interview of magistrate judge in this stephan m....

DEFENSE newsSummer 2012

The Legal News Journal for New Mexico Civil Defense Lawyers

Interview of Magistrate Judge Stephan M. Vidmar

Interviewed by Megan T. Muirhead, Modrall, Sperling, Roehl, Harris & Sisk, PA

Page 4

NMDLA Civil Case Summaries January – April 2012 State Court Opinions

By John S. Stiff, Esq., Ann L. Keith, Esq., and Nels D. Orell, Esq., Stiff, Keith & Garcia, LLC

Page 8

Application of the Three Year Statute of Repose Contained in the

Medical Malpractice ActSandra L. Beerle, Esq.,

Rodey, Dickason, Sloan, Akin & Robb PA6

Should Plaintiffs be Able to Recover Medical Expenses Written off or Adjusted by Health

Care Providers?Harriett J. Hickman, Esq., Gallagher, Casados & Mann PC

Page 19

EditionIN THIS

New Mexico Defense Lawyers AssociationPO Box 94116

Albuquerque, NM 87199-4116www.nmdla.org

tel: 505.797.6021

Message fromthe President

Page 3

Women in the Courtroom Seminar

InformationPage 10

NMDLA Contributors

Page 15

Attorney of the Year Awards

Page 23

The New Mexico Defense Lawyers Association is the only New Mexico Organization of civil defense attorneys. We currently have over 400 members. A common misconception about NMDLA is that its membership is limited to civil defense attorneys specializing solely in insurance defense. However, membership in NMDLA is open to all attorneys duly licensed to practice law in New Mexico who devote the majority of their time to the defense of civil litigation. Our members include attorneys who specialize in commercial litigation, employment, civil rights, and products liability.

The purpose of NMDLA is to provide a forum where New Mexico civil defense lawyers can communicate, associate, and organize efforts of common interest. NMDLA provides a professional association of New Mexico civil defense lawyers dedicated to helping its members improve their legal skills and knowledge. NMDLA attempts to assist the courts to create reasonable and understandable standards for emerging areas of the law, so as to make New Mexico case law dependable, reliable, and a positive influence in promoting the growth of business and the economy in our State.

The services we provide our members include, but are not limited to:

• Exceptional continuing legal education opportunities, including online seminars, and self-study tapes, with significant discounts for DLA members;

• A newsletter, Defense News, the legal news journal for New Mexico Defense Trial Lawyers;

• Members‘ lunches that provide an opportunity to socialize with other civil defense lawyers, share ideas, and listen to speakers discuss a wide range of issues relevant to civil defense attorneys;

• An e-mail network and website, where members can obtain information on judges, lawyers, experts, jury verdicts, the latest developments in the law, and other issues; and

• An Amicus Brief program on issues of exceptional interest to the civil defense bar.

Nancy FranchiniInterim President

Bryan EvansPresident Elect

Richard PadillaSecretary/Treasurer

Board MembersWilliam R. Anderson Ann ConwayBryan GarciaSean E. GarrettRichard E. Hatch Trent Howell

Lorena Olmos Tony F. Ortiz

S. Carolyn Ramos Mark RileyCody R. RogersBrenda M. Saiz

Defense News

Co-Editors in Chief Courtenay L. Keller Harriett Hickman

Board of Editors

Sandra L. BeerleDenise ChanezNathan Cobb Andrew JohnsonAnn L. KeithCassandra R. Malone

Carlos G. Martinez Megan T. MuirheadAgnes Fuentevilla PadillaLisa PullenJohn S. StiffAlex C. Walker

Executive Director

Jean F. Gibson

Defense News 2 Summer 2012

Board of directors

NMDL A

Dear NMDLA Members -

I have exciting news!! Our president, Michelle Hernandez, has decided to resign her position with NMDLA to focus her attention on becoming a member of the highest court of this State. On June 7, 2012 Michelle resigned her position and is working towards having her name on the November ballot as the Democrat nominee to become a New Mexico Supreme Court

Justice. Justice Patricio Serna announced his retirement from the Court in early June. The NMDLA Executive Board wishes Michelle all the best and admires her for pursuing her dream. Good luck, Michelle!

In the interim, the Executive Board has elected me to complete the remainder of Michelle’s term. I will strive to continue Michelle’s excellent work for this organization.

NMDLA is in a superb and strong position. Coming in August is the Women in the Courtroom CLE that has been organized by Carolyn Ramos. This CLE will prove to be new and fresh with a portion of the CLE being taught by Court of Appeals Judge Linda Vanzi and former Second Judicial District Judge Wendy York, and seasoned trial lawyer Sarah Bradley will be the guest luncheon speaker.

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A Me s s Ag e Fr o M t h e Pr e s i d e n t

Vice-President Bryan Evans has been organizing the NMDLA Annual Meeting that will be held at Hotel Andaluz in Albuquerque in October. The guest speaker will be Larry J. Cohen, JD, PhD who is a Phoenix, Arizona attorney as well as an adjunct professor at Sandra Day O’Conner College of Law at Arizona State University. He will be making a presentation on “What Hollywood Can Teach Us About Ethics,” which word has it, will be hilarious, entertaining and educational. This will be followed by a judges’ panel.

Finally, I’d like to mention a new feature on the NMDLA website. In an effort to support the Editorial Board’s tireless efforts and to help it continue to create interesting editions, we have added a link on the website to submit topics on which members would like to see articles. Each of us sees new issues arise in our practices. If you come across a new and interesting issue, submit it on the NMDLA website and take advantage of this new link.

Also, please volunteer to write and submit an article to the Defense News. Along those lines, I urge the partners of firms to encourage their associates to write articles for the Defense News. Not only will your firm be recognized, but it will also help associates to get involved in our legal community outside of handling cases.

I hope you all have a happy and prosperous summer. Keep cool!

Nancy Franchini Gallagher Casados & Mann PC NMDLA Interim President 2012

Over the last few years we have been able to enhance the value of membership in the NMDLA by way of electronic access to a variety of information — especially through the use of email inquiries for information and publication of peer accomplishments. As part of that continuing effort, we ask each of you to bring your accomplishments to the DLA‘s attention. Submissions might include a good result at trial, a favorable appellate decision, a successful motion at the trial court level, or a recommended expert or mediator.

When you submit your success, we will publish the information and case details to our website‘s library of defense verdicts, and send an email notification to all DLA members. Also, the NMDLA website‘s home page highlights our most recent submissions.

Successes may be submitted in the member-only section of NMDLA‘s website, www.nmdla.org. If you need password assistance, contact us at [email protected].

Share Your Successes!


Interviewed by Megan T. Muirhead, Modrall, Sperling, Roehl, Harris & Sisk, PA

in t e r v i e w o F MAg i s t r At e Ju d g e st e P h A n M. vi d MA r


MM: Please tell us about your background:

SV: I grew up in the Detroit area. I received an appointment to West Point, graduated in 1974 and served five years as an Army officer. I resigned my commission in 1979 to attend the University of Michigan Law School. After graduation, I moved to New Mexico in May of 1982 to take a job with what was then Miller Stratvert Torgerson & Brandt.

MM: What kind of practice did you have before your appointment?

SV: Miller was my first and only law firm job. I practiced there for just under thirty years. In 2008, I was elected managing partner and did that until I took the bench in December of 2011. At Miller, my practice was 100% civil litigation, primarily insurance defense work. When I was doing insurance defense work, the bulk of my work was representing doctors in medical malpractice actions. Once I became managing partner, my practice changed and I primarily represented plaintiffs in commercial litigation.

MM: Why did you apply for a federal magistrate judge position?

SV: When I started managing back in 2008, it really reinvigorated me to do something different. That experience of doing something different from what I’d been doing for the past twenty-seven years made me start thinking of what I wanted to do when I didn’t want to manage anymore. I’d planned to manage Miller for five years and then step down. I was beginning my

fourth year when a magistrate judge position came open so I decided to apply for it. I will admit that I was influenced by the fact that every Magistrate Judge I’ve ever spoken with described his or her job as “the best job in the world.” Turns out, they were right.

MM: So far, what do you enjoy most about being a federal magistrate judge?

SV: The two things I’ve enjoyed the most are conducting mediations and the criminal work. As a litigator, of course, I’d attended hundreds of settlement conferences. It’s been a lot of fun serving as the mediator. As for the criminal work, the last time I had any exposure to criminal law was in my first year of law school in 1979. Having the opportunity to learn an entirely new area of the law at age 60 is a lot of fun. Every ten weeks, I have a two-week criminal docket. During those two weeks, I do pretty much nothing but criminal work.

MM: Who are the members of your chamber staff?

SV: My clerks are Annie Mason and Mikhail Petersen. Annie is a 2009 graduate of the University of Arizona. She clerked for Judge Garza and Judge Martínez for a year in 2009 and 2010. She was in private practice for a little over a year before I lured her back. My other clerk is Mikhail Petersen, a 2011 graduate of the George Washington University Law School. He served a brief clerkship with Judge Williams on the United States Court of Federal Claims before coming out to Las Cruces.

Interview of Stephan VidmarContinued from Page 4


MM: What has been your biggest surprise about becoming a federal magistrate?

SV: One of the things that has been a very pleasant surprise to me is how well organized the court system is. I’m a naturally organized person; being in a structured organization suits my personality. The federal court is extremely well organized. People know what they’re supposed to do, they get it done, and they do it well. I’ve been extremely impressed with that so far.

MM: Several magistrate judges have advised that if parties have a discovery dispute, they should call the court and request a conference and attempt to have it resolved informally without unnecessary expense and time of full motions. Do you agree with that practice?

SV: Yes, I encourage people to give me a call if it’s a discrete discovery dispute that they think can be resolved quickly with a phone call. I’m more than happy to do that if I’m available. If I’m not available when they call, I try to get back within 24 hours.

MM: What is your preference for attorneys and parties appearing telephonically at hearings?

SV: I encourage telephonic hearings. However, if one of the parties is going to attend telephonically, I like all the parties to attend telephonically. Also, if the attorneys are going to appear telephonically and they anticipate having to refer to documents, I encourage them to put the documents in a packet, number them, and then e-mail them to me and opposing counsel well in advance of the hearing. In court, of course, it’s very easy for counsel simply to hand me a copy of the document. On the phone, it’s cumbersome for an attorney to say, “Judge, if you’ll turn to page 15 of Appendix B to Plaintiff ’s Reply Brief, which is Document Number 359,” which I might or might not have before me.

MM: What is your practice for settlement conferences?

SV: Before the settlement conference, I ask the plaintiff to send the defendant a brief letter,

typically fewer than five pages, setting forth the plaintiff ’s theories for recovery, why he thinks he’ll win, and the elements of damages he thinks he’ll recover. That letter must contain a settlement demand that is better than plaintiff ’s last demand, if any. The defense counsel then responds to the plaintiff stating what points with which the defense agrees and disagrees. The defendant’s letter must contain a counteroffer that is better than the defendant’s last offer. At this point, these letters are not sent to me. The attorneys are instructed to have their clients read the letters in advance of the settlement conference. If the case doesn’t settle, then the parties send the letters to me, and I will determine whether (1) the offers are so close that a telephone call to the attorneys might resolve it, (2) a settlement conference is necessary, or (3) a settlement conference would be futile. For example, if a defendant tells me, “We have a dispositive motion pending. We are 99% sure we’re going to win that motion. So we are not prepared to offer any money to settle the case until that motion is resolved,” I might cancel the settlement conference, because there’s no point in wasting everyone’s time. But assuming the settlement conference goes forward, a few days before the conference, the parties are required to send me a confidential position statement setting forth an analysis of each party’s strengths and weaknesses. I always stress the same thing: A lengthy, detailed recitation of the facts is far less useful than the attorney’s honest evaluation of the strengths and weaknesses of his or her case.

MM: Having worked most recently at a firm known for its civil defense, do you have any thoughts on whether you will be perceived as being ‘defense oriented’?

SV: I have two responses. First, when you are sworn in as an attorney, you swear an oath to zealously represent your clients. When you become a judge, you swear an oath to be fair and impartial to all parties. The judges with whom I serve and interact take that oath very, very seriously. Second, I want to succeed at this job as badly as I’ve ever wanted to succeed at any job. And, how do you succeed at being a judge, or how do you ever hope to become a successful settlement facilitator if you don’t develop a reputation for fairness? To me it’s a no brainer: You can’t. If you’re asking me how to respond to plaintiff attorneys who might


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MM: Is there anything you know now being a magistrate judge that you wished you had known about magistrate judges or the federal court system when you were in private practice?

SV: Well, for one thing, I regret thinking, “I don’t need to learn how to use CM/ECF because I’ll always have someone to do that for me.” Nowadays I live in CM/ECF. More seriously, I wish

Interview of Stephan VidmarContinued from Page 5

I had given more consideration to consenting to magistrate judges in my cases. I have a better understanding now of the workload the district judges carry. Had I understood that better when I was in private practice, I probably would have consented more often. I encourage litigants to give some consideration to consenting if they really want a quicker trial setting.

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Workers’ Compensation/Attorney Fees

NM Bar Bulletin – January 18, 2012Vol. 51, No. 3

Rivera v. Flint Energy and Liberty Mutual Ins. Co.No. 30,020 (N.M. Ct. App., filed October 24, 2011)

A worker appealed a Workers’ Compensation Judge’s (WCJ) apportionment of worker’s attorney fees equally between the worker and his employer, who was insured by Liberty Mutual. The worker argued that the Workers’ Compensation Act obligated the employer to pay the worker’s attorney fees when he recovered more at trial than he had previously offered to take in settlement. The Court of Appeals held that the worker’s settlement offer failed to comply with the Workers’ Compensation Act, affirming the WCJ’s apportionment.

The worker’s settlement offer was faxed to the employer’s attorneys, and stated, “[w]e would agree to settle as follows[,]” and listed eight factors comprising a proposed settlement. The letter concluded, “[p]lease review the information and offer I have given you and contact me.” The employer did not accept worker’s offer and the case went to trial. The award was in excess of the offer stated in the letter to the Employer. The worker then filed an application for attorney fees under NMSA 1978 Section 52-1-54(F)(2003), which allows recovery of attorney fees if the offer is made pursuant to the statute, for an amount less than is awarded at trial, and is rejected by the employer. The WCJ denied the request, because the letter did not “provide sufficient specificity or adhere sufficiently to the statute” to trigger the statutes’ fee-shifting provisions, and apportioned the worker’s attorney fees equally between the worker and employer. The Court of Appeals did not suggest that offers sufficient to allow fee-shifting need to follow any specific format to be effective, but at a minimum, if a party intends to invoke the provisions of Section 52-1-54(F), the document conveying the offer must refer to the statute explicitly or address each of its material requirements, including that if the offer is accepted, a judgment is to be entered against Employer.

By John S. Stiff, Esq., Ann L. Keith, Esq., and Nels D. Orell, Esq.Stiff, Keith & Garcia, LLC

nMdLA CiviL CAse suMMAries JA n uA ry – AP r i L 2012 stAt e Co u r t oP i n i o n s

Summary Judgment/Contractors and SubcontractorsDuty to Defend

NM Bar Bulletin – January 25, 2012Vol. 51, No. 4

Windham v. L.C.I.2, Inc.No. 29,609 (N.M. Ct. App., filed November 8, 2011)

The memorandum opinion filed in this case on September 28, 2011 was withdrawn, and this opinion was substituted in its place.

The City of Taos hired L.C.I.2 to build a structure over a swimming pool. L.C.I.2 subcontracted with the Plaintiff’s employer, Newt & Butch, to install the roof on the structure. Under the subcontract, Newt & Butch agreed to indemnify L.C.I.2. and L.C.I.2 was listed as an additional insured under Newt & Butch’s general liability policy. The plaintiff, an employee of Newt & Butch, fell through the roof and into the empty swimming pool. He sued L.C.I.2 claiming it was negligent in failing to provide coverings of the cutouts for the skylights and in failing to implement, communicate, monitor, and enforce safety rules which would have prevented the accident. L.C.I.2 denied liability and demanded a defense and indemnification from Newt & Butch’s insurer. The insurer accepted the defense under a reservation of rights not to defend or indemnify L.C.I.2 for any damages arising out of its individual negligence. The Court held that L.C.I.2 is an “additional insured” under Newt & Butch’s policy “with respect to liability arising out of Newt & Butch’s ongoing operations performed for LC.I.2.” Applying City of Albuquerque v. BPLW, Plaintiff’s allegations against L.C.I.2 “arise out of” Newt & Butch’s installation of the roof on the structure; therefore, the insurer had a duty to defend L.C.I.2 regardless of L.C.I.2’s ultimate liability to the plaintiff.

New Mexico Human Rights Act

NM Bar Bulletin – February 1, 2012Vol. 51, No. 5

Lobato v. N.M. Environment DepartmentNo. 32,917 (N.M. S.Ct., filed December 14, 2011)


Upon certification from the United States District Court for the District of New Mexico, the Supreme Court was asked to answer two questions on whether the New Mexico Department of Labor’s Charge of Discrimination form fairly and adequately allows a claimant to exhaust administrative remedies and preserve the right to pursue judicial remedies for individual liability claims under the New Mexico Human Rights Act (NMHRA). The Court held that the Charge of Discrimination form is so misleading that exhaustion of administrative remedies in the circumstances of this case is not required.

The plaintiff filed two complaints and one amended complaint with the EEOC, charging his employer, the New Mexico Environment Department, with discrimination in violation of Title VII of the Civil Rights Act. He filed his administrative complaints using the NM Department of Labor, Human Rights Division’s (NMHRD) official Charge of Discrimination form. Submitting the form to either the EEOC or the NMHRD constitutes filing with both agencies, as noted on the form directly above the signature line. According to the form’s instructions, Plaintiff was required to name the “Employer, Labor Organization, Employment Agency, Apprenticeship Committee, or State or Local Government Agency” he believed discriminated against him, provide the entity’s address and phone number and explain the “Particulars” of his charge. Nothing on the NMHRD Charge of Discrimination form instructed Plaintiff to add any identification of individual agency employees involved in the alleged discrimination. Plaintiff then filed a complaint in federal court stating that his EEOC complaints had been processed to conclusion. He named as defendants the NM Environment Department and multiple department employees. The individually named defendants filed a motion to dismiss arguing that individuals are not subject to liability under the Civil Rights Act, and that Plaintiff did not exhaust his NMHRA administrative remedies, preserving his right to sue any individual defendant not specifically identified in his original NMHRD Charge of Discrimination forms.

The Court held that in these limited circumstances, because the Plaintiff relied on the administrative procedures he was instructed to follow, and that reliance on the instructions threatened to deny him the statutory remedies to which he is entitled, the requisite administrative exhaustion of the NMHRA should not be required in order for him to pursue his judicial remedies under the statute.

The Court advised that the NMHRD should revise its Charge of Discrimination forms to instruct filers in plain language to include the names and addresses of any individuals involved.

Arbitration


Strausberg v. Laurel Healthcare Providers, LLCNo. 29,238 (N.M. Ct. App., filed November 4, 2011)

The district court granted Defendant’s motion to compel arbitration under a nursing home mandatory arbitration agreement. The Court of Appeals reversed the decision, because a party who seeks to compel arbitration has the burden to prove the existence of a valid agreement to arbitrate. In this case, the district court shifted the burden to the Plaintiff to prove that the agreement was invalid. This shifting of the burden of proof resulted in reversible error. The Court held that when a nursing home relies upon an arbitration agreement signed by a patient as a condition for admission to the nursing home, and the patient contends that the arbitration agreement is unconscionable, the nursing home has the burden of proving that the arbitration agreement is not unconscionable.

Choice of Law/Arbitration


Flemma v. Halliburton Energy Services, Inc.No. 29,933 (N.M. Ct. App., filed November 17, 2011)

An employee of Halliburton was terminated allegedly for voicing opposition to a proposed location for a new Halliburton facility. He sued, claiming wrongful and retaliatory discharge. Defendants appealed the district court’s refusal to compel arbitration. The Court of Appeals reversed holding that 1) under Texas law, there was sufficient evidence of the plaintiff’s acceptance of and assent to a contractual arbitration program; 2) the differences between Texas and New Mexico law in terms of the evidence required to prove acceptance and assent are insufficient to overcome application of the place-of-contract-formation rule on public policy grounds, thus the arbitration agreement should be enforced under the law of the state where the contract was formed, in this case Texas; and 3) under Texas law, the arbitration agreement was not illusory and was therefore supported by consideration.

Workers’ Compensation


Schultz v. Pojoaque Tribal Police Dept.No. 38,508 (N.M. Ct. App., filed December 6, 2011)

In this wrongful death case, a worker drowned while

Civil Case SummariesContinued from Page 8




rescuing a child who had fallen into the Rio Grande River near Pilar, New Mexico. At the time of his death, the worker was an off-duty police officer with the Pojoaque Tribal Police Department. His widow filed a workers’ compensation complaint for medical and survivor benefits fourteen months after his death. The WCJ denied her claims, determining that the complaint was barred by the statute of limitations and that, even if the complaint had been timely filed, his death did not arise out of his employment.

The Court of Appeals affirmed that the widow’s complaint was not timely filed and was therefore barred by the one year statute of limitations under the Workers’ Compensation Act, and did not address whether his death arose out of and in the course of his employment. The one-year limitations period began to accrue on the date of the worker’s death.

Insurance Bad Faith


Financial Indemnity Co. v. CordobaNo. 30,417 (N.M. Ct. App., filed December 20, 2011)

In this workers’ compensation case, the trial court dismissed the defendant’s counterclaim against his insurer. The Court of Appeals held that the district court misconstrued and misapplied Rules 11-408 and 1-012(B)(6) NMRA, and dismissal of the counterclaim was inappropriate. The Court states that Rule 11-408 is not designed or intended to preclude admission of evidence of settlement negotiations in an insurance coverage dispute when the settlement negotiations are offered not to prove coverage or amount, but are offered to prove wrongful conduct such as bad faith or unfair practices during the claim investigation and upon denial of the claim.

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The defendant was injured in an accident when he was a passenger in a company-owned truck. Worker’s compensation paid his lost wages and medical bills. He then sought payment from his own insurer, plaintiff, under the UM/UIM coverage of his policy and requested the limit for bodily injury. After unsuccessful settlement negotiations, the insurer filed a declaratory judgment action as to whether the policy covered the claim, and if so, in what amount. The defendant filed a counterclaim alleging that the insurer had breached its contract, violated New Mexico law, and acted in bad faith. The defendant alleged that the insurer had acknowledged coverage, because they made two settlement offers. The Court held that the references to settlement negotiations were not linked with proving the amount of the claim, but were for “another purpose” allowed under Rule 11-408, and the case was remanded.

Attorneys Fees

NM Bar Bulletin – March 15, 2012Vol. 51, No. 11

Palenick v. City of Rio RanchoNo. 30,136 (N.M. Ct. App., filed November 17, 2011)

The New Mexico Attorney General informed the City of Rio Rancho that its termination of the City Manager violated the Open Meetings Act. The City, in a meeting eleven months after the termination, passed a resolution attempting to retroactively cure the violation. The City Manager sued to enforce the Act and for debt and money due under the employment agreement (breach of contract) for the period between the initial termination and the later-attempted cure. The district court dismissed the claim to enforce the act, because it lacked subject matter jurisdiction. On the breach of contract claim, the court determined that the City violated the Act, but nevertheless held against the plaintiff on his breach of contract claim, holding that the City’s cure in the later meeting of its prior action applied retroactively, resulting in an effective earlier termination. The court also held that the plaintiff’s acceptance of severance benefits immediately after his termination constituted a waiver of his breach of contract claim.

The Court of Appeals held that the district court erred in determining that the City’s last resolution retroactively rectified, ratified, and approved the invalid earlier action taken in violation of the Act, thereby making the termination valid and effective. The Court also held that plaintiff’s acceptance of severance benefits did not constitute a waiver of his right to salary and benefits pursuant to his employment agreement, and remanded the case for further proceedings on whether Plaintiff is entitled under the employment agreement to salary

and benefits for any period following his initial termination, and if so, for a determination of how much he is entitled to receive. However, the Court also held that the plaintiff was not entitled to attorney fees or costs under the Act.

Insurance Contracts and Monthly Installments/Parol Evidence Rule


Nellis v. Farmers Insurance Company of ArizonaNo. 29,295 (N.M. Ct. App., filed September 20, 2011)

In a class action against Farmers, the Court of Appeals addressed whether fees incurred in making monthly premium payments were themselves premium, undisclosed in the policy, and whether the policy allowed imposition of the fee, whatever its nature. On cross-motions for summary judgment, the district court held for the class finding: (1) service charge was not part of the insurance contract, because the invoices sent by the company handling monthly payments were not delivered with the policies; (2) an empty space next to the word “Fees” on the declarations page meant there were no “fees associated” with the policy; and (3) that the service charges constituted “premium,” because (a) they could not be installment fees since the policy issued was for only one month without the necessity of a continuing obligation to make installment payments, (b) Farmers could cancel a policy for failure to pay the service charge, indicating the service charge was consideration for the insurance contract, and (c) the service charge had the effect of increasing the cost of the insurance and therefore constituted premium.

The Court of Appeals reversed the district court. First, the Court of Appeals held that the installment payment fees were not premiums, because they are associated with the privilege of paying in installments instead of a lump sum. Paying in installments, the Court found, equated to a separate enforceable agreement regarding the mode of premium payment, and the service charges were merely designed to cover the additional costs of the monthly mode of payment. Second, the reference to the installment plan in the issued policy was only inserted, because plaintiffs elected to pay in such a manner, and that the insurer’s agreement to forgo a lump sum payment, in exchange for the insureds’ payment of the additional costs, constituted consideration. Finally, the Court held that the parol evidence rule did not prevent enforcement of the installment plan, entered before the policy was issued, because the installment agreement was either: (1) a separate agreement dealing with the payment of premium and accompanying monthly service charges; or (2) a separate agreement that is actually part of a larger comprehensive arrangement between the parties that should be construed together.


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Appellate Procedure


Wakeland v. N.M. Department of Workforce SolutionsNo. 31,031 (N.M. Ct. App., filed September 27, 2011)

In this case, petitioner sought unemployment compensation benefits after being fired from her job. Workforce Solutions denied petitioner benefits, and she appealed as of right to the district court, which affirmed the denial of her benefits. Believing that she was entitled to an appeal as of right to the Court of Appeals, petitioner filed a notice of appeal in the district court and a docketing statement in the Court of Appeals. Petitioner failed to file a petition for writ of certiorari, which is required when seeking discretionary review. The Court of Appeals found that New Mexico courts “have not been stringent about the form and content requirements of documents filed in an effort to seek appellate review, so long as the information provided in the non-conforming document is adequate to convey the basic intent of the party filing the document.”

The liberal policy for accepting documents that are deficient as to form or content, allows an appellate court to accept a docketing statement, or other non-conforming document, in lieu of a petition for certiorari. For a deficient or non-conforming document to be acceptable, it must still substantially comply with Rule 12-505, and contain enough information to enable the Court of Appeals to assess whether the issues raised meet one of the four criteria for granting a petition for writ of certiorari pursuant to Rule 12-505(D)(2)(d). However, the timeliness requirement of Rule 12-505(C) is strictly applied and tardily filed appeals will only be excused if the “stringent unusual circumstances standard” can be met. The Court found petitioner’s filing untimely, and denied the non-conforming petition, because “[s]imply being confused or uncertain about the appropriate procedure for seeking review is not the sort of unusual circumstance beyond the control of a party that will justify an untimely filing.”

Unfair Practices Act/Award of Attorney Fees


Atherton v. Gopin, No. 29,850 (N.M. Ct. App., filed January 19, 2012)

Plaintiff prevailed under the Unfair Practices Act (UPA), entitling him to an award of attorney fees, pursuant to NMSA 1978, Section 57-12-10(C). In awarding fees, the district court applied the “lodestar” method which is “ordinarily

used in statutory fee-shifting cases, because it provides adequate fees to attorneys who undertake litigation that is socially beneficial.” Under the “lodestar” method, “the court determines a fee that approximates a reasonable hourly rate multiplied by the number of hours reasonably incurred in the representation.” The district court determined fees using the “lodestar” method; however, it determined it was precluded from granting Plaintiff’s request to apply a multiplier to the fees, which it deemed limited to class actions and common fund cases. The Court of Appeals held that the UPA contains no limitation on awards of attorney fees, that multipliers may be necessary to ensure rights can be enforced under the UPA, and that district courts may apply a multiplier to the lodestar value.

Additionally, the Court of Appeals held that: (1) federal cases interpreting federal fee-shifting statutes are not binding on a state court’s interpretation of UPA; (2) omission from the settlement language of a demand for a multiplier did not waive Plaintiff’s right to ask for a multiplier where it was noted fees would be litigated if no agreement was reached; and (3) that it would not decide whether application of a multiplier would have been an abuse of discretion, because the district did not apply a multiplier.

Dramshop Liability/Jury Instructions

NM Bar Bulletin – April 11, 2012Vol. 51, No. 15

Estate of Gutierrez v. Meteor Monument, LLCNo. 32,436 (N.M. S. Ct., filed February 22, 2012)

Plaintiffs prevailed in an action involving liability for the sale or service of alcohol to an allegedly intoxicated patron/employee subsequently involved in a lethal automobile accident. After the Court of Appeals reversed on several issues, the Supreme Court granted certiorari to review the evidence necessary to establish liability under the Dramshop Act, and whether the appropriate jury instructions were given. To establish liability under the Dramshop Act, a plaintiff must prove the licensee “(1) sold or served alcohol to a person who was intoxicated; (2) it was reasonably apparent to the licensee that the [patron]…was intoxicated; and (3) the licensee knew from the circumstances that the [patron]…was intoxicated.” NMSA 1978, § 41-11-1(A). Plaintiff had been unable to show who, individually, sold the alcohol to the patron, and the Court of Appeals held that without such evidence, Plaintiff could not establish Defendant knew the patron/employee was intoxicated.

The Supreme Court held that (1) identification of the server was not essential, and (2) the circumstantial evidence was sufficient for a jury to find it was reasonably apparent to Defendant that the patron/employee was intoxicated at the time he was last served. The “reasonably apparent” prong of the Dramshop Act was found to impose an objective standard,



which does not require that the server be identified, because it is not based on “what the actual server subjectively perceived about the patron’s level of intoxication.” The objective standard looks to whether one “knew or should have known” the patron was intoxicated. Additionally, because the Dramshop Act is based on an objective standard, “circumstantial evidence at a time other than the time of service may be sufficient to prove what a server should have known regarding the level of the patron’s intoxication at the time the patron was served.”

Finally, Defendant argued that the jury instruction regarding scope of employment, which it requested, should not have been given. The Court held that Defendant not only requested the complained of jury instruction, but failed to raise the issue in moving for judgment as a matter of law notwithstanding the verdict and for a new trial. Where a party invites error and subsequently complains about the very error, a new trial will not be granted, because it “would subvert the orderly and equitable administration of justice.”

Appellate Procedure/Administrative Appeals


Mascarenas v. City of AlbuquerqueNo. 30,123 (N.M. Ct. App., filed February 7, 2012)

Plaintiff appealed the district court’s affirmation of the personnel board’s finding of just cause for her termination and the dismissal of her suit against the city alleging wrongdoing regarding her termination. The district court dismissed Plaintiff’s civil complaint as being barred by res judicata and collateral estoppel based on the finding of just cause. The Court of Appeals affirmed, because Plaintiff did not file a timely petition for writ of certiorari regarding the personnel board’s decision and found no error in applying res judicata and collateral estoppel as a bar to relitigating the factual predicates of the civil suit.

Plaintiff filed a notice of appeal pursuant to Rule 12-201(A)(2) NMRA challenging the dismissal of the civil complaint; however, she failed to file a petition for writ of certiorari seeking review of the district court’s affirmation in the administrative appeal. Plaintiff’s docketing statement, filed sixty days after entry of the district court’s order, was the first time it became apparent the affirmation of the personnel board’s determination was also being challenged. The Court of Appeals accepted the docketing statement as a non-conforming petition for writ, under Wakeland and Audette; however, the Court of Appeals held it lacked jurisdiction, because the petition was untimely.

The Court of Appeals also affirmed that the civil complaint

against the city was barred by res judicata and collateral estoppel. Res judicata precluded the breach of implied contract claim, because the personnel board had jurisdiction over it and had addressed the issues raised in the claim. Collateral estoppel barred Plaintiff’s FMLA and due process claims because the personnel board found, and the district court affirmed, factual findings that negated the allegations, and both parties had a full and fair opportunity to litigate the issues before the personnel board.

Surety and Performance Bonds/Pre- and Post-Judgment Interest


State of New Mexico ex rel. v. Liberty Mutual Insurance CompanyNo. 30,068 (N.M. Ct. App., filed October 7, 2011)

Plaintiff sought payment for materials, provided for a construction project, subject to a bond for which Defendant was the surety. Plaintiff was awarded the cost of the materials and prejudgment interest, and was denied attorney fees and post-judgment interest at a rate of 18%. Defendant appealed alleging Plaintiff could not recover absent proof of actual delivery and incorporation into the project, that notice was faulty under the Little Miller Act, NMSA 1978, Section 13-4-18 to -20, and that prejudgment interest was entered in error. Plaintiff cross-appealed claiming error in not awarding attorney fees and post-judgment interest at 18%.

The Court of Appeals held that there is no bright-line rule that a subcontractor must prove materials supplied for a project were actually delivered and incorporated into the project. The district court concluded that Plaintiff supplied the materials for the project, and the Court of Appeals held that sufficient because “requiring the supplier to trace specific materials after they have left his control may often place upon him an impossible burden of proof even when the items involved were in fact consumed.”

The Little Miller Act contains several requirements for notice of a claim: (1) written notice must be served on the contractor; (2) the notice must state the amount of the claim with substantial accuracy; (3) the invoice must be served on the contractor within ninety days of the last provided material; (4) the notice must be served by registered mail in an envelope; and (5) the notice must be addressed to the contractor at any place the contractor maintains an office or conducts business, or the contractor’s residence. Defendant raised several contentions regarding the timeliness of notice, that notice was sent by certified, not registered, mail, and that notice was sent to a post office box. The Court of Appeals reviewed the district court’s findings and held that it could be reasonably inferred, based on the liberal construction of the act to protect suppliers of materials that the notice

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provisions were substantially complied with. Additionally, addressing Defendant’s complaints regarding timeliness of notice to the City, the court found no evidence or argument that any prejudice resulted to the parties or the City and that no reversible error occurred in permitting Plaintiff to pursue claims against Defendant absent the City’s presence.

The award of prejudgment interest at a rate of 18% was also upheld. NMSA 1978, Section 56-8-5 provides that interest shall not be collected at a rate more than 15%; however, it also provides that the parties may agree to a higher rate. Where the contract provides for a higher rate of interest, the parties, and a supplier to the contracting parties, may be awarded interest consistent with the contractually agreed upon rate. Finally, the Court held that attorney fees are awardable where the contract provides for the award of fees incurred in endeavoring to collect amounts due and unpaid, and that the contract provision at issue was broad enough to provide for an award of post-judgment interest for the same reasons prejudgment interest was available at the rate provided by the contract.

Workers’ Compensation Act/Executive Employee Affirmative Election


Jackson Construction, Inc. v. SmithNo. 30,454 (N.M. Ct. App., filed February 15, 2012)

In this matter, the Court of Appeals addressed whether a construction company whose sole employee is its owner, president and board member, must procure workers’ compensation insurance even though he has affirmatively exempted himself from coverage under the Act. In reviewing whether the owner of JCI was an “employer” under the Act, the court held that since the president indicated he was the sole “employee,” executive “employee,” and signed his affirmative election form defining himself as a “worker” under the act, that the company employed at least one person and was subject to the Act. Further, the Court found that an executive employee is sufficient to bring a company within the definition of “employer” under the Construction Industry provision of the Act. Such an interpretation does not lead to absurd results the Court held, because construction is an inherently dangerous activity and there are circumstances where a general contractor could be liable to a subcontractor’s employee either through contract or “constructively.”

On May 24, 2012, the Supreme Court quashed the Writ of Certiorari for a decision by the New Mexico Court of Appeals issued last May in Christus St. Vincent Regional Medical Center v. Duarte-Afara, which holds that the Medical Malpractice Act, NMSA 1978, § 41-5-1 to -29 (1976 as amended) (“MMA”) governs a hospital’s indemnification claim against a qualified health care provider, and therefore, must be filed within three years of the date of occurrence, as provided by Section 41-5-13. See 2011-NMCA-112, ¶ 20, N.M. ___, 267 P.3d. 70 cert. quashed 2012-NMCERT-005, __ N.M. __, __ P.3d __.1 The Court of Appeals further held that the application of Section 41-5-13 to such claims does not violate the hospital’s due process or equal protection rights, even though the claim against the hospital was not brought until six days before the expiration of limitations period. Id. ¶ 30.

The complaint in the underlying lawsuit was filed against the hospital on December 4, 2007, and it arose from injuries allegedly suffered on December 9 and 10, 2004, as the result of negligent care following a surgery on December 6, 2004. Id. ¶ 2. On March 6, 2008, the underlying plaintiff filed an application for a panel review by the New Mexico Medical Review Commission and, on March 12, 2008, she amended her complaint to add two physician defendants. Id. ¶ 3. The district court subsequently granted a motion for summary judgment, dismissing the claims against the physicians with prejudice on grounds that the claims were time barred by Section 41-5-13. Id. ¶ 4.

The Hospital then filed a third-party complaint for indemnification against one physician on December 22, 2008, and a second physician was added on March 19, 2009. Id. ¶ 5. The physicians filed a motion to dismiss pursuant to Section 41-5-13. The hospital countered that the four year period under Section 37-1-4 was controlling. The district court initially agreed with the physicians, but on reconsideration, found that Section 41-5-13 was inapplicable to a claim for indemnification, which precedent held accrues at the time of payment of the underlying claim, judgment or settlement. Id. ¶¶ 6, 7.

1 On June 6, 2012, the hospital filed a motion for recon-sideration, which is pending in the Supreme Court.

AP P L i C At i o n o F t h e th r e e ye A r stAt u t e o F re P o s e Co n tA i n e d i n t h e Me d i C A L MA L P r AC t i C e AC t

On interlocutory appeal, the Court of Appeals considered three issues: (1) whether the hospital’s claim for equitable indemnification is governed by the MMA and subject to a three year statue of repose provided by Section 41-5-13, Id. ¶ 7, and (2) whether application of 41-5-13 deprived the hospital of its rights to (a) due process and (b) equal protection, Id. ¶ 8. The Court found the MMA was controlling and its application did not violate the hospital’s rights. Hence, the Court of Appeals held that the hospital’s indemnification claim was stale, reversed the lower court’s decision, and remanded with instructions to dismiss Plaintiff-Appellees Third-Party Complaint. Id. ¶¶ 20, 30, 31.

In reaching its decision that Section 41-5-13 was controlling, the Court of Appeals applied principles of statutory construction by analyzing the legislative history and plain language of the MMA. Citing to earlier New Mexico Supreme Court cases, the Court observed that the MMA was enacted in response to a perceived malpractice insurance crisis in New Mexico to make professional liability insurance available to health care providers quid pro quo by offering providers certain benefits in exchange for accepting burdens under the MMA as qualified health care providers (i.e. maintaining a minimal level of insurance and paying a surcharge to the patient’s compensation fund). Id. ¶¶ 10, 11. The Court further observed that New Mexico courts have recognized Section 41-5-13 is a benefit of the MMA and expressly provide that, “[n]o claim for malpractice arising out of an act of malpractice . . . may be brought against a healthcare provider unless filed within three years after the date that the act of malpractice occurred.” Id. ¶ 11 (internal quotation marks & citation omitted). The effect of this so-called “occurrence rule” is that it fixes the date of accrual for filing a malpractice claim, even if the harm has yet to be discovered. Id. ¶ 12.

The Court then considered how Section 41-5-3(C) of the MMA defines a malpractice claim to include “any cause of action arising . . . against a health care provider for medical treatment . . . , which proximately results in injury to the patient, whether the patient’s claim or cause of action sounds in tort or contract” and concluded that a malpractice claim is a broadly defined concept in the context of the MMA. Id. ¶ 13


Sandra L. Beerle, Esq., Rodey Dickason, Sloan, Akin & Robb PA

(internal quotation marks & citation omitted).

The determinative factor for the Court in deciding whether an indemnification claim is a malpractice claim as used in the MMA was that “the indemnitor must be at least partly liable to the original plaintiff for his or her injuries.” Id. ¶ 14 (internal quotation marks & citation omitted). The Court reasoned that if “a properly pled indemnity claim must allege that the defendant or indemnitor caused some direct harm to a third party and that the plaintiff or indemnitee discharged the resulting liability from this harm,” then the hospital’s indemnification claim, which alleges that the physician negligently caused some or all of the patient’s injury is effectively a malpractice claim and, therefore, subject to Section 41-5-13. Id. ¶¶ 14, 15 (internal quotation marks & citation omitted) (alterations & emphasis omitted). As a policy matter, the Court found it was inconsistent with the goals of the MMA to treat an indemnification claim differently when a physician is exposed to the same liability had the claim been brought by the patient. Id. ¶ 16.

The controlling question in the Court’s analysis was whether the indemnification claim is a malpractice claim as the term is used in the MMA. The Court, therefore, declined to apply the common law principle in New Mexico that the limitation period for an indemnification claim accrues upon payment of the underlying claim, settlement, or judgment. Id. ¶¶ 17, 18. Nor was the Court persuaded by other jurisdictions that recognize an indemnification claim is separate and distinct from the underlying tort claim or Missouri common law, which interprets its malpractice statute to include a narrower class of suits to constitute a malpractice claim, since in its view the New Mexico legislature intended a much broader application of the term. Id. ¶19.

With regard to due process, the Court agreed that “considerations of fairness implicit in the Due Process Clauses of the United States and New Mexico Constitutions dictate that when the Legislature enacts a limitation period it must allow a reasonable time within which existing or accruing causes of action may be brought.” Id. ¶ 22 (internal quotation marks & citation omitted). The Court further observed that the Supreme Court has applied these principles in the context of MMA. Id. ¶ 22-25 (discussing Tomlinson v. George, 2005-NMSC-020, ¶ 4, 138 N.M. 34, 116 P.3d 105 (holding application of Section 41-5-13 did not violate due process where patient learned of malpractice shortly after it occurred but waited for most of the statutory period to run before filing); Cummings v. X-Ray Assocs. of N.M., P.A., 1996-NMSC-035, ¶ 29, 121 N.M. 821, 918 P.2d 1321 (finding no violation of due process where Section 41-5-13 barred action when patient discovered malpractice eighteen months before limitations period expired, but waited to file eleven months after period expired); Garcia v. La Farge, 119 N.M. 532, 541, 893 P.2d 428, 437 (1995) (applying Section

41-5-13 violated due process rights of a patient whose claim was brought seven months after the limitation period had run where boy learned of malpractice only eighty-five days before statute’s expiration date and applying accrual based statute in Section 37-1-8 so lawsuit could proceed)).

The Court applied a due process analysis that has been developed in these cases, although they suggested that a different analysis may be appropriate where third party rights are implicated. Under a patient rights analysis, courts are to consider: “(1) the occurrence date . . . ;2) the discovery date . . . ; and 3) the Section 41-5-13 expiration date.” Duarte-Afara, 2011-NMCA-112, ¶ 27. The Court further observed that, under current New Mexico law, a due process analysis in the context of the MMA, “applies only to claims discovered within the statutory period; if a claim is discovered after the statute has run, Section 41-5-3 is an explicit bar.” Id. ¶ 30 (internal quotation marks & citation omitted).

Applying the traditional due process analysis to the instant case, the Court found that the discovery date of plaintiff’s claim against the hospital was when the complaint was served on December 11, 2007, one day after the statutory period had run, or later, and that Section 41-5-13, therefore, barred the hospital’s indemnification claim. It further found, under this analysis, that the hospital’s due process rights were not harmed by the preclusive effect of Section 41-5-13. Id.

Lastly, the Court rejected the hospital’s equal protection arguments as unclear and unpersuasive. Appellant’s argument was apparently premised on two considerations: (1) if indemnification was denied, the hospital would be solely responsible for the patient’s liabilities and (2) third-party indemnity claims were not included in the MMA’s definition of a malpractice claim, a point already addressed by the Court. Id. ¶ 31.

In sum, Duarte-Afara instructs that the MMA governs equitable indemnification claims arising from a malpractice action. and Section 41-5-13 is an explicit bar. Courts will now bar such claims where the hospital is served with a complaint after the limitations period has run. In cases where the complaint is served before expiration of the statutory period, a due process analysis may apply, but defense counsel would be wise to ensure that a third-party complaint for indemnification is filed quickly. Further, it appears the Court left open the question of whether another due process analysis might be more appropriate in cases where third party rights are implicated. Our Appellate Courts may also consider an equal protection argument that has been thoroughly developed, bearing in mind the important principles enunciated by the Court in this opinion.

Three Year Statute of ReposeContinued from Page 16


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This has become an increasingly hot topic in state court litigation. To date, neither the Supreme Court of New Mexico nor the New Mexico Court of Appeals has addressed this issue. Defense counsel rely upon state court decisions from other jurisdictions such as Texas and California to support their argument. Plaintiffs’ counsel rely upon a Memorandum Opinion and Order issued by U.S. Magistrate Judge William P. Lynch as well as state court decisions from other jurisdictions. This article provides a summary of a few of the decisions both in support of and against allowing evidence at trial of the amounts actually paid rather than the amounts billed.

In New Mexico, the purpose of compensatory damages is to make an injured person whole. The measure of damages should be that which fully and fairly compensates for the injuries sustained. Lovelace Medical Center v. Mendez, 111 N.M. 336, 805 P.2d 603 (1991). The plaintiff should not be put in a better position than he would have been had the injury not occurred. Central Sec. & Alarm Co. v. Mehler, 1996 NMCA-060, 121 N.M. 840, 918 P.2d 1340. With regard to medical bills, a plaintiff is entitled to the reasonable expense of necessary medical care, treatment and services received. UJI 13 1804.

The collateral source rule allows a plaintiff to recover his full losses from the responsible party, even though he may have already recovered part of his losses from a collateral source. McConal Aviation, Inc. v. Commercial Aviation Insurance Company, 110 N.M. 697, 799 P.2d 133 (1990). Generally, the benefits a plaintiff receives from a collateral source may not be used to reduce the defendant’s liability for damages. Id.

When a healthcare provider provides medical services to a patient covered under Medicare, the provider must submit its bill to Medicare for reimbursement. 42 USC §1395f, et. seq. By operation of federal law, the healthcare provider must write off the balance between the amount billed and the amount that Medicare paid, and the healthcare provider cannot collect any further payment on the remaining amount. 42 USC §1395f, et. seq. The question is whether the collateral source rule allows plaintiffs to recover those medical expenses that were written off by Medicare or other insurers.

The California Courts agree that a plaintiff is deemed

shouLd PLAintiFFs be AbLe to reCover MediCAL exPenses written oFF or AdJusted by heALth CAre Providers?

to have personally paid or incurred liability for the medical expenses that were paid, and he is entitled to be recompensed accordingly. Hanif v. Housing Authority, 200 Cal.App.3d 635, 640, 246 Cal. Rptr. 192, 194 (Cal. App. 1988). When a plaintiff has been injured by another’s tortious conduct, he is entitled to recover the reasonable value of medical care and services reasonably required by and attributable to the tort. Id. A reasonable recovery means that the plaintiff may only recover the actual amount he paid for past medical care and services. Id. A plaintiff should not be allowed to be placed in a better position than he would have been had he not been injured. Thus, an award of damages for past medical expenses in excess of the actual cost of medical care and services constitutes over-compensation. Id., 200 Cal.App.3d at 641.

When the evidence shows that, an amount certain was paid or incurred for past medical care and services, regardless of whether it was paid by the plaintiff or by an independent source, that certain amount is the most the plaintiff should recover for that care even if it was less than the prevailing market rate. Id. A plaintiff is entitled to recover up to and no more than the actual amount expended or incurred for past medical services so long as that amount is reasonable. Id. at 643. “[W]hen a 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.” Id. Thus, a plaintiff should not be entitled to recover for medical expenses beyond those paid by Medicare or another insurer, because he never had any liability for those expenses and would have been made whole by an award limited to the amount that Medicare or another insurer paid to his healthcare providers.

In Howell v. Hamilton Meats & Provisions, Inc., 52 Cal.4th 541, 548-549, 257 P.3d 1130, 1133 (2011), the Supreme Court of California held that the collateral source rule has no bearing on amounts that were included in a provider’s bill for which the plaintiff never incurred liability, because the provider, by prior agreement, accepted a lesser amount as full payment. These


Harriett J. Hickman, Esq., Gallagher, Casados & Mann PC


sums are not damages that the plaintiff would otherwise have collected from the defendant. These sums were not paid to the plaintiff’s healthcare providers on his behalf and were not paid to the plaintiff in indemnity of his expenses. Since these sums do not represent an economic loss for the plaintiff, they are not recoverable.

In a leading Texas case, Haygood v. Escabedo, 356 S.W.3d 390, (2012), the defendant moved to exclude from evidence the plaintiff’s medical expenses other than those expenses that were paid or that were owed. Like New Mexico, in Texas, the collateral source rule precludes any reduction in a tortfeasor’s liability because of benefits the plaintiff received from someone else – a collateral source. Id. at 394-395. The Supreme Court of Texas did not agree with the plaintiff that an adjustment in billed medical charges required by an insurer is a collateral benefit. An adjustment in the amount of the medical charges to arrive at an amount owed is a benefit to the insurer that the insurer obtains from the provider. Id.

The plaintiff argued that an adjustment reduces the insured’s liability. However, the Court found that an insured’s liability is for payment of taxes, if a government insurer, or premiums, if a private insurer, and for any deductible. Any effect of an adjustment on liability is at most indirect and is not measured by the amount of the adjustment. Id. In Texas, the collateral source rule does not allow recovery as damages of medical expenses that a healthcare provider is not entitled to charge. Id. at 396.

Texas statute, Tex.Civ.Prac.&Rem.Code §41.0105, provides that recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of a claimant. Id. The plaintiff argued that a claimant incurs the full charges billed by a provider, even if the provider is required by law or contract to reduce those charges. The Court disagreed and determined that a tortfeasor is not liable to a heathcare provider or its patients for medical expenses the patients were not required to pay the provider. Otherwise, the patients would recover a windfall. The effect of the Texas statute is to prevent such a windfall to a claimant. Id. at 397.

Yet, other jurisdictions have held that a claimant is entitled to recover the full charges billed by a provider. In

Recover Medical ExpensesContinued from Page 19

Pipkins v. TA Operating Corp. and Travel Centers of America, Inc., 466 F.Supp.2d 1255 (NM 2006), a case relied upon by plaintiffs’ counsel in New Mexico, the Court determined that New Mexico would characterize the amounts written off as a collateral contribution. The Court analyzed cases from those jurisdictions that find the contractual write offs are a benefit or contribution received by the plaintiff from a collateral source with those jurisdictions that find the contractual write offs to be illusory and inapplicable to the collateral source rule. Id. at 1260.

The Court agreed with those jurisdictions that hold that the write off amounts are not illusory. The Court stressed that the focus of the collateral source rule is not whether the plaintiff has incurred certain medical expenses or whether an amount of money has been paid by a collateral source. The focus of the collateral source rule is whether the plaintiff has received benefits from a collateral source that cannot be used to reduce the amount of damages owed by a tortfeasor. Id.

The Court discussed the similarity between contractual write offs and a medical care provider’s gratuitous provision of medical services. When a health care provider gratuitously waives an injured party’s financial obligation, the collateral source rule allows the plaintiff to recover the full amount of medical expenses from the tortfeasor. The plaintiff incurs no financial liability. Yet, the collateral source rule applies, since the plaintiff received a benefit from a source collateral to the defendant. Id. at 1261. Contractual write-offs are also a benefit or contribution the plaintiff receives from a collateral source. Like a gratuitous medical service, the health care provider waives the write-off amount as required by the contractual agreement between the provider and the insurer. The only difference between the two situations is the source of the benefit. In one case, the benefit springs from the provider’s good will. In the other case, the benefit arises from a contractual agreement. In both cases, the plaintiff receives a benefit from a source collateral to the tortfeasor. Id.

The Court determined that prior case law in New Mexico suggests that New Mexico courts would apply the collateral source rule to the gratuitous provision of medical services. Thus, it would follow that New Mexico courts would similarly find that the amount of a contractual write-off also constitutes a benefit received from a collateral source. Id. The Court also determined that under New Mexico case law, Medicare write-offs would be treated the same as any other benefit a plaintiff may receive from a collateral source. Just because a Medicare write-off arises from a government program does not militate against policy in New Mexico favoring a plaintiff’s, rather than a tortfeasor’s receipt of any windfall. Id. at 1262.

Until we have a firm decision from the New Mexico Courts, defense counsel will continue to argue that plaintiffs should

Recover Medical ExpensesContinued from Page 20


not be entitled to collect the amount billed as an expense. Plaintiffs do not pay the amount billed, nor does Medicare or other insurers. The collateral source rule does not apply to the write-off since that amount was not paid by a collateral source—no one paid it. If plaintiffs are allowed to collect the write-off, they most certainly will be put in a better position than they would have been had they never been injured.

For other cases supporting the defense position, see McAmis v. Wallace, 980 F.Supp. 181 (D. W.Va. 1997) (Plaintiff cannot recover the amount of her medical bills written-off by Medicaid and the collateral source rule does not require that Plaintiff receive compensation for fees that were not incurred by Plaintiff or Medicaid); Suhor v. Lagasse, 770 So.2d 422, 426 (La.App.4 Cir. 2000) (Amounts written off by Medicaid or Medicare should not fall under the collateral source rule because the amounts written off are not procured by the plaintiff but are required by operation of federal law, and no one pays the amounts written off; Cook v. Jefferson Parish Hospital Service District No. 2, 876 So.2d 173, 179 (La. App 5 Cir. 2004) (It was error for the trial court to award that portion of medical expenses that were “contractually adjusted” or “written off” by the healthcare provider pursuant to Medicare); Wildermuth v. Staton, WL 922137, D. Kansas, 2002) (unpublished opinion) (Collateral source rule only excludes “evidence of benefits paid a collateral source” because a write-off is never paid, it cannot possibly constitute payment of any benefit from a collateral source); Moorehead v. Crozer Chester Medical Center, 564 Pa. 156, 765 A2d 786 (2001). (Patient’s recovery for past medical services was limited to the amount actually paid and accepted as full payment for services rendered by hospital, rather than the fair and reasonable value of the medical services.)

For other cases supporting a plaintiff’s position, see Martinez v. Milburn Enterprises, Inc., 290 Kan. 572, 612, 233 P.3d 205, 229 (2010) (Allowing into evidence the original amount billed and the amount accepted by the hospital in full satisfaction of the amount billed.); Lopez v. Safeway Stores, Inc., 212 Ariz. 198, 207, 129 P.3d 487, 496 (2006) (Holding that Lopez was entitled to claim and recover the full amount of her reasonable medical expenses for which she was charged without any reduction for the amounts written off by her healthcare providers pursuant to contractually agreed upon rates with her medical insurance carriers.); and Reed v. National Council of Boy Scouts of America, 706 F.Supp.2d 180, 192 (D.N.H. 2010) (Consistent with the view of the New Hampshire Supreme Court, the focal point of the collateral source rule is not whether an injured party has ‘incurred’ certain medical expenses. Rather, it is whether a tort victim has received benefits from a collateral source, and amounts written off are as much of a benefit to the plaintiff as are the actual cash payments made by his health insurance carrier to the health care providers.)

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New Mexico Civil Defense Lawyers

Market your products or services in the next issue of Defense News. Contact NMDLA for more information at [email protected].

Friday, August 24Women in the Courtroom IV: Empathy & EmpowermentLocation: Jewish Community CenterTime: 8 am – 6 pm

Friday, October 5 NMDLA Annual MeetingLocation: Hotel AndaluzTime: 11:30 am – 6 pm

Thursday, November 29Advanced Trial PracticeLocation: State Bar Center AuditoriumTime: 8 am – 5 pm

Friday, December 7Annual Civil Rights SeminarLocation: Jewish Community CenterTime: 8 am – 5 pm

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The New Mexico Defense Lawyers Association is pleased to sponsor the 2012 Awards for Outstanding Civil Defense Lawyer and Young Lawyer of the Year. Please read the descriptions of the awards and let us know whom you would like to see recognized for their contributions and accomplishments.

NMDLA Outstanding Civil Defense LawyerThis award is given to one or more attorneys who have, by their ethical, personal, and professional conduct, exemplified for their fellow attorneys the epitome of professionalism and ability. NMDLA Young Lawyer of the YearThis award is given to one or more attorneys who have not practiced more than five years or are under the age of 36 and have, by their ethical, personal, and professional conduct, shown exemplary achievement in the legal profession and/or who have contributed time and expertise to NMDLA.

SubmiSSionS

For your convenience nominations may be made using our online Nomination Form, or you may submit our printable form by mail, fax or e-mail.

Deadline for submission is Wednesday, August 8, 2012.

The awards will be presented at the 2012 New Mexico Defense Lawyers Association Annual Meeting on October 5, 2012, in Albuquerque at the Hotel Andaluz.

Please contact us by e-mail at [email protected] or

phone 505.797.6021 with questions.

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