Cabrera v. E. Rojas Properties: The Second District Speaks on the Hanif/Nishihama Issue
On Febrary 24, 2011, the Second District Court of Appeal, Division Eight ordered the publication of its decision in Cabrera v. E. Rojas Properties, Inc., (B216445). Given the Supreme Court’s upcoming decision on the same issue later this year in Howell v. Hamilton Meats & Provisions, Inc. (2009) 179 Cal. App. 4th 686, review granted Mar. 10, 2010 (S179115), there can be little doubt that the court will grant a Petition for Review and hold pending the Howell decision. However, Cabrera is important because it provides insight into the analysis of the position that Hanif/Nishihama controls the question of the proper measure of damages for past medical expenses paid by private insurance. It also comes from the Second District, so Los Angeles County trial courts will be paying close attention to this decision.
The plaintiff was injured in a fall down a staircase, and had private health insurance. Past medical expenses totaled $57,534.45, and private insurance paid $8,914.26 as full payment for these expenses. The jury returned a verdict that included $57,534.45 as damages for these expenses. The trial judge, in a post trial procedure seen in the Los Angeles County Superior Court, held that the amount paid, not the amount billed, was the proper measure of damages for past medical expenses, and therefore reduced the plaintiff’s verdict to so reflect. Plaintiff appealed.
For those who have been watching the recent decisions on the appellate court level, these basic facts look like those found in the Fourth District decision in Howell v. Hamilton Meats & Provisions, Inc. (2009) 179 Cal. App. 4th 686, review granted Mar. 10, 2010, the First District decision in Yanez v. SOMA Environmental Engineering, Inc. (2010) 185 Cal. App. 4th 1313, review granted Sept. 1, 2010, and the Third District decision in King v. Willmett (2010) 187 Cal. App. 4th 313, review granted Oct. 13, 2010. In each of these cases, the holdings at the appellate level are that when the plaintiff has private health insurance, the difference between the amount incurred/charged by providers and the amount actually paid to the provider is considered a collateral source, and therefore recoverable by the plaintiff without any reduction. The Second District has not followed this trend.
There are two main differences between the analysis in Cabrera and the analysis in the other appellate level decisions. One, the Cabrera court accepts, without question, the decision and reasoning in the First District case of Nishihama v. City and County of San Francisco (2001) 93 Cal. App. 4th 298. The other appellate cases, including another First District case, criticized and/or declined to follow Nishihama. Two, the parties in Cabrera entered into several stipulations that made it easy for the trial court, and then the appellate court, to sidestep some of the principal arguments made by the plaintiffs in personal injury cases related to the collateral source issue.
Those stipulations included: an agreement that the jury would not hear evidence of payment by plaintiff’s insurer, an agreement that the defense would file a “postverdict motion” to reduce the recoverable amount of plaintiff’s medical bills, and, importatntly, an agreement that no legal amount remained due to plaintiff’s medical providers after the insurance paid the amounts contractually due. It is unclear whether the trial judge was intending to admit evidence of plaintiff’s health insurance payments absent such a stipulation. Hopefully not, as the admission into evidence of plaintiff’s health insurance coverage would seem in itself to violate the evidentiary component of the collateral source rule.
Nevertheless, the Cabrera court used these stipulations to streamline the issue, which for the court became whether or not to follow Nishihama, or to do as the other courts considering the issue, and reject it. The court decided to follow Nishihama and held that the plaintiff’s argument, that had been successful in the other recent appellate court decisions “is inconsistent with current California case law as explained in Hanif…Nishihama.” The court did not analyze in this context whether or not an amount billed by the provider is “incurred” for purposes of determining the proper amount recovered.
This same division fo the Second District had already considered this issue in 2008 in the context of the criminal restitution case: People v. Bergin (2008) 167 Cal. App. 4th 1166. The holding in Bergin was that “an award of damages for past medical expenses in excess of what the medical care and services actually cost constitutes overcompensation.” The penal code section at issue required the offender to fully compensate the victim for economic losses “incurred” as a result of the criminal activity. Cal. Penal Code section 1202.4(f)(3). The amount “incurred” was considered the amount of money actually paid for the medical care provided for purposes of deciding what restitution was required from the offender. As the word “incurred” is found in both statutes, this court logically construed the word identically and therefore reached the same conclusion.
The string of recent appellate cases favoring the plaintiff’s position on this issue has been broken with Cabrera. For those keeping score, the First, Third and Fourth districts have pro-plaintiff decisions, and the Second district has a pro-defense position. Howell is set to be decided this year.
In the meantime, uncertainty reigns, which makes the analysis of past economic losses an inexact science at best. This uncertainty can assist in having a reasonable discussion with the other side in order to achieve a just settlement of cases where past medical expenses are a significant value driver of the case.
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