Yet Another Trial Lawyer-Enriching Decision by Wisconsin’s Supreme Court

On March 6, 2012, in yet another bad decision, the Wisconsin Supreme Court held that the collateral source rule applies to underinsured motorists.  In a unanimous 7-0 decision, the court held that plaintiffs are entitled to the full amount of past medical expenses, even those amounts that were written off by the medical providers as a result of a contractual agreement between the medical provider and health insurer.  These expenses have become known as “phantom damages” because no one has paid the medical expenses, but yet the plaintiff is awarded the full sticker price. 

In the case of Orlowski v. State Farm Auto Insurance, Linda Orlowski was injured in an automobile accident caused by an underinsured driver.  She received damages up to the limits of the underinsured driver’s insurance.  In addition to personal health insurance coverage, Orlowski also had an automobile insurance policy with State Farm that included underinsured motorist coverage (UIM).  After the accident, Orlowski submitted a claim to State Farm.  She argued that she was entitled to the full amount billed, which was $72,985.94, as opposed to the amount paid.  The arbitration panel disagreed, and awarded her $11,498.55, the amount that was actually paid to the health care provider.  Orlowski appealed the arbitration decision to the Milwaukee County Circuit Court, which modified the award and granted her the full amount billed.  State Farm appealed to the Court of Appeals, which certified the case to the state Supreme Court.

The high court upheld the trial court’s decision and awarded Orlowski the full amount, handing her a windfall of $61,487.39 in damages that no one ever paid.  Crooks wrote, “We reaffirm what our prior precedent has clearly established: an injured party is entitled to recover the reasonable value of medical services, which , under the operation of the collateral source rule, includes written-off medical expenses.” 

And Wisconsites wonder why their insurance premiums keep rising and personal injury lawyers keep driving ever fancier cars.

For additional information about the case and opinion, please read this Wisconsin Civil Justice Council article.