Motion,Ex Parte: ROBERT ROSS et al VS. C.C. MOORE & CO. ENGINEERS

• 
• 
• 
• 
• 
• 
• 
• 

						
                                
Preview
                                SONIA E. BLOMQUIST, SBN #099341, sblomquist@lowball.com
PAMELA Y. LOUIE, SBN #259391, plouie@lowbali.com

LOW, BALL & LYNCH
505 Montgomery Street, 7 Floor
San Francisco, California 94111-2584

| Telephone (415) 981-6630

Facsimile (415) 399-1506

Attomeys for Defendant

PACIFIC MECHANICAL CORPORATION

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO
ROBERT ROSS and JEAN ROSS, } Case No. CGC-10-275731
)
Plaintiffs, } MOTION IN LIMINE NO, 2
)
¥. ) PACIFIC MECHANICAL
} CORPGRATION’S MOTION IN
C.C, MOORE & CO. ENGINEERS; ) LIMINE TO LIMIT DAMAGES FOR
Defendants as Reflected on Exhibit I } MEDICAL EXPENSES TO THOSE
attached to the Summary Complaint herein; j) ACTUALLY INCURRED AND FOR A
and DOES 1-8500, ) LIMITING INSTRUCTION ON
) EVIDENCE
Defendants. J
) Judge: Hon. Teri L. Jackson
} Dept. 503
} Trial Date: September 9, 2013
} Complaint Filed: December 17, 2010
)

Defendant PACIFIC MECHANICAL CORPORATION (“PMC”) moves this Court for
an order to limit damages for medical expenses to those actually incurred.
L INTRODUCTION
California law allows a plaintiff to recover past medical expenses in an amount
according to proof. However, a plaintiff may only recover past medical expenses up to the
amount actually incurred and for which a plaintiff or his insurer was or rernains liable.
Evidence of a medical provider’s bills over and above that which was actually paid or for which

plaintiff remains liable is admissible for the limited purpose of proving the reasonableness of

the amounts actually paid.

«l-

ELECTRONICALLY
FILED

Superior Court of California,
County of San Francisco

AUG 30 2013

Clerk of the Court
BY: ALISON AGBAY
Deputy Clerk

PACIFIC MECHANICAL CORP.’S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED)

Werveriyen-fasiZ! 1 SSFLOGNPMC MELSMIL 2 « Ames Paid.dora

Oo © WH

10
il
12
13
14
15

16

17
18
19
20

21]
22

23
24
25
26
27
28

-Hiable to pay. Therefore, what an expert testifies is a “reasonable” amount for past medical

| that this Court admonish the jury concerning the purpose for which this evidence is introduced.

Based on past asbestos trials, PMC anticipates that Plaintiffs will claim medical
expenses for care given to Plaintiffs through the testimony of their medical experts as
established through the average value of medical services from surveys and/or through the
undiscounted or unbilled and inflated provider invoices. These are improper means of
determining past medical expenses. Often, insurance companies will negotiate lower medical
costs from medical providers. Medical providers may also forgive or write off the difference
between what an insurance carrier will pay and the actual amount billed.

Plaintiffs may only recover for those medical expenses for which they or their insurer is

expenses is an improper basis for establishing a plaintiff's past medical expenses. Similarly, it
is improper to base a plaintiff's past medical expenses on figures over and above that which
was negotiated by an insurance carrier or the written off or discounted amount, because
plaintiffs are not legalfy obligated to pay those inflated amounts. Whenever a medical provider
has decided to forego an amount above the negotiated or discounted price, the medical provider
no longer has an expectation that the excess charge will ever be recovered. Thus, a
patient/plaintiff is not expected to repay the written-off or discounted amount.

This principle comports with sound public policy and California law. In a tort action, a
plaintiff secks to collect past medical expenses as an indemmitor for the medical provider. After
recovering past medical expenses at trial, a plaintiffis expected to reimburse the medical
provider or insurance carrier for the amounts those entities paid on the plaintiff's behalf.
Allowing a plaintiff te collect more than the amount he and his insurers actually paid or for
which they continue to be liable constitutes an improper windfall for the plaintiff.

Furthermore, evidence of the actual medical providers’ bills is admissible for the sole
purpose of determining whether the amount plaintiff or his insurers paid was reasonable.

Because a jury is highly likely to confuse the purpose of this type of evidence, PMC requests

Uf

-2e«
PACIFIC MECHANICAL CORP.'S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED
\WServer7igon-inst2t 1 SSF 1G43\PMC MELS\MEL 2 - Amts Prid.deeSD

|) Hamilton Meats & Provisions, Inc., 52 Cal. 4th 541 (2011). The Supreme Court’s holding in

|| plaintiff is entitled to recover up to, and no more than, the actual amount expended or incurred

TL. LEGAL ARGUMENT
A. Plaintiffs Can Only Recover Past Medical Expenses Up To The Amount

They Or Their Insurance Company Actually Paid Or Fer Which They
Remain Liable.

There is no question that the appropriate measure of recovery for a person injured by
another’s tortious conduct is the reasonable value of medical care and services directly required
and/or attributable to the tort. See Melone v. Sierra Railway Co., 151 Cal. 113, 115 (1907);
Gimbel v. Laramie, 181 Cal.App.2d 77, 81 (1960); BAJI No. 14.10; CACI No. 30934. A
plaintiff may recover for medical expenses billed by his medical provider “as long as the plaintifi
legitimately incurs those expenses and remains liable for their payment.” (Katiuzhinsky v. Perry,
152 Cal.App.4th 1288, 1291 (2007).

As tuled on by the California Supreme Court in Howell v. Hamilton Meats &

Previsions, the plaintiff cannot recover a windfall for amounts billed but not paid. Howell v.

Howell explicitly limits the recovery of past medical expense damages to amounts paid by the
plaintiff's insurer, and it excludes any amount billed yet unpaid.

The rule that a plaintiff may not recover more than their actual paid medical expenses at
trial has been reinforced in California Court of Appeals over the years. The issue is “whether
the ‘reasonable value’ measure of recovery means that an injured plaintiff may recover from the
tortfeasor more than the actual amount he paid or for which he incurred liability for past
medical care and services.” Hanif v. Housing Authority of Yolo County, 200 Cal.App.3d 635,
640 (1988). The Hanif court held that an award of damages for past medical expenses in excess

of what the medical care and services actually cost constitutes overcompensation and that “a

for past medical services so long as that amount is reasonable.” Jd. at 643 (emphasis in
original). The Hanif court noted that a misunderstanding may have arisen from the language of
BAJi 14.10 which states the measure of damages as follows:

Mf
23

PACIFIC MECHANICAL CORP.’S MIL TO LIMIT DAMAGES POR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED)
WServer7igen-inst2i IS\SP1O4NPMC MELSIMIL, 2 - Aunts Paid.dec| at 307. The original $17,168 award had been based on California Pacific Medical Center’s

The reasonable value of medical [hospital and nursing] care,
services, and supplies reasonably required and actually given in the
treatment of the plaintiff to the present time [and the present case
value of the reasonable value of similar items reasonably certain to
be required and given in the future], (BAJI 14.105

A comment to BATI 14.16 states:

The reasonable value of medical and nursing care may be
recovered although rendered gratuitously or paid for by a source
independent of the wrongdoer.

The corresponding CACI jury instruction contains similar language:

To recover damages for past medical expenses, [name of plaintiff]
must prove the reasonable cost of reasonably necessary medical
care that {he/she} has received.

To recover damages for future medical expenses, [name of
plaintiff] must prove the reasonable cost of reasonably necessary
medical care that [he/she is reasonably certain to need in the future.
(CACTI instruction no. 3903A Medical Expenses — Past and Future
(Economic Damage).

Hanif stated that the comment to BAJJ 14.10 merely restates the collateral source rule,
which was not at issue in Hanif, rather the issue was the meaning of the term “reasonable
value” when applied to past medical services. Hanif, 200 Cal.App.3d at 641.

‘Reasonable value’ is a term of limitation, not aggrandizement.”
(See Civ. Code § 3359.) Thus, when the evidence shows a sum
certain to have been paid or incurred for past medical care and
services, whether by the plaintiff or by an independent source, that
sum certain is the most the plaintiff may recover for that care
despite the fact it may have been less than the prevailing market
rate, Id.

In Nishihama v. City and County of San Francisco, 93 Cal.App.4th 298 (2001), the
Court of Appeal reduced the trial Court’s award of $17,168 for medical expenses to $3,600. Id.

(CPMC”) “normal” rates for services. Id. at 306. However, the plaintiff was a participant in
an employer-sponsored health plan administered by Blue Cross, whereby CPMC had
contractually agreed with Blue Cross that Blue Cross would pay reduced rates for specified
services rendered to its members, and CPMC would accept Blue Cross’ payment as payment in

Hf

“4.
PACIFIC MECHANICAL CORP.’S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED]
‘WServer/\gen-ins\2i IBISFIO4BPMC MILs\MEL 2 - Amits Paid. doca A wv

oo

-| having to accept the lesser ammount in damages while simultaneously risking the possibility that

|| CPMC had been paid the lesser amount, it had no lien rights in damages awarded to the plaintiff

full for such services. /d. At 306-307. Under the terms of the agreement, CPMC had accepted
$3,600 as payment in full for plaintiff's medical treatment. Jd. at 307.

One of the arguments raised by plaintiff was that in accordance with California’s
Hospital Lien Act (“HLA”) and Civil Code sections 3045.1-3045.6, CPMC had filed a lien
against the plaintiffs judgment, and the amount of the claimed lien was based upon CPMC’s

normal rates for service. Accordingly, the plaintiff argued that that she should not be at risk of

she would later be held to pay a greater amount to CPMC on the lien. Jd. The Nishihama
court, however, held that “CPMCs lien rights do not extend beyond the amount it agreed to

receive from Blue Cross as payment in full for services provided to plaintiff.” Jd. Inasmuch as

and the trial court therefore erred in awarding the plaintiff an excess of $3,600 for services
provided by CPMC. id. As the court explained, “[t]he HLA places the burden of satisfying the
hospital's lien on the defendant tortfeasor, not on the plaintiff....Civil Code sections 3045.4 and
3045.5 permit the hospital to seek recourse against the tortfeasor, but there is no authority
permitting the hospital to seek recourse from the plaintiff.” Jd. at 309; see also Swanson v. St.
John’s Regional Med. Cer., 97 Cal.App.4th 245, 248 (in.2) (2002). Thus, under Hanif'and
Nishihama, Plaintiff cannot recover more than the costs actually incurred for medical treatment,
ie., those costs actually paid by Plaintiff and a collateral source, such as his medical insurer.
This result is not affected by the recent decision Katiuzhinsky v. Perry, 152 Cal.App.4th
{288, 1292 (2007). In Katiuzhinsky, the plaintiff was treated at Mercy Hospital, where she
incurred $144,000 in unpaid medical bills. Mercy Hospital then sold its entire medical lien to
MedFin, a financial services company in the business of purchasing medical liens, for
approximately $72,000. Jd. at 1291-92. That amount is in keeping with MedFin’s practice of
purchasing medical liens from medical providers at an approximate 50% discount. Jd. at 1292.
During an Evidence Code section 402 hearing to determine the admissibility of evidence
regarding the lien and the damages plaintiff could claim for medical expenses, the trial court

found that the amount paid by MedFin amounted to what Mercy Hospital and the other

-5-
PACIFIC MECHANICAL CORP.’S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED
\ServerTigen-ins\2i [BSF IG4S\PMC MILS\MIL 2 - Arts Paid. docproviders would accept as payment for their services —- even though the evidence showed that
the plaintiff was still personally liable for the full amount of the services. fd, At 1293.
However, the trial court concluded that evidence of the original medical providers’ bills were
inadmissible. /d.

The appellate court in Katiuzhinsky reversed the trial court’s ruling, finding under
Nishiharna and Hanif that the plaintiff continued to be liable for the original amount of the
providers’ bills, not just the amount MedFin had paid for those bills, as MedFin maintained the
right to collect the full amount from plaintiff. /d. at 1297-1298. Although a plaintiff should not
be placed in a better position by recovering for expenses not incurred, the Katiuzhinsicy
plaintiff was “placed in a worse position than had the tort not been committed....The result is
that plaintiff are undercompensated and the tortfeasor receives a windfall.” Jd. at 1296
(emphasis in original).

The California Supreme Court in Howell Inc., eliminated any existing conflicts within
the Court of Appeals regarding the rule that plaintiff may not recover more than actual medical
expenses paid at trial. In Howell, Plaintiff Rebecca Howell (“Howell”) was seriously injured
when her car was struck by a truck driven by one of defendant Hamilton Meats & Provisions,
Inc.’s (“Hamilton’s) employees. Howell had private health insurance with PacifiCare and
underwent two spinal fusions and surgical procedures for harvesting grafts. Before surgery,
Howell executed an agreement with Scripps Memorial Hospital and CORE Orthopedic Medical
Center to be fully Hable for all charges, Ultimately, PacifiCare paid a reduced amount for
Howell’s medical treatment, and Scripps and CORE wrote-off the balance. fd. at 5.

At trial, relying on Hanif'v. Housing Authority (1988) 200 Cal. App.3d 635, Hamilton
moved in limine to exclude evidence of portions of the medical bills that neither Howell nor
PacifiCare had paid, on the ground that plaintiff could only recover what had been paid. The
trial court denied the motion, ruling that plaintiff could present her full medical bills to the jury
and that any reduction in the medical damages award could be handled by a “post-trial Hanif
motion.” The jury awarded plaintiff damages for past medical expenses in the amount of

$189,978 .63--the total amount billed. Za. at 5.
-6-

PACIFIC MECHANICAL CORP.'S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCUICRED)
\Servar?\gen-ins\2i LASFIGGRPMC MILS\MIL 2 - Amts Paid doc2 @ QV BR A BF BY He =

RN DNR RN
oc OW A A RB BP Me = S Oo we BS A FH RB BOB Be So

When Hamilton moved to reduce the award pursuant to Hanif by $130,286.90--the
amount “written off” by plaintiff's medical providers--plaintiff argued in opposition that such a
reduction would violate the collateral source rule. The collateral source rule provides that any
compensation an injured party may receive for her injuries from a source independent of the
tortfeasor may not be deducted from damages the injured party would otherwise collect from
the tortfeasor. /d at 5 — 6.

Plaintiff submitted copies of her executed agreements in which she agreed to pay her
providers any sums unpaid by her insurance. The trial court granted Hamilton’s motion. The
court of appeal reversed, holding that the reduction violated the collateral source rule.

The Supreme Court granted Hamilton’s petition for review and agreed with the trial
court that the collateral source rule did not apply. The Court first observed that a tortiously
injured person can recover as economic damages any reasonable charges paid or incurred for
medical treatment. /d. at 8. The Court then determined that the billed amount “written off” by
Howell’s medical providers when Howell’s insurance paid a reduced amount to the providers
was not a collateral source benefit to Howell. Id. at 14. The Court reasoned that when Howell
incurred liability for her medical services, her providers and her insurer already had in place an

agreement that provided for medical services in exchange for payment at a reduced amount. Id.

'} at 13. Thus, Howell at most, incurred liability for the reduced amount and never for the full

amount billed. She could not have received a collateral source benefit when her providers
accepted the reduced amount as payment in full. fd. at 13-14. Accordingly, the Court found
this circumstance to fall outside the scope of the collateral source rule. The Court made a point
to state that the collateral source rule does not extend to permit the injured party to recover
sums that neither plaintiff nor any collateral source would ever be obligated to pay. Id. at 13.
In arriving at its holding, the Howell court made four determinations. First, Hanif was
correct in deciding that a plaintiff can recover as economic damages no more than the
reasonable value of the medical services received, and is not entitled to recover the reasonabie
value if her actual loss was less. The Howell court noted that California decisions have focused

on “reasonable value” in the context of limiting recovery to reasonable expenditures and not

-7-
PACIFIC MECHANICAL CORP'S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED
‘WServer7\gen-ins\2E ASFIOSNPMC MILs MIL 2 ~ Anats Paid.doea

expanding recovery beyond plaintiff's actual loss or liability. /d. at 9-10.
Second, Hanif’s holding properly extends to plaintiffs covered by private health

_insurance. Id. at 9-10. The Supreme Court observed that the discounted amount paid by

Howell's insurers and accepted by her medical providers was pursuant to pre-existing
agreements in place when she incurred liability for medical expenses. Therefore, Howell’s
incurred liability was limited to the discounted amounts paid and accepted and Howell could
not be understood to have incurred the full charges billed. fd. at 12-13.

Third, limiting plaintiff's recovery to the amounts paid and owed on her behalf did not
confer a windfall on the tortfeasor and defeat the goals of the collateral source rule. The
Supreme Court noted “[t]he complexities of contemporary pricing and reimbursement patterns
for medical providers” do not support the generalization that limiting plaintiff's recovery to
amounts paid translates inte a windfall for the tortfeasor. Jd. at 11-12.

Fourth, the difference between the full billing and the discounted amount accepted as
payment in full is not a benefit received by the injured plaintiff from her health insurance policy
that is subject to the collateral source rule. The Supreme Court pointed out that the discounted
sum (referred to by the court of appeal as the negotiated rate differential) is not primarily a
benefit to plaintiff, but rather a benefit to the insurer, and is not provided as compensation for

plaintiff's injuries. Therefore, the Court concluded that the discounted sum does not come

"| within the collateral source rule, /d. at 12-13.

Under the Supreme Court’s decision in Howell, the defense will be allowed to introduce
at trial evidence of the medical expenses actually paid on the ground that it is relevant to
determining plaintiff’s reasonable medical costs. Evidence that such payments were made in
part or whole by an insurer remains inadmissible pursuant to the evidentiary aspect of the
collateral source rule. /d. at 14-15.

The Howell decision reaffirms the results in Katiuzhinsky, Nishihama, and Hanif in all
respects. A plaintiff cannot recover for more than the amount of medical care he personally
paid, or was actually paid for by a third party, such as his insurance company.

if
Qs

PACIFIC MECHANICAL CORP.'S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURREI
‘Woerver?igen-ins\t 185 F1043\PMC MELS\MIL 2 - Amts Paid. docB. A Limiting Instruction Must Be Given Concerning Evidence Of The Actual
Vaine OF Plaintiffs’ Medical Costs As It Is Relevant To The Issue Of
Whether The Actual Costs Are Reasonable

Plaintiffs may introduce evidence to the jury “regarding reasonable medical costs for
plaintiff's care,” including a hospital’s “normal” rates, even if an eventual award is properly
reduced to the amounts the plaintiff actually incurred. Greer v. Buaghela, 141 Cal.App.4th
1150, 1157 (2006). Greer affirmed the trial court’s ruling allowing the plaintiff to introduce a
hospital’s bills as evidence of the reasonableness of the cost of the medical services, even
though the hospital accepted a reduced amount as payment in full from the plaintiff's Medi-Cal
insurance. /d.

Katiushinsky found that the trial court had erred in excluding evidence of the actual
medical providers’ bills as evidence of the reasonable value of the plaintiff's care under Greer.
Katiushinsky, 152 Cal.App.4th at 1295-1296. Under Nishihama and Greer, the Katiushinsky
plaintiff should have been able to introduce the original bills, “regardless of whether defendants
were entitled to a Nishihama-type reduction of the medical damage award....[This evidence
was] therefore relevant to [the jury’s] assessment of an overall damage award.” Id. 1296
(emphasis in original).

Plaintiffs’ actual and undiscounted medical bills may be introduced for the limited
purpose of establishing the reasonableness of the charges Plaintiffs actually paid under
Nishihama, Greer, and Katiushinsky. However, those bills are not relevant to determining the
actual value of the past medical expenses awarded. Thus, PMC respectfully requests that the
Court admonish the jury that they must consider plaintiffs’ medical providers’ bills as evidence
of the reasonableness of what plaintiffs or their insurer paid only. And the jury must be
instructed that they cannot award an amount greater than what Plaintiffs’ insurer actually paid
or continue to be liable for as actual damages in this case,

In Howell v. Hamilton Meats & Provisions, Inc., 2011 Cal. LEXIS 8119 (August 18,
2011), the court states in pertinent part:

ii

it
-9-

PACIFIC MECHANICAL CORP.'S MIL TG LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURRED)
\oerver?\gemiasttt INSP IOSAEMC MILL. 2 - Amis Pald.doeWhere a trial jury has heard evidence of the amount accepted as
full payment by the medical provider but has awarded a greater
sum as damages for past medical expenses, the defendant may
move for a new trial on the grounds of excessive damages. (Code
Civ. Proc. § 657, subd. 5.) A nonstatutory “Hanif motion” is
unnecessary. The trial court, if it grants the new trial motion, may
permit the plaintiff to choose between accepting reduced damages
or undertaking a new trial.

fd, at 16.
i. CONCLUSION

California law makes clear that a plaintiff may only recover reasonable past medical

damages up to the amount he or his insurance companies actually paid or for which they remain

| liable. Evidence of what the “actual” cost of these services may only be introduced for the

limited purpose of determining the reasonableness of what plaintiff or their insurance
companies actually paid or for which they remain liable. The California Supreme Court further
strengthened this rule in the Howell case. Because the jury is highly likely to consider the
actual medical costs when determining an award for medical costs, a limiting instruction is

appropriate to prevent the improper use of this evidence in awarding damages.

Dated: August 2%, 2013 LOW, BALL & LYNCH

By: L- abt
SONIA EL BLOMOQUIST
PAMELA Y, LOUIE
Attorneys for Defendant
PACIFIC MECHANICAL CORP.

-10-

PACIFIC MECHANICAL CORP.’S MIL TO LIMIT DAMAGES FOR MEDICAL EXPENSES TO THOSE ACTUALLY INCURREL
\WServer?igen-insi2 | 1S\SF1043. PMC MILSMIL 2 - Amts Paid. doc