Woodland Hills personal injury attorney Barry P. Goldberg has been vigorously fighting to obtain fair compensation for his clients in light of recent California Supreme Court decisions that severely limit the admissibility of medical bills to the very low negotiated rate of a health insurer. Many accident victims chose to reject their own health insurance coverage for this and other reasons and seek medical care from outside sources. This medical care is often provided on a “lien” basis, based on the likelihood of recovery in the underlying personal injury action.
The courts have been struggling on how to handle these plaintiffs that chose to go outside of their own health insurance in determining the economic damage of past and future medical expenses. The insurance companies, championed by the defense bar, regularly urge the courts to basically “pretend” that the plaintiff actually used his health insurance and is required to limit his reasonable medical expenses to the amount that the health insurer would have paid. In other words, the insurers and the defense bar want the imputed discounted medical costs, that reduce jury awards, to apply even though the insurance was not used.
Pebley v. Santa Clara Organics, LLC.
In a newly reported case, Pebley v. Santa Clara Organics, LLC. (May 8, 2018, Ventura County), the competing arguments came before the Court and all of the arguments advanced by both sides was analyzed. The Court held that such a plaintiff shall be considered uninsured, as opposed to insured, for the purpose of determining economic damages.
The Court of Appeal concluded that the trial court properly allowed Pebley, as a plaintiff who is treating outside his insurance plan, to introduce evidence of his medical bills. Pebley’s medical experts confirmed these bills represented the reasonable and customary costs for the services in the Southern California community. Pebley testified that he was liable for these costs regardless of this litigation, and his treating surgeons stated they expect to be paid in full. The court permitted defendants to present expert testimony that the reasonable and customary value of the services provided by the various medical facilities was substantially less than the amounts actually billed, and defendants’ medical expert opined that 95% of private pay patients would pay approximately 50% of the treating professionals’ bills. The jury rejected this expert evidence and awarded Pebley the billed amounts.
The Howell Case.
The California Supreme held that an injured plaintiff with health insurance may not recover economic damages that exceed the amount paid by the insurer for the medical services provided. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 566 (Howell).
As the Supreme Court pointed out: “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.” (Howell, supra, 52 Cal.4th at p. 566.) The court in Howell reasoned that because insured plaintiffs incur only the fee amount negotiated by their insurer, not the initial billed amount, insured plaintiffs may not recover more than their actual loss, i.e., the amount incurred and paid to settle their medical bills. (Id. at p. 555.)
What if the Plaintiff has Health Insurance—But, Does Not want to Use It?
In the Pebley case, the issue decided was whether Pebley is to be classified as insured or uninsured under Howell and its progeny. Although Pebley admittedly has health insurance, he chose to receive medical services outside his insurance plan. As defendants conceded, Pebley had a right to choose physicians and medical facilities outside his plan, but they maintain he also had a duty to mitigate his damages. They assert he did not meet this duty when he elected to treat with lien providers. This is the argument raised by the insurers and defense counsel in every one of our cases.
Insurers and defense counsel reference general authority that every plaintiff has a duty to take reasonable steps to minimize the loss caused by a defendant’s actions. (Placer County Water Agency v. Hofman (1985) 165 Cal.App.3d 890, 897.) For example, “[u]nder the avoidable consequences doctrine as recognized in California, a person injured by another’s wrongful conduct will not be compensated for damages that the injured person could have avoided by reasonable effort or expenditure.” (State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, 1043; Rosenfeld v. Abraham Joshua Heschel Day School, Inc. (2014) 226 Cal.App.4th 886, 900 [“‘[A] plaintiff’s recoverable damages do not include those damages that the plaintiff could have avoided with reasonable effort and without undue risk, expense, or humiliation.’”].)
The defendants maintained that Pebley failed to mitigate his medical expenses by opting for the most expensive method to pay for his treatment. They contend that Pebley’s unreasonable choice of going outside his insurance plan for treatment resulted in excess medical expenses which constitute avoidable losses Pebley seeks to pass on to defendants. In other words, the defense wants a discount it neither earned nor paid for.
In Pebley, the Court rejected defendants’ argument that Pebley failed to mitigate his damages. A tortfeasor cannot force a plaintiff to use his or her insurance to obtain medical treatment for injuries caused by the tortfeasor. That choice belongs to the plaintiff. If the plaintiff elects to be treated through an insurance carrier, the plaintiff’s recovery typically will be limited to the amounts paid by the carrier for the services provided. (Howell, at p. 566.) But where, as here, the plaintiff chooses to be treated outside the available insurance plan, the plaintiff is in the same position as an uninsured plaintiff and should be classified as such under the law.
As such, it was still Pebley’s burden to prove that the amount of his medical specials was reasonable. Pebley put on evidence, including the bills and doctor’s testimony, that the bills were reasonable and necessary. In opposition, the defense provided testimony that the bills were unreasonable and were about 50% higher than what is paid and accepted in this community. The jury agreed with the plaintiff and disagreed with the defense.
One of the reasons that the defense was upset is because they were precluded from telling the jury that the plaintiff had health insurance and did not use it. But, that falls squarely into the collateral source rule. Further, the Court agreed that it would be unfair and confusing for that information to be in front of the jury. We are expecting the defendants to appeal this case to the California Supreme Court.
This is a very important case for plaintiff’s going forward. Plaintiffs will have to make an educated assessment about paying for medical bills through health insurance or going completely outside the health insurance network. If you have a case where you are unsure about whether to pay for medical procedures through your health insurance, it is critical to consult with an experienced trial attorney who can guide you through the pros and cons of going outside your health network.