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Attorney Jack Stokan recently obtained a favorable result in a real estate licensing matter filed with the Colorado Department of Regulatory Agencies. Jack’s client, a real estate broker, was accused of severe infractions that could have resulted in revocation of his real estate license, as well as criminal penalties. The real estate broker assisted his clients by funding a remodel of their home to prepare the home for sale and avoid foreclosure. He found a buyer and closed on the sale, reducing his costs from the settlement. Despite avoiding foreclosure and financially gaining from the sale, the real estate broker’s clients were not pleased that their real estate agent was paid from the sale proceeds. The real estate broker’s clients filed a damaging administrative licensing complaint with the Colorado Department of Regulatory Agencies. After the investigatory phase, the Colorado Division of Real Estate identified numerous licensing infractions and demanded substantial penalties to resolve the case. Mr. Stokan negotiated with the Division to reduce the breadth of the infractions and severity of the penalties.

Michael Daugherty and Jack Stokan recently obtained summary judgment for White and Steele’s client, an auto parts retailer, by arguing the client was not a “landowner” within the meaning of Colorado’s Premises Liability Act. Plaintiff alleged he sustained injuries when he struck a pothole in an alleyway near the retailer’s store while riding his motorcycle. Plaintiff claimed the retailer was responsible for the pothole because the alleyway provided access to its store. We argued the retailer had no control over the condition of the alleyway and had no responsibility to maintain the portion of the alleyway where Plaintiff struck the pothole. Therefore, the retailer could not be classified as a “landowner” as a matter of law. The Court agreed and dismissed Plaintiff’s claims against the retailer.

On May 23, 2019 a division of the Colorado Court of Appeals published its opinion in Scholle v. Delta Air Lines, Inc., Nos. 18CA0049 & 18CA0760 (May 23, 2019). Significantly, the Court held that workers’ compensation benefits fall within the collateral source rule. That means a plaintiff who has received workers’ compensation benefits for medical expenses is entitled to introduce the full billed amount as evidence in a third party case, despite the fact that the workers’ compensation statute makes illegal and void any amount billed by the medical provider in excess of the workers’ compensation Fee Schedule.

Prior to Scholle, a number of trial courts had held that because the workers’ compensation statute precluded and made illegal amounts billed by the medical providers in excess of the workers’ compensation Fee Schedule, a plaintiff could only introduce evidence of the amount paid for medical expenses by the workers’ compensation carrier. This holding was incongruous to the circumstance where a private health carrier or governmental entity paid medical expenses. In those later circumstances the law is clear that the billed amount is the admissible amount.

The decision in Scholle aligns circumstances where workers’ compensation carriers make payments for medical expenses with the circumstances of a private health carrier or governmental entity—the plaintiff in a third party lawsuit is entitled to introduce and recover the amount billed by a medical services provider even though the workers’ compensation carrier paid a lesser amount pursuant to the workers’ compensation Fee Schedule to the provider in full satisfaction of the services. In that way, it could be seen as a natural extension of the collateral source rule, excluding evidence of all third party medical payments even in cases where a defendant has already settled a subrogation claim.

On the other hand, this case can be interpreted as a step backwards. As set forth in the dissent, allowing the plaintiff “to pursue additional amounts for past medical ‘expenses’ against delta, in excess of what workers’ compensation . . . has already paid for his injuries and under circumstances where Delta has settled with [plaintiff’s workers’ compensation carrier], contravenes the intent and purpose of the workers’ compensation statutes.” Namely, “to ensure employees are paid promptly for medical expenses incurred for injuries suffered in the job.” A windfall result is seemingly avoidable in situations where a defendant has already paid a subrogation claim in full. The unfortunate result is that this case allows courts to stand by in situations where defendants essentially pay twice for a plaintiff’s medical expenses.

If you would like to discuss this ruling, or its practical effect throughout the state, do not hesitate to contact me.

Jack Stokan
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