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Cuevas v. Contra Costa County

California Court of Appeals, First District, First Division

April 27, 2017

BRIAN CUEVAS, a Minor, etc., et al., Plaintiffs and Respondents,
CONTRA COSTA COUNTY, Defendant and Appellant.

         Contra Costa County Superior Court, No. MSC09-01786 Hon. Steven K. Austin Judge

          Horvitz & Levy, H. Thomas Watson, Karen M. Bray, Robert H. Wright; Craddick, Candland & Conti, W. David Walker; Mauro Lilling Naparty, Richard J. Montes for Defendant and Appellant

          Cole Pedroza, Curtis A. Cole, Matthew S. Levinson for California Medical Association, California Dental Association, and California Hospital Association as Amici Curiae on behalf of Defendant and Appellant

          Fred J. Hiestand for Civil Justice Association of California as Amicus Curiae on behalf of Defendant and Appellant

          Alston & Bird, David Venderbush, Brian Boone; California Chamber of Commerce, Heather Wallace; U.S. Chamber Litigation Center, Janet Galeria for Chamber of Commerce of the United States as Amicus Curiae on behalf of Defendant and Appellant

          Greines, Martin, Stein & Richland, Robert Olson for Association of Southern California Defense Counsel as Amicus Curiae on behalf of Defendant and Appellant

          The Veen Firm, William L. Veen, Elinor Leary; Alan Charles Dell'Ario for Plaintiff and Respondent

          DONDERO, J.

         Plaintiff Brian Cuevas, through his guardian ad litem, brought an action for medical malpractice against defendant the County of Contra Costa, among others, arising out of injuries he sustained at birth. A jury awarded him $9, 577, 000 as the present cash value of his future medical and rehabilitation care expenses. Defendant appeals from the damages verdict, asserting, among other things, that the trial court erred in excluding evidence that health insurance benefits under the Patient Protection and Affordable Care Act (ACA) (Pub.L. No. 111-148 (Mar. 23, 2010) 124 Stat. 119) would be available to mitigate plaintiff's future medical costs. We agree that the trial court erred in ruling that evidence of future ACA benefits is inadmissible. We reverse the judgment and remand the case for a new trial on the amount of plaintiff's future medical damages. In light of our conclusion, we also reverse the postjudgment orders awarding costs and expert fees.



         Because defendant does not contest the jury's findings of liability and proximate cause, we need not address the facts of this case in great detail. Plaintiff suffered irreversible brain damage in utero while his mother's pregnancy was being managed by Dr. Teresa Madrigal, a physician employed by defendant. Plaintiff is the surviving twin of a monochorionic-diamniotic pregnancy-a condition whereby identical twins share a placenta, but have separate amniotic sacs.

         When plaintiff's mother reported for an appointment at 37 weeks and six days pregnant, only one fetal heartbeat could be detected. She was transferred to a hospital by ambulance, where the twins were delivered via caesarian section. Plaintiff's twin had died, and plaintiff had suffered a hypoxic brain injury. As a result, plaintiff has a very low verbal IQ and will never be a functional reader. He also has serious language communication difficulties, significant behavioral problems, and has been diagnosed with cerebral palsy. Though he has severe developmental delay, he is sociable. He is toilet trained and can walk, run, and feed himself. In the future, he will be able to feed, dress, and bathe himself. However, he will be dependent on others for his personal care and safety for the rest of his life.

         On April 19, 2010, plaintiff, through his guardian ad litem, filed a first amended complaint (FAC) against Contra Costa County Health Services and 13 other defendant health care providers and medical centers. The FAC alleges two causes of action: (1) medical malpractice as to plaintiff, and (2) negligent infliction of emotional distress as to his mother.[1] Plaintiff's theory at trial was that he sustained his injury because Madrigal breached the applicable standard of care by failing to schedule his delivery prior to 37 weeks' gestation. The case was tried to a jury, which found in plaintiff's favor on liability. Defendant does not contest this finding on appeal.

         Plaintiff's and Defendant's Life Care Plans

         During discovery, plaintiff disclosed a life care plan prepared by Jan Roughan, in which she provided her opinion as to the kind of medical and rehabilitative care he will need for the rest of his life, along with the projected costs for each specific care item. Her plan was based on the recommendations of medical specialists who testified on plaintiff's behalf. As to future medical costs, the plan does not account for service discounts associated with Medi-Cal, even though plaintiff is currently receiving Medi-Cal benefits. Nor does it reflect negotiated discounts that would potentially be available under insurance procured through the ACA. Instead, Roughan determined future costs for plaintiff's medical care by referencing a national database that reflects the average charges billed for each type of service.

         Defendant's life care planner, Linda Olzack, prepared life care plans based on services recommended by a defense pediatric neurologist. In contrast to Roughan, Olzack's plans reflect three alternate cost scenarios, including one in which plaintiff would continue to be covered by Medi-Cal, one in which he would procure private insurance under the ACA, and one in which he would pay for his expenses out of pocket. With respect to the private pay scenario, Olzack did not rely on amounts billed by healthcare providers in calculating future medical expenses. Instead, she contacted local health care providers and asked them how much individuals without insurance are required to pay. These rates typically are less than what providers would state on a bill.

         Olzack's alternative plans reflect the wide variations that presently exist in medical charging practices. Her Medi-Cal life care plan reflects reimbursement rates that appear to be substantially lower than the rates paid by persons without insurance. For example, one category of expenses reflects a more than 60 percent difference between the private pay rate and the Medi-Cal rate. Within her plans, she also took into consideration the free benefits that plaintiff is currently entitled to receive from the regional center and public school system.

         Olzack also prepared a report comparing the costs for the services itemized in Roughan's plan with the Medi-Cal payment rate for the same goods and services, revealing that Roughan's costs were substantially higher. For example, the cost for a wide variety of physician visits listed in Roughan's plan were four to six times higher than the corresponding Medi-Cal rates.[2]

         Evidentiary Rulings

         On January 10, 2014, plaintiff filed various motions in limine, including one seeking to exclude evidence of collateral source payments from Medi-Cal and other public sources, and another to exclude evidence of future collateral sources. Plaintiff also filed a motion to exclude evidence, opinion, or argument regarding any possible future medical benefits available through ACA-mandated insurance. In part, plaintiff asserted that Civil Code section 3333.1 (section 3333.1), a statute contained within the Medical Injury Compensation Reform Act (MICRA), does not allow the introduction of evidence regarding future collateral source medical benefits. He contended defendant's expert should be prohibited from offering opinions as to such evidence.

         On July 14, 2014, defendant filed further briefing on the issue of future medical benefits. In support of its argument that evidence of prospective ACA benefits should be offered to the jury, it included a declaration prepared by Thomas J. Dawson, an expert on the ACA and regulatory and health care policy, who worked for the United States House of Representatives during the passage of the ACA and was directly involved in negotiating key provisions of the legislation.

         After hearing argument, the trial court ruled that defendant could not present as a collateral-source offset any evidence concerning publicly funded benefits available through regional centers and the public school system. Relying on section 3333.1, it also ruled defendant could not introduce any evidence of Medi-Cal benefits, nor could it introduce evidence of ACA insurance benefits. With respect to Medi-Cal, the court ruled that Medi-Cal is not subject to MICRA's exception to the collateral source rule. With respect to the ACA, the court also reasoned: “I believe that there is no reasonable certainty that that benefit will be in place, and that's something that-you have to cross that barrier in order to be considered as something that should be presented to the jury for factual consideration.”

         On August 28, 2014, defendant filed a request for clarification regarding the presentation of evidence as to plaintiff's future medical expenses. Specifically, it asserted Roughan had relied on “inflated” billed amounts in calculating the cost of plaintiff's future medical care, rather than the lower amounts providers actually accept as full payment. Defendant questioned whether the trial court had intended to allow the introduction of such evidence when it made its earlier rulings on plaintiff's motions in limine. Defendant suggested the evidence should instead be limited to the amounts health care providers will accept in the future as full payment.

         Defendant noted Roughan's life care plan did not reflect the substantially lower amounts that would be accepted as full payment under Medi-Cal or private insurance.[3] It relied heavily on Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 (Howell) and Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308 (Corenbaum) in arguing that plaintiff's recovery should be limited to the amount he proves is likely to be paid to providers for his future medical care, not the amount his providers are likely to bill. It contended that the billed rates reflected in Roughan's plan were therefore inadmissible.

         Defendant also asked whether it would be allowed to introduce evidence concerning the range of amounts healthcare providers accept as full payment, without making reference to the actual sources (i.e., Medi-Cal or private insurance) of those payments. Defendant asserted that introducing these reduced amounts “would assist the jury in evaluating the reasonable value of plaintiff's future medical care, without violating the collateral source rule by disclosing the third party source of payment.” It reasoned “[t]he fact that Medi-Cal does not fall within the exception to the collateral source rule of MICRA is completely separate from the issue of whether the County may introduce evidence regarding the amounts Medi-Cal will pay for a service, without referencing the source of payment. In the former scenario, the County would be seeking to be completely relieved from paying for a service that Medi-Cal will cover, while in the latter, the County simply seeks to provide the jury with all of the information needed to determine the reasonable value of plaintiff's future medical care.”

         The trial court stated that it would allow evidence of Roughan's reliance on the national database to project plaintiff's medical costs into the future “because it's not relying on past billed amounts.” The court also indicated it would permit Olzack to testify that she had based her own calculations on the lower amounts that are accepted by healthcare providers under certain circumstances (the private pay scenario). However, defendant would not be allowed to attempt to establish that future billed amounts do not reflect the amounts that will actually be accepted by the providers.

         Defendant also sought a modified version of CACI No. 3903A (with the modification italicized): “To recover damages for future medical expenses, plaintiff Brian Cuevas must prove the reasonable cost of reasonably necessary medical care that he is reasonably certain to need in the future. The damages awarded for future medical expenses cannot exceed the amount that is reasonably certain to be owed or paid to plaintiff's healthcare providers in the future for that care.” The trial court rejected defendant's proposed modification.

         Evidence Offered at Trial

         Roughan's life care plan was admitted in evidence during her testimony. Subsequently, Olzack was permitted to testify about her private-pay life care plan, the only version of her three plans that the trial court allowed into evidence. Olzack noted that her plan identifies the providers her office contacted to obtain her cost estimates. As to the specific services listed for future medical care, her task was not to make care recommendations, but only to determine how much the recommended services will cost. Unlike Roughan, Olzack did not rely on the charged amounts that appear in national health care cost ...

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