HARPER v. COPPERPOINT MUT. INS. HOLDING CO.

Citation: 2022 NV 33Docket: 82158

Court: Nevada Supreme Court; May 5, 2022; Nevada; State Supreme Court

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The Supreme Court of Nevada addressed the interpretation of NRS 42.021, which governs the collateral source rule in medical malpractice cases. This statute allows defendants to introduce evidence of collateral benefits, such as workers' compensation, that the plaintiff has received due to an injury. Specifically, subsection 2 states that entities providing these collateral benefits cannot recover amounts from the plaintiff or gain subrogation rights against a defendant.

In this case, the court was asked whether this prohibition applies when a medical malpractice case is settled before trial. The court concluded that the statute's language indicates it only applies when a defendant introduces evidence of a plaintiff's collateral source benefits, which does not occur in a pretrial settlement. Thus, the court affirmed the district court's decision, denying the appellants' request to declare that NRS 42.021 barred the respondents from recovering their workers' compensation payments from the settlement proceeds of the medical malpractice case.

The background involves appellant Daria Harper, who suffered a work-related injury in Arizona and later sustained severe injuries, resulting in quadriplegia, during a medical procedure in Las Vegas. The respondents, Copperpoint Mutual Insurance and Copperpoint General Insurance, were her workers' compensation insurers and sought recovery related to the settlement.

In 2016, Harper initiated a medical malpractice lawsuit in Nevada against the doctors and hospital involved in her treatment, represented by Kenneth Marshall Silberberg and his law firm. Copperpoint, upon learning of this lawsuit, asserted a statutory lien under Arizona Revised Statute section 23-1023 for approximately $3 million in workers' compensation benefits it had previously paid to Harper. Harper's husband, also a plaintiff in the malpractice case, has claims that depend on the outcome of Harper's claims. Silberberg informed Copperpoint that Harper had settled the malpractice action for about $6 million and argued that NRS 42.021(2) barred Copperpoint from seeking reimbursement. Subsequently, Copperpoint suspended Harper's workers' compensation coverage until repayment of the $3 million, prompting Harper to file a lawsuit against Copperpoint and Silberberg for declaratory and injunctive relief, asserting that NRS 42.021(2) prohibited the lien and sought continued workers' compensation benefits. Harper later filed a motion for partial summary judgment arguing that NRS 42.021(2) applied and prohibited the lien, while Copperpoint filed a motion to dismiss, arguing the opposite and claiming the district court lacked subject matter jurisdiction. The district court denied Harper's motion and granted Copperpoint's motion, concluding that NRS 42.021 only applied to actions with third-party payments introduced into evidence and did not extend to settled cases. The court did not resolve whether NRS 42.021 or conflicting Arizona law applied or address jurisdictional concerns. The district court then certified the order as final, leading to Harper's appeal. The discussion indicates that Copperpoint’s jurisdictional argument and the application of NRS 42.021 will be reviewed de novo.

The district court had subject matter jurisdiction over Harper's claims for declaratory and injunctive relief. Copperpoint argued on appeal that these claims were merely attempts to secure continued workers' compensation benefits, which should be pursued through Arizona's workers' compensation system. Harper countered that her claims do not seek continued benefits but rather a judicial declaration that Copperpoint cannot assert a lien against her medical malpractice settlement proceeds under Nevada law. The court found that, despite the incidental nature of her claims, the core issue was the interpretation of NRS 42.021, which pertains to the rights to medical malpractice settlement proceeds. 

The court noted that Harper's complaint involved a justiciable controversy ripe for judicial determination, fulfilling the prerequisites for declaratory relief as established in Kress v. Corey. The decision confirmed that the district court's jurisdiction extended to Harper's claims, as the matter involved the interpretation of a Nevada statute relevant to the parties' rights in a Nevada-based medical malpractice action. Additionally, NRS 42.021 does not prevent a collateral source provider from seeking reimbursement from medical malpractice proceeds when the case settles before trial. The statute allows for the introduction of evidence regarding collateral benefits but explicitly states that such sources cannot recover amounts against the plaintiff or be subrogated to the plaintiff's rights against a defendant.

Harper and Copperpoint concur that subsection 1 of NRS 42.021 pertains to trials, not settlements, referencing Leven v. Frey. The dispute arises regarding the applicability of subsection 2 to settlements. Harper presents two arguments for this application: (1) adhering to the plain language would yield absurd results, and (2) it should align with California’s interpretation of a similar statute, California Civil Code section 3333.1, which informed NRS 42.021. NRS 42.021, enacted in 2004 as part of the "Keep Our Doctors in Nevada" initiative, aims to reduce medical malpractice insurance costs to retain physicians in Nevada.

Harper argues that the statute's plain language leads to absurd outcomes, particularly that parties would need to engage in a two-phase settlement process to accommodate third-party payments, which contradicts the statute's intent. However, the court maintains that the plain language does not produce absurd results and emphasizes that NRS 42.021 allows defendants to introduce evidence of third-party payments at trial, thereby reducing the plaintiff's damages. The court cites prior rulings that affirm the intention of NRS 42.021 to prevent "double-dipping" by ensuring juries are aware of other payments received by plaintiffs for the same injury. Ultimately, the court is not convinced by Harper's argument for extending the statute's application to settlements.

Question No. 3, if approved, would allow juries to consider third-party payments when determining plaintiff awards, per NRS 42.021(1) and (2). However, this application is more relevant in trial contexts rather than settlements, where agreements between plaintiffs and defendants, such as Harper and medical malpractice defendants, occur without third-party providers like Copperpoint being involved. While a literal interpretation of NRS 42.021 could lead to a nonsensical 'trial' scenario, it is more logical that medical malpractice parties would factor in third-party payments during settlement negotiations, helping to prevent 'double-dipping.' The claim that a straightforward reading of NRS 42.021 would yield an 'absurd' outcome is not convincing, as absurdity requires a gross deviation from common sense. Consequently, the statute's prohibition on collateral benefits does not apply to settled medical malpractice cases. Harper argues for alignment with California’s interpretation of a similar statute, California Civil Code section 3333.1, which applies to settlements. However, the court finds no basis to adopt this interpretation, emphasizing that NRS 42.021's clear language does not require further construction. Thus, the intention behind NRS 42.021 does not support applying it to settlements, countering Harper’s reasoning that Nevada voters must have intended to follow the California precedent established in Graham v. Workers' Compensation Appeals Board. The court concludes that the plain and unambiguous language of NRS 42.021 stands on its own.

When the language of a statute is clear, courts will adhere to that language, prioritizing the intent of the legislature or voters. In this context, the Nevada Supreme Court emphasized that it cannot look beyond the plain meaning of statutes to infer intent. The court expressed hesitation to apply California’s intermediate court decision, Graham, due to a lack of supporting authority. It criticized the rationale behind using section 3333.1 for settlements, questioning its effectiveness in lowering medical malpractice insurance costs, which was the intent behind NRS 42.021's enactment. The court concluded that NRS 42.021(1) and (2) restrict reimbursement from collateral source benefits to instances where evidence of such payments is presented by the defendant, a situation not applicable in pretrial settlements. The court affirmed the district court's judgment, rejecting the application of California's statute as suggested.