Recently in Medical Damages Category

Where a sanction award is statutorily appealable, may the merits of a medical damages discovery dispute resulting in that sanction be reviewed at the same time?

February 14, 2014

file0001257337525.jpgIn Dodd v. Cruz (filed 2/5/2014) B247493, Dodd sued Cruz for injuries sustained in a vehicle accident, including medical surgical expenses he incurred with Coast Surgery Center as a result of the accident. Coast sold to Medical Finance LLC (MedFi) its medical lien for services provided to Dodd. (MedFi's president is Dodd's attorney, Waks.) Cruz sought discovery of documents relating to the lien transaction via subpoena; MedFi succeeded in a motion to quash the subpoena (joined by Dodd), including the trial court's award of $5,600 in sanctions. Cruz appealed the sanction order (sanctions in excess of $5,000 being immediately appealable under Code of Civil Procedure section 904.1, subd. (a)(12).). The Court of Appeal, Second Appellate District, Division Three, reversed the granting of the motion and awarding of sanctions.

The documents sought by Cruz were a contract between Med-FI and Coast that predated Dodd's surgery, a redacted assignment of the claim dated the day of the surgery, and "MedFi's Open Lien Detail;" these documents included evidence of the amount paid for its lien. MedFi objected on grounds of confidentiality, proprietary rights, and relevance. In its motion to quash the subpoena of the documents, MedFi claimed it would incur attorney fees of $5,600 in prosecuting it motion. The trial court granted the motion on grounds of relevancy and awarded the requested sanctions.

Respondents to the appeal first contend the trial court order to quash was not reviewable on a statutory appeal of the sanctions order. The appellate court disagreed, finding that a discovery ruling is reviewable if it "necessarily affects" an appealable order (section 906); here the underlying discovery ruling was "inextricably intertwined" with the monetary sanctions order.

Next, the Court Appeal discussed respondents' contention that the subpoena was not directed at obtaining any documents relevant to this personal injury litigation. It was undisputed that the amount of economic damages, if any, that Dodd may recover for his medical treatment by Coast was one of the subject matters of the lawsuit. The court thus reviewed the measure of damages for past medical expenses: the lesser of the reasonable value of the medical services and the actual amount paid to discharge that obligation. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 555.) The court found that the subpoena was reasonably calculated to lead to discovery of admissible evidence of reasonable value of the services. Coast's belief of reasonable value, allowing for the risk and expense of collection, could be explained from the amount it received for conveying the lien to Medfi. As a part of this inquiry, what a medical provider is willing to accept in relinquishing its claim may be an adjustment downward from the face amount of its gross billing.

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Under what circumstances will a non-settling medical malpractice defendant found liable at trial pay only a token amount to plaintiff as a result of other defendants' pretrial settlement?

Medical.jpgThe case of Rashidi v. Moser (filed 9/23/13) 2013 DJDAR 12903 provides such circumstances. And the circumstances are not terribly unusual. What causes a virtual victory here for to a losing defendant is the confluence of the following statutes: California Civil Code section 3333.3 (MICRA), section 1431 (Prop 51), and Code of Civil Procedure section 877 (concerning good faith settlements).

Plaintiff Rashidi had gone to the emergency room of defendant Cedar-Sinai Hospital with a severely bleeding nose. Based on his ER examination, Defendant physician Franklin Moser proceeded to perform an embolization procedure that same day utilizing embosphere microspheres manufactured by defendant Biosphere Medical. The process was to inject these particles through a catheter to stop the bleeding. Immediately after the procedure, Rashidi lost sight in one eye. He sued the hospital and doctor for medical practice, and additionally alleged Biosphere was liable for product defect for failing to warn that there was a risk the manufactured particles would enter into the wrong part of the blood system and cause blindness.

Court approved good-faith settlements were reached as follows: with Cedar-Sinai for $350,000, and with Biosphere for $ 2 million. Moser was the sole defendant to go to and participate at trial. The jury found him liable, awarding $125,000 for economic damages (future medical), $331,250 for past non-economic damages, and $993,750 for future non-economic damages. The trial court reduced both categories of non-economic damages to a total amount of $250,000 under MICRA, leaving a total damage award of $375,000 against Moser. Moser argued he was entitled to a greater reduction under MICRA, Prop 51 and CCP section 877 in light of the amounts paid by the settling defendants. The trial court disagreed, denying the claimed offset because there was no basis to allocate the settlements between economic and non-economic damages and the jury was not required to attribute any portion of the fault to the settling defendants.

The Court of Appeal, Second Appellate District, Division Four, disagreed with the trial court and modified the judgment to defendant being liable for only $16,655 in total damages after appropriate offsets. It took some nifty arithmetic to get there, which I will briefly explain below. But first, I will summarize the applicable legal principals discussed by the appellate court. CCP section 877 explains that the settlements reduce the claims against other defendants in the amount paid. Under Prop 51 all of the settling and liable defendants are jointly liable for economic damages; but they are proportionately liable for noneconomic damages. As to the medical malpractice defendants, under MICRA, the aggregate total of noneconomic damages is capped at $250,000.

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Must medical provider prove charges were "reasonable and necessary" in seeking lien on portion of award for medical expenses patient received from third party?

medical.jpgThe Court of Appeal, Fourth Appellate District, Division One, answers, "yes." Sounds pretty straight-forward. But more may be involved here than meets the eye.

To place this question in context, when a party without medical coverage is injured in an automobile accident, that party might say to the treating hospital, "Just bill the liability insurance company of the person responsible for the accident." The hospital's financial offices might run a quick check of the situation and determine an insured third party is responsible for the injuries, and figure it will get paid eventually. It might also feel protected by the Hospital Lien Act (California Civil Code Sections 3045.1-3045.6) which says the hospital, in providing reasonable and necessary services to a patient who was injured as a result of the legal fault of a third party, has a lien upon the damages recovered from the third party by the patient.

The above scenario approximately describes the position of the defendant healthcare provider in State Farm Mutual Automobile Insurance Co. v. Huff and Pioneers Memorial Healthcare Dist. (published opinion filed 6/11/13), D062550. The provider treated Huff for injuries he incurred in an automobile accident for which it billed $34,320.86 for medical services. Neither Huff nor anyone on his behalf paid for these services. Huff in turn sued the other driver, insured by State Farm, and obtained a judgment for $356,587.92 in damages; as part of this, the jury found that Huff's past medical expenses incurred in this matter were $232,708.80. State Farm received notice from the provider of its Hospital Lien Act claim, then filed the present interpleader action, essentially asking the court to whom and in what proportion it should pay the asserted lien amount of $34,320.86.

The trial court found the authenticated hospital statement was prima facie evidence that the services were rendered and billed for, and that the Hospital Lien Act does not require detailed description or expert declaration to establish reasonableness and necessity, viewing the lien procedure to be a simplified process. It saw the matter as one of collection on common counts, rather than one where "reasonable and necessary" proof would be required for the purpose of proven causation and damages in a contested tort action It awarded the provider the lien amount less a pro rata share of the costs and attorney fees incurred in the interpleader action.

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Is the full amount billed for medical care admissible at personal injury trial to prove past medical, future medical or general damages?

medical_doctor.jpgThe recent appellate opinion in Corenbaum v. Lampkin (filed 4/30/13) 2013 DJDAR 5591 answers "no" on all counts. The California Court of Appeal, Second Appellate District, Division Three, determined that only the actual amount paid for past medical care (here, as is typical, the discount rate paid by the medical insurer) is relevant and admissible. The court acknowledges that in ruling this full-billing evidence inadmissible for all of these purposes, it plows new ground, beyond the holding of the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal. 4th 541. There, the state high court took the minority view among U.S. jurisdictions in holding that an injured plaintiff may not recover as past economic damages more than the amount paid by medical insurance--the full amount of medical billing was not recoverable as past medical expense damages; the court "expressed no opinion as to its relevance or admissibility on other issues, such as noneconomic damages or future medical expenses."( Id., at p. 567.) Allow me to discuss briefly the underpinnings from Howell, how the Corenbaum court navigated its conclusion, and what might lie ahead.

In Howell, the Supreme Court had before it the following: the trial court had admitted evidence of the full medical billings, but granted the defense motion to reduce the medical damage award to reflect the amount actually accepted by medical providers as full payment (per Hanif v. Housing Authority (1988) 200 Cal.App.3d 625); the Court of Appeal reversed, holding the reduction violated the collateral source rule. The Supreme Court held: [W]e merely conclude the negotiated rate differential--the discount medical providers offer the insurer--is not a benefit provided to the plaintiff in compensation for his injuries and therefore does not come within the rule." (Howell, at p. 566.) Thus the trial court in Howell had properly reduced the past medical award post-verdict.

The Corenbaum court recognized the Howell court did not hold that full amount billed was inadmissible to prove past medical expenses, let alone that it was not at all relevant to prove future medicals and/or pain and suffering. It however theorized that because plaintiff can recover as past special damages no more than the amount incurred for past medical services, the value of those services exceeding what was paid is irrelevant and inadmissible to prove the past specials. As to future medical expenses, it reasoned that the billing rate not paid would be an improper foundation for an expert to use to project future medical expenses. Finally, because pain and suffering is so difficult to assess, any attempt to use the otherwise irrelevant "full amount billed" to gauge pain and suffering would be improper.

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Tort damages concerning domestic pets are not limited by market value.

November 19, 2012

domestic pets.jpg"[A]nimals are special, sentient beings, because unlike other forms of property, animals feel pain, suffer and die." With words like these, the California Court of Appeal, Second Appellate District, Division One, rejected defendants argument, an argument accepted by the trial courts, that the measure of damages are limited to the market value of the injured dogs in Martinez v. Robledo (filed October 23, 2012) 2012 DJDAR 14708.

This opinion involved consolidated matters: (1) In Martinez v. Robledo, defendant shot his next door neighbor's (Plaintiff's) dog (Gunner, a two-year-old German Shepherd), causing the amputation of Gunner's right leg; plaintiff seeks recovery of the vertinary bills of $20,789.81 plus punitive damages. (2) In Workman v. Klause, plaintiff's 9-year-old Golden Retriever, Katie, received surgery from defendant veterinarian at a cost of $4,836.16; Katie's intestine was nicked during the surgery and a piece of surgical gauze was left in her body causing an infection; plaintiff's incurred emergency bills elsewhere in the sum of $37,766.06 in order to save Katie's life; plaintiff sued for this later sum, defendant having already refunded to plaintiff monies for his professional charges.

In both cases, defendants were granted motions in limine, limiting the matters that would be admissible to prove damages, and the trial courts ruled that the measure of damages would be limited to the fair market value of the dogs. Plaintiffs appealed each of their cases (in which their damage recovery was $1,000 fair market value) claiming pets are and should be treated fundamentally more significant than mere personal property, relying upon the First Appellate District case of Kimes v. Grosser (2011) 195 Cal.App.4th 1556. (A discussion of that appellate ruling concerning injuries to pet cat "Pumpkin," including potential punitive damages, appears in the June 16, 2011 blog.) As alluded to above, the Second Appellate District panel here agreed with both plaintiffs and the Kimes opinion.

Two things seem apparent from these opinions. First, veterinarians may find their malpractice premiums rising significantly. Second, appellate justices appear to be more attached to their household critters than the trial judges who rendered the trial court rulings.

Collateral source rule in California: injured plaintiffs barred recovery of value of medical services in excess of bargained rate paid by insurance

Thumbnail image for gaveljanjpg.jpgThe California Supreme has filed its opinion after months of speculation in the legal community about the reach of the collateral source rule. In Howell v. Hamilton Meats (filed August 18, 2010), the court held an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more that the amounts paid by the plaintiff or his insured for the medical services. It concluded the negotiated rate differential (the difference between the medical provider's customary charges and the charge it agrees to receive as payment-in-full from plaintiff's insurance) is not a collateral benefit recoverable by plaintiff under the collateral source rule.

While, the 6-1 majority opinion written by Associate Justice Werdegar goes into 30-page detail to explain its ruling, the critical turning point is found in the following language: "[W]e do not alter the collateral source rule as articulated in Helfend [Helfend v. Southern California Rapid Transit (1970) 2 Cal.3d 1] and the Restatement. Rather we conclude that because the plaintiff does not incur liability in the amount of the negotiated rate differential, which also is not paid to or on behalf of the plaintiff to cover expenses of the plaintiff's injuries, it simply does not come within the rule." (Slip opinion at pp. 26-27.)

Presiding Justice Cantil-Sakauye voted with the six justice majority. Just one year ago, she authored the opinion of the Court of Appeal, Third Appellate District in King v. Willmett (one of three opinions granted review along with Howell) and wrote, "We see no basis in the record from which we could conclude plaintiff did not incur $169, 499.94 [of which $93, 213.62 was the negotiated rate differential not paid by medical insurance] in past medical expense." (Slip opinion at p. 25.) In holding exactly the opposite as the holding in the state high court ruling in Howell, the King court found persuasive the Helfend view that "a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift. The tortfeasor should not garner the benefits of the victim's providence." (Id. at p.26)

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Tort Claim Is Actionable As Plaintiff May Recover Damages for Reasonable Treatment of Pet Even If Animal Has No Market Value

Thumbnail image for Thumbnail image for Walking_the_Dog_3154_(10).JPGRecently, the issue of awardability of claimed medical damages against tortfeasors has been a hot appellate topic. The California Supreme Court currently has under submission the case of Howell v. Hamilton Meats concerning medical expenses incurred yet paid to the provider in a lesser sum due to downwardly negotiated collateral medical insurance benefits. (See March 10 blog.) When it comes to future medical expenses, the question arises as to whether the expense is too speculative. (See March 31 blog and Behr v. Redmond.) These cases, of course, deal with human medical expenses. Today I will write about animal medical expense (in particular those incurred regarding a wrongfully injured pet).

In Kimes v. Grosser (filed May 31, 2011) 2011 DJDAR 7866), plaintiff's cat Pumkin was shot with a pellet gun allegedly fired by one of the defendants, who were neighbors. Emergency surgery at a cost of $6,000 saved Pumkin's life and an additional $30,000 was spent caring for Pumkin's partially paralyzed condition. Plaintiff sued for these medical costs and further claimed punitive damages. Defendants succeeded on a motion in limine in the trial court to exclude any evidence of plaintiff's expenses because Pumkin was "an adopted stray of very low economic value." With the granting of this motion, plaintiff could not proceed resulting in judgment of dismissal.

The Court of Appeal, First Appellate District, Division One, disagreed with the trial court, reversing the judgment and holding the pet owner can recover the costs of care of the pet attributable to the injury if the costs are found to be reasonable and necessary, and punitive damages if proven. While pets are considered property of their owners, the jury instruction on injury to personal property (CACI NO. 3903J) does not apply here as was argued by defendants. That capsulation of law suggests that an owner can only recover the lesser of the diminution in market value of the property and the reasonable costs of repair. Nor is this a case of the plaintiff trying to recover due to the sentimental or emotional value of the pet (in contrast to McMahon v. Craig (2009) 176 Cal.App.4th 1502). Under California Civil Code section 3355, one is entitled to value property based upon its unique economic value.

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Plaintiff's Future Medical Damage Award For Tortious Transmission Of Herpes Must Be Based On Substantial Evidence, But Punitive Damages Award Was Not Excessive

After receiving a $6.75 million Riverside County Superior Court jury verdict against him for tortiously transmitting genital herpes to his ex-girlfriend, Aussie hair care products founder Thomas Redmond appealed. In Behr v. Redmond (filed March 2, 2011, certified for publication on March 14, 2011) 2011 DJDAR 3795, the California Court of Appeal, Fourth Appellate District, Division Two, reduced the award of $2.5 million in future medical expenses to $72,000, otherwise affirming the judgment that provided $3,600 for past medical expenses, $500,000 for past general damages, $1million for future general damages and 2.75 million for punitive damages (reduced total of $4,325,600).

Plaintiff and defendant began having sexual relations in October 2003. Defendant knew he had genital herpes since 1975, but did not initially inform plaintiff. After they had sex on 10 occasions, he decided in February 2004 to tell her about this long-time medical condition, but misinformed her that it was safe for them to have sex so long as he was not experiencing an outbreak, so they continued their sexual activity. The following month she started having outbreaks and was eventually diagnosed with genital herpes in February 2005. Plaintiff sued and prevailed at trial as indicated above. Defendant's contentions on appeal included the evidence was insufficient that plaintiff contracted herpes prior to defendant's disclosure, and the compensatory and punitive damages were excessive.

The appellate court was satisfied that the evidence was sufficient to establish causation because the jury could have reasonably concluded that defendant's eventual disclosure was incomplete due to his assurances to plaintiff that she could safely continue to engage in sexual activity with him; this could reasonably constitute negligence and fraudulent concealment even if it was unclear as to when she contracted herpes. The court was not satisfied however that plaintiff produced sufficient evidence to support the award of future medical loss in the sum of $2.5 million. The only medical cost projected by the evidence was that of the medication Valtrex which costs $200 for a one-month supply. Based on the 56-year-old plaintiff's life-expectancy, the amount of expense over her lifetime would be no more than $72,000, far short of the $2.5 million award. The verdict was reduced accordingly. But the court was unpersuaded that the punitive award of 2.75 million required either reduction or remand. Defendant's argument was that a jury's mistake in awarding an excessive compensatory award necessarily taints the amount of the punitive award, citing Krusi v. Bearn, Stearns & Co. (1983) 144 Cal.App.3d 664 and Auerbach v. Great Western Bank (1999) 74 Cal.App.4th 1172. Misplaced reliance, responded the court: Krusi merely holds that when a trial court is instructed to reconsider compensatory damages, it may wish to reduce the punitive award as well; Auerbach involved a grossly disproportionate award of punitive damages relative to compensatory damages in a ratio of 385 to 1. After reduction here, the ratio is only 1.75 to 1, so this punitive award, in the court's view, is not "suspect."

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The Risky Business of Judges and Counsel, Both Trial and Appellate, Predicting How the Supreme Court Will Decide An Undecided Issue, Such as Award for Reasonable Value of Negotiated Medical Services

In my last posting, I discussed the recently published appellate court opinion in Cabrera. Part of the rationale of that opinion was that the court was following "current" California published case law. My question is how should judges and attorneys handle legal authority that may appear shaky based upon currently pending cases before higher authority? In the present situation, three previously published appellate opinions reaching the opposite result of Cabrera are under review by the California Supreme Court. For attorneys, it all depends which side you are on; you will want to shed the best possible light on the arguments that favor your client. Judges have a tougher call.

On the specific issue of jury awards for reasonable medical services rendered yet not actually paid due to a plaintiff's private insurance company's negotiated rate with the provider, defense counsel should not expect Cabrera to remain for very long as a citable opinion. I suspect it will have the shelf life of the "catch of the day." It will likely be promptly depublished by the Supreme Court as part of a review grant-and-hold order awaiting the Supreme Court's opinion in Howell. So until the Supreme Court rules, what will lower courts do? Based on everything I have read, the foundational case of Cabrera's "current law" rationale (Hanif) teeters on shaky ground. I draw a strong inference from the Supreme Court saying in Parnell that it had no opinion as to whether Hanif applies outside of the Medi-Cal context that it will find it does not. The Court need only summon the Supreme Court's authoritative language found in Helfend to say that Hanif is different from the collateral source principles that apply to private insurance, recognizing the important public policy of rewarding ones investment in medical insurance. The mere fact that Helfend is 41 years old does not make it bad law--it actually reads as a prescient statement of what has happened in medical cost financing during these many years since. I also suspect that a good predictor is Chief Justice Cantil-Sakauye's previous authorship of King the third case in the Howell trilogy, in which she concludes that Hanif (a case that came out of that same district) and two other cases that follow it, "do not provide governing authority for the question directly presented in this case."

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Appellate Panel Finds Collateral Source Rule Does Not Bar Reduction of Jury-Awarded Past Medical Expenses That Were Reasonable and Necessary but Negotiated Down by Plaintiff's Private Insurance

During 2010, the California Supreme Court granted review in the Court of Appeal cases of Howell v. Hamilton Meats (4th District), Yanez v. SOMA Environmental Engineering (1st District) and King v. Willmett (3rd District). In a nutshell, those three opinions can be summarized as saying that the award of an injured plaintiff's medical provider's full billing of reasonable and necessary charges was compelled because plaintiff's investment in medical insurance premiums is recompensed as a type of objectively verifiable economic damage under California Civil Code section 1431.2 (b) (1)--actual expense is only part of entitled damages; the fact that plaintiff 's insurance negotiated group rate paid to the provider is less does not provide a windfall to plaintiff whose prudence in procuring such insurance should not benefit the tortfeasor.

The 2nd District, Division 8, had the same issue before it in Cabrera v. E. Rojas Properties, Inc. (filed February 8, 2011; certified for publication on February 24, 2011) 2011 DJDAR 2961. There, after the jury had awarded plaintiff damages that included all of her reasonable and necessary medical billings (less 10% due to comparative fault regarding her fall down a staircase on property owned by defendant), the trial court granted defendants post-verdict motion to reduce the past medical damages to include only what was actually paid by her insurer.

The Cabrera court reasoned that under its view of current California law, as explained in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and followed by some other pre-2007 Court of Appeal opinions, an injured plaintiff is limited to medical expenses actually paid; to the extent the reasonable amount of those services is greater, there is no entitlement. The court recognized that Hanif concerned medical care paid by Medi-Cal, not private insurance, but other cases relying on Hanif, in the court's view, have "extended" Hanif to private insurers. The court dutifully recites from the venerable, seminal case of Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, cited frequently in the "Howell trilogy," which endorses the policy of encouraging people to get insurance; the collateral source rule protects that objective in valuing ones investment in insurance and not allowing the tortfeasor to benefit from the victim's providence. Interestingly, when evaluating the plaintiff's argument that the Hanif reduction view should be rejected based on this articulated policy and because it "rejects decades of Supreme Court authority", the Cabrera court responds there is "no current Supreme Court authority that extends the collateral source rule to include the benefit of a negotiated contract between a medical provider and a medical insurer."

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