Pebley v. Santa Clara Organics, LLC
22 Cal. App. 5th 1266
| Cal. Ct. App. 5th | 2018Background
- On May 9, 2011, David Pebley was injured in a motor vehicle collision caused by Santa Clara Organics' employee; he underwent a 3‑level cervical fusion and other care.
- Pebley had health insurance (Kaiser) but elected to get treatment outside the plan on a lien/private‑pay basis from surgeons and hospitals that did not accept his insurer's negotiated rates.
- At trial Pebley sought recovery of billed amounts for past and future medical services; the jury awarded $269,000 (past) and $375,000 (future) among other damages, effectively awarding most billed amounts.
- Defendants argued Howell and progeny limit recovery to amounts paid by an insurer when the plaintiff is insured and thus the full billed amounts were irrelevant; they sought exclusion or reduction of billed‑amount evidence.
- The trial court admitted billed amounts and treating/retained experts testified the billed costs were reasonable; defense experts offered lower market/cash‑pay valuations; the jury credited plaintiff's evidence.
- On appeal the court affirmed except it reduced the award by $1,063 to account for two providers (VCMC and AMR) where the insurer had in fact paid a lower amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insured plaintiff who elects to treat outside his insurance must be treated as "insured" for damage measure | Pebley: treating outside the plan makes him personally liable; he should be treated like an uninsured plaintiff and may introduce billed amounts with expert support | Defendants: plaintiff had a duty to mitigate and should be limited to what in‑plan services would cost or what insurer would pay | Court: Plaintiff who elects out‑of‑plan care is treated as uninsured for damages; billed amounts admissible when supported by expert evidence of reasonableness |
| Whether Howell bars admission of full billed amounts when no prenegotiated insurer discount applies | Pebley: Howell applies to insured plaintiffs who used their plan; it does not automatically bar bills where plaintiff personally incurred them | Defendants: Howell/Corenbaum render full billed amounts irrelevant even if unpaid | Held: Howell governs insured‑through status, but where plaintiff elects out‑of‑plan treatment and is personally liable, billed amounts are admissible as part of a wide‑ranging inquiry into reasonable value |
| Scope of admissible expert testimony about reasonable value | Pebley: treating surgeons and retained experts may testify the billed amounts reflect reasonable/customary cost | Defendants: may counter with experts showing lower market/cash prices and evidence of what providers accept | Held: Trial court properly allowed plaintiff experts to testify on reasonable cost/value and allowed defendants to present rebuttal experts; jury resolves conflicts |
| Whether any awarded billed amounts exceed Howell limits based on insurer payments | Pebley: conceded two small items where insurer paid less | Defendants: sought reversal or reduction of award as Howell requires | Held: Judgment modified to deduct $1,063 (difference between billed and insurer‑paid amounts for two providers); otherwise affirmed |
Key Cases Cited
- Howell v. Hamilton Meats & Provisions, Inc., 52 Cal.4th 541 (Cal. 2011) (insured plaintiffs recover no more than amounts paid/incurred; prenegotiated insurer payments are relevant)
- Bermudez v. Ciolek, 237 Cal.App.4th 1311 (Cal. Ct. App. 2015) (uninsured or non‑insured plaintiffs may use billed charges together with expert opinion to prove reasonable value)
- Corenbaum v. Lampkin, 215 Cal.App.4th 1308 (Cal. Ct. App. 2013) (in cases involving insured plaintiffs, full billed amounts are irrelevant to prove medical and noneconomic damages)
- Katiuzhinsky v. Perry, 152 Cal.App.4th 1288 (Cal. Ct. App. 2007) (billed charges for unpaid medical care may reflect reasonable value when plaintiff is personally liable)
- Hanif v. Housing Authority, 200 Cal.App.3d 635 (Cal. Ct. App. 1988) (early limitation on collateral‑source recovery where governmental/bargained rates apply)