BRIAN CUEVAS, a Minor, etc., Plaintiff and Respondent, v. CONTRA COSTA COUNTY, Defendant and Appellant.
Nos. A143440, A144041
First Dist., Div. One.
Apr. 27, 2017.
Rehearing Denied May 23, 2017
163
DONDERO, J.
Horvitz & Levy, H. Thomas Watson, Karen M. Bray, Robert H. Wright; Craddick, Candland & Conti, W. David Walker; Mauro Lilling Naparty and Richard J. Montes for Defendant and Appellant.
Cole Pedroza, Curtis A. Cole and Matthew S. Levinson for California Medical Association, California Dental Association, and California Hospital Association as Amici Curiae on behalf of Defendant and Appellant.
Alston & Bird, David Venderbush, Brian Boone; California Chamber of Commerce, Heather Wallace; U.S. Chamber Litigation Center and Janet Galeria for Chamber of Commerce of the United States as Amicus Curiae on behalf of Defendant and Appellant.
Greines, Martin, Stein & Richland and Robert Olson for Association of Southern California Defense Counsel as Amicus Curiae on behalf of Defendant and Appellant.
The Veen Firm, William L. Veen, Elinor Leary; and Alan Charles Dell‘Ario for Plaintiff and Respondent.
OPINION
DONDERO, J.—Plaintiff Brian Cuevas, through his guardian ad litem, brought an action for medical malpractice against defendant, the County of Contra Costa, among others, arising out of injuries he sustained at birth. A jury awarded him $9,577,000 as the present cash value of his future medical and rehabilitation care expenses. Defendant appeals from the damages verdict, asserting, among other things, that the trial court erred in excluding evidence that health insurance benefits under the Patient Protection and Affordable Care Act (ACA) (
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Background
Because defendant does not contest the jury‘s findings of liability and proximate cause, we need not address the facts of this case in great detail. Plaintiff suffered irreversible brain damage in utero while his mother‘s pregnancy was being managed by Dr. Teresa Madrigal, a physician employed by defendant. Plaintiff is the surviving twin of a monochorionic-diamniotic pregnancy—a condition whereby identical twins share a placenta, but have separate amniotic sacs.
On April 19, 2010, plaintiff, through his guardian ad litem, filed a first amended complaint (FAC) against Contra Costa County Health Services and 13 other defendant health care providers and medical centers. The FAC alleges two causes of action: (1) medical malpractice as to plaintiff; and (2) negligent infliction of emotional distress as to his mother.1 Plaintiff‘s theory at trial was that he sustained his injury because Madrigal breached the applicable standard of care by failing to schedule his delivery prior to 37 weeks’ gestation. The case was tried to a jury, which found in plaintiff‘s favor on liability. Defendant does not contest this finding on appeal.
Plaintiff‘s and Defendant‘s Life Care Plans
During discovery, plaintiff disclosed a life care plan prepared by Jan Roughan, in which she provided her opinion as to the kind of medical and rehabilitative care plaintiff will need for the rest of his life, along with the projected costs for each specific care item. Her plan was based on the recommendations of medical specialists who testified on plaintiff‘s behalf. As to future medical costs, the plan does not account for service discounts associated with Medi-Cal, even though plaintiff is currently receiving Medi-Cal benefits. Nor does it reflect negotiated discounts that would potentially be available under insurance procured through the ACA. Instead, Roughan determined future costs for plaintiff‘s medical care by referencing a national database that reflects the average charges billed for each type of service.
Defendant‘s life care planner, Linda Olzack, prepared life care plans based on services recommended by a defense pediatric neurologist. In contrast to Roughan, Olzack‘s plans reflect three alternate cost scenarios, including one in which plaintiff would continue to be covered by Medi-Cal, one in which he would procure private insurance under the ACA, and one in which he would pay for his expenses out of pocket. With respect to the private pay scenario,
Olzack‘s alternative plans reflect the wide variations that presently exist in medical charging practices. Her Medi-Cal life care plan reflects reimbursement rates that appear to be substantially lower than the rates paid by persons without insurance. For example, one category of expenses reflects a more than 60 percent difference between the private pay rate and the Medi-Cal rate. Within her plans, she also took into consideration the free benefits that plaintiff is currently entitled to receive from the regional center and public school system.
Olzack also prepared a report comparing the costs for the services itemized in Roughan‘s plan with the Medi-Cal payment rate for the same goods and services, revealing that Roughan‘s costs were substantially higher. For example, the cost for a wide variety of physician visits listed in Roughan‘s plan were four to six times higher than the corresponding Medi-Cal rates.2
Evidentiary Rulings
On January 10, 2014, plaintiff filed various motions in limine, including one seeking to exclude evidence of collateral source payments from Medi-Cal and other public sources, and another to exclude evidence of future collateral sources. Plaintiff also filed a motion to exclude evidence, opinion, or argument regarding any possible future medical benefits available through ACA-mandated insurance. In part, plaintiff asserted that
On July 14, 2014, defendant filed further briefing on the issue of future medical benefits. In support of its argument that evidence of prospective ACA benefits should be offered to the jury, it included a declaration prepared by Thomas J. Dawson, an expert on the ACA and regulatory and health care policy, who worked for the United States House of Representatives during the passage of the ACA and was directly involved in negotiating key provisions of the legislation.
On August 28, 2014, defendant filed a request for clarification regarding the presentation of evidence as to plaintiff‘s future medical expenses. Specifically, it asserted Roughan had relied on “inflated” billed amounts in calculating the cost of plaintiff‘s future medical care, rather than the lower amounts providers actually accept as full payment. Defendant questioned whether the trial court had intended to allow the introduction of such evidence when it made its earlier rulings on plaintiff‘s motions in limine. Defendant suggested the evidence should instead be limited to the amounts health care providers will accept in the future as full payment.
Defendant noted Roughan‘s life care plan did not reflect the substantially lower amounts that would be accepted as full payment under Medi-Cal or private insurance.3 It relied heavily on Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 (Howell) and Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308 (Corenbaum) in arguing that plaintiff‘s recovery should be limited to the amount he proves is likely to be paid to providers for his future medical care, not the amount his providers are likely to bill. It contended that the billed rates reflected in Roughan‘s plan were therefore inadmissible.
Defendant also asked whether it would be allowed to introduce evidence concerning the range of amounts health care providers accept as full payment, without making reference to the actual sources (i.e., Medi-Cal or private insurance) of those payments. Defendant asserted that introducing these reduced amounts “would assist the jury in evaluating the reasonable value of plaintiff‘s future medical care, without violating the collateral source rule by disclosing the third party source of payment.” It reasoned “[t]he fact that Medi-Cal does not fall within the exception to the collateral source rule of MICRA is completely separate from the issue of whether the County may introduce evidence regarding the amounts Medi-Cal will pay for a service,
The trial court stated that it would allow evidence of Roughan‘s reliance on the national database to project plaintiff‘s medical costs into the future “because it‘s not relying on past billed amounts.” The court also indicated it would permit Olzack to testify that she had based her own calculations on the lower amounts that are accepted by health care providers under certain circumstances (the private pay scenario). However, defendant would not be allowed to attempt to establish that future billed amounts do not reflect the amounts that will actually be accepted by the providers.
Defendant also sought a modified version of CACI No. 3903A (with the modification italicized): “To recover damages for future medical expenses, plaintiff Brian Cuevas must prove the reasonable cost of reasonably necessary medical care that he is reasonably certain to need in the future. The damages awarded for future medical expenses cannot exceed the amount that is reasonably certain to be owed or paid to plaintiff‘s healthcare providers in the future for that care.” The trial court rejected defendant‘s proposed modification.
Evidence Offered at Trial
Roughan‘s life care plan was admitted in evidence during her testimony. Subsequently, Olzack was permitted to testify about her private-pay life care plan, the only version of her three plans that the trial court allowed into evidence. Olzack noted that her plan identifies the providers her office contacted to obtain her cost estimates. As to the specific services listed for future medical care, her task was not to make care recommendations, but only to determine how much the recommended services will cost. Unlike Roughan, Olzack did not rely on the charged amounts that appear in national health care cost databases. Notwithstanding their different approaches, Olzack‘s private-pay plan reflects essentially the same costs as Roughan‘s plan for many life care categories.
Based on a projected remaining life expectancy of 74 years, plaintiff‘s economist calculated the total value of his future care expenses under Roughan‘s life care plan to be $285 million, with a present value of nearly $29 million. In contrast, defendant‘s economist took the rates to which Olzack was permitted to testify and concluded that the present value of plaintiff‘s future service needs totaled somewhere between $3,233,670 and
Jury Instructions and Verdict
The jury found in favor of plaintiff and awarded $100 million for future medical, hospital, surgical, and rehabilitation care expenses, which it reduced to $9,577,000 in present cash value. The total represents approximately one-third of what plaintiff had sought, and about three times the total in the private pay version of Olzack‘s plan that the trial court admitted into evidence. Following posttrial motions, defendant appealed from the judgment and postjudgment orders awarding plaintiff costs and expert witness fees.
DISCUSSION
I. Issues and Standard of Review
On appeal, defendant asserts the trial court committed four categories of error, all pertaining to its rulings regarding evidence of the costs for plaintiff‘s future care.4 Defendant claims the court erred in: (1) barring evidence under
Trial courts ordinarily enjoy broad discretion with respect to the admission and exclusion of evidence in ruling on motions in limine. (Katiuzhinsky v.
II. The Collateral Source Rule and Section 3333.1
The collateral source rule provides that “if an injured party received 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.” [Citation.] Therefore, the collateral source rule precludes a defendant from presenting evidence that an injured plaintiff‘s medical expenses have been paid by an independent source. [Citation.] While the rule may effectively allow a plaintiff to receive a double recovery, “the collateral source rule expresses a policy judgment in favor of encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. . . . To permit the defendant to tell the jury that the plaintiff has been recompensed by a collateral source for his medical costs might irretrievably upset the complex, delicate, and somewhat indefinable calculations which result in the normal jury verdict. . . .” (Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 504–505 (Hernandez).)
In response to a medical malpractice insurance crisis in California, the Legislature in 1975 adopted MICRA. (Barme v. Wood (1984) 37 Cal.3d 174, 178–179 (Barme).)
Courts have held that
III. Evidence Regarding Future Benefits Is Admissible Under Section 3333.1
A. Section 3333.1 Is Ambiguous with Respect to Awards of Future Damages
The trial court ruled that
The issue is one of statutory interpretation. A court‘s “primary task in interpreting a statute is to determine the Legislature‘s intent, giving effect to the law‘s purpose. [Citation.] [The court] consider[s] first the words of a statute, as the most reliable indicator of legislative intent. [Citation.] ‘“Words must be construed in context, and statutes must be harmonized, both internally and with each other, to the extent possible.”‘” (Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1037.) If, however, ” ‘the statutory language may reasonably be given more than one interpretation, ““courts may consider various extrinsic aids, including the purpose of the statute, the evils to be remedied, the legislative history, public policy, and the statutory scheme encompassing the statute.””‘” (People v. Cornett (2012) 53 Cal.4th 1261, 1265.)
Again,
While the meaning of “paid” as used in subdivision (a) of
Preliminarily, we observe we are not alone in entertaining the notion that
Although this reimbursement procedure was not raised as an issue on appeal, the Supreme Court observed in the footnote referenced above that the plaintiff did “raise a minor contention . . . which is somewhat related to this matter.” (Fein, supra, 38 Cal.3d at p. 165, fn. 21.) The court explained: “In awarding damages applicable to plaintiff‘s future medical expenses, the trial court indicated that defendant was to pay the first $63,000 of such expenses that were not covered by employer-provided medical insurance. Plaintiff, pointing out that he may not be covered by medical insurance in the future, apparently objects to any reduction of future damages on the basis of potential future collateral source benefits. Under the terms of the trial court‘s judgment, however, defendant‘s liability for such damages will be postponed only if plaintiff does in fact receive such collateral benefits; thus, it is difficult to see how plaintiff has any cause to complain about this aspect of the award. Indeed, if anything, the trial court may have given plaintiff more than he was entitled to, since it did not reduce the jury‘s $63,000 award by the collateral source benefits plaintiff was likely to receive, but instead imposed a continuing liability on defendant to pay up to a total of $63,000 for any noncovered medical expenses that plaintiff may incur in the future as a result of the injury. Defendant has not objected to this portion of the judgment.” (Ibid., second italics added.)
Concededly, the relevant language in Fein appears to be dicta; however, in support of its argument, defendant also draws our attention to several federal court cases holding that
B. Purpose of MICRA and Public Policy
We recently had occasion to reflect on the significant reform created by MICRA legislation. ” ‘In May 1975, the Governor—citing serious problems that had arisen throughout the state as a result of a rapid increase in medical malpractice insurance premiums—convened the Legislature in extraordinary session to consider measures aimed at remedying the situation. In response, the Legislature enacted . . . MICRA . . ., a lengthy statute which attacked the problem on several fronts.’ [Citation.] ‘In broad outline, the act . . . sought to curtail unwarranted insurance premium increases by authorizing alternative insurance coverage programs and by establishing new procedures to review substantial rate increases, and . . . attempted to reduce the cost and increase the efficiency of medical malpractice litigation by revising a number of legal rules applicable to such litigation.’ ” (Chan v. Curran (2015) 237 Cal.App.4th 601, 607, fns. omitted; see American Bank & Trust Co. v. Community Hospital (1984) 36 Cal.3d 359, 363–364.)
Defendant asserts that as a matter of practice and policy, maintaining a distinction between past and future insurance benefits “makes no sense” because of the public‘s strong interest in containing medical malpractice liability. We note “[t]he cases agree that MICRA provisions should be construed liberally in order to promote the legislative interest in negotiated resolution of medical malpractice disputes and to reduce malpractice insurance premiums.” (Preferred Risk Mutual Ins. Co. v. Reiswig (1999) 21 Cal.4th 208, 215.)
As the Supreme Court stated in Fein: “Because
C. Legislative History
The legislative history of
Assembly Bill No. 1 (1975–1976 2d Ex. Sess.) § 1.19 (Assembly Bill 1) was enacted and codified as
While “[p]rior unpassed bills generally have little value in showing legislative intent” (Medical Board v. Superior Court (2003) 111 Cal.App.4th 163, 181), here the predecessor bills are instructive. This is because the Assembly Committee on Judiciary acknowledged the relationship between Assembly Bill 1 and its predecessor bills, stating that Assembly Bill 1 “incorporates the concepts or language of the following assembly bills introduced during the regular or special session,” referencing Assembly Bills 21 and 27. Since the adopted bill, Assembly Bill 1, incorporated “the concepts or language” of the prior bills, it is not unreasonable to conclude the legislative intent to extend the statute‘s reach to future damages was adopted as well.11
And while the Legislature used the past tense in
D. The Collateral Source Rule and Howell
Defendant asserts the trial court erred independent of
Howell addressed whether a plaintiff could recover from a tortfeasor economic damages for amounts billed by a medical provider in excess of the discounted sum the provider agreed to accept as full payment for past medical services pursuant to a preexisting contract with the plaintiff‘s health insurance carrier. Howell ultimately concluded the plaintiff was limited to recovering the amount actually paid on his behalf because the billed amounts did not represent an economic loss the plaintiff incurred. (Howell, supra, 52 Cal.4th at pp. 548–549.)
The Howell court explained it was not abrogating or modifying the collateral source rule, it simply found the rule inapplicable: “The rule . . . has no bearing on amounts that were included in a provider‘s bill but for which
The appellate court in Corenbaum addressed issues left open in Howell, supra, 52 Cal.4th at page 567. The court held evidence of the full amount billed for a plaintiff‘s medical care is not relevant to damages for future medical care or noneconomic damages, concluding that the admission of such evidence was error. (Corenbaum, supra, 215 Cal.App.4th at pp. 1319, 1330–1333.) The court reasoned the trial court‘s erroneous admission of such evidence was prejudicial in that case because the record “clearly demonstrate[d]” that the damages awards were based on the full amount billed and not on the lesser amount the plaintiff‘s medical providers had accepted as full payment. (Id. at p. 1333.) The court reversed and remanded for a new trial limited to the issue of compensatory damages. (Id. at pp. 1333–1334.)
A recent case from the Second Appellate District, Markow v. Rosner (2016) 3 Cal.App.5th 1027 (Markow), cites to Howell and Corenbaum, explaining: “Our Supreme Court has endorsed a market or exchange value as the proper way to think about the reasonable value of medical services. [Citation.] This applies to the calculation of future medical expenses. [Citation.] For insured plaintiffs, the reasonable market or exchange value of medical services will not be the amount billed by a medical provider or hospital, but the ‘amount paid pursuant to the reduced rate negotiated by the plaintiff‘s insurance company. ’ ” (Markow, at pp. 1050–1051.)
In Markow, the plaintiffs’ life care planning expert estimated that the amount billed for the injured party‘s future hospitalizations would be approximately $2 million. She also testified that the amount actually paid is usually 50 to 75 percent of the total amount billed, while noting that with respect to one particular hospitalization, the injured party‘s cost had been reimbursed at a much lower rate of 12.9 percent. She also testified that “reimbursement rates vary and that there is no one ‘across-the-board, set percentage. ’ ” (Markow, supra, 3 Cal.App.5th at p. 1051.) The jury awarded $1.3 million for the cost of future hospitalizations, which the defendant claimed was excessive
IV. The ACA
In a related argument, defendant further faults the trial court for preventing it from introducing evidence of future benefits that will be available to plaintiff under the ACA based on its conclusion that it was speculative to assume the ACA will continue to exist. It is noteworthy that this case was briefed before the 2016 presidential election, the aftermath of which did place the ACA‘s continued viability into question. However, in spite of recent efforts to abolish or substantially alter the ACA, as of the writing of this opinion the ACA remains essentially intact.
The declaration of defendant‘s expert Dawson supports the proposition that plaintiff will be able to acquire comprehensive health care insurance going forward. In other words, it provides a defense expert assessment of the availability of insurance benefits compatible with defense health care expert Olzack‘s analysis of sources to finance plaintiff‘s future need satisfaction. Dawson opined that the ACA is reasonably certain to continue well into the future and that plaintiff will be able to acquire comprehensive health insurance notwithstanding his disability. Dawson reviewed Roughan‘s and Olzack‘s life care plans and compared them both to plaintiff‘s current Medi-Cal coverage and to insurance available on the Covered California health care exchange. Dawson identified specific California insurance plans that would be available to meet many of his needs. He also explained that plaintiff could use funds held in his special needs trust to purchase private health insurance, in which case private insurance would pay first, and Medi-Cal would have a right to reimbursement from the corpus of the trust only upon his death.
Defendant presented evidence sufficient to support the continued viability of the ACA, as well as its application to plaintiff‘s circumstances. Accordingly, we conclude the trial court‘s decision to exclude evidence of future
V. Evidence of Regional Center and School District Services
Defendant asserts the trial court erred in excluding evidence regarding the free services that plaintiff is entitled to receive from the regional center and school district. Defendant acknowledges that the trial court concluded those benefits did not qualify as collateral sources admissible under
As we discussed above, the collateral source rule “provides that if an injured party received 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.” (Hrnjak v. Graymar, Inc. (1971) 4 Cal.3d 725, 729; see Helfend v. Southern California Rapid Transit Dist. (1970) 2 Cal.3d 1, 6, 13–14.) In enacting
Regional center benefits, like Medi-Cal benefits, are not paid to the disabled directly. They are paid to the providers by the State Department of Developmental Services. The services rendered to plaintiff will be paid for by a regional center funded under the comprehensive statutory scheme designed to meet the needs of the developmentally disabled. (
As to the availability of the public schools to address plaintiff‘s needs, defendant was, in fact, allowed to introduce evidence of benefits he would
VI. Remaining Issues
As noted above, defendant also argues that the trial court erred in allowing the admission of evidence of plaintiff‘s future medical expenses that was based upon billed rates and in refusing its related modification to the standard jury instruction on damages for future medical care. Because we have concluded that defendant is entitled to a new trial on the issue of plaintiff‘s future medical costs, we offer some guidance to the trial court.
We agree with Corenbaum that while an injured plaintiff is entitled to recover the reasonable value of medical services that are reasonably certain to be necessary in the future, evidence of the full amount billed for past medical services cannot support an expert opinion on the reasonable value of future medical services. (Corenbaum, supra, 215 Cal.App.4th at pp. 1330–1333.) It does not appear, however, that Roughan used the full amount billed for past medical services in making the calculations for her life care plan. We observe “the ‘requirement of certainty . . . cannot be strictly applied where prospective damages are sought, because probabilities are really the basis for the award.’ ” (Behr v. Redmond (2011) 193 Cal.App.4th 517, 533.) At the time of trial, the precise medical costs a plaintiff will incur in the future are not known. Nor is it known how a plaintiff will necessarily pay for such expenses. It is unknown, for example, what, if any, insurance a plaintiff will have at any given time or what rate an insurer will have negotiated with any given medical provider for a particular service at the time and location the plaintiff will require the medical care. The fact finder is entrusted with the tasks of evaluating the probabilities based on the evidence presented and arriving at a reasonable result. If issues arise during retrial, the court is directed to address them in a manner not inconsistent with this opinion.15
During oral argument both sides agreed that if the case is remanded for a trial on future medical damages, the jury verdict on future lost earnings should be affirmed. Appellant is not disputing this portion of the jury award. Therefore, we affirm the jury award of future lost earnings in this case.
DISPOSITION
The judgment is reversed in part. The matter is remanded for a new trial on the issue of the amount of plaintiff‘s future medical damages. Consequently, the postjudgment orders awarding costs and expert fees are also reversed. The jury award of future lost earnings is affirmed. The parties are to bear their own costs on appeal.
Humes, P. J., and Margulies, J., concurred.
A petition for a rehearing was denied May 23, 2017.