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Lydia Sanchez v. Darrell G. Brooke et al.

March 8, 2012

LYDIA SANCHEZ, PLAINTIFF AND APPELLANT,
v.
DARRELL G. BROOKE ET AL., AS TRUSTEES, ETC., DEFENDANTS AND APPELLANTS.



(Los Angeles County Super. Ct. No. GC041017) APPEALS from an order and a judgment of the Superior Court of Los Angeles County, Jan A. Pluim, Judge.

The opinion of the court was delivered by: Suzukawa, J.

CERTIFIED FOR PUBLICATION

Plaintiff's appeal: affirmed. Defendants' appeal: reversed in part and remanded.

An injured employee (plaintiff Lydia Sanchez, a home health care worker) filed a personal injury action against the trustees of the estate of a third party tortfeasor (the late Dorothea B. Kavanaugh, the elderly woman for whom Sanchez had provided care). The trustees (defendants Darrell G. Brooke and Darryl Denning) asserted as an affirmative defense the comparative negligence of Sanchez and her employer (Glendale Adventist Health, also known as Western Health Resources (Western or employer)). Western, which is not a party to this action, filed a workers' compensation lien against Sanchez's potential recovery.*fn1

The jury found that Kavanaugh, Western, and Sanchez all were negligent, but that Sanchez's negligence was not a substantial factor in causing her own injuries. The jury apportioned 50 percent of the fault to Kavanaugh and 50 percent to Western. Based on the jury's finding that Sanchez had sustained total damages of $903,000, the trial court calculated Kavanaugh's share and entered a judgment against defendants for $570,949.87.

Sanchez and defendants filed separate appeals, which we consolidated. In Sanchez's appeal from the order denying her motion for judgment notwithstanding the verdict, she challenges the sufficiency of the evidence to support the finding of employer negligence. We conclude that because the finding was supported by substantial evidence, the motion was properly denied.

In defendants' appeal from the judgment, they contend that the judgment should be further reduced to reflect the fact that, under the workers' compensation law, an injured employee's medical expenses must be paid in full by the employer, and the employee is not liable for any unpaid balance. We conclude that defendants are correct. This case is analogous to and is therefore governed by the California Supreme Court's recent decision in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 (Howell), which was issued while this appeal was pending. The court in Howell held that an injured person's recovery of past medical expenses as economic damages was limited to the discounted amount that the medical providers accepted as payment in full from the injured person's private health insurance carrier.

We conclude that the same result applies where an injured employee's medical provider accepts a discounted amount as payment in full from the employer under the workers' compensation law. In both situations, because the injured person/employee is not liable for the undiscounted sum stated in the provider's bill, the unpaid balance does not represent an economic loss to the plaintiff and is not recoverable as damages. We therefore reverse the judgment in part as to the amount of damages only and remand for a limited rehearing and recalculation of damages.

BACKGROUND

Sanchez, a home health aide employed by Western, was working as Kavanaugh's live-in caregiver when a fire broke out in Kavanaugh's bedroom at around midnight on September 20, 2006. The evidence at trial showed that the fire was caused by Kavanaugh's negligent smoking in bed, and that Sanchez was injured while attempting to rescue Kavanaugh, who died in the fire.*fn2

The jury found that Sanchez suffered total damages of $903,000, which included $300,000 in non-economic damages and $603,000 in economic damages. The jury also found that the economic damages consisted of $575,000 in past medical expenses and $28,000 in lost earnings.

Given that Western was apportioned 50 percent of the liability and had paid $272,622.38 in workers' compensation benefits to Sanchez, the trial court had to determine defendants' share of the total damages of $903,000. Based on the following calculations, the trial court entered a judgment against defendants for $570,949.87. The first calculation addressed the effect of the employer's (Western's) concurrent negligence on a third party defendant's (Kavanaugh's) liability for non-economic damages. Under Proposition 51 (as codified in Civ. Code, § 1431.2), a finding of employer negligence eliminates a third party defendant's joint and several liability for non-economic damages attributable to the fault of the employer. (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 596; C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18 Cal.App.4th 376, 387.) In light of the jury's apportionment of 50 percent of the liability to Western, the trial court concluded that under Civil Code section 1431.2, defendants are responsible for only 50 percent of the $300,000 non-economic damages award, or $150,000. Although Sanchez challenges the finding of employer negligence, neither party disputes the mathematical computation of the $150,000 non-economic damages award.

The second calculation addressed the effect of a concurrently negligent employer's (Western's) payment of workers' compensation benefits on a third party defendant's (Kavanaugh's) liability for economic damages. The relevant rule is that because "the injured employee may not be allowed double recovery, his [or her economic] damages must be reduced by the amount of workmen's compensation he [or she] received." (Witt v. Jackson (1961) 57 Cal.2d 57, 73.) Under Witt v. Jackson and its progeny, an employee's economic damages award is properly reduced by the amount of any workers' compensation benefits received from a concurrently negligent employer that properly are attributable to economic damages.*fn3 (Engle v. Endlich (1992) 9 Cal.App.4th 1152, 1156; C.J.L. Construction, Inc. v. Universal Plumbing, supra, 18 Cal.App.4th at p. 387.) This reduction is commonly referred to as the Witt v. Jackson offset. It is calculated by multiplying the workers' compensation benefits by the percentage of the jury verdict attributable to economic damages. The product of that equation (the Witt v. Jackson offset) is the amount of the workers' compensation benefits presumptively attributable to economic damages, and is subtracted from the jury's award of economic damages to prevent the injured employee's double recovery. (See Scalice v. Performance Cleaning Systems (1996) 50 Cal.App.4th 221, 225-238 [Witt v. Jackson offset calculation explained].)

Before calculating the Witt v. Jackson offset, the trial court had to resolve the parties' disagreement over the amount of past medical expenses that were recoverable by Sanchez as economic damages. Defendants contended that the jury's award of $575,000 in medical expenses was excessive because it included amounts that were billed but not paid by Western. Defendants argued that because the medical providers had accepted $241,818.38 from Western (the amount of Western's medical lien) as payment in full, Sanchez's recovery of past medical expenses must be capped at that amount under Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 640 (Hanif) and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, 306-307 (Nishihama).

In Hanif, the injured plaintiff's recovery of past medical expenses from the defendant tortfeasor was capped at the amount the provider had accepted from Medi-Cal as payment in full. (Hanif, supra, 200 Cal.App.3d at pp. 643-644.) In Nishihama, the injured plaintiff's recovery of past medical expenses from the defendant tortfeasor was capped at the amount the provider had accepted from the private health insurer as payment in full. (Nishihama, supra, 93 Cal.App.4th at pp. 306-309.)

Based on their view that a Hanif-Nishihama reduction is required in this case, defendants argued that Sanchez could recover only $269,818.38 of the $603,000 economic damages award, consisting of $241,818.38 in past medical expenses (the amount of Western's medical lien) and $28,000 in lost earnings, reduced by a Witt v. Jackson offset of $129,091.16. Using these reduced figures, defendants calculated a proposed judgment of $290,727.22.*fn4

Based on her view that a Hanif-Nishihama reduction is not required in this case, Sanchez argued that she was entitled to the full award of $603,000 in economic damages, consisting of $575,000 in past medical expenses and $28,000 in lost earnings. Using those unreduced figures, Sanchez calculated a proposed ...


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