Contribution--medical payment coverage--entitlement to credit or setoff--collateral source
rule--Uniform Contribution Among Tortfeasors Act
The trial court erred in a negligence action arising out of an automobile accident by
concluding a defendant was required to pay the $5,000 judgment without contribution from his
codefendant, because even though the collateral source rule holds that neither defendant may
benefit from a credit or setoff of money paid to plaintiff under the medical payment coverage, the
Uniform Contribution Among Tortfeasors Act provides that contribution is allowed between
defendants held jointly and severally liable for plaintiff's injuries. N.C.G.S. § 1B-1(a), (b).
Law Offices of Michael J. Bednarik, P.A., by Michael J.
Bednarik, for plaintiff-appellee.
Caudle & Spears, P.A., by Michael J. Selle and Christopher J.
Loebsack, for defendant-appellee Rande J. Muscatell.
Morris York Williams Surles & Barringer, by John P. Barringer,
for defendant-appellant Darryl J. Ysteboe.
WALKER, Judge.
This action arises from an automobile accident which occurred
on 18 March 1995 in Mecklenburg County, North Carolina. At the
time of the accident, plaintiff was married to defendant Muscatell
and was a passenger in his vehicle. The accident occurred as
defendant Muscatell attempted to turn left out of his driveway onto
the main road, colliding with a vehicle traveling on the main road
owned and operated by defendant Ysteboe.
As a result of the injuries received in the accident,
plaintiff incurred medical expenses in the amount of $3,743.11. Plaintiff was reimbursed for these expenses under the medical
payments coverage of the automobile insurance policy issued to
plaintiff and defendant Muscatell.
Plaintiff filed this action alleging negligence on the part of
both defendants. Each defendant answered denying negligence and
cross claimed against each other for contribution. Later,
defendant Muscatell was permitted to amend his answer to assert his
right to a setoff and credit for the medical payment coverage paid
to plaintiff under their joint insurance policy.
At trial, the jury found plaintiff was injured by the
negligence of both defendants and therefore entitled to recover
$5,000 for her injuries. On 23 May 2000, the trial court entered
a judgment ordering both defendants jointly and severally liable in
the amount of $5,000. Defendant Muscatell was allowed “a credit or
setoff in the amount of $3,743.11” representing the amount of
medical payment coverage paid to plaintiff. Accordingly, defendant
Ysteboe was denied any credit or setoff.
Defendant Ysteboe assigns error to the trial court's ruling
that he is not entitled to a credit or setoff for the $3,743.11
paid to plaintiff under her medical payment coverage, thus
requiring him to pay the $5,000 judgment without contribution from
defendant Muscatell. Defendant Ysteboe argues this denial of his
right to credit or setoff is in error because: (1) North Carolina
adheres to the rule that double compensation or overcompensation
for a single injury shall not be collected; and (2) if it is
determined that plaintiff is entitled to a double recovery, then
neither party would be entitled to credit or setoff for the medicalpayment coverage paid to plaintiff. Defendant further contends the
trial court erred in requiring him to pay the full $5,000 against
plaintiff because, as a joint tortfeasor, he is entitled to
contribution from defendant Muscatell.
On the other hand, plaintiff contends the $3,743.11 paid to
her was pursuant to the contractual coverage available to her, both
as a named insured and as a guest passenger in the vehicle. She
asserts this coverage is available to her regardless of whether
defendant Muscatell was at fault in causing the accident.
The nature of plaintiff's medical payment coverage, as opposed
to liability coverage, was explained by our Supreme Court as
follows:
'(Insurer's) responsibility under its
liability coverage [depends] upon its insured
being shown negligent; its responsibility
under its [m]edical [p]ayments [c]overage
[has] nothing to do with negligence at all.
A claim based on the liability feature of the
policy is a tort claim; a claim based on the
medical payments feature of the policy is a
claim sounding in contract . . . .'
Tart v. Register and Flowers v. Register, 257 N.C. 161, 173, 125
S.E.2d 754, 763 (1962), citing Distefano v. Delta Fire and Casualty
Co., 98 So.2d 310 (La. App. 1957). Here, plaintiff's receipt of
medical payment coverage was not on behalf of defendant Ysteboe but
due to a contractual obligation. For this reason, plaintiff's
receipt of payment under this policy does not raise an issue of
double or overcompensation as defendant Ysteboe contends.
This case raises the collateral source rule which provides“[a] tort-feasor [sic] should not be permitted to re
duce his own
liability for damages by the amount of compensation the injured
party receives from an independent source.” Fisher v. Thompson, 50
N.C. App. 724, 731, 275 S.E.2d 507, 513 (1981)(holding plaintiff's
sick leave benefits from her employer were included within
protection of collateral source rule). See also Baxley v.
Nationwide Mutual Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993)
(holding automobile insurer was not entitled to $10,000 credit
against its underinsured motorist coverage limit for amount paid to
insured under medical payments provision of policy); 2 Clifford S.
Fishman, Jones on Evidence § 13.26 at 526-27 (7th ed.
1994)(citations omitted)(stating “[b]ecause [under common law],
plaintiff's receipt of other collateral benefits is irrelevant in
assessing the amount of compensatory damages the tortfeasor owed to
the plaintiff, under the [collateral source rule], evidence of such
benefits is inadmissible, and cannot be utilized by the tortfeasor
to reduce his claim for damages.”) Therefore, under the collateral
source rule, neither defendant may benefit from a credit or setoff
of money paid to plaintiff under the medical payment coverage.
Notwithstanding the collateral source rule, this State's
Uniform Contribution Among Tortfeasors Act (Act) provides in
pertinent part:
(a) . . . where two or more persons become
jointly or severally liable in tort for the
same injury to person or property for the same
wrongful death, there is a right of
contribution among them even though judgment
has not been recovered against all or any of
them.
(b) The right of contribution exists only in
favor of a tort-feasor [sic] who has paid more
than his pro rata share of the common
liability, and his total recovery is limited
to the amount paid by him in excess of his pro
rata share. No tort-feasor [sic] is compelled
to make contribution beyond his own pro rata
share of the entire liability.
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