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Lee v. Silveira

California Court of Appeals, Fifth District

May 15, 2015

LENA LEE et al., Plaintiffs and Appellants,
v.
JOSEPH M. SILVEIRA et al., Defendants and Respondents.

[As modified June 9, 2015.]

APPEAL from a judgment of the Superior Court of Stanislaus County, No. 652893 Roger M. Beauchesne, Judge.

Page 1209

[Copyrighted Material Omitted]

Page 1210

COUNSEL

Alan Charles Dell’Ario; The Brandi Law Firm and Daniel Dell’Osso for Plaintiffs and Appellants.

Morris Polich & Purdy, Richard H. Nakamura, Jr.; Law Office of Murray M. Aron and Murray M. Aron for Defendants and Respondents.

Page 1211

OPINION

FRANSON, J.

In this appeal, a personal injury plaintiff contends the trial court erred in denying her request for expert witness fees and prejudgment interest under Civil Code section 3291. Plaintiff argues she was entitled to such fees and interest, which totaled over $350, 000, because defendants “fail[ed] to obtain a more favorable judgment” (Code Civ. Proc., § 998)[1] than the $1 million offer to compromise she made under section 998.

Plaintiff contends the proper comparison is between her offer and an intermediate judgment based on a jury verdict that included an award for past medical expenses in the full amount billed to her, rather than the smaller amount actually paid by her insurer under the rates the insurer negotiated with the medical providers. This negotiated rate differential (i.e., the difference between the amounts billed and the amounts paid) totaled $165, 262. When it was subtracted from the verdict, plaintiff recovered less than $1 million in damages.

For purposes of determining whether a defendant failed to obtain a more favorable judgment under section 998, we conclude that any negotiated rate differential included in a jury’s verdict should be subtracted from the award before the comparison is made to the offer to compromise “for the simple reason that the injured plaintiff did not suffer any economic loss in that amount.” (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 548 [129 Cal.Rptr.3d 325, 257 P.3d 1130] (Howell).) In other words, the negotiated rate differential is not part of the judgment "obtained" in the litigation.

In this case, the trial court correctly reduced the jury verdict by the negotiated rate differential before making the section 998 comparison and concluding the judgment obtained by defendants was more favorable than the offer to compromise for $1 million.

We therefore affirm the judgment.

FACTS AND PROCEEDINGS

On April 29, 2008, plaintiff Lena Lee was injured when her GMC Yukon collided with a large manure spreader that defendant Joseph M. Silveira had pulled onto Ellenwood Road in front of her. Lee suffered fractures of her hips, leg, elbow and wrist and damage to associated nerves, ligaments and tendons. Attempts to settle Lee’s claim before the lawsuit was filed were unsuccessful.

Page 1212

Before this personal injury lawsuit was filed, the California Supreme Court granted review of the decision in Howell v. Hamilton Meats & Provisions, Inc. [*] (Cal.App.), to address whether the ‘negotiated rate differential’—the difference between the full billed rate for medical care and the actual amount paid as negotiated between a medical provider and an insurer—is a collateral source benefit under the collateral source rule and thus recoverable by the plaintiff as economic damages.

In April 2010, Lee sued Joseph M. Silveira and Silveira Custom Farming (collectively, defendants).

On August 12, 2010, Lee’s attorney served defendants with a section 998 offer to compromise in the amount of $1 million.[2] Defendants did not accept the offer which, by its terms, lapsed after 30 days.

On August 18, 2011, the California Supreme Court filed its opinion in Howell, supra, 52 Cal.4th 541 and held that the negotiated rate differential could not be recovered by a plaintiff as past medical expenses “for the simple reason that the injured plaintiff did not suffer any economic loss in that amount.” (Id. at p. 548.) The court also stated the collateral source rule “does not expand the scope of economic damages to include expenses the plaintiff never incurred.” (Id. at p. 549.)

About a year after the Howell decision, a jury trial began in this case. Defendants filed a motion in limine requesting the trial court permit only the introduction into evidence of paid medical bills. The court denied the motion, concluding that the amount of billed medical expenses was relevant to the question of reasonable past medical expenses, future medical expenses and pain and suffering.[3] The court indicated that the verdict would be reduced to reflect the amount of paid medical expenses. Counsel then stipulated that the amount of billed medical expenses was $274, 514.12 and the amount of paid medical expenses for Lee was $109, 251.61.

Page 1213

In September 2012, the jury completed a special verdict form awarding Lee damages totaling $1, 027, 014. The jury explicitly found the past economic loss for Lee’s medical expenses totaled $274, 514. This was the amount the parties stipulated was billed to her.

On October 5, 2012, the trial court filed a document labeled “JUDGMENT ON JURY VERDICT.” It stated that “Lee is entitled to judgment against Joseph M. Silveira in the amount of $1, 027, 014” and her daughter was entitled to $1, 979. It also stated: “The judgment is subject to amendment following post trial hearing concerning: 1) Plaintiffs’ motion for pre-judgment interest and costs; and 2) the stipulated reduction for plaintiffs’ past medical expenses.”

Defendants immediately filed a posttrial motion for reduction of jury verdict that requested the award for past medical expenses be reduced from the amount charged (i.e., $274, 514.12) to the amount actually paid by Lee’s insurer (i.e., $109, 251.61). Lee agreed the deduction for the negotiated rate differential of $165, 262 eventually should be made, but opposed defendants’ motion on the ground her expert fees and prejudgment interest under Civil Code section 3291 should be determined before the negotiated rate differential was deducted.

The trial court agreed with Lee’s position. The court’s ruling from the bench was confirmed in a December 2012 order stating defendants were entitled to a $165, 262.51 reduction of the judgment, but the reduction would be made after determining Lee’s ...


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