
determined by the vagaries of whether the plaintiff has pur-
chased life or medical insurance, is eligible for employment or
governmental life, medical, disability or retirement benefits,
or by the terms of such insurance or benefits. Tortfeasors that

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cause the same injuries are responsible for the same dam-
ages, irrespective of the plaintiffs' receipt of benefits from, or
legal relationships with, third-party benefit providers.

## II. THE COLLATERAL SOURCE STATUTE, ORS 31.580

In this case, defendant acknowledges that the com-
mon law has permitted the recovery that we have described.
However, defendant asserts, when the legislature adopted
ORS 31.580 as a component of the comprehensive tort law
revisions that it enacted in 1987, that body intended to
change the common-law collateral source rule to preclude
"double recovery." We agree that ORS 31.580 modified the
common-law collateral source rule and that it now provides
the controlling law in actions for damages for bodily injury or
death. We disagree, however, that ORS 31.580 prohibits dou-
ble recovery. ORS 31.580(1) provides:

"In a civil action, when a party is awarded damages for
bodily injury or death of a person which are to be paid by
another party to the action, and the party awarded dam-
ages or person injured or deceased received benefits for the
injury or death other than from the party who is to pay the
damages, the court may deduct from the amount of dam-
ages awarded, before the entry of a judgment, the total
amount of those collateral benefits other than:

"(a) Benefits which the party awarded damages, the
person injured or that person's estate is obligated to repay;

"(b) Life insurance or other death benefits;

"(c) Insurance benefits for which the person injured or
deceased or members of that person's family paid premi-
ums; and

"(d) Retirement, disability and pension plan benefits,
and federal Social Security benefits."

By its terms, ORS 31.580 applies only to civil actions
where a party is awarded damages for bodily injury or death.
In those actions, subsection (1) permits, but does not require,
a trial court to deduct from a plaintiff's award of damages
those benefits that a plaintiff receives from a third party.
Paragraphs (a) through (d) limit the circumstances in which
a court may exercise its discretion to do so. Those paragraphs
preclude a trial court from deducting four sets of benefits;

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paragraph (a) exempts from deduction those benefits that a
plaintiff has an obligation to repay; paragraphs (b) through
(d) exempt from deduction other specified benefits such as
private and governmental insurance and retirement bene-
fits, but do so without regard to whether a plaintiff has an
obligation to repay those benefits, and paragraph (d) specifi-
cally precludes trial courts from deducting "federal Social
Security benefits" from a plaintiff's damages award.

Instead of relying on the text of ORS 31.580 to sup-
port its position, defendant requests that we look to its legis-
lative history to discern "that the legislature sought to elimi-
nate any double recovery by plaintiff in the application of the
collateral source rule." Although we will consider the legisla-
tive history of ORS 31.580, we emphasize that that legisla-
tive history cannot substitute for, or contradict the text of,
that statute.

"[A] party seeking to overcome seemingly plain and unam-
biguous text with legislative history has a difficult task
before it. Legislative history may be used to confirm seem-
ingly plain meaning and even to illuminate it; a party also
may use legislative history to attempt to convince a court
that superficially clear language actually is not so plain at
all-that is, that there is a kind of latent ambiguity in the
statute. For those or similar purposes, whether the court
will conclude that the particular legislative history on
which a party relies is of assistance in determining legisla-
tive intent will depend on the substance and probative
quality of the legislative history itself. We emphasize again
that ORS 174.020 obligates the court to consider proffered
legislative history only for whatever it is worth-and what
it is worth is for the court to decide. When the text of a stat-
ute is truly capable of only one meaning, no weight can be
given to legislative history that suggests-or even con-
firms-that legislators intended something different."

State v. Gaines, 346 Or 160, 172-73, 206 P3d 1042 (2009)
(footnotes omitted; emphasis in original).

Rather than disclose a latent ambiguity in its text,
the legislative history of ORS 31.580 confirms our conclusion
that, in enacting that statute, the legislature did not preclude
"double recovery" of collateral source benefits. When the

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Senate Judiciary Committee considered the collateral source
rule in 1987, it framed the policy choice as follows:

"The policy question here is: Should the defendant get the
benefit of the plaintiff's planning and coverage from
another source or should the plaintiff recover twice for some
of his or her damages * * *? "

Staff Measure Analysis, Senate Committee on Judiciary,
Senate Bill (SB) 323, Feb 11, 1987, Ex G (memorandum pre-
pared by Karsten Rasmussen) (hereinafter Staff Analysis).
Some legislators sought to answer that question by requiring
the trial court to deduct collateral benefits from a plaintiff's
verdict except in circumstances in which the plaintiff would
be required to repay the benefits or had purchased, earned, or
invested toward the benefits. Those legislators introduced
Senate Bill (SB) 323 (1987), which provided, in part:

"Section 13. (1) When in a civil action a party is
awarded damages for bodily injury or death of a person to
be paid by another party to the action, and the party
awarded damages or person injured or deceased received
benefits for the injury or death other than from the party
who is to pay the damages, the court shall deduct from the
amount of damages awarded, before the entry of final judg-
ment, the total amount of those collateral benefits other
than:

"(a) Benefits the party awarded damages, the person
injured or that person's estate is obligated to repay;

"(b) Life insurance or other death benefits;

"(c) Insurance benefits for which the person injured or
deceased or members of that person's family paid premi-
ums; and

"(d) Retirement, disability or pension plan benefits."

(Emphases added.) In the work sessions where that bill was
discussed, members of the committee expressed a desire to
prevent a plaintiff from recovering twice for the same injury;
members, however, stressed the need that "all economic
issues [be] brought in"-i.e., including what the injured party
had paid for the collateral damages in premiums, or what the
injured party had earned through employment. See Minutes,
Senate Committee on Judiciary, SB 323, Mar 3, 1987, 5-6

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(Senators Wyers, Cohen, and Brockman, and Chairman Frye
expressing agreement that statute should be written to "pre-
vent true double recovery"). Senator Brockman argued that
the exceptions essentially neutered that section of the bill. He
advocated replacing Section 13 with Senate Bill (SB) 347
(1987), which contained wording similar to subsection 13(1)
("the amount * * * shall be deducted by the court"), but with-
out any exceptions. Id.

The committee then heard testimony and received
exhibits demonstrating that, in many cases, double recovery
had been addressed by agreements or law that governed the
relationships between plaintiffs and the third-party benefit
providers. For instance, witnesses noted, subrogation clauses
in insurance agreements and government benefit schemes
reduced the instances of double recovery. See Staff Analysis
(noting that there were few instances of actual double recov-
ery); Testimony, Senate Committee on Judiciary, SB 323,
Jan 27, 1987, Ex C (statement of Professor Dominick Vetri)
(collateral source rule becoming "less and less significant"
because of subrogation). A judiciary committee staff member
advised the committee that "passage of legislation which
requires that collateral benefits be deducted from the ver-
dict[ ] may either eliminate subrogation or penalize the
injured party." Staff Memorandum, Senate Committee on
Judiciary, SB 323, Mar 17, 1987, Ex G (Memorandum
Regarding Collateral Benefits prepared by Eric Carlson).

After considering that and other testimony, the com-
mittee voted to remove Section 13 from the bill. Minutes,
Senate Committee on Judiciary, SB 323, Mar 19, 1987, 20
(motion to delete Section 13 passed over votes of no from
Senators Brenneman, Brockman, and Hamby). The effect of
Section 13's removal would have been to leave the issue of
collateral benefits to the existing common law that permitted
"double recovery."

SB 323 then went to the House of Representatives.
The House reinserted, as Section 9 of the bill, a provision that
authorized, but did not require, a court to deduct collateral
benefits received by a plaintiff, except those benefits that a
plaintiff had an obligation to repay. Section 9 provided, in
part:

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"In any action arising out of bodily injury * * * , in the event
that the injured party * * * has received benefit from a col-
lateral source for which there is not an obligation to repay,
the amount or value thereof may be deducted by the court
from any verdict or award in [the] plaintiff's favor prior to
the entry of final judgment. Before making the deduction,
the court shall determine the cost to [the] plaintiff or [the]
plaintiff's estate of obtaining such benefit and shall credit
the cost against the amount of the benefit to be deducted
from the judgment."

House Amendments to C-Engrossed SB 323 (emphases
added). The House Committee on Judiciary discussed the
policy implications of the proposed House amendment and
noted that the use of the word "may" would grant a court dis-
cretion to consider the collateral benefits that a plaintiff had
received but did not have an obligation to repay. The permis-
sive term would authorize a court to reduce a tort verdict by
the amount of those benefits, less the cost of obtaining them,
when necessary to prevent an unjust result. Minutes,
House Committee on Judiciary, SB 323, June 6, 1987, 21.
Representative Bunn argued in favor of replacing the discre-
tionary "may" with a mandatory "shall." In advocating for
that position, he articulated the same concern about a plain-
tiff's potential "windfall" that lies at the heart of defendant's
argument in this case. He urged the committee that

"the basic concept [of the collateral source revision] says
that if you are being paid from some other source that you
didn't have to pay for, we're not going to have the court
award a judgment paying you a second time. If you got a
judgment for $100,000 of costs and you got $50,000 of costs
from some other source that you didn't have to pay for then
we'll reduce the judgment by $50,000 so that you don't get a
surplus. * * *.

"If we use the word 'may' that will destroy the section. It
will not provide a meaningful collateral source [statute]."

Tape Recording, House Committee on Judiciary, SB 323,
June 6, 1987, Tape 733 (statement of Representative Bunn).
In response, Representative Dix asserted that "[t]he compro-
mise that was worked out was 'may,'" giving a judge discre-
tion to reduce verdicts in certain situations and that that
compromise "[wa]s an important ingredient in the overall

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package." Id. (statement of Representative Dix). Represen-
tative Bunn subsequently moved to replace the word "may"
with the word "shall" and that motion was defeated with all
other members on the committee voting against the change.
Id.

The final House version of the bill also contained the
four categories of benefits that the current version of ORS
31.580 exempts from judicial reduction, regardless whether a
plaintiff stands to receive a double recovery. Thus, the legis-
lature answered the policy question posed at the outset of its
deliberations by deciding that, for those listed categories of
third-party benefits, the plaintiff always should receive the
benefit of his or her planning and investment and should not
be prevented from recovering twice. For other, unlisted, ben-
efits, a trial court should have discretion to consider the
plaintiff's planning and investment and answer the question
posed based on the particular facts presented.

ORS 31.580 applies to this action for damages for
bodily injury. We turn therefore to an examination of how
that statute treats the collateral benefits at issue in this case.

The collateral benefits that plaintiff received and
that are at issue here are Medicare benefits. Medicare is a
federally funded and administered medical insurance pro-
gram for the elderly and disabled. 42 USC §§ 1395 - 1395hhh.
Congress established Medicare as Title XVIII of the 1965
Social Security Act. Medicare provides individuals with
varying degrees of coverage for different types of medical
care. Part A of the Medicare program covers hospital stays.
Beneficiaries generally fund the benefits that they receive
under Medicare Part A by paying payroll taxes. 42 USC
§ 1395i(a). If beneficiaries have not worked a sufficient period
of time to be eligible for Medicare Part A, then they may
qualify for those benefits by paying premiums. Id.
§ 1395i-2a(d). Part B of the Medicare program provides "med-
ical and other health services," including "physicians' serv-
ices," medically necessary outpatient procedures, and pre-
ventative care. Id. § 1395x(s). Beneficiaries fund the benefits
they receive under Medicare Part B by paying monthly pre-
miums and a yearly deductible. Id. §§ 1395j-1.5

5 Additionally, Medicare, under Part C, provides for health plan options
approved by Medicare and offered by private companies. Under Part C, Medicare

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The Medicare provisions of the Social Security Act
assure beneficiaries that, except for deductibles and copays,
they will not be required to pay for covered medical expenses.
The Medicare provisions achieve that result in the following
ways.6

With respect to the services provided under part A of
the Social Security Act, beneficiaries are entitled to have
Medicare make payments "on [their] behalf." Id. § 1395d(a).
Medicare makes those payments directly to providers of hos-
pital services. Id. § 1395g. Providers of hospital services must
sign an agreement with Medicare not to charge beneficiaries
for services for which beneficiaries are entitled to have pay-
ment made by Medicare. Id. § 1395cc(A)(1).

With respect to services provided under Part B of the
Social Security Act, Medicare beneficiaries are entitled to
have Medicare make payments "to [them] or on [their]
behalf." Id. § 1395k(a)(1). There are two types of physicians
under Part B-participating physicians and nonparticipat-
ing physicians. Participating physicians make an annual
election to accept assignment of Medicare claims from
Medicare beneficiaries. Nonparticipating physicians do not
make an annual election to accept assignment, but may do so
on a case-by-case basis.7 Medicare pays an assigning physi-
cian directly, and assigning physicians agree to accept pay-
ment from Medicare as payment in full for their services. Id.
§ 1395u(b)(3)(B)(ii)(I).

If a nonparticipating physician does not accept
assignment from a Medicare eligible patient, then Medicare
will pay the patient, not the physician. Id. § 1395u(b)(6). In
that instance, the Social Security Act prohibits the physician

pays to those private companies, a fixed monthly amount on the participating ben-
eficiary's behalf. 42 USC §§ 1395w-21 - 1395w-29. Part D of Medicare consists of a
voluntary prescription drug benefit program. Id. §§ 1395w-101 - 1395w-152. Parts
C and D of the Medicare program are not at issue in this case.

៛ Plaintiff in this case may have had an obligation to pay deductibles, copays, or
expenses not covered by Medicare, but those obligations are not at issue here. See
42 USC § 1395e (describing deductibles and copayments under Part A); § 1395](a),
(b) (describing deductibles and copayments under Part B).

7 In many instances, nonparticipating physicians must bill on an assignment
basis. See, e.g., 42 USC § 1395w-4(g)(3) (requiring physicians who treat patients
eligible for Medicaid to accept assignment).

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from billing or collecting from the patient an amount that
exceeds a statutorily defined "limiting charge." 42 USC
§ 1395w-4(g)(1)(A)(i).8

In this case, plaintiff's medical providers billed him
$38,977 for their services. If plaintiff had not qualified for
Medicare benefits, then he would have been liable for the
entire amount that the providers had billed him. Instead,
Medicare satisfied those bills by requiring that those provid-
ers accept Medicare payments of $13,400 as payment in full
for their services. Defendant accepts that the amounts that
Medicare actually paid his medical providers are exempt
from deduction under ORS 31.580(1)(a), which exempts ben-
efits that the plaintiff, the injured party, or that person's
estate "is obligated to repay." As defendant states it:

"Whether they are considered social security benefits,
insurance benefits, or some other type of benefit, medical
bill payments actually made by Medicare and for which
Medicare has a right to reimbursement are clearly, under
ORS 31.580(1)(a), a collateral source that may not be
deducted from the judgment."

(Emphasis in original omitted; emphasis added.) Defendant
argues, however, that, because plaintiff does not have an
obligation to reimburse Medicare for the "write-offs" that the
Social Security Act requires, ORS 31.580(1)(a) does not apply
to those "write-offs" and does not preclude their deduction.9

8 Because Medicare does not pay physicians who do not accept assignment
directly, and because those physicians are prohibited from billing patients more
than the statutorily defined "limiting charge," and because it appears from the bills
in the record in this case that Medicare paid plaintiff's physicians directly and that
those physicians charged plaintiff more than a "limiting charge," we believe,
although we cannot be certain, that all of plaintiff's physicians accepted assign-
ment. Supporting that inference in this case is the fact that plaintiff's medical bills
indicate that he received Medicaid in addition to Medicare benefits, and physicians
who treat patients eligible for Medicaid must accept assignment. 42 USC § 1395w-
4(g)(3).

" Defendant cites 42 USC § 2651 as authority for its conclusion that Medicare
has a right to require plaintiff to reimburse it for the amounts that it actually paid
on plaintiff's behalf. That statute provides that the United States has a right to sue
a tortfeasor for the reasonable value of medical care that it is authorized or
required by law to furnish or pay for, or gives the United States the right to be sub-
rogated to any claim that the injured person has or to require the injured person to
assign his or her claim or cause of action to the United States. That statute is not
specific to Medicare and defendant does not cite any cases indicating that it has
been used to require reimbursement by Medicare recipients. Defendant also did

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However, as we have explained, if Medicare benefits fall into
one of the categories set forth in ORS 31.580(1)(b), (c), or (d),
then the trial court was precluded from reducing plaintiff's
verdict by the amount of those benefits without regard to
whether plaintiff had an obligation to repay them.

One of those paragraphs, ORS 31.580(1)(d), specifi-
cally exempts "federal Social Security benefits" from deduc-
tion, and Medicare benefits are, as defendant acknowledges,
benefits "established as part of the Social Security Act." The
Court of Appeals conducted a detailed analysis of the text of
ORS 31.580(1)(d) and decided that that provision is not lim-
ited to Social Security retirement benefits but encompasses
the benefits provided by all Social Security programs, includ-
ing Medicare. White, 219 Or App at 74-75. In this court,
defendant does not contend that the Court of Appeals erred
in its analysis. Defendant instead points to similar statutes
in other states that specifically mention Medicare benefits
and argues that the lack of specificity in ORS 31.580(1)(d)
makes that text ambiguous. Defendant then cites to legisla-
tive history that indicates that one legislator believed that
Medicare and Medicaid payments would be treated as health
insurance benefits under ORS 31.580(1)(c). Minutes, House
Committee on Judiciary, SB 323, June 6, 1987, 21.

Neither defendant's citation to other state statutes
nor the legislative history of ORS 31.580 convinces us that
paragraph (d) of that statute is ambiguous. For the reasons
explained by the Court of Appeals, we think that the term
"federal Social Security benefits" is comprehensive and
includes Medicare benefits.

If plaintiff had not been an eligible Medicare benefi-
ciary, then he would have been entitled to recover and retain
the jury award of $37,600, the reasonable medical expenses
that plaintiff's providers had charged to him. Under ORS
31.580, plaintiff's status as a Medicare beneficiary and his
receipt of Medicare benefits do not permit a different result.

not establish that plaintiff in this case assigned his claim or cause of action to the
United States government or that the government asserted a right to subrogation.
Because defendant does not contest its liability for the sums paid by Medicare, and
because we decide that all Social Security benefits are exempt from reduction
under ORS 31.580(1)(d), we need not decide whether plaintiff had an obligation to
repay Medicare for the sums that it paid his medical providers on his behalf.

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The legislature precluded the trial court from making any
deduction from the jury verdict for "Social Security benefits."
In doing so, the legislature did not indicate an intent to dis-
tinguish between the payments that Medicare makes and the
requirement that it imposes on medical providers to accept
those payments in satisfaction of their charges; the legisla-
ture exempted from judicial deduction Social Security "bene-
fits"; it did not exempt Social Security "payments." Thus, the
trial court in this case was correct to deny defendant's post-
trial motion under ORS 31.580 to reduce the jury's award of
medical expenses.

## III. RECOVERABLE DAMAGES AND ORS 31.710

Defendant's next argument, to which we now turn, is
that plaintiff was not entitled to claim as economic damages
amounts that he did not pay or have a legal obligation to pay.
For the reasons that we explain, examining defendant's
objection to plaintiff's "double recovery" through the lens of
the damages that a plaintiff is permitted to claim, rather
than those damages that a plaintiff may recover, does not
lead us to a different conclusion.

In support of its argument, defendant cites the defi-
nition of "economic damages" found in ORS 31.710. That stat-
ute provides, in part:

"(1) Except for claims subject to ORS 30.260 to 30.300
and ORS chapter 656, in any civil action seeking damages
arising out of bodily injury, including emotional injury or
distress, death or property damage of any one person
including claims for loss of care, comfort, companionship
and society and loss of consortium, the amount awarded for
noneconomic damages shall not exceed $500,000.

"(2) As used in this section:

"(a) 'Economic damages' means objectively verifiable
monetary losses including but not limited to reasonable
charges necessarily incurred for medical, hospital, nursing
and rehabilitative services and other health care services,
burial and memorial expenses, loss of income and past and
future impairment of earning capacity, reasonable and nec-
essary expenses incurred for substitute domestic services,
recurring loss to an estate, damage to reputation that
is economically verifiable, reasonable and necessarily

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incurred costs due to loss of use of property and reasonable
costs incurred for repair or for replacement of damaged
property, whichever is less."

(Emphases added.)

Defendant cites the dictionary definitions of "mone-
tary" and "loss" for the proposition that, to suffer monetary
loss, a plaintiff must "unintentionally part with money."10
Defendant cites the dictionary definition of "incurred" for the
proposition that, to "incur" a charge, a plaintiff must "become
liable or subject to" it.11 We understand defendant's argu-
ment with respect to those definitions to be that, because
plaintiff did not pay or have an obligation to pay the charges
that his medical providers billed to him but later "wrote off,"
plaintiff did not suffer "monetary loss" with respect to those
charges, nor did he "incur" them.

The first problem with that argument is that ORS
31.710(2) does not define or limit the compensatory damages
that a plaintiff may recover. ORS 31.710(2) introduces the
definition of "economic damages" with the phrase "as used in
this section" and therefore defines "economic damages" for
the purposes of ORS 31.710. ORS 31.710(1) indicates that the
purpose of that statute is to describe the damages that are
subject to a statutory cap (noneconomic damages) and those
that are exempt from that cap (economic damages). Because
this case does not present an issue relating to the statutory
cap, the definition in ORS 31.710 is not directly applicable.

Perhaps recognizing that impediment, defendant
contends that ORS 31.710 is consistent with the common law
and the purpose of compensatory damages-to " 'compensate
the injured party for the injury sustained, and nothing
more[.]'" Tadsen v. Praegitzer Industries, Inc., 324 Or 465,
470, 928 P2d 980 (1996) (quoting Black's Law Dictionary 390
(6th ed 1990)). Defendant further asserts that, for more than
100 years, Oregon law has sought to put the injured party in

10 Defendant cites to Webster's II New College Dictionary 707 (1995), which
defines "monetary" in part, as "[o]f or relating to money or its circulation"; and
Black's Law Dictionary 945 (6th ed 1990), which defines "loss," in part, as an "unin-
tentional parting with something of value."

11 Defendant cites to Webster's II New College Dictionary 562, which defines
"incur" as "[t]o become liable or subject to."

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the same position that he or she would have occupied had no
tort been committed. See Yamaha Store of Bend, Inc. v.
Yamaha Motor Corp., 310 Or 333, 344, 798 P2d 656 (1990)
("For more than a century, the general rule in Oregon in
assessing damages has been that a plaintiff should recover
only such sums as will compensate a plaintiff for the injury
suffered as a result of a defendant's wrong.") (citing Budd v.
Multnomah St. Ry. Co., 15 Or 413, 419, 15 P 659 (1887)).
Thus, defendant argues, where a plaintiff does not pay or
have an obligation to pay an expense, the plaintiff does not
suffer a loss for which a defendant may be held liable.

We have no quarrel with the maxims on which
defendant relies, but they do not precisely address the issue
highlighted here. In this case, plaintiff suffered bodily injury
as a result of defendant's tort, and he obtained the medical
treatment that was necessary to restore him, to the degree
possible, to his physical state before the tortuous act. The
question that this case poses is not whether plaintiff suffered
loss-plaintiff's physical injuries certainly are a loss entitling
him to compensatory damages. The question is whether the
amount that defendant must pay as damages for that loss is
limited to the amounts that plaintiff paid or remains legally
obligated to pay for the medical care that he obtained to treat
that loss.12

One answer to that question is found in the collat-
eral source statute and the legislative policy that it imposes.
As we have explained, under ORS 31.580, a plaintiff who has
medical insurance that pays his or her reasonable medical
bills is entitled to recover the amount of those bills from a
tortfeasor. That result obtains even though the plaintiff will
not have paid the medical providers and will not remain lia-
ble to the providers or, absent subrogation rights, to the
insurer. Defendant's argument that a plaintiff is not entitled
to seek, as "economic damages" under ORS 31.710, the med-
ical expenses that ORS 31.580 permits the plaintiff to recover
presents, in different dress, the argument against "double

12 The dissent takes a different tack than does defendant. It states the issue as
whether a plaintiff can recover as damages "'costs' for which no one was ever
liable." 347 Or at 245 (Kistler, J., dissenting). In taking the position that a plaintiff
is not entitled to recover such costs, the dissent does not appear to contend that a
plaintiff who suffers bodily injury does not suffer loss.

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recovery" that we have rejected. If a plaintiff who obtains
third-party benefits that cover his or her medical expenses
and who does not suffer out-of-pocket loss is entitled to
recover those expenses, then that plaintiff also must be enti-
tled to seek those expenses from the tortfeasor. If we were to
accept defendant's newly clothed argument, we could not give
effect to ORS 31.580.

Insofar as ORS 31.710 applies to this action, we do
not read its definition of economic damages to be inconsistent
with the result that ORS 31.580 permits. A plaintiff who is
injured and who obtains necessary medical treatment
becomes "liable or subject to" reasonable charges for that
treatment and thereby "incurs" them. ORS 31.710 does not
require that a plaintiff also pay or otherwise satisfy those
charges. Whether or by what means the plaintiff or a third
party satisfies medical charges is a matter between the plain-
tiff, the third party, and the medical providers. ORS 31.710
does not make a plaintiff's right to assert a claim for economic
damages against a tortfeasor dependent on those arrange-
ments.

A clear indication that ORS 31.710 does not limit a
plaintiff's claim to charges that the plaintiff has paid or
remains legally obligated to pay is that ORS 31.710 permits a
plaintiff to assert a claim for medical treatment that will be
necessary in the future. For example, in Clarke v. OHSU, 343
Or 581, 586, 175 P3d 418 (2007), the plaintiff's economic
damages of $11 million included expenses for future health-
care. See also Mulligan v. Hornbuckle, 227 Or App 520, 522,
206 P3d 1078 (2009) (plaintiff sought economic damages of,
inter alia, $8,000 for future medical expenses). In those cir-
cumstances, a plaintiff can neither allege nor prove payment
or a legal obligation to make payment. The plaintiff will not
know or be able to determine whether the plaintiff or a third
party will pay or otherwise satisfy those charges.

Defendant does not cite an Oregon case that limits a
plaintiff's claim to amounts that a plaintiff pays or remains
obligated to pay and we have not discovered one. Oregon
courts often have stated that plaintiffs are entitled to recover
"reasonable" medical charges. See, e.g., Matthews v. City of
La Grande, 136 Or 426, 430, 299 P 999 (1931) (juries may

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consider charges incurred, evidence of amount paid, and
what "would be a reasonable charge * * * in connection with
the plaintiff's injury" as evidence of the reasonable value of
medical services provided); Touhy v. Columbia Steel Co., 61
Or 527, 532, 122 P 36 (1912) ("The rule is that a plaintiff in a
case involving personal injuries can recover, as a part of his
damages, his reasonable expenses for * * * medical treat-
ment, but there must be some evidence that the charges are
reasonable."). And, in Valdin v. Holteen and Nordstrom, 199
Or 134, 147-48, 260 P2d 504 (1953), the court indicated that
the amount charged for medical services is admissible evi-
dence of the reasonableness of a provider's charges:

"Plaintiff had the right to testify concerning the several
charges made for the services performed in his care and
treatment, or if he had paid for such services, as to the sev-
eral amounts paid, but before such evidence could be the
basis of a claim for special [economic] damages, it would be
necessary to connect it by offering evidence that the charges
or amounts paid, as the case might be, were reasonable for
the services rendered, and, of course, that the services were
performed."

### (Emphases added.)

Cary v. Burris, 169 Or 24, indicates that a plaintiff
may claim medical expenses as damages although he or she
will not pay or have an obligation to pay the provider of the
medical services. In that case, federal law assured the plain-
tiff that the government would provide for his medical care
and that the plaintiff would not have any obligation to his
medical providers. The court characterized the government
program as a gratuity and held that its existence did not
relieve the defendant from liability for the worth of the care
that the plaintiff received. Id. at 28-29. The legal authority
that the court cited with approval stated that, whether third-
party benefits are given as a gift or in performance of a
contract, a defendant has no "'equitable or legal claim to
share in the benefit.'" Id. at 28 (quoting Sedgwick on Dam-
ages). Although the court in Cary approached the issue as a
collateral source issue and not as a pleading issue, the end
result was that the court permitted the plaintiff to recover
the "worth" of the medical expenses from the defendant,
regardless of the fact that he would not pay money or incur

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legal liability to his providers as a result of his medical
treatment.

The decision in Cary accords with Restatement
(Second) of Torts § 924 (1979), cited with approval by this
court in Zehr v. Haugen, 318 Or 647, 656 n 6, 871 P2d 1006
(1994). Section 924 is entitled "Harm to the Person." It pro-
vides, in part, that "[o]ne whose interests of personality have
been tortuously invaded is entitled to recover damages for
the past or prospective * * * reasonable medical and other
expenses[.]" Comment f to that section, entitled "Expenses,"
provides that an "injured person is entitled to damages for all
expenses and for the value of services reasonably made nec-
essary by the harm." Restatement § 924, comment f (empha-
sis added). Comment f then instructs that "[t]he value of med-
ical services made necessary by the tort can ordinarily be
recovered although they have created no liability or expense to
the injured person, as when a physician donates his services."
(Referring to Restatement (Second) of Torts § 920A (1979),
which describes the collateral source rule.) (emphases
added)). Thus, the Restatement permits a plaintiff to recover
from a tortfeasor the reasonable value of the medical treat-
ment that he or she receives whether plaintiff is liable to pay
or pays the medical providers' charges for that treatment, the
providers waive those charges, or a third party pays or other-
wise satisfies those charges. Under that rule, and as we noted
with respect to the collateral source statute, plaintiffs who
incur the same injuries as a result of a defendant's tortuous
actions may claim and recover the same damages.

Defendant accepts that a plaintiff who is eligible for
Medicare benefits and who does not pay out of pocket for the
amounts that Medicare pays on his or her behalf may seek
recovery of those amounts from a tortfeasor. Defendant con-
tests, however, a plaintiff's right to seek recovery of sums
that Medicare satisfies by requiring that providers accept
Medicare payment as payment in full for their services. The
distinction is one without a legal difference. As we have
explained, a plaintiff may claim the reasonable value of the
medical charges to which the plaintiff is subject without lim-
itation to the amount that plaintiff pays or remains liable.
Similarly, a plaintiff may claim the reasonable value of med-
ical charges without limitation to the amount that a third

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party pays or remains liable to pay on the plaintiff's behalf.
The law does not require either that a plaintiff suffer out-of-
pocket loss or that a plaintiff satisfy medical charges by a
particular means. Similarly, the law does not require that a
third party acting on a plaintiff's behalf suffer out-of-pocket
loss or satisfy medical charges by a particular means. Just as
a plaintiff's claim against a tortfeasor is not dependent on
whether or by what means the plaintiff satisfies reasonable
medical charges, a plaintiff's claim is not dependent on
whether or by what means a third party satisfies those
charges.

The vast majority of courts to consider the issue fol-
low the common-law rule articulated in section 924 of the
Restatement and permit plaintiffs to seek the reasonable
value of their expenses without limitation to the amount that
they pay or that third parties pay on their behalf. See Wills v.
Foster, 229 Il12d 393, 414, 892 NE2d 1018, 1031 (Ill 2008) (so
stating). In Wills, the Illinois Supreme Court relied on its col-
lateral source rule to hold that the plaintiff was entitled to
the full amount of her medical expenses, notwithstanding the
fact that she had not paid those expenses and would not be
required to do so. Medicare had satisfied the plaintiff's obli-
gation and had done so by paying less than the amounts that
the plaintiff had been billed. The court noted, as this court
did in Cary, 169 Or at 28-29, and Reinan, 270 Or at 213, that
the policy behind the collateral source rule-"that the wrong-
doer should not benefit from the expenditures made by the
injured party or take advantage of contract or other relations
that may exist between the injured party and third persons,"
Wills, 229 Ill2d at 413, 892 NE2d at 1030 (citation and
emphasis omitted)-militated a result in which the plaintiff
could claim the full value of the medical treatment:

"Clearly, another relationship between an injured plaintiff
and a third party could be a relationship with the govern-
ment that allows the plaintiff's medical expenses to be paid
because of factors such as her age or income level. Simi-
larly, an arrangement between the plaintiff and a physician
who agrees to perform free medical services is a relation-
ship with a third party who is collateral to the tortfeasor. In
either case, the benefit is intended to be for the plaintiff, not
for the tortfeasor."

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Id. Accord Simpson v. Saks Fifth Ave., Inc., 2008 WL 3388739 at
*2 (ND Okla 2008) (applying Oklahoma law); McMullin v. U.S.,
515 F Supp 2d 904, 908 (ED Ark 2007) (applying Arkansas
law); Lindholm v. Hassan, 369 F Supp 2d 1104, 1111 (DSD
2005) (applying South Dakota law); Bynum v. Magno, 106
Hawai'i 81, 88, 101 P3d 1149, 1156 (Haw 2004); Baptist
Healthcare Systems, Inc. v. Miller, 177 SW3d 676, 682-83 (Ky
2005); Brandon HMA, Inc. v. Bradshaw, 809 So 2d 611, 618
(Miss 2001); Haselden v. Davis, 353 SC 481, 485, 579 SE2d
293, 295 (SC 2003); Papke v. Harbert, 738 NW2d 510, 536
(SD 2007); Brown v. Van Noy, 879 SW2d 667, 676 (Mo App
WD 1994).13

In the related circumstance of physician "write-offs"
pursuant to agreements with private insurance companies,
courts in other states also have concluded that plaintiffs are
entitled to seek and recover from tortfeasors the reasonable
medical expenses that their medical providers bill to them
without limitation to the amounts paid by their insurers.
Mitchell v. Haldar, 883 A2d 32, 40 (Del 2005); Hardi v.
Mezzanotte, 818 A2d 974, 985 (DC 2003); Robinson v. Bates,
112 Ohio St 3d 17, 18, 857 NE2d 1195, 1196 (Ohio 2006) (but
allowing defendant to adduce evidence of the amount paid to
satisfy medical bills); Acuar v. Letourneau, 260 Va 180, 192,
531 SE2d 316, 322 (Vir 2000); Koffman v. Leichtfuss, 246
Wis2d 31, 630 NW2d 201 (Wis 2001); Lopez v. Safeway
Stores, Inc., 212 Ariz 198, 206, 129 P3d 487, 495 (Ariz App
Div 2, 2006); Tucker v. Volunteers of America Colorado
Branch, 211 P3d 708, 713 (Colo App 2008).14

13 It further bears noting that other jurisdictions applying ORS 31.710 to the
question of Medicare "write-offs" have reached the same result. Miller v. J-M Mfg.
Co., Inc., 2008 WL 356932 4 (D Or 2008); Liner v. Bellingham, Civil No CV-02-
1681-ST, Opinion and Order by Magistrate Judge Stewart, Aug 6, 2003. In Cole v.
Builder's Square, Inc., 382 F Supp 2d 1200, 1201 (D Or 2003), the district court con-
sidered private insurance "write-offs" under the definition of economic damages
now codified as ORS 31.710(2)(a), but ultimately determined that, because those
"adjustments are a benefit flowing directly from that insurance," the collateral
source statute precluded judicial reduction of the verdict, irrespective of whether
the plaintiff "incurred" those charges.

14 Defendant seeks to distinguish Medicare "write-offs" from private insurance
"write-offs" on the ground that, in the latter context, plaintiffs receive the benefit of
their bargain with their insurance companies. However, Medicare is an insurance
program for the elderly, and Medicare beneficiaries have a relationship with
Medicare that is similar to the relationship that other insureds have with their

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A minority of jurisdictions have held that plaintiffs
can collect from tortfeasors no more than the sums actually
paid by or on behalf of the plaintiffs, but, for the most
part, those courts have reached their results by relying on
statutes different than those in Oregon, or a section of the
Restatement which does not apply to bodily injuries, but
instead applies to clams for the value of services tortuously
obtained.15 See Goble v. Frohman, 901 So 2d 830, 832-33 (Fla
2005) (noting Florida statute); Dyet v. Mckinley, 139 Idaho
526, 529, 81 P3d 1236, 1239 (2003) (relying on Idaho Code);
Moorhead v. Crozer Chester Medical Center, 564 Pa 156, 162,
765 A2d 786, 789 (Pa 2001) (relying on Restatement § 911);

insurers. Medicare beneficiaries also work and pay taxes, premiums, and deducti-
bles for the insurance benefits that they receive. If they benefit from the discounted
rates that the government is able to obtain, they are not less entitled to those ben-
efits than are those who receive the benefits of private insurance programs.

There are some courts that require a plaintiff to prove that she or he has pro-
vided some consideration for the benefit of the "write-off" before the plaintiff can
seek recovery. See, e.g., Acuar, 260 Va at 192, 531 SE2d at 322 (so holding). Those
courts generally hold that Medicare beneficiaries provide such consideration. See
Rose v. Via Christi Health System, Inc., 276 Kan 539, 546, 78 P3d 798, 803 (2003);
Bozeman v. State, 879 So 2d 692, 704 (La 2004) (so holding).

15 Restatement § 911, comment h, provides, in part, that,

"[w]hen the plaintiff seeks to recover for expenditures made or liability
incurred to third persons for services rendered, normally the amount recovered
is the reasonable value of the services rather than the amount paid or charged.
If, however, the injured person paid less than the exchange rate, he can recover
no more than the amount paid, except when the low rate was intended as a gift
to him. A person can recover even for an exorbitant amount that he was
reasonable in paying in order to avert further harm."

In Bynum, the Hawai'i Supreme Court explained that the section 911 comment is
inapplicable to bodily injury actions:

"[A]s employed in § 911, the term 'value' means 'the exchange value,' and that
" 'the exchange value of property or services is the amount of money for
which the subject matter could be exchanged or procured if there is a
market continually resorted by traders, or if no market exists, the
amount that could be obtained in the usual course of finding a pur-
chaser or hirer of similar property or services.'

"(Emphases added.) Comment h only pertains to the 'value of services ren-
dered' in the context of ascertaining the 'measure of recovery of a person who
sues for the value of his services tortiously obtained' or when a plaintiff'seeks to
recover for expenditures made or liability incurred to third persons for services
rendered.' (Emphases added.) This definition of 'value of services rendered' is
inapplicable, for the present case does not involve a provider who is suing for
the value of the medical services provided or who seeks to recover expenditures
incurred to third persons."

Bynum, 106 Hawai'i at 91, 101 P3d at 1159.

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Hanif v. Housing Authority, 246 Cal Rptr 192, 194-96 (Cal
App Div 3 1988) (citing Restatement § 911 and California
code); Cooperative Leasing, Inc. v Johnson, 872 So 2d 956,
958 (Fla App 2d Dist 2004) (citing Restatement § 911); Terrell
v. Nanda, 759 So2d 1026, 1031 (La App 2000); Kastick v.
U-Haul Co. of Western Michigan, 740 NYS2d 167, 169, 292
AD2d 797, 798 (NY App Div 4 2002).

The dissent disagrees with the Restatement rule that
a plaintiff may recover the value of medical services made
necessary by a tortuous act without regard to whether the
plaintiff is liable for that sum. As the dissent explains, a
plaintiff can seek and recover the reasonable value of services
rendered only if the plaintiff (or someone) was, at the time
the services were rendered, legally obligated to pay that
value. The dissent reasons that no one "incurs" an obligation
if no one is obligated legally to pay it. 347 Or at 245 (Kistler,
J., dissenting). Under that reasoning, if a plaintiff receives
medical services, and, after the services are rendered, the
medical provider gratuitously discharges an express or
implied obligation to pay for those services, the plaintiff may
recover their full reasonable value from a tortfeasor. If, how-
ever, the medical provider informs the plaintiff prior to treat-
ment that the plaintiff will have no obligation to pay for med-
ical services, the plaintiff is not entitled to recover any sum
from a tortfeasor for those necessary services. Similarly,
under the dissent's reasoning, if a plaintiff receives medical
services and a bill for their full reasonable value, but the
medical provider has an agreement with an insurer to accept
less than that sum as payment in full, and to "write off" the
remainder, thus discharging the plaintiff from an express or
implied contractual obligation, the plaintiff can recover from
a tortfeasor the full sum charged. However, if the law, rather
than an insurer's agreement, requires the "write-off," the
plaintiff cannot recover the amount "written off."

The only reason that the dissent gives for its posi-
tion, other than that it is compelled by the legislature's use of
the word "incurred," is that "no compensatory purpose is
served by holding a defendant responsible for more than
[costs incurred]." 347 Or at 245 (Kistler, J., dissenting). If the
dissent means to argue that a plaintiff can only recover as
damages the amount necessary to compensate him or her for

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out-of-pocket loss, then the dissent's construct does not
accomplish that purpose. Whether a plaintiff does not incur a
legal obligation or incurs a legal obligation that is discharged
or satisfied, the plaintiff does not suffer out-of-pocket loss. To
hold a defendant responsible in the latter instance and not in
the former serves no greater compensatory purpose.

Although the collateral source statute, ORS 31.580,
does not directly address the issue of the damages that a
plaintiff in a personal injury action may seek, it reflects a leg-
islative decision to permit plaintiffs to recover damages from
tortfeasors even if, due to insurance and or benefits, includ-
ing Medicare benefits, they do not suffer out-of-pocket loss,
and the damages therefore serve no compensatory purpose.
In enacting ORS 31.580, the legislature chose to make tort-
feasors who cause the same injuries liable to the same extent
and to leave arrangements between plaintiffs and their pro-
viders and insurers to other law.

Furthermore, we do not necessarily agree with the
dissent's premise-that "federal law makes clear that no
costs were incurred in this case over the Medicare cap[,]" 347
Or at 252 (Kistler, J., dissenting), and thus that the bills that
plaintiff's medical providers sent and the contracts that they
required plaintiff to execute violated federal law. 347 Or at
249 (Kistler, J., dissenting).16 The Social Security Act more
reasonably may be interpreted to limit not the amounts a
beneficiary may incur but the amounts that Medicare will
pay "to [injured beneficiaries] or on their behalf." 42 USC §§
1395d(a), 1395k(a)(1) (emphasis added).17 See also 42 USC §
1395(y)(a)(2) (no payment by Medicare "may be made under

16 The dissent quotes portions of Medicare Part B that prohibit nonparticipat-
ing physicians from billing a patient more than "the limiting charge." 347 Or at
249 (Kistler, J., dissenting). As we explained in footnote 8, it appears to us that all
of plaintiff's treating physicians were participating physicians not subject to the
prohibitions that the dissent cites.

17 The dissent takes the position that plaintiff is not liable for his hospital
expenses but contends that he can recover those expenses because Medicare itself
is liable for them. 347 Or at 251 n 7 (Kistler, J., dissenting). The statutes quoted
make it clear, however, that Medicare beneficiaries, not Medicare, incur liability to
medical providers. Medicare's only responsibility is to make payment to or on
behalf of those beneficiaries. If those beneficiaries are not liable, as the dissent
claims, then neither is Medicare, and, under the dissent's reasoning, because no
one is liable, defendant is not required to pay the reasonable value of the hospital
services plaintiff received.

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part A or part B * * * for any expenses incurred for items or
services * * * for which the individual furnished such items
or services has no legal obligation to pay").

Because we decide that an injured person who
receives medical services and who is billed for those services
may seek the reasonable value of that treatment in a claim
against a tortfeasor, a definitive interpretation of the Social
Security Act is not crucial to our holding. But we do point out
that all of the medical providers that rendered services to
plaintiff billed him for the full reasonable value of that treat-
ment, and defendant reasonably did not contend that plain-
tiff, by contract, had not agreed to pay those bills. Whether
the Medicare laws benefitted plaintiff by providing that he
was not legally obligated to pay those bills or instead pro-
vided a means for their discharge is of no legal consequence
in this tort action. In either instance, plaintiff obtained treat-
ment with the same reasonable value. In either instance,
plaintiff received the benefits of the Medicare program that
he earned through employment or payment of premiums,
and those benefits do not reduce the amount that he can seek
or recover from defendant.

In sum, the common-law rule, as it has been articu-
lated in the Restatement and the majority of jurisdictions, is
that the plaintiff in a personal injury action is entitled to
claim and recover from a tortfeasor the reasonable value of
the medical services charged without limitation to the sums
for which plaintiff is legally liable, that plaintiff has paid for
those services, or that a third party has paid on plaintiff's
behalf. Tying a plaintiff's claim to the amount that a third
party has paid or satisfied undermines the collateral source
rule by effectively linking the tortfeasor's obligation to the
plaintiff's relationship with a third-party benefit provider.
Moreover, exclusion of "write-offs" from the amount that a
plaintiff may claim creates the anomaly that a defendant will
be liable for the full reasonable charges that a medical pro-
vider makes to an uninsured person who is injured, but may
have more limited liability if the injured person is insured or
the beneficiary of other third-party benefits.

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We conclude that ORS 31.580 and the law of eco-
nomic damages should and do work in harmony and permit
plaintiff to claim and recover from defendant the reasonable
value of the medical expenses for which he was billed and
which were necessary to treat his injuries, viz., the same
amount that plaintiff would have been entitled to claim and
recover were he not eligible for Medicare benefits. Plaintiff's
claim is not limited to the amounts that he paid or that
Medicare paid on his behalf.

## IV. DEFENDANT'S EVIDENTIARY ARGUMENT

In its final, alternative, evidentiary argument, defen-
dant contends that, if the amount that Medicare paid plain-
tiff's medical providers does not establish the limits of defen-
dant's liability, then it is at least admissible evidence of the
reasonable value of the services that they rendered. The
amount that one pays for services generally is admissible and
often may be an important factor in determining the reason-
able value of those services. See Oliver v. N. P. T. Co., 3 Or 84,
87 (1869) ("In estimating damages, it is proper to consider
loss of time, money necessarily paid, or debts necessarily
incurred in curing the bodily injury * * *. "). But, in the cir-
cumstances where it applies, ORS 31.580(2) precludes the
admission of such evidence when it discloses the existence
and amount of a collateral source benefit:

"Evidence of the [collateral] benefit [received by plaintiff]
\* \* \* and the cost of obtaining it is not admissible at trial,
but shall be received by the court by affidavit submitted
after the verdict by any party to the action."

In this case, ORS 31.580(2) prohibited defendant from
proving to the jury the benefits that plaintiff received from
Medicare-the satisfaction of his obligations to his providers
by both payment and "write-offs."

That did not mean, however, that defendant was
required to accept liability for the charges that plaintiff
sought to recover. Plaintiff had the burden of proving to the
jury that his claimed medical expenses were reasonable.
Defendant could have put plaintiff to his proof and could
have called witnesses to testify that the amounts that plain-
tiff sought were unreasonable. Instead, defendant stipulated

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at trial that the bills that plaintiff submitted as evidence
were reasonable. Therefore, defendant is bound by the jury's
factual determination and award.

## V. CONCLUSION

The trial court did not err in declining to limit plain-
tiff's claim or recovery to the amounts that Medicare actually
paid plaintiff's providers or in prohibiting defendant from
offering evidence of those payments.

The decision of the Court of Appeals and the judg-
ment of the circuit court are affirmed.

KISTLER, J., dissenting.

The majority holds that plaintiff may recover, as eco-
nomic damages, medical costs that Medicare prevented
plaintiff's medical providers from charging for their services.
The majority's decision is at odds with both federal and state
law. As a matter of federal law, the statutes governing
Medicare capped the costs of plaintiff's medical care; neither
plaintiff nor Medicare incurred more medical costs than the
Medicare statutes permitted. As a matter of state law, the
only economic damages arising from plaintiff's injury were
the medical costs for which plaintiff was liable and for which
Medicare reimbursed his providers. Because I would hold
that plaintiff cannot recover economic damages for medical
costs for which no one was ever liable, I respectfully dissent.

Plaintiff was injured on defendant's premises. As a
result of that injury, plaintiff had reconstructive surgery on
his shoulder and knee. Plaintiff was over 65 at the time of the
accident, and Medicare both provided coverage for plaintiff's
medical costs and capped the amount that plaintiff's medical
providers could charge for their services. In this case,
Medicare capped plaintiff's medical costs at approximately
$13,400; that was the amount that Medicare paid plaintiff's
medical providers and neither plaintiff nor Medicare ever
was liable for more than that amount. Without that cap,
plaintiff's medical providers would have charged approxi-
mately $39,000 for their services.

The question that this case presents is whether
plaintiff can recover economic damages for the difference

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between the Medicare capped rate and the medical providers'
customary rate. Put differently, the question is whether
plaintiff can recover economic damages from defendant for
approximately $25,600 in medical "costs" for which no one
was ever liable.

The answer to that question is, or should be, simple.
Economic damages compensate a plaintiff for the costs
incurred as a result of a defendant's tort. A defendant should
be responsible for all costs incurred, but no compensatory
purpose is served by holding a defendant responsible for
more than that. In this case, the Medicare statutes limited
the costs incurred as a result of plaintiff's injury and imposed
a corresponding limitation on the amount of economic dam-
ages that plaintiff could recover.

That limitation on the amount of damages is sepa-
rate from the collateral source doctrine. The collateral source
doctrine addresses whether a defendant may take advantage
of a benefit that a plaintiff receives from a collateral source
(someone other than the defendant) to reduce the amount of
damages that a judge or jury has awarded. See ORS 31.580
(codifying doctrine); Fowler V. Harper, Fleming James, Jr.,
Oscar S. Gray, 4 Harper, James and Gray on Torts § 25.22,
801-04 (2007) (describing common-law doctrine). The collat-
eral source doctrine does not address the amount of damages
that a plaintiff can recover in the first instance. That much is
clear from the terms of ORS 31.580, which provides that the
collateral source doctrine comes into play only after "a party
is awarded damages for bodily injury or death of a person."
By its terms, ORS 31.580 presumes an existing award of
damages and is limited to the question of how much of that
award a defendant owes.

In my view, the majority does not keep those two
doctrines separate. Rather, it appears to rely on the collateral
source doctrine to define the amount of economic damages
that plaintiff can recover and in doing so errs. This dissent
first explains that, as a matter of federal law, the Medicare
capped rate limited the costs incurred as a result of plaintiff's
injury; no one incurred more than that amount. This dissent
then explains that, as a matter of state statute, plaintiff's eco-
nomic damages are limited to the costs that were incurred.

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Finally, it explains why the collateral source statute does not
provide a basis for awarding plaintiff more damages than the
statute defining economic damages permits.

### I. MEDICARE CAPS THE MEDICAL COSTS INCURRED

Plaintiff received medical services from eight provid-
ers. Seven provided physician services, which are covered
under Medicare Part B. One provided inpatient hospital
services, which are covered under Medicare Part A. Medicare
Part A and Medicare Part B are subject to different statutory
provisions, and this opinion begins by discussing the limita-
tions that Medicare Part B places on the amount that physi-
cians can charge Medicare beneficiaries.

Medicare Part B sets a reasonable charge (or
Medicare approved charge) for medical services that a phy-
sician provides. As initially enacted, Medicare Part B did not
limit the amount that a physician could charge a Medicare
beneficiary unless the physician accepted assignment of the
beneficiary's Medicare claim. See 1 Medicare and Medicaid
Guide (CCH) I 3186, 1184 (Nov 20, 2007) (explaining the his-
tory of Part B). Rather, Medicare paid 80 percent of the
Medicare approved charge, leaving the beneficiary responsi-
ble for the remainder of the physician's customary charge. Id.
Beginning in 1987, however, Medicare Part B capped the
amount that physicians can charge Medicare beneficiaries.
Id. Since 1991, that cap has taken the form of a "limiting
charge," which is a percentage of the Medicare approved
charge. 42 USC § 1395w-4(g)(2)(C). Under Part B, "[n]o per-
son is liable for payment of any amounts billed for the service
in excess of [the] limiting charge." 42 USC § 1395w-
4(g)(1)(A)(ii).

The "limiting charge" establishes both the maximum
that a physician can charge a Medicare beneficiary and the
maximum for which a Medicare beneficiary will be liable.
Physicians who do not accept assignment of Medicare claims
can charge Medicare beneficiaries an amount up to the limi-
ting charge. 42 USC § 1395w-4(g)(2)(C). Those physicians,
however, may not "bill or collect an actual charge in excess of
the limiting charge." 42 USC § 1395w-4(g)(1)(A)(i). And, as
noted, "[n]o person is liable for payment of any amounts
billed for the service in excess of [the] limiting charge."

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42 USC § 1395w-4(g)(1)(A)(ii). If a physician has not accepted
assignment, a Medicare beneficiary is responsible for paying
the physician's bill up to the amount of the limiting charge,
and Medicare will reimburse the beneficiary for 80 percent of
the limiting charge. Under Medicare Part B, a patient is not
liable for the physician's customary charge to the extent it
exceeds the Medicare "limiting charge."1

Medicare Part A covers inpatient services in hospi-
tals and similar facilities. Under Part A, a Medicare benefi-
ciary is liable for a lesser amount of the cost than under Part
B. Specifically, 42 USC § 1395cc(a)(1)(A)(i) provides that a
hospital cannot receive payments under Medicare Part A
unless it agrees "not to charge, except as provided in para-
graph (2), any individual or any other person for items or
services for which such individual is entitled." Paragraph 2 of
subsection 1395cc(a) lists the exceptions to that limitation on
liability, which include: (1) payment of a deductible for each
stay in the hospital ($1,068 in 2009); (2) daily coinsurance
payments if the stay exceeds 60 days (either the hospital's
customary rate or a percentage of the deductible, whichever
is lower); and (3) the additional cost of noncovered services,
such as a private room, that the patient expressly requests.
42 USC § 1395cc(a)(2); see 3 Medicare and Medicaid Guide
(CCH) I 13,010, 5307-08 (Dec 2, 2008) (describing costs for
which beneficiaries will be liable under Medicare Part A).

Medicare Part A differs from Medicare Part B in that
Part A permits a hospital to charge a Medicare beneficiary
only for the cost of the deductible and other charges. A bene-
ficiary is not liable, under Part A, for the cost of inpatient hos-
pital services up to the amount of Medicare cap-the amount
that Medicare reimburses the hospital.2 However, both Part

1 Physicians who accept assignment of a Medicare beneficiary's claim are lim-
ited to a lesser amount. They may not charge the beneficiary more than the
Medicare approved amount, which is slightly less than the "limiting charge."
42 USC § 1395u(b)(3)(B)(ii) (physicians who accept assignment agree that the
"reasonable charge [set by Medicare] is the full charge for the service"); see
1 Medicare and Medicaid Guide (CCH) { 3186, 1184 (same). Because the reason-
able charge is less than the limiting charge, the limiting charge establishes the
maximum amount that any physician can charge a Medicare beneficiary for medi-
cal services and the maximum amount for which the beneficiary will be liable.

2 Since 1983, Medicare has capped the payments to hospitals and similar
facilities by providing a set amount, adjusted for certain costs, for each condition

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A and Part B are identical in that neither part permits a hos-
pital or a physician to charge more than the Medicare capped
amount. Under both Part A and Part B, no one incurs or is
liable for a hospital or a physician's customary charges to the
extent that those charges exceed the Medicare cap.

Plaintiff argues, however, that he agreed to pay and
was liable for the full amount of his providers' customary
charge.3 The record does not support that assertion. As noted,
plaintiff received medical services from eight providers. The
agreements with two of those providers are in the record. One
agreement, with Open Advanced MRI & CT, reminds
patients that "whether you have health insurance coverage
or not, professional services are rendered to and charged to
the patient." It then adds, "You (or the responsible party in
the case of a minor) are responsible for payment of your bill
even if not covered in full or in part by your insurance."4 The
part of the agreement on which plaintiff relies states only
that plaintiff remains responsible for payment of his bill,
even if he has insurance. The agreement says nothing about
the rate that plaintiff agreed to pay or whether plaintiff is
responsible for any amounts over and above what Medicare
permits. The agreement is silent on that point.

diagnosed. See 1 Medicare and Medicaid Guide (CCH) I 4202 (June 16, 2009)
(describing history and methodology of setting payments to hospitals under
Medicare Part A); 42 CFR § 412.60 (specifying procedures for determining
Medicare payments under Part A).

" In resolving defendant's motion to reduce the verdict, the trial court recited
that "it is undisputed that * * * the plaintiff contractually agreed to pay" his med-
ical providers' customary charges. Defendant, however, argued in its motion that
plaintiff had not "incurred" his providers' customary charges to the extent that
they exceed the amount that Medicare paid, and it quoted the federal district court
opinion in Wildermuth v. Staton, No CIV.A. 01-2418-CM, 2002 WL 922137 at *5
(D Kan, Apr 29, 2002), for the proposition that " 'Medicare providers are prohibited
under Medicare law and regulations from seeking reimbursement of the written-
off amounts from any source.'"

4 Paragraph 2 of the agreement states:

"Payment is preferred at the time of service as a courtesy and if you supply all
information needed today, we will bill your primary insurance carrier and give
you an insurance form for other billing. This does not waive your responsibility
for payment. Remember whether you have health insurance coverage or not,
professional services are rendered to and charged to the patient. This office
cannot accept responsibility for collecting any insurance claim or negotiating a
settlement on a disputed claim. You (or the responsible party in the case of a
minor) are responsible for payment of your bill even if not covered in full or in
part by your insurance."

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Medicare Part B prevents entities providing physi-
cian services, such as Open Advanced MRI, from billing a
patient more than the limiting charge.5 As noted, nonparti-
cipating physicians may not bill a Medicare beneficiary for
more than the limiting charge, and "[n]o [beneficiary] is lia-
ble for payment of any amounts billed for the service in
excess of [the] limiting charge." 42 USC § 1395w-
4(g)(1)(A)(ii). It is hardly surprising that Open Advanced
MRI's agreement does not impose an obligation on its
patients that would be contrary to federal law. Its agreement
does not support plaintiff's position.

Plaintiff's agreement with Southwest Washington
Medical Center presents a closer question but still does not
support plaintiff's position. Paragraph 10 of that agreement
states:

"I, the undersigned, agree * * * that in consideration of the
services to be provided that the undersigned hereby obli-
gates himself/herself * * * to pay the account of SWMC in
accordance with its regular rates and terms. I further agree
to pay for services denied or not covered by my insurance
regardless of the reason for denial or non-coverage. I agree
to pay for services not covered by my Medicaid program
even if I did not disclose my Medicaid eligibility at registra-
tion or obtain eligibility on a retroactive basis."

Plaintiff presumably interprets the agreement obligating
him "to pay the account of SWMC in accordance with its reg-
ular rates and terms" as an agreement to accept liability for
the hospital's customary charges. While textually permissi-
ble, that interpretation conflicts with Medicare Part A, which
requires hospitals to agree not to charge Medicare benefici-
aries for their services except as expressly authorized.6

It is also equally permissible to read the agreement
consistently with federal law; that is, the agreement "to pay
\* \* \* SWMC in accordance with its regular rates and terms"

5 Physician services include diagnostic tests, such as an MRI. See 42 CFR
§ 414.2 (defining physician services).

6 Southwest Washington Medical Center's bill makes clear that it provided
hospital inpatient services subject to Part A rather than physician services subject
to Part B.

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refers to those "rates and terms" that Medicare Part A per-
mits. One should hesitate to assume that the nonspecific
phrase "regular rates and terms" refers to rates and terms
that are contrary to federal law. The third sentence in para-
graph 10 supports that reading. It provides that the patient
"agree[s] to pay for services not covered by my Medicaid pro-
gram." If the first sentence were as broad as plaintiff per-
ceives, the third sentence in paragraph 10 would be unnec-
essary. That is, if the first sentence in paragraph 10 required
a Medicaid beneficiary to assume responsibility for all the
hospital's customary charges, there would be no need to spec-
ify in the third sentence that a Medicaid beneficiary agrees to
pay for those services that Medicaid does not cover. In any
event, if the agreement with Southwest Washington Medical
Center purported to impose liability on plaintiff for all the
hospital's customary charges, it would be inconsistent with
Medicare Part A, and federal law would negate any contrary
obligation that that agreement sought to impose.

Plaintiff did not introduce any other agreements
that he may have had with his other six medical providers,
all of whom were physicians. The burden of production was
on plaintiff to prove the extent of his damages, and the
absence of those agreements cuts against him. Beyond that,
as explained above, Medicare Part B prevents a physician
from charging more than the limiting charge. There is no rea-
son to assume that plaintiff's doctors entered into agree-
ments contrary to federal law, and, even if they did, federal
law would supersede those agreements. As a matter of fed-
eral law, neither plaintiff nor Medicare incurred liability for
any medical charges in excess of the Medicare cap.

### II. ECONOMIC DAMAGES ARE LIMITED TO COSTS INCURRED

"For more than a century, the general rule in Oregon
in assessing damages has been that a plaintiff should recover
only such sums as will compensate a plaintiff for the injury
suffered as a result of a defendant's wrong." Yamaha Store of
Bend, Inc. v. Yamaha Motor Corp., 310 Or 333, 344, 798 P2d
656 (1990). ORS 31.710(2)(a) embodies that principle. It
defines "economic damages" as "objectively verifiable mone-
tary losses including but not limited to reasonable charges

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necessarily incurred for medical, hospital, nursing and reha-
bilitative services and other health care services * * *. " That
statute assumes that, at a minimum, charges for medical
services must be "incurred" to be recovered as economic dam-
ages. As the majority notes, incurred means "become liable or
subject to." See Webster's Third New Int'l Dictionary 1146
(unabridged ed 2002) (defining incur). And federal law makes
clear that no one (neither plaintiff nor Medicare) became
liable for any medical costs over the Medicare cap. The
Medicare cap limits the amount of medical costs incurred as
a result of plaintiff's injury, and ORS 31.710(2)(a) only per-
mits recovery of those costs incurred as a result of defen-
dant's tort.7

That limitation also follows from this court's prece-
dent. This court's cases have long recognized that the reason-
able value of a doctor's services limits the amount of economic
damages that a plaintiff can recover; that is, if the amount
that a doctor charges for medical services exceeds the reason-
able value of those services, a plaintiff can recover only the
reasonable value. Touhy v. Columbia Steel Co., 61 Or 527,
532-33, 122 P 36 (1912).8 The converse is not true, however.
This court has never held nor suggested that, when the
agreed charge for medical services is less than its reasonable
value, a plaintiff may recover the reasonable value of those
services. Such a rule would be antithetical to the principle
that "a plaintiff should recover only such sums as will com-
pensate a plaintiff for the injury suffered as a result of a
defendant's wrong." Yamaha Store of Bend, Inc., 310 Or at

7 ORS 31.710(2)(a) does not, by its terms, limit the amount of economic dam-
ages to the costs incurred by the plaintiff. In this case, both plaintiff and Medicare
incurred costs for medical services as a result of defendant's acts, and defendant
has not argued that it is not liable for the costs that plaintiff and Medicare
incurred. Rather, it has argued only that it is not liable for costs that no one
incurred.

8 In Touhy, the plaintiff introduced into evidence the bills for medical treat-
ment that he received as a result of the defendant's negligence but submitted no
evidence that those charges were reasonable. 61 Or at 530. This court held that,
without evidence that the charges were reasonable, the plaintiff could not recover
the cost of his medical treatment and directed that the amount of those bills be
deducted from the judgment for plaintiff. Id. at 532-33. The court explained that
"[t]he rule is that a plaintiff in a case involving personal injuries can recover, as a
part of his damages, his reasonable expenses for medicines and medicinal treat-
ment, but there must be some evidence that the charges were reasonable." Id. at
532.

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344 (emphasis added). It also would be contrary to the use of
the word "incurred" in the definition of economic damages in
ORS 31.710(2)(a).

The majority questions whether the definition of eco-
nomic damages found in ORS 31.710(2)(a) is limited to deter-
mining whether a statutory cap on economic damages
applies. This court, however, has not limited the definition to
that context. For instance, in Zehr v. Haugen, 318 Or 647,
656-67, 871 P2d 1006 (1994), the court relied on the defini-
tion of economic damages in ORS 31.710(2)(a) to determine
whether the economic damages that the plaintiffs sought as
part of their medical malpractice claim were recoverable.9 If
the statutory definition of economic damages were limited to
determining whether the statutory cap on economic damages
applies, as the majority suggests, the court would not have
considered that definition in Zehr to determine whether the
damages sought in that case were recoverable. See also
Clarke v. OHSU, 343 Or 581, 608 n 17, 175 P3d 418 (2007)
("Special damages now are described [in ORS 31.710(2)(a)] as
economic damages and refer to the verifiable out-of-pocket
losses, including medical expenses * * *. ").

The definition of economic damages in ORS
31.710(2)(a) limits defendants' damages to the costs incurred,
and federal law makes clear that no costs were incurred in
this case over the Medicare cap. ORS 31.710(2)(a) and the
Medicare cap combine to limit the amount of economic dam-
ages that the jury could award plaintiff.

### III. THE COLLATERAL SOURCE STATUTE

The majority bases its opinion primarily on the col-
lateral source statute. In the first part of its opinion, the
majority asks whether the collateral source statute applies,
but in doing so it assumes that plaintiff was liable for his
medical providers' customary charges. The first part of the
court's opinion thus assumes away what is, in my view, the

9 Additionally, ORS 31.705 requires that jury verdicts in civil actions seeking
damages arising out of bodily injury "shall set forth separately economic damages
and noneconomic damages, if any, as defined in ORS 31.710." That requirement is
not limited to cases in which a plaintiff's prayer exceeds the statutory cap on eco-
nomic damages, confirming that the legislature's definition of economic damages is
not as narrow as the majority suggests.

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dispositive question. In the second part of its opinion, the
majority asks "whether the amount that defendant must pay
as damages for that loss is limited to the amounts that plain-
tiff paid or remains legally obligated to pay for the medical
care that he obtained to treat that loss." 347 Or at 233. And it
undertakes to answer that question in four related but sepa-
rate ways.

The majority looks initially to the collateral source
statute to answer the question it poses. It notes that, under
the collateral source statute, a plaintiff may recover his or
her medical costs from a defendant even though an insurer
has paid those costs and the plaintiff does not remain legally
obligated to pay them. Id. The majority reasons that the
same answer should apply in this case. Id. at 233-34. The
majority concludes that, if we were to reach a different
answer, we could not give effect to ORS 31.580. Id. at 234.

In my view, the majority asks and answers the
wrong question. The question is not whether plaintiff has
paid or remains liable to pay its medical charges. Rather, the
question is whether plaintiff ever incurred liability for those
charges. That follows from ORS 31.710(2)(a), which provides
that costs must be "incurred" to constitute economic dam-
ages. The collateral benefits statute does not point in a differ-
ent direction. As noted, ORS 31.580 has nothing to do with
the amount of damages a plaintiff incurs. That statute
applies only after "a party is awarded damages for bodily
injury or death." It assumes that a judge or jury has deter-
mined the amount of damages and provides a rule to deter-
mine how much of those damages a defendant owes.

The majority reasons next that "[a] plaintiff who is
injured and who obtains necessary medical treatment
becomes 'liable or subject to' reasonable charges for that
treatment and thereby 'incurs' them." Id. at 234. The major-
ity's reasoning sweeps too broadly. Ordinarily, the charge
incurred for medical services turns on the terms of the agree-
ment between the patient and the medical provider; that is, a
patient ordinarily will be liable for and will incur whatever
charges he or she agrees to pay a medical provider. That is
true without regard to whether the patient agrees to pay

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more or less than the reasonable charge. The rule the major-
ity posits applies only when no agreement exists and the law
implies a reasonable charge. See Cronn v. Fisher, 245 Or 407,
416, 422 P2d 276 (1966) (discussing quantum meruit). In this
case, the Medicare statutes imposed an a priori limit on the
charges incurred for medical services. No one incurred any
charges over and above that cap, and plaintiff may not
recover damages for medical costs that no one incurred.

Although the majority relies on Cary v. Burris, 169
Or 24, 127 P2d 126 (1942), as support for its reasoning, that
decision addresses a related but different issue. In Cary, an
employee of the federal government was injured in an auto-
mobile accident. Id. at 25. The defendant alleged, as a partial
defense, that the United States had paid the employee's med-
ical costs. Id. The employee admitted in his reply that "the
United States Employees' Compensation Commission had
advanced all said sums but that he would be required to
reimburse the commission for said advances out of the pro-
ceeds of the judgment [against defendant] when collected."
Id. at 25-26. The trial court ruled that the employee could
recover damages for the money that the United States had
advanced for his medical treatment, and this court affirmed.
Id. at 29.10 In reaching that conclusion, this court recognized
that a federal statute required the employee to reimburse the
United States for any funds that it had advanced to pay for
his medical costs. Id. at 27; see Dahn v. Davis, 258 US 421,
430, 42 S Ct 320, 66 L Ed 696 (1922) (discussing federal
statute).

The decision in Cary addressed a typical situation in
which a third party, such as an insurer, has paid medical
expenses for which the plaintiff would otherwise be liable,
and the question was whether the defendant could avoid
responsibility for those expenses. Cary did not address a sit-
uation in which federal law limited the amount that a medi-
cal provider could charge a plaintiff in the first instance. In

10 Initially, the trial court ruled that the jury could not consider those sums as
an element of the plaintiff's damages. The court then allowed the plaintiff's motion
for a new trial on the ground that its damages ruling was erroneous, the defendant
appealed to this court from that ruling, and this court affirmed. Id. at 26.

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my view, Cary neither advances nor detracts from the major-
ity's reasoning.

The majority also relies on cases from other jurisdic-
tions. As the majority notes, courts from other jurisdictions
have split on this matter both in the result that they have
reached and also in their analysis. Some have held, as I
would, that a plaintiff cannot recover damages for costs that
no one incurred. See Moorhead v. Crozer Chester Medical
Center, 765 A2d 786, 789-91 (Pa 2001) (holding that the
reasonable value of medical services that a Medicare benefi-
ciary received cannot exceed "the amount that the plaintiff
has actually paid or for which he or she has incurred liabil-
ity"); Hanif v. Housing Authority, 246 Cal Rptr 192, 194-96
(Cal App 3 Dist 1988) (holding that a state Medicaid benefi-
ciary cannot "recover from the tortfeasor more than the
actual amount he paid or for which he incurred liability for
past medical care and services"). Other courts have held that
the amount Medicare pays is, while not dispositive, admissi-
ble evidence on the reasonable value of medical services.
Robinson v. Bates, 857 NE2d 1195, 1200 (Ohio 2006). Still
other courts have held, as the majority does, that a plaintiff
can recover the reasonable value of the services received
without regard to the limitations that Medicare or Medicaid
places on the costs that a medical provider charges. See, e.g.,
Bynum v. Mango, 106 Hawai'i 81, 88, 101 P3d 1149, 1556-57
(Haw 2004); Brandon HMA, Inc. v. Bradshaw, 809 So 2d 611,
619-20 (Miss 2001).

Those various decisions establish that, at a mini-
mum, the issue is one about which reasonable people can and
have disagreed.11 Beyond that, the decisions do not have
much bearing on the inquiry before us. The Oregon legisla-
ture has chosen to codify both the collateral benefit rule and
the definition of economic damages. While other states'
common-law decisions may be informative and even persua-
sive in the abstract, ORS 31.710(2)(a) and ORS 31.580 define

11 Part of the difficulty arises, I suspect, from the fact that Medicare was not
written with tort law in mind. When Congress decided to provide a system of med-
ical coverage for persons over 65 years of age, it did not necessarily consider how
the limitations it imposed on medical costs would affect a plaintiff's ability to
recover damages for medical services resulting from a defendant's tortious acts. We
are, however, obliged to make that determination.

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the scope of our inquiry in determining the extent of the dam-
ages that plaintiff may recover. As I read ORS 31.710(2)(a), it
requires that costs be incurred before they may be recovered
as economic damages. Conversely, ORS 31.580 has nothing
to do with determining the extent of the damages that a
plaintiff may recover. Rather, it defines a defendant's respon-
sibility for those damages that a judge or jury has awarded.
Given those two statutes, I would hold that a plaintiff cannot
recover economic damages for medical costs that no one ever
incurred.

The majority notes one final point. It cites 42 USC
§ 1395y(a)(2) for the proposition that Medicare would not
have made payments to plaintiff's medical providers if plain-
tiff had not agreed to assume liability for their customary
charges. 347 Or at 241-42. That paragraph provides:

"Notwithstanding any other provision of this subchap-
ter, no payment may be made under part A or part B of this
subchapter for any expenses incurred for items or
services-

** * * * *

"(2) for which the individual furnished such items or
services has no legal obligation to pay, and which no other
person * * * has a legal obligation to provide or pay for
\* \* \* "

In my view, the majority reads paragraph 1395y(a)(2)
for more than it is worth. That paragraph is one of 21 exclu-
sions from Medicare coverage, which range from eyewear to
pedicures. See 42 USC § 1395y(a)(7) (excluding coverage for
eyewear); 42 USC § 1395y(a)(13)(C) (excluding coverage for
pedicures). The exclusion that the majority cites applies to
services "for which the individual furnished such * * * serv-
ices has no legal obligation to pay, and [for] which no other
person * * * has a legal obligation to provide or pay." 42 USC
§ 1395y(a)(2) (emphasis added).

By its terms, paragraph 1395y(a)(2) excludes from
Medicare coverage only those services provided for free, with-
out expectation of payment from anyone. As the agency
charged with administering Medicare has explained, the
exclusion "applies where items and services are furnished

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gratuitously without regard to the beneficiary's ability to pay
and without expectation of payment from any source, such as
free x-rays or immunizations provided by health organiza-
tions." Center for Medicare Services, Medicare Benefits Policy
Manual, Pub 100-02, ch 16, § 40.

This is not a case in which plaintiff's medical provid-
ers furnished services gratuitously without expectation of
payment from anyone. Rather, plaintiff had an obligation to
pay, at a minimum, the deductible for the inpatient hospital
services he received under Part A and 20 percent of his phy-
sicians' charges under Part B. And Medicare had an obliga-
tion to pay the remainder of the charges up to the Medicare
approved amount. In my view, the majority errs in convert-
ing an exclusion from Medicare coverage for completely gra-
tuitous services into an implicit requirement that Medicare
beneficiaries assume liability for all of their medical provid-
ers' customary charges.

As I read the governing Oregon statutes, medical
charges must be incurred to be recovered as economic dam-
ages. In this case, neither plaintiff nor Medicare ever
incurred liability for more than the Medicare cap. It follows
that plaintiff may not collect damages for costs that no one
incurred. I respectfully dissent.

Balmer, J., joins this dissenting opinion.