APPEAL from a judgment of the Superior Court of Sacramento County, Judy Holzer Hersher, Judge. Reversed with directions. (Super. Ct. No. 06AS02165).
The opinion of the court was delivered by: Cantil-sakauye, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
In this case we primarily consider whether, in a negligence action against a nonpublic defendant, the reduction of a plaintiff's award of past medical expense damages to the dollar amount ultimately paid by the plaintiff's private health insurance to his health care providers is appropriate under the collateral source rule. In light of the public policy conclusions expressed by our state Supreme Court and the Legislature's enactment of specific statutes governing the operation of the collateral source rule in limited kinds of cases, we conclude reduction is inappropriate in this case. Therefore, the trial court erred in reducing the award here.*fn2
In the unpublished portion of this opinion, we reject plaintiff's other contentions of reversible error.
We shall reverse the amended judgment on verdict and remand the matter to the trial court with directions to reinstate the jury's award of past medical expense damages and enter a new judgment in favor of plaintiff with interest and costs consistent with such award.
Plaintiff Michael King, an insurance defense attorney employed as the managing attorney for the Sacramento legal office for Farmers Insurance, was driving south on Highway 99 on the evening of August 27, 2004, when he was rear-ended by defendant Carol Willmett. According to plaintiff, he was hit three times. Plaintiff got out of his car and went back to defendant's car where he spoke with defendant. Defendant admitted responsibility for the accident several times and, at plaintiff's urging, wrote a note stating: "I, Carol J. Willmett, take responsibility for rear-ending an 03 Bonneville driven by Mike King on 8/27/04 approximately 7:40 pm, south bound on Hwy 99, just north of Morada Lane in Stockton, CA. s/Carol J. Willmett."
After the accident, plaintiff drove his damaged car to a Farmer's Insurance claims office and then to a body shop. He rented a car intending to continue his drive south, but he turned around after 10 miles or so because he was feeling pain and stiffness in his neck and shoulders. He did not go to the hospital, but went home where he rested, took over-the-counter pain medication, and used ice packs over the course of the weekend. Plaintiff went to see his primary care physician a few days later when he continued to feel sore. He was prescribed medication and massage therapy. Plaintiff also obtained chiropractic treatment over the course of the next couple of months, which according to plaintiff, would be effective for a few days but did not resolve the problem. Plaintiff's chiropractor testified plaintiff did not complain of any numbness, tingling or radiating pain.
When plaintiff had a trial in Shasta County in late November through December 2004, his symptoms flared up under the stress of his work. Rest over the Christmas holiday helped, but did not eliminate his pain.
Plaintiff returned to his chiropractor in January 2005 because of his ongoing symptoms. He described his level of pain at this time as a two on a scale of 10, which was down from his initially reported level of six. He still had no weakness, numbness, tingling or radiating pain. His chiropractor felt plaintiff's prognosis was good and released him from treatment.
In February 2005, plaintiff drove to Los Angeles to attend a meeting. During the drive and after he arrived, plaintiff began to have tingling and numbness in his left upper back and into his left upper arm. Plaintiff went back to his chiropractor in March 2005 and reported these symptoms. The chiropractor suspected possible neurological involvement.
Plaintiff decided to see a neurologist or neurosurgeon and a colleague recommended Dr. Laura Anderson. Plaintiff went to see Dr. Anderson in July 2005. She recommended he have cervical spine X-rays and a MRI. After obtaining those tests in October 2005, plaintiff returned to Dr. Anderson in December 2005 for evaluation and diagnosis. She told plaintiff he had nerve root impingement at the C6-7 disk level on the left and recommended physical therapy and yoga, which plaintiff undertook.
In early 2006, plaintiff decided to move back to Santa Rosa where he could manage the smaller Santa Rosa legal office. Plaintiff felt the move was necessary because of a decline in his stamina. Plaintiff was referred to a new neurosurgeon, Dr. Samir Lapsiwala, whom he saw beginning in October 2006. Dr. Lapsiwala diagnosed plaintiff with degenerative disk disease and recommended continuing conservative treatment with physical therapy. If plaintiff continued to show weakness, plaintiff would be a candidate for a surgical three-level fusion.
As part of this action against defendant, plaintiff was seen in March 2007 by neurosurgeon Edward F. Eyster for an independent medical evaluation. According to Dr. Eyster, plaintiff's October 2005 MRI showed extensive degenerative damage at most levels of plaintiff's spine, but it was worst at three specific disk levels. By the time Dr. Eyster saw plaintiff, plaintiff was losing function in the C7 nerve root. Dr. Eyster thought plaintiff was a surgical candidate because of the progressive weakness in his left arm and warned plaintiff of the risks of delaying surgery. Dr. Eyster advised electrical studies, new X-rays and a repeated MRI to determine the appropriate surgical intervention, but believed it was most likely plaintiff would "need a one or two level anterior cervical discectomy and fusion[.]"
It was Dr. Eyster's opinion that the 2004 accident aggravated plaintiff's pre-existing asymptomatic condition of degenerative cervical disk disease. In deposition testimony played at trial, Dr. Eyster explained that when he looked at causation, there were three relevant events in his mind. "The number one was the motor vehicle accident, which started the process. I think there was a second event in December, with excessive fatigue and workload. The degenerative process was pre-existing. This has been going on for years. And then the event in February, the third event, when the disk actually ruptured, was off the long drive." Dr. Eyster testified he did not know what happened in February, but something new did happen to cause additional aggravation resulting in the need for surgery.
Plaintiff saw another neurosurgeon, Dr. Eldan Eichbaum, for a second opinion on the appropriate surgical treatment. Dr. Eichbaum recommended surgery at the two most affected disc levels. He felt it was possible plaintiff would improve after such surgery, but if his symptoms persisted, a second surgery could be performed to address the third disc level.
In January 2008, plaintiff underwent a successful two-level anterior cervical discectomy and fusion surgery performed by Dr. Lapsiwala. The surgery had two purposes--to relieve the irritation of the nerve causing the radicular pain and to stabilize the spine to help with the neck pain. Plaintiff was pleased with the results of his surgery and showed significant improvement in his symptoms. Plaintiff did not, however, feel completely cured by the surgery. Dr. Lapsiwala opined that the continued tingling in the small finger of plaintiff's left hand indicated irritation of the nerve not addressed by the surgery. When asked on direct examination if he had an opinion to a reasonable degree of medical probability whether it is more likely than not that plaintiff will have to have a second surgery, Dr. Lapsiwala said he believed "at some point" plaintiff will require the third level to be addressed by surgery. On cross-examination, however, Dr. Lapsiwala testified it was best to wait on the C8 nerve root to give plaintiff time to recover from the first surgery and to see what happens, to possibly avoid the second surgery. He admitted a future surgery was not 100 percent definite and agreed that a recommendation for a second surgery would be highly speculative without knowing what plaintiff's recovery would be from the first surgery. All he could give plaintiff was the chances that surgery would be needed or not. He could not be sure one way or the other.
Dr. Lapsiwala released plaintiff to return to work without restrictions on February 15, 2008. He saw no medical reason plaintiff could not go back to his regular and customary work. Plaintiff returned to work and tried to resume his usual workload, but was unable to perform his full duties. He started looking into early retirement, although he admitted no doctor had told him medically he should retire. At the time of trial, plaintiff testified he planned to take early retirement in a few months, but acknowledged he had not submitted any paperwork to initiate his retirement.
The defense called Dr. William Hoddick, a physician specializing in diagnostic radiology and medical imaging, to testify regarding his review of plaintiff's medical imaging studies. He testified plaintiff's October 2005 MRI exam showed only age-related degenerative damage. He testified he found no evidence of trauma on the MRI. The same was true of plaintiff's abdominal ultrasound examination in September 2005, plaintiff's radiography of the cervical spine in December 2006 and plaintiff's MRI of the cervical spine in April 2007. The exams showed no injury he could relate back to the 2004 auto accident. On cross-examination, Dr. Hoddick testified that nothing he reviewed indicated plaintiff's degenerative disk disease was aggravated by the accident. In his deposition, Dr. Hoddick admitted he could not say to a reasonable degree of medical certainty that plaintiff's disease was not aggravated by the accident. He could not say one way or the other. Plaintiff's diagnostic radiologist disputed Dr. Hoddick's opinion at trial that plaintiff's imaging studies did not show evidence of trauma.
By way of a special verdict, the jury found defendant negligent, that her negligence was a substantial factor in causing harm to plaintiff and that plaintiff sustained damages in the amount of $169,499.94 for past medical expenses, $20,000 for past wage loss, $75,000 for past non-economic damages, $0 for future medical expenses, $0 for future wage loss, $0 for future loss of pension, $0 for future loss of bonus, $0 for future loss of company car, and $50,000 for future non-economic damages, for a total jury award of $314,499.94.
After hearing legal argument, the trial court granted defendant's posttrial motion for reduction of medical billings and reduced the amount of past medical expense damages to $76,286.32 for a final amended judgment amount of $221,286.32.*fn3
The trial court denied plaintiff's motion for attorney fees under Code of Civil Procedure section 2033.420 and plaintiff's motion for new trial or, in the alternative, request for additur.
I. APPLICATION OF THE COLLATERAL SOURCE RULE
Before we discuss this rule, a few prefatory statutes are in order. Civil Code section 3281 provides that, "[e]very person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages." (Italics added.) The standard measure of tort damages is "the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not." (Civ. Code, § 3333.) "Detriment is a loss or harm suffered in person or property." (Civ. Code, § 3282.) Economic damages in a personal injury action "means objectively verifiable monetary losses including medical expenses[.]" (Civ. Code, § 1431.2.)
In determining such damages, the doctrine known as the "collateral source rule" provides "that if an injured party receives 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." (Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6 (Helfend).) As a matter of common law, California has adopted the collateral source rule, which includes the closely related principle that, "jurors should not be told that plaintiff can recover compensation from a collateral source." (Lund v. San Joaquin Valley Railroad (2003) 31 Cal.4th 1, 9-10 (Lund); see Hrnjak v. Graymar, Inc. (1971) 4 Cal.3d 725, 729-730 (Hrnjak); Helfend, supra, at p. 6; Smock v. State of California (2006) 138 Cal.App.4th 883, 886-887 (Smock).) Thus, the collateral source rule as expressed by case law has two components; an evidentiary rule that limits what the jury is told about plaintiff's receipt of collateral source compensation, and a substantive rule that prohibits reduction of the damages plaintiff would otherwise receive for plaintiff's receipt of collateral source compensation. (Arambula v. Wells (1999) 72 Cal.App.4th 1006, 1015 (Arambula).)
This case involves the application of the substantive rule. Plaintiff contends the trial court violated the collateral source rule by reducing the jury's award of past medical expense damages from the amount billed by plaintiff's health care providers to the cash amount paid by plaintiff's private health insurance that was accepted by the providers as payment in full.*fn4 Whether the trial court correctly applied the collateral source rule here is a question of law that we independently review. (See Souza v. Westlands Water Dist. (2006) 135 Cal.App.4th 879, 891 [when the issue is presented on the basis of undisputed facts and only a question of the application of the law to those facts need be answered, our review is de novo].)
A. Plaintiff Did Not Waive His Claims
Defendant claims plaintiff stipulated to the post-verdict procedure used by the trial court to address defendant's claims regarding reduction of the award of past medical expense damages and to the specific amounts claimed as reductions. Therefore, according to defendant, plaintiff waived any challenge to the trial court's reduction of the jury's award of medical expense damages. We disagree.
The record shows that both plaintiff and defendant filed pretrial motions in limine dealing with the issues surrounding the application of the collateral source rule to plaintiff's past medical expenses. The trial court ruled it would not permit evidence to be presented before the jury of any collateral source payments, including health insurance payments. It reserved consideration of the reduction of any jury award for past medical expenses until after the verdict, consistent with Greer, supra, 141 Cal.App.4th 1150. The court told defendant her right to a post-verdict motion was preserved and that counsel could argue whatever was appropriate at that time.
Defense counsel then represented to the trial court that the parties had agreed "that the reimbursed amounts that have been tabulated by the defendant for purposes of [her] post-trial motion are authenticated and otherwise will not be objected to as bills by... plaintiff." The trial court clarified the nature of the agreement, indicating its understanding that defendant was not going to make plaintiff call a witness to "testify that each and every item on that bill was reasonable and necessary and has been properly authenticated, meaning it was ordered by a doctor or was necessary to the treatment and care of [plaintiff]. In exchange for which, [plaintiff was] not going to challenge [defendant's] rendition of the fact that X amount was actually paid on a particular bill in satisfaction of that bill." Plaintiff noted that in addition to what the insurance companies may have actually paid, he may have paid additional amounts out of his pocket. Defendant agreed there were certain "co-pays that were paid[,]" which were included in the tabulation. Plaintiff again clarified the agreement as follows: "So we don't have to bring in any of these outside people to say, yes, these are my bills and these are the reasonable amounts. That's fine on both sides, going both ways. [¶] We have some legal arguments, of course, at the end of the case on Greere [sic] and so forth. But I'm not going to challenge his numbers and make him bring in a witness to testify as to, yes, indeed, these were the actual amounts we received." (Italics added.) The court responded: "Okay. Legal arguments are fine. We have that agreement." (Italics added.)
The parties subsequently agreed the amount of plaintiff's medical bills totaled $169,499.94. They agreed the amount paid by plaintiff's private health maintenance organization (HMO) and plaintiff through his "co-pays," which plaintiff's medical providers accepted as full payment for their services, was $76,286.32.
We view this record as showing an agreement by the parties to save their respective arguments on the collateral source rule until after the jury returned its verdict. It shows the parties agreed to limit their arguments to their legal positions and not to challenge how the plaintiff arrived at the monetary figures underlying each of their legal positions. The record does not show plaintiff waived his contention that the collateral source rule prohibits the reduction of the jury's award of medical expense damages. We turn to the merits of that claim.
B. The Trial Court Erred in Reducing the Jury's Award of Damages for Past Medical Expenses
(1) The California Supreme Court Has Declared the Public Policy Interests in Favor of the Collateral Source Rule
In Helfend, supra, 2 Cal.3d 1, the California Supreme Court described the collateral source rule as "embod[ying] the venerable concept that a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift. The tortfeasor should not garner the benefits of his victim's providence." (Id. at pp. 9-10, fn. omitted.) "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. Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds. If we were to permit a tortfeasor to mitigate damages with payments from plaintiff's insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums would have earned no benefit. Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance." (Id. at p. 10.)
The California Supreme Court in Helfend concluded a number of public policy interests justified the continuation of the collateral source rule (3 Cal.3d at pp. 10-14) despite criticism that the rule provides a plaintiff with a "'double recovery'" and "defeats the principle that damages should compensate the victim but not punish the tortfeasor." (Id. at p. 10; see Smock, supra, 138 Cal.App.4th at p. 887.) The Supreme Court first questioned whether there would be any true double recovery where the payor has a right of subrogation or reimbursement (Helfend, supra, at pp. 10-11), but went on to conclude that even when subrogation or reimbursement is inapplicable, the collateral source rule "performs entirely necessary functions in the computation of damages." (Id. at p. 11.) Since the cost of medical care is often an important indicator of plaintiff's general damages, the rule prevents a defendant from upsetting "the complex, delicate, and somewhat indefinable calculations" of the jury with evidence that the plaintiff has been recompensed by a collateral source for his medical costs. (Id. at pp. 11-12.) The rule also partially serves to compensate the plaintiff for the portion of the award that the plaintiff's attorney typically receives as a contingent fee, making the award "a somewhat closer approximation to full compensation for [plaintiff's] injuries." (Id. at pp. 12-13; accord, Arambula, supra, 72 Cal.App.4th at p. 1009, fn. 1.) Quoting from commentary with apparent approval, the Supreme Court noted, "'the rule seems to perform a needed function. At the very least, it removes some complex issues from the trial scene. At its best, in some cases, it operates as an instrument of what most of us would be willing to call justice.' [Citation.]" (Helfend, supra, at p. 7, fn. 6.)
Essentially, application of the collateral source rule as expressed by our Supreme Court represents its policy choice in the calculation of tort damages to permit the victim to retain a benefit where necessary, rather than to confer a benefit on the tortfeasor. (Helfend, ...