Opinion
D053620
12-22-2011
REBECCA HOWELL, Plaintiff and Appellant, v. HAMILTON MEATS & PROVISIONS, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super. Ct. No. GIN053925)
APPEAL from an order of the Superior Court of San Diego County, Adrienne Orfield, Judge. Affirmed.
In this personal injury action, plaintiff Rebecca Howell's private health care insurance policy provided coverage for medical expenses she incurred for treatment of injuries she sustained in a vehicle accident caused by the negligent driving of an employee of defendant Hamilton Meats & Provisions, Inc. (Hamilton). The trial court granted Hamilton's posttrial motion to reduce by $130,287 the jury's special verdict award for her past injury-related medical expenses from $189,979, which was the full amount of her medical bills, to $59,692, the amount her medical providers Scripps Memorial Hospital Encinitas (Scripps) and CORE Orthopedic Medical Center (CORE) accepted as payment in full from Howell's health care insurer, PacifiCare PPO (PacifiCare).
Howell appealed, contending the order should be reversed because (1) the reduction of the jury's award for her past medical expenses violates the collateral source rule, which (as we shall discuss more fully, post) generally bars at trial in a personal injury case evidence of compensation the plaintiff has received for her injuries from a source wholly independent of the defendant tortfeasor; and (2) Hamilton's motion was "procedurally improper and lacked sufficient evidence to support the claimed reduction."
Specifically, regarding her claim that Hamilton's motion was "procedurally improper," Howell asserted the postverdict motion procedure the court used in this case was not authorized because "[t]he only authority for a 'post-verdict reduction hearing' concerning the role of collateral source payments in recovery of damage awards" is Government Code section 985, subdivision (b), and "that procedure is exclusively reserved to public entity defendants." Howell also asserted that because she did not "waive her right to have all questions of fact determined by the jury" and "[t]he issue of what was paid to satisfy the charges incurred by [Howell] to her past healthcare providers is a question of fact," the court "erred in invading the province of the jury and acting as trier of fact on the issue of what was 'paid.'"
Regarding her claim of evidentiary error, Howell asserted "there is no evidence in the trial record to support a finding as to what was 'paid' by [her] private health insurer to satisfy her past medical debts to Scripps and/or CORE, and thus [there is] an insufficient record to support the court's reduction of the verdict for past medical specials."
The principal question of first impression presented was whether a plaintiff who has private health care insurance in a personal injury case may recover, under the collateral source rule, economic damages for the amount of past medical expenses that her health care providers have billed, but which neither the plaintiff nor her health care insurer is obligated to pay because the providers have agreed, under contracts into which they have entered with the insurer, to accept as payment in full payments in an amount that is less than the amount the providers have billed. Stated differently, is the difference between the full amount of the medical providers' bills and the lesser amount actually paid by the plaintiff and her private health care insurer to the medical providers that the providers have agreed to accept as payment in full pursuant to their agreements with the insurer (an amount we referred to as the negotiated rate differential), a benefit from a collateral source within the meaning of the collateral source rule such that the plaintiff is entitled under that rule to recover the amount of the negotiated rate differential as part of her economic damages award?
Amicus curiae Consumer Attorneys of California (CAC) referred to this difference as an "alternative payment rate discount."
In a published opinion filed on November 23, 2009 (Howell I), we reversed the order reducing Howell's award of economic damages for her past medical expenses and remanded the matter to the superior court with directions to reinstate the award and enter judgment accordingly. In support of this decision, we held that in a personal injury case in which the plaintiff has private health care insurance, the negotiated rate differential is a collateral source benefit within the meaning of the collateral source rule, and thus the plaintiff may recover under that rule the amount of that differential, if that amount is reasonable, as part of her recovery of economic damages for the past medical expenses she incurred for care and treatment of her injuries.
Howell I was originally published at 179 Cal.App.4th 686.
The California Supreme Court granted Hamilton's petition for review. The high court reversed the judgment of this court and remanded the matter to this court for further proceedings consistent with its opinion. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 568 (Howell, hereafter occasionally referred to as Howell II).)Concluding that "the negotiated rate differential—the discount medical providers offer the insurer—is not a benefit provided to the plaintiff in compensation for his or her injuries and therefore does not come within the [collateral source] rule," Howell II held that "an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial." (Id. at p. 566.) The Supreme Court stated that "the trial court correctly ruled [Howell] could recover as damages for her past medical expenses no more than her medical providers had accepted as payment in full from [her] and PacifiCare, her insurer." (Id. at p. 567.)
Review granted March 10, 2010 (S179115).
The remittitur in this case was filed on November 7, 2011.
We are bound by the decisions of our Supreme Court. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.) Applying the high court's decision in Howell II, we vacate our Howell I opinion and issue this new opinion affirming the trial court's order.
FACTUAL BACKGROUND
A. Howell's Private Health Care Insurance
In November 2005 Howell was seriously injured when the vehicle she was driving was struck by a truck driven by one of Hamilton's employees, who had negligently made an illegal U-turn across the lane in which Howell was traveling.
At the time of the accident, Howell had private health care insurance through PacifiCare. According to Howell, PacifiCare agreed to indemnify her for any medical charges covered by her health plan in exchange for her premium payments, subject to her responsibility for deductibles and copayments; and PacifiCare, as a regular part of its business practice, entered into contractual agreements with hospitals and other health care providers, including Scripps and CORE, to satisfy any bills incurred by PacifiCare plan members who obtained care from those providers.
Howell underwent two fusion spinal surgeries, as well as surgical procedures that took bone from her hip (in an attempt to repair her neck) and repaired the graft site on her hip.
B. Howell's Financial Responsibility Agreements with Her Medical Providers
Before she received treatment from Scripps and CORE, Howell executed written agreements in which she agreed to be financially responsible for all charges for the medical services they provided to her. Specifically, Howell's agreement with Scripps provided that in consideration for all services she received at a Scripps facility, she was "obligated to pay the Facility's usual and customary charges for such services." She expressly acknowledged in that agreement that "she may be asked to execute a separate financial agreement for all amounts deemed to be [her] responsibility and/or not covered under an insurance policy, health care service plan, managed care program or any third party payer not a party to this agreement." An assignment of benefits clause in the agreement provided that Howell "authorize[d] direct payment to the Facility of any insurance or reimbursement from third party payers otherwise payable to or on behalf of the patient for services obtained at the Facility, at a rate not to exceed the Facility's usual and customary charges." Howell also agreed that she "remain[ed] financially responsible for charges due, but not paid, under this assignment of benefits."
Howell's agreement with CORE provided it was "[her] responsibility to pay any co-insurance, or any other balance not paid for by [her] insurance." The agreement contained an assignment of benefits clause, under which she "assign[ed] all medical and/or surgical benefits, to include major medical benefits to which [she was] entitled, including Medicare, private insurance, and other health plans to the provider." (Italics added.)
PROCEDURAL BACKGROUND
A. Hamilton's Motion In Limine
Hamilton filed a motion in limine seeking to exclude at trial any evidence of, or reference to, those portions of Howell's medical bills that were not paid either by PacifiCare, or by Howell as a copayment. Hamilton argued that the decision in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 (Hanif) "preclude[d] [Howell] from seeking to recover as medical expenses amounts billed, but not ultimately paid by PacifiCare."
Howell opposed the motion, arguing that under the collateral source rule articulated in Helfend v. Southern California Rapid Transit Dist. (1970) 2 Cal.3d 1 (Helfend), "the gross amount of all medical bills, not any lesser amount, should be presented to the jury."
1. Ruling
Following oral argument, the court denied Hamilton's in limine motion, ruling that Howell was entitled to present at trial evidence of the full amount of the medical bills. The court, however, deferred to a posttrial proceeding, on a defense motion under Hanif (supra, 200 Cal.App.3d 635), the determination of whether the jury's award of damages for Howell's past medical expenses should be reduced by any amount her medical providers may have "compromised their billing."
B. Trial and Special Jury Verdict
In their joint trial readiness report, the parties stipulated that the only issue to be determined at trial was the amount of damages Howell suffered as a result of the accident caused by the admitted negligence of Hamilton's driver. The report and Howell's trial exhibit list identified as exhibit No. 57 Howell's "Summary of Plaintiff's Past Medical Expenses," which itemized 19 medical expenses and indicated that those expenses totaled $189,978.63. Her trial exhibit list also indicated that copies of the billing records were attached to that exhibit.
During the trial, Dr. Timothy Peppers, who performed Howell's surgeries, testified on her behalf. After Dr. Peppers testified about his qualifications, Howell's injuries, and the medical treatment she received for those injuries, Howell's counsel showed him exhibit No. 57 and the attached billing records. Dr. Pepper testified that to the best of his knowledge the summary and billing records were a fair and reasonable representation of the medical billings.
Howell's husband, James Michael Vallee, also testified on her behalf. He indicated he had been keeping track of her injury-related medical bills, which to date totaled $189,978.63, as shown in exhibit No. 57.
The jury returned a special verdict that awarded to Howell compensatory damages in the total amount of $689,978.63, which included $189,978.63 for "[p]ast economic loss, including medical expenses," $150,000 for "[f]uture economic loss, including medical expenses," $200,000 for "[p]ast noneconomic loss (including physical pain, mental suffering, loss of enjoyment of life, disfigurement, physical impairment, inconvenience, grief, anxiety, humiliation, and emotional distress," and $150,000 for "[f]uture noneconomic loss."
C. Hamilton's Motion to Reduce the Special Verdict for Past Medical Expenses
In February 2008, before the court entered judgment, Hamilton filed a motion under Hanif, supra, 200 Cal.App.3d 635, and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298 (Nishihama), seeking an order reducing the jury's special verdict for Howell's past medical expenses by $130,286.90 (i.e., from $189,978.63 to $59,691.73).
All further dates are to calendar year 2008 unless otherwise specified.
In its motion papers, Hamilton argued it was entitled to the reduction under Hanif and its progeny because the amount of the claimed reduction was neither incurred nor expended for the medical services that Scripps and CORE provided to Howell in this matter.
In support of its motion, Hamilton submitted the declarations of Mourence Burris, Scripps's supervisor of customer service and collections from third parties, and Betsy Engstrom, who was employed in the accounting department of CHMB, a billing company that provided medical billing services for CORE. In his declaration, Burris indicated that Scripps's billing records showed that Scripps waived or "wrote off" the sum of $94,894.42 related to Howell's "surgeries and related treatment as a result of its agreement with PacifiCare," no outstanding balance remained on Howell's account, and no further collection would be pursued. In her declaration, Engstrom indicated that the entries in CORE's bill related to the services CORE provided to Howell showed that CORE had waived or "written off" the sum of $35,392.48 pursuant to its agreement with PacifiCare, and no collection from Howell would be pursued by either CORE or CHMB for this "written off" amount. The Burris and Engstrom declarations thus showed the total amount of the negotiated rate differential "written off" by Scripps and CORE was $130,268.90.
$94,894.42 + $35,392.48 = $130,286.90.
1. Howell's opposition to Hamilton's motion
Howell filed written opposition to the motion, contending that (1) as she was not a Medi-Cal beneficiary and she was suing a private defendant, she was permitted under the collateral source rule and the applicable measure of damages to recover the full amount of the reasonable "cost" or "value" of the past medical expenses paid or incurred as a result of her injuries, and not just what her private health care insurer paid to her medical providers; and (2) under the collateral source rule, the court should exclude evidence of the benefits PacifiCare "paid" to Howell's health care providers. Howell did not submit any evidence in support of her opposition to Hamilton's motion, nor did she file any evidentiary objections to the Burris and Engstrom declarations filed in support of Hamilton's motion.
D. Judgment
On May 4, the court entered a judgment on special verdict against Hamilton, awarding Howell (among other things) economic damages in the amount of $339,978.63, including the sum of $189,978.63 for past medical expenses.
E. Oral Arguments Regarding Hamilton's Motion
At the May 19 hearing on Hamilton's motion, which the court referred to as the "Hanif motion," Howell's counsel argued that, unlike the plaintiff in Nishihama (supra, 93 Cal.App.4th 298), Howell disputed the amount that her health care insurer "paid" to the medical providers and objected that Hamilton's presentation of evidence of what Howell's insurer paid to those providers violated the collateral source rule. Counsel also asserted that, under Hanif and Nishihama, Howell was entitled to recover for her past medical expenses the amount paid or incurred; that, under Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595 (Parnell), the amount incurred is the total amount of debt the patient incurs when she goes to the doctor; and that, under the contracts between the private health insurer and the medical providers, what the insurer "pays" the medical providers includes both cash payments and any other consideration given in the form of "in-kind benefits."
In support of the motion, Hamilton's attorney argued that Nishihama was controlling; Howell's medical bills had been "discounted," and thus she did not owe the full billed amount of about $189,000 charged in the medical bills; she incurred no debt for (what this court calls) the negotiated rate differential because her bills were extinguished and her accounts had a zero balance, and she was not entitled under Nishihama to recover the amount of the negotiated rate differential because that was the portion of the medical bills her insurer did not pay to Scripps and CORE; and the collateral source rule did not apply to that unpaid portion of the medical bills.
In rebuttal, Howell's counsel claimed the declarations submitted by Burris and Engstrom in support of Hamilton's motion were not evidence because "they're hearsay," and stated he doubted they "[had] ever seen the contracts" between PacifiCare and Howell's medical providers. Thus, he asserted, there was no competent evidence of what PacifiCare paid. Counsel repeated his claim that the word "paid" meant more than just the cash payment and included the in-kind benefits the insurer "paid" to the medical providers. Howell's attorney also argued that to determine what the insurer "paid" to the providers would require a finding of fact, and such a finding would violate the collateral source rule, which precludes evidence of the amount paid by a collateral source.
F. Order and Notice of Ruling
On June 10, after taking the matter under submission, the court granted Hamilton's motion. The court's minute order stated:
"The Court grants [Hamilton's] motion to reduce [Howell's] past medical specials to reflect the amount the medical providers accepted as payment in full of the medical bills. Contrary to [Howell's] assertions, reaching this amount does not violate the collateral source doctrine, as evidence of how or why an amount less than the full bill was accepted as payment in full is unnecessary to make this determination. Further, the trier of fact relied on evidence of the gross amount billed to [Howell], and thus had an accurate understanding of the severity of [her] injuries when it rendered its verdict. Thus a posttrial motion to reduce past medical specials to the amount that was actually paid and considered payment in full does not violate the collateral source doctrine; rather it embodies the well-established principle that a plaintiff is entitled to recover an amount that would make her whole, but not overcompensate her. . . ."
On July 8, Hamilton's counsel served and filed a notice of the court's ruling, which included a copy of the court's minute order, and indicated that the amount of the judgment was reduced by $130,286.90 from $689,978.63 to $559,691.73. Howell thereafter appealed the order.
DISCUSSION
I
CLAIM THAT THE COURT'S POSTVERDICT REDUCTION OF THE JURY'S
ECONOMIC DAMAGES AWARD FOR HOWELL'S PAST MEDICAL
EXPENSES VIOLATED THE COLLATERAL SOURCE RULE
In Howell II, our Supreme Court explained that "[t]he collateral source rule states that 'if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.'" (Howell, supra, 52 Cal.4th at p. 551, quoting Helfend, supra, 2 Cal.3d at p. 6.) "Put another way, 'Payments made to or benefits conferred on the injured party from other sources [i.e., those unconnected to the defendant] are not credited against the tortfeasor's liability, although they cover all or a part of the harm for which the tortfeasor is liable.'" (Howell, at p. 551, quoting Rest.2d Torts, § 920A, subd. (2).)
Howell argues the trial court's order reducing the jury's award of damages for her past medical expenses from the full amount of the medical charges billed by Scripps and CORE ($189,978.63) to the amount of the cash payments her health care insurer, PacifiCare, paid to those medical providers pursuant to its agreements with them ($59,691.73), should be reversed because the reduction violates the collateral source rule.
In support of this argument, Howell asserts that when she executed the written financial responsibility agreements with Scripps and CORE before she received treatment from them, she became financially liable for, and thus suffered compensable detriment by incurring, the full combined charges these medical providers billed for the services they provided. She also asserts she received two collateral source benefits from PacifiCare: (1) the reduced "alternative rate" cash payments in the total amount of $59,691.73 that Pacificare paid to Scripps and CORE on her behalf; and (2) the negotiated rate differential, which she calls "other contractual consideration," valued at $130,286.90 (i.e., the remaining balance of the combined medical bills) that PacifiCare "paid" to Scripps and CORE on her behalf in the form of "non-cash benefits and services" (such as "preferred provider" listings that are endorsements of, and advertisements for, the medical providers; a guaranteed flow of patients who are members of PacifiCare's health care plan; and timely payments from pooled premiums that reduces the number of collection actions the providers must bring to collect payments from their patients).
Together, she maintains, these two collateral source benefits of her private health insurance resulted in the satisfaction or discharge of the medical services debt she incurred in the full billed amount of $189,978.63; and, therefore, under the collateral source rule articulated in Helfend, supra, 2 Cal.3d 1, and the Restatement Second of Torts, section 920A, comment b, Hamilton should not have received the benefit of her thrift and foresight, in procuring health insurance, through the court's postverdict reduction of Hamilton's liability for the past medical expenses she incurred as a result of the negligent driving of its employee. Thus, she argues, the court's order reducing the jury's award of damages for her past medical expenses by $130,286.90—the amount of the negotiated rate differential that she, Hamilton, and the trial court referred to as the "written-off" balance or portion of her medical bills—violates the collateral source rule.
In light of the Supreme Court's decision in Howell II, we conclude Howell's arguments are unavailing. In reversing the judgment of this court, the Howell II court first reviewed the statutory provisions governing the recovery of compensatory damages by plaintiffs who receive medical treatment for tortiously-caused injuries. The high court explained:
"Compensatory damages are moneys paid to compensate a person who 'suffers detriment from the unlawful act or omission of another' (Civ. Code, § 3281), and the measure of damages generally recoverable in tort is 'the amount which will compensate for all the detriment proximately caused' by the tort (id., § 3333). Civil Code section 3282, in turn, defines 'detriment' as 'a loss or harm suffered in person or property.' A person who undergoes necessary medical treatment for tortiously caused injuries suffers an economic loss by taking on liability for the costs of treatment. Hence, any reasonable charges for treatment the injured person has paid or, having incurred, still owes the medical provider are recoverable as economic damages. (See Melone v. Sierra Railway Co. (1907) 151 Cal. 113, 115 [plaintiff is entitled to '[s]uch reasonable sum . . . as has been necessarily expended or incurred in treating the injury'].)" (Howell, supra, 52 Cal.4th at p. 551.)
Reaffirming the "Hanif rule" that such tort action plaintiffs may recover only reasonable medical expenses that are actually paid or incurred (Howell, supra, 52 Cal.4th at pp. 555, 559), the Supreme Court concluded that "a plaintiff may recover as economic damages no more than the reasonable value of the medical services received and is not entitled to recover the reasonable value if his or her actual loss was less." (Howell, at p. 555, citing Hanif, supra, 200 Cal.App.3d at p. 641, original italics.)
Applying the foregoing principles, the Howell II court found unpersuasive Howell's argument that she had incurred liability for the full amount of Scripps's and CORE's bills when she signed the patient financial responsibility agreements with those providers and accepted their medical services. (Howell, supra, 52 Cal.4th at pp. 556-557, 563-564.) Citing Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595, 609 (Parnell), the high court determined that Howell "did not incur liability for her providers' full bills, because at the time the charges were incurred the providers had already agreed on a different price schedule for PacifiCare's PPO [(preferred provider organization)] members," and, thus, "[h]aving never incurred the full bill, [she] could not recover it in damages for economic loss." (Howell, at p. 563; see also id. at p. 557.)
In Parnell, a patient injured in an automobile accident received medical treatment from a hospital that received payment from the patient and his health care insurer in a negotiated "discounted" amount specified in the hospital's provider agreement, under which the hospital agreed to receive that reduced amount, rather than its usual and customary charges, as payment in full for the medical services it had provided. (Parnell, supra, 35 Cal.4th at pp. 598-599, 609.)
After the patient brought a tort action against the driver who caused the accident, the hospital sought to recover the difference between its usual and customary charges and the amount it received from the patient and his insurer by filing a lien under the Hospital Lien Act (HLA) (Civ. Code, §§ 3045.13045.6) against any judgment or settlement the patient might obtain in that underlying tort action. (Parnell, supra, 35 Cal.4th at p. 598.) In response, the patient sued the hospital alleging unfair business practices and related causes of action. (Id. at p. 600.) The trial court granted the hospital's motion for judgment on the pleadings, and the Court of Appeal reversed the judgment. (Ibid.)
The Supreme Court in Parnell affirmed the judgment of the Court of Appeal, holding that (1) a lien under the HLA may not attach absent the existence of an underlying debt, and (2) the hospital could not assert a lien under the HLA against the patient's recovery from the thirdparty tortfeasor because the bill the hospital sent to the patient stated that the difference between the hospital's usual and customary charges and the amount owed under the insurance contract would be "written off" by the hospital, and thus the patient's entire debt to the hospital had been extinguished. (Parnell, supra, 35 Cal.4th at p. 609.)
The high court also found unpersuasive Howell's claim that she had received a collateral source benefit within the meaning of the collateral source rule when (according to Howell) her insurer, PacifiCare, extinguished her incurred obligations to her health care providers through a combination of cash payments and noncash consideration in the amount of the negotiated rate differential, which the court described as "the discount medical providers offer the insurer." (Howell, supra, 52 Cal.4th at pp. 566, 563-565.) The high court stated that "[t]he negotiated rate differential lies outside the operation of the collateral source rule also because it is not primarily a benefit to the plaintiff and, to the extent it does benefit the plaintiff, it is not provided as 'compensation for [the plaintiff's] injuries.'" (Id. at p. 564, quoting Helfend, supra, 2 Cal.3d at p. 6.) Rather, it found, "[t]he primary benefit of discounted rates for medical care goes to the payer of those rates—that is, in largest part, to the insurer." (Howell, at p. 564.)
The Howell II court held that Howell "may not recover as past medical damages the amount of [the] negotiated rate differential," explaining that "because [she did] not incur liability in the amount of the negotiated rate differential, which also is not paid to or on behalf of [Howell] to cover the expenses of [her] injuries, it simply does not come within the rule." (Howell, supra, 52 Cal.4th at p. 565.) Emphasizing that the "[collateral source] rule applies with full force here and in similar cases," the court concluded that Howell may only recover "the amounts paid on her behalf by her health insurer as well as her own out-of-pocket expenses." (Ibid.)
Regarding the application in this case of what it called the "evidentiary aspect" of the collateral source rule (Howell, supra, 52 Cal.4th at p. 552), the Supreme Court also concluded that, "[w]here 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 grounds of excessive damages." (Id. at p. 567, citing Code Civ. Proc., § 657, subd. 5.) The high court explained that "[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." (Howell, at p. 567, citing § 662.5, subd. (b).)
Applying the high court's decision in Howell II, we vacate our Howell I opinion and affirm the trial court's order reducing Howell's award for past medical expenses.
DISPOSITION
This court's opinion in Howell I (D053620) is vacated. The trial court's order reducing Howell's award for past medical expenses is affirmed. The parties shall bear their own costs on appeal.
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NARES, J.
WE CONCUR:
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BENKE, Acting P. J.
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McINTYRE, J.