Practice Tip: Medical Expenses In CA

Howell Background

Plaintiff Rebecca Howell was injured as a result of an automobile accident, and presented evidence that her medical bills totaled $189,978.63. The jury returned a verdict in the same amount for past medical expenses. The defendant, Hamilton Meats & Provisions, Inc., then filed post-trial motions to reduce the judgment by $130,286.90, the amount written off by the plaintiff's medical care providers.

The plaintiff argued against the reduction based on the collateral source rule, which precludes the deduction in compensation from independent sources and allows plaintiffs to recover the amount paid on their behalf by others. The trial court granted the defendants' motion and reduced the judgment by $130,286.90. The court of appeal reversed the reduced order as in violation of the collateral source rule.

The Supreme Court of California then granted the defendant's petition for review and made the following rulings.

Howell's Key Rulings

• Plaintiffs can't recover amounts greater than the amount the medical providers accept as full payment. Howell at p. 566.
• Plaintiffs recover the lesser of the amount paid or incurred or the reasonable value of the services. Howell at p. 556.
• The full amount billed is not indicative of the reasonable value of the services due to high variation among medical providers, hospitals, and locations. Howell at p. 560-562.
• The negotiated rate may be the best indication of reasonable value. Howell at p. 562.
• Limiting plaintiffs only to the amount paid does not contravene the collateral source rule, which does not apply to liabilities the plaintiff never incurred. The plaintiff was never liable for the full amount billed, only the amount accepted as full payment. Howell at 567.

Thus, the Howell decision eliminated the futile exercise that had existed in California of presenting the full amount of expenses billed to the jury, which practically guaranteed post-trial motions for reduction of the amounts billed but not paid.

The Howell court also put to rest the plaintiffs' arguments that the collateral source rule dictates that the amount billed (though not paid) can be recovered. Although the Howell decision barred the admission of medical billings for purposes of past medical damages, it left unsettled the question of whether the medical billings could be admitted for other purposes, namely future medical expenses, and more importantly, noneconomic damages.

The new Corenbaum case definitely closed the door on admissions of medical amounts billed for nearly any purpose.

Corenbaum Background

Plaintiffs John Corenbaum and Charles Carter were passengers in a taxi involved in an automobile accident with a vehicle driven by defendant Dwight Eric Lampkin. A jury awarded Corenbaum and Carter $1.8 and $1.4 million, respectively, in compensatory damages and $20,000 each in punitive damages. Lampkin contended that the trial court erred in allowing into evidence the amount of billed medical expenses, and the court of appeal agreed.

Corenbaum's Key Rulings

The recent decision in Corenbaum uses the Howell decision as a stepping stone to curtail the admissibility of the full amount billed for a plaintiff's medical care.

First, it definitively holds that the full amount billed is not relevant for past medical expenses and therefore is inadmissible for that purpose. The Corenbaum court based this holding on the Howell decision, including the Howell court's reasoning that the amount billed is not indicative of the reasonable value of medical services.

Second, it holds that the evidence of the amount accepted as full payment is admissible. In doing so, it strikes down opposing arguments that the accepted amount is hearsay. Again, this draws upon the Howell decision, which found that the discounted or negotiated rate may be the best indication of the reasonable value of medical services. This also is consistent with the Howell ruling that the plaintiff may recover the lesser of the amount paid or reasonable value of services.

Third, and most importantly, it tackles the issue of whether the full amount billed is admissible for the purposes of determining future medical expenses and noneconomic damages and determines it is not. As the evidence of the full amount billed is not relevant to past medical services, discussed above, the Correnbaum decision held that it was not relevant to the reasonable value of future medical services. Furthermore, the court thought it would cause jury confusion to allow the jury to consider only the actual payment for past medical services but then consider the full amount billed for another purpose.

A natural consequence of the court's holding that the full amount billed is not relevant is that experts may not use the full amount billed as a reasonable basis for forming opinions on the value of future medical services. The Corenbaum decision specifically held that experts may not rely on the full amounts billed for plaintiffs' past medical expenses to determine the reasonable value of future medical services.

Perhaps the most significant aspect of Corenbaum's holding, however, is that it precludes the admissibility of the full amount of medical bills for purposes of noneconomic damages. Specifically, the court held that it was not admissible “for the purpose of providing plaintiff's counsel an argumentative construct to assist a jury in its difficult task of determining the amount of noneconomic damages.”

The well-accepted standard in personal injury cases is that noneconomic damages are three times the economic damages. Now, with the Corenbaum ruling, plaintiffs can no longer present the highly inflated medical bills and ask the jury to award noneconomic damages by multiplying by three. As a result, not only are the economic damages lowered by the new standard of admissibility of medical billings, but the noneconomic damages as well.

Conclusion: Practical Considerations in a Post-Corenbaum World

• For each medical provider in a case, know the amount billed versus paid and the basis for both figures.
• Look specifically for plaintiffs' receipts showing out-of-pocket expenses or explanations of benefits showing agreed-to rates with insurance companies, payments made by the insurance companies, the amount to be paid by plaintiffs, and any co-payments already paid.
• Make sure all experts in the case, your own and opposing, are only using the amount of medical bills actually accepted as full payment.
• Seek a stipulation from plaintiffs' counsel that they will not refer to or mention the full amount billed in opening statements and that they will instruct their witnesses not to discuss the full amount billed. If plaintiffs will not agree, bring a motion in limine to exclude such evidence and arguments.

Julia Beckley is a litigation associate in the Los Angeles office of McKenna Long & Aldridge LLP. She can be contacted at [email protected] or 213-243-6207.

Damages in product liability personal injury cases inevitably involve medical expenses. Depending on the nature and extent of the injury, those medical expenses can generate extraordinarily high numbers, especially when examining the amount billed without insurance discounts. When it comes to recovering medical expenses, the question in determining the amount of damages often turns on what number can be presented to the jury: Do we recover the amount billed by the medical providers? Or the out-of-pocket amount actually paid by the plaintiff? The differential between the amount billed versus paid can be substantial, and understanding the admissibility of the figures can have a large impact on the potential damages in your case.

Since the California Supreme Court's decision in Howell v. Hamilton Meats & Provisions, Inc ., (2011) 52 Cal.4th 541, California law has been clear that plaintiffs cannot recover medical damages in excess of those they have paid. The Howell court indirectly opined that evidence of the full amount of an injured plaintiff's medical billings is inadmissible with respect to damages for past medical expenses. The decision, however, left the door open for plaintiffs to seek the admissibility of the full medical billings with respect to the calculation of potential future medical expenses and noneconomic damages. The recent decision in Corenbaum v. Lampkin, (2013) 215 Cal.App.4th 1308, closed that door.

An analysis of the new Corenbaum decision in California necessitates a brief discussion of the main points of its predecessor, Howell.

Howell Background

Plaintiff Rebecca Howell was injured as a result of an automobile accident, and presented evidence that her medical bills totaled $189,978.63. The jury returned a verdict in the same amount for past medical expenses. The defendant, Hamilton Meats & Provisions, Inc., then filed post-trial motions to reduce the judgment by $130,286.90, the amount written off by the plaintiff's medical care providers.

The plaintiff argued against the reduction based on the collateral source rule, which precludes the deduction in compensation from independent sources and allows plaintiffs to recover the amount paid on their behalf by others. The trial court granted the defendants' motion and reduced the judgment by $130,286.90. The court of appeal reversed the reduced order as in violation of the collateral source rule.

The Supreme Court of California then granted the defendant's petition for review and made the following rulings.

Howell's Key Rulings

• Plaintiffs can't recover amounts greater than the amount the medical providers accept as full payment. Howell at p. 566.
• Plaintiffs recover the lesser of the amount paid or incurred or the reasonable value of the services. Howell at p. 556.
• The full amount billed is not indicative of the reasonable value of the services due to high variation among medical providers, hospitals, and locations. Howell at p. 560-562.
• The negotiated rate may be the best indication of reasonable value. Howell at p. 562.
• Limiting plaintiffs only to the amount paid does not contravene the collateral source rule, which does not apply to liabilities the plaintiff never incurred. The plaintiff was never liable for the full amount billed, only the amount accepted as full payment. Howell at 567.

Thus, the Howell decision eliminated the futile exercise that had existed in California of presenting the full amount of expenses billed to the jury, which practically guaranteed post-trial motions for reduction of the amounts billed but not paid.

The Howell court also put to rest the plaintiffs' arguments that the collateral source rule dictates that the amount billed (though not paid) can be recovered. Although the Howell decision barred the admission of medical billings for purposes of past medical damages, it left unsettled the question of whether the medical billings could be admitted for other purposes, namely future medical expenses, and more importantly, noneconomic damages.

The new Corenbaum case definitely closed the door on admissions of medical amounts billed for nearly any purpose.

Corenbaum Background

Plaintiffs John Corenbaum and Charles Carter were passengers in a taxi involved in an automobile accident with a vehicle driven by defendant Dwight Eric Lampkin. A jury awarded Corenbaum and Carter $1.8 and $1.4 million, respectively, in compensatory damages and $20,000 each in punitive damages. Lampkin contended that the trial court erred in allowing into evidence the amount of billed medical expenses, and the court of appeal agreed.

Corenbaum's Key Rulings

The recent decision in Corenbaum uses the Howell decision as a stepping stone to curtail the admissibility of the full amount billed for a plaintiff's medical care.

First, it definitively holds that the full amount billed is not relevant for past medical expenses and therefore is inadmissible for that purpose. The Corenbaum court based this holding on the Howell decision, including the Howell court's reasoning that the amount billed is not indicative of the reasonable value of medical services.

Second, it holds that the evidence of the amount accepted as full payment is admissible. In doing so, it strikes down opposing arguments that the accepted amount is hearsay. Again, this draws upon the Howell decision, which found that the discounted or negotiated rate may be the best indication of the reasonable value of medical services. This also is consistent with the Howell ruling that the plaintiff may recover the lesser of the amount paid or reasonable value of services.

Third, and most importantly, it tackles the issue of whether the full amount billed is admissible for the purposes of determining future medical expenses and noneconomic damages and determines it is not. As the evidence of the full amount billed is not relevant to past medical services, discussed above, the Correnbaum decision held that it was not relevant to the reasonable value of future medical services. Furthermore, the court thought it would cause jury confusion to allow the jury to consider only the actual payment for past medical services but then consider the full amount billed for another purpose.

A natural consequence of the court's holding that the full amount billed is not relevant is that experts may not use the full amount billed as a reasonable basis for forming opinions on the value of future medical services. The Corenbaum decision specifically held that experts may not rely on the full amounts billed for plaintiffs' past medical expenses to determine the reasonable value of future medical services.

Perhaps the most significant aspect of Corenbaum's holding, however, is that it precludes the admissibility of the full amount of medical bills for purposes of noneconomic damages. Specifically, the court held that it was not admissible “for the purpose of providing plaintiff's counsel an argumentative construct to assist a jury in its difficult task of determining the amount of noneconomic damages.”

The well-accepted standard in personal injury cases is that noneconomic damages are three times the economic damages. Now, with the Corenbaum ruling, plaintiffs can no longer present the highly inflated medical bills and ask the jury to award noneconomic damages by multiplying by three. As a result, not only are the economic damages lowered by the new standard of admissibility of medical billings, but the noneconomic damages as well.

Conclusion: Practical Considerations in a Post-Corenbaum World

• For each medical provider in a case, know the amount billed versus paid and the basis for both figures.
• Look specifically for plaintiffs' receipts showing out-of-pocket expenses or explanations of benefits showing agreed-to rates with insurance companies, payments made by the insurance companies, the amount to be paid by plaintiffs, and any co-payments already paid.
• Make sure all experts in the case, your own and opposing, are only using the amount of medical bills actually accepted as full payment.
• Seek a stipulation from plaintiffs' counsel that they will not refer to or mention the full amount billed in opening statements and that they will instruct their witnesses not to discuss the full amount billed. If plaintiffs will not agree, bring a motion in limine to exclude such evidence and arguments.

Julia Beckley is a litigation associate in the Los Angeles office of McKenna Long & Aldridge LLP. She can be contacted at [email protected] or 213-243-6207.