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Muranyi v. Turn Verein Frisch-Auf

October 20, 1999

PATRECIA MURANYI, PLAINTIFF-APPELLANT,
V.
TURN VEREIN FRISCH-AUF, A/K/A AURORA TURNER CLUB, INC., DEFENDANT-APPELLEE



Appeal from the Circuit Court of Kane County. No. AR-97-0377 Honorable Donald J. Fabian, Judge, Presiding.

The opinion of the court was delivered by: Justice Galasso

Plaintiff, Patrecia Muranyi, sued defendant, Turn Verein Frisch-Auf, a/k/a Aurora Turner Club, Inc., under the Dramshop Act (235 ILCS 5/6--21 (West 1996)), after her husband, Wade Muranyi, was injured in an automobile accident. Plaintiff alleged that defendant served her husband alcohol and that, as a result, he became intoxicated and caused the accident. Plaintiff sought to recover the cost of the medical care that her husband received.

Defendant moved for summary judgment (see 735 ILCS 5/2--1005(c) (West 1996)), asserting that plaintiff suffered no loss because her medical expenses had been reimbursed through the health insurance coverage that the Muranyis' received as a benefit of Wade Muranyi's employment. Plaintiff responded that the collateral source rule barred the court from reducing defendant's liability by any sums she received from the insurance carrier. The trial court granted defendant summary judgment, and plaintiff timely appeals.

Plaintiff argues that, under the collateral source rule, she is entitled to recover all the damages for which defendant is liable under the Dramshop Act, regardless of whether a third party wholly unconnected with defendant has also reimbursed her for these losses. Defendant responds that plaintiff may not invoke the collateral source rule because she suffered no loss, having received all her claimed medical expenses in the form of insurance reimbursements and having paid no consideration for her husband's insurance policy. Alternatively, defendant asserts that summary judgment was proper because anything defendant owes plaintiff must be offset by the payments from Wade Muranyi's insurer.

We agree with plaintiff that the trial court erred in declining to apply the collateral source rule here and that defendant is not entitled to a setoff for the payments plaintiff received from the insurer. Therefore, we reverse the grant of summary judgment and remand the cause.

Summary judgment is proper when the pleadings, depositions, and other matters on file disclose that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2--1005(c) (West 1996). Our review is de novo. Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 7 (1997). The parties do not dispute the crucial facts, so we move directly to the issues of law involved in this appeal.

The primary point of contention is whether the collateral source rule bars the reduction of plaintiff's damages by any sums she received in insurance payments. Defendant maintains that, under Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill. 2d 353 (1979), plaintiff, who did not pay for her husband's insurance, has in essence received a gratuity and may not now recover medical expenses that a third party actually paid. Plaintiff claims that Peterson does not apply because an insurer's payment of medical costs is not a gratuity and the crucial consideration is whether the payment came from a source unrelated to defendant. For the reasons that follow, we believe that plaintiff's argument is nearer the mark and that the trial court erred in ruling that her damages would have to be reduced by the amounts she received from the insurance carrier.

The collateral source rule is generally phrased in terms of common-law tort liability, but Illinois courts have also applied it to statutory causes of action, including dramshop suits (see Deel v. Heiligenstein, 244 Ill. 239 (1910) (dramshop action); Illinois Central R.R. Co. v. Prickett, 210 Ill. 140 (1904) (wrongful death); Beaird v. Brown, 58 Ill. App. 3d 18, 21 (1978) (dramshop action); Bireline v. Epenscheid, 15 Ill. App. 3d 368, 369-70 (1973) (dramshop action)). Under the collateral source rule, benefits received by the injured party from a source independent of and collateral to the tortfeasor will not diminish damages otherwise recoverable from the tortfeasor. Wilson v. Hoffman Group, Inc., 131 Ill. 2d 308, 320 (1989); Bernier v. Burris, 113 Ill. 2d 219, 242 (1986). Thus, the plaintiff may recover twice for a single injury--once from the defendant and once from the collateral source. This result leaves the rule open to the criticism that it bestows a windfall on plaintiffs, violating the principle that the purpose of tort damages is simply to make plaintiffs whole.

Courts adhering to the collateral source rule have defended this result in various ways. Some courts reason that, if there is to be a windfall, it is more just to give it to the injured party than to the wrongdoer. See Grayson v. Williams, 256 F.2d 61, 65 (10th Cir. 1958); Werner v. Lane, 393 A.2d 1329, 1335-36 (Me. 1978). Under this broad application of the rule, it makes no difference from whom the injured party received the benefits (as long as it is not the defendant) or whether he paid any consideration for them. What is crucial is that the tortfeasor not become the real beneficiary of a stranger's expenditure on behalf of the injured party. See Restatement (Second) of Torts §920A, Comment b, at 514 (1977).

In Peterson, however, our supreme court rejected this unconditional version of the collateral source rule. There, the plaintiff's claimed damages included the value of medical services a charitable hospital rendered free of charge to his son. The supreme court denied the plaintiff any recovery for these services even though they were allegedly caused by the defendant's negligence. In so doing, the court rejected "[t]he view that a windfall, if any is to be enjoyed, should go to the plaintiff." Peterson, 76 Ill. 2d at 363. Such a view, the court reasoned, is inconsistent with the principle that "[t]he purpose of compensatory tort damages is to compensate" (emphasis added) (Peterson, 76 Ill. 2d at 363)) and not to punish defendants by allowing plaintiffs double recoveries.

Peterson did not abolish the collateral source rule, but it did limit its application. The Peterson court drew a distinction between the case before it, where the plaintiff sought "to recover for the value of services that he has obtained without expense, obligation, or liability" (Peterson, 76 Ill. 2d at 362, citing with approval Coyne v. Campbell, 11 N.Y.2d 372, 183 N.E.2d 891, 230 N.Y.S.2d 1 (1962)), and one in which the plaintiff seeks to recover expenses for which he has also been compensated by insurance benefits. In the latter situation, the plaintiff has in his favor the fact that he paid consideration for the coverage from which he later benefitted. Peterson, 76 Ill. 2d at 362-63. As other courts have recognized, reducing a plaintiff's damages by the amount of his insurance proceeds would deprive him not of a mere gratuity, but of the benefit of his bargain. See Beaird, 58 Ill. App. 3d at 21; Helfend v. Southern California Rapid Transit District, 84 Cal. Rptr. 173, ___, 465 P.2d 61, 66-67 (1970).

The parties disagree on whether Peterson supports applying the collateral source rule to the facts here. For two reasons, we conclude that it does. First, the benefits here more nearly resemble the type of collateral payments that Peterson protects than those that it places outside the collateral source rule. Second, this case does not involve compensatory common-law tort damages but recovery under a specific statute that is intended not merely to compensate plaintiffs but also to regulate and even punish defendants. Thus, Peterson's rationale for avoiding double recoveries does not apply.

We explain the first of these reasons. Defendant argues that the insurance benefits plaintiff received are essentially a gratuity because she paid no consideration for them; she merely received them from her husband's health insurer. Plaintiff maintains that the benefits are essentially indistinguishable from the type of insurance payments that Peterson shelters under the collateral source rule. She reasons that her family paid for the coverage indirectly in that both she and Wade Muranyi decided to forgo greater family earnings in order to obtain the policy. We believe that plaintiff has the better argument.

Under Peterson, a party who pays premiums on an insurance policy, receives the benefits and sues the wrongdoer, would be entitled to recover his medical expenses by invoking the collateral source rule (assuming that he could recover at all). The situation here differs from this paradigmatic case in two respects that may be pertinent here. First, Wade Muranyi did not pay premiums or other direct consideration but received the insurance coverage as a fringe benefit of his employment. Second, the party seeking reimbursement here is not Wade Muranyi but his ...


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