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Pebley v. Santa Clara Organics, LLC

California Court of Appeals, Second District, Sixth Division

May 8, 2018

DAVE PEBLEY, Plaintiff and Respondent,
SANTA CLARA ORGANICS, LLC, et al., Defendants and Appellants.

          Superior Court County of Ventura No. 56-2013-00436036-CU-PA-VTA Rocky J. Baio, Judge.

          Horvitz & Levy, Lisa Perrochet and Steven S. Fleischman; Benton, Orr, Duval & Buckingham, Kevin M. McCormick and Panda L. Kroll, for Defendants and Appellants.

          The Simon Law Group, Sevy W. Fisher and Greyson M. Goody; The Ehrlich Law Firm and Jeffrey I. Ehrlich, for Plaintiff and Respondent.

          PERREN, J.

         An injured plaintiff with health insurance may not recover economic damages that exceed the amount paid by the insurer for the medical services provided. (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 566 (Howell). The amount of the “full bill” for past medical services is not relevant to prove past or future medical expenses and/or noneconomic damages. (Id. at p. 567; Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1330-1331 (Corenbaum).) In contrast, the amount or measure of economic damages for an uninsured plaintiff typically turns on the reasonable value of the services rendered or expected to be rendered. (Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1330-1331 (Bermudez).) Thus, an uninsured plaintiff may introduce evidence of the amounts billed for medical services to prove the services' reasonable value. (Id. at pp. 1330-1331, 1335.)

         Here, we are confronted with an insured plaintiff who has chosen to treat with doctors and medical facility providers outside his insurance plan. We hold that such a plaintiff shall be considered uninsured, as opposed to insured, for the purpose of determining economic damages.

         Plaintiff Dave Pebley was injured in a motor vehicle accident caused by defendant Jose Pulido Estrada, an employee of defendant Santa Clara Organics, LLC (Santa Clara). Although Pebley has health insurance, he elected to obtain medical services outside his insurance plan. A jury found defendants liable for Pebley's injuries and awarded him $3, 644, 000 in damages, including $269, 000 for past medical expenses and $375, 000 for future medical expenses. For the most part, Pebley recovered the amounts that were billed for past services and expected to be incurred for future services.

         We conclude the trial court properly allowed Pebley, as a plaintiff who is treating outside his insurance plan, to introduce evidence of his medical bills. Pebley's medical experts confirmed these bills represent the reasonable and customary costs for the services in the Southern California community. Pebley testified he is liable for these costs regardless of this litigation, and his treating surgeons stated they expect to be paid in full. The court permitted defendants to present expert testimony that the reasonable and customary value of the services provided by the various medical facilities is substantially less than the amounts actually billed, and defendants' medical expert opined that 95% of private pay patients would pay approximately 50% of the treating professionals' bills. The jury rejected this expert evidence and awarded Pebley the billed amounts.

         Based on this record, defendants have not demonstrated error except with respect to two charges. It is undisputed the jury improperly awarded Pebley the amounts billed by Ventura County Medical Center (VCMC) and American Medical Response (AMR) instead of the amounts paid to these providers by his insurance carrier. The difference between the amounts billed and the amounts paid is $1, 063. We therefore reduce the damage award by that amount and affirm the judgment as modified.


         A. The Accident

         On May 9, 2011, Pebley and his wife, Joline, were returning from a camping trip in their motor home. Mrs. Pebley was driving eastbound on the 126 freeway in Ventura County when the vehicle developed a flat tire. She turned on the hazard lights, pulled over to the right shoulder and stopped. A portion of the motor home remained in the No. 2 lane.

         In the rearview mirror, Mrs. Pebley saw a Kenworth “big rig” truck bearing down on them from behind. The driver, Estrada, who was travelling at approximately 50 miles per hour, crashed into the left rear end of the motor home with sufficient force to break the passenger seat in which Pebley was seated.

         The truck, which was owned by Santa Clara, was carrying a 40, 000-pound load at the time of the collision. Pebley was transported to the hospital by ambulance, treated and released. He suffered injuries to his face, teeth, neck and lower back.

         B. Pebley's Medical Treatment

         Pebley initially sought treatment through his health insurance carrier, Kaiser Permanente (Kaiser). After filing a personal injury action against defendants, Pebley obtained care from an orthopedic spine specialist, Dr. Gerald Alexander, who is outside the Kaiser network. Pebley testified he was referred to Dr. Alexander by members of his men's group. Defendants claim Pebley was referred to the doctor by his attorneys. They point to an internet article co-written by one of Pebley's attorneys. The article notes that “[t]ypically, medical liens in personal injury cases have been used where the plaintiff is uninsured, or where the insurance provider will not cover or refuses to authorize recommended medical care.” The authors propose, however, that insured plaintiffs use the lien form of medical treatment, which “effectively allows the plaintiff and his or her attorney to sidestep the insurance company and the impact of Howell, Corenbaum andObamacare.” They maintain that treating on a lien basis increases the “settlement value” of personal injury cases. Pebley's post-Kaiser medical treatment was provided on that basis.

         Dr. Alexander performed a 3-level cervical fusion surgery on March 13, 2014.[1] His co-surgeon was Dr. Carl Lauryssen. At trial, both doctors testified that the injuries Pebley suffered in the accident necessitated the surgery. Dr. Alexander also testified that Pebley would require additional cervical fusion surgery as well as lumbar fusion surgery. Dr. Alexander explained that a person undergoing spinal fusion surgery is “never normal again, ” and that Pebley could expect decreased range of motion, ongoing weakness and numbness, and chronic pain for the rest of his life.

         C. Motions in Limine

         The parties filed numerous motions in limine addressing the admissibility of evidence concerning Pebley's medical treatment costs. Pebley's motion in limine No. 1 requested exclusion of evidence that Pebley was insured through Kaiser as well as defense arguments concerning Pebley's decision not to seek medical treatment through his insurance. Defendants conceded that Pebley was allowed to treat with doctors outside his insurance plan, but asserted the cost of available in-plan services was relevant to the measure of damages. Pebley claimed a due process right to make medical treatment decisions irrespective of insurance. The trial court granted Pebley's motion in limine.

         Pebley's motion in limine No. 2 sought to exclude evidence of the amounts an insurance company may pay, or what a medical provider may accept, for medical services, both past and future. The motion was granted, along with motion in limine No. 5, which excluded evidence that Pebley obtained most of his medical treatment on a lien basis.[2]

         Pebley's motion in limine No. 9 sought to preclude the defense's expert, Dr. Henry Miller, from challenging Pebley's evidence regarding the reasonable value of medical services. Pebley asserted that Dr. Miller's methodology for evaluating marketplace costs improperly includes the rates that providers accept from insurance companies and Medicare. The trial court conducted a hearing under Evidence Code section 402 to determine the admissibility of Dr. Miller's testimony.

         Outside the jury's presence, Dr. Miller explained that part of his methodology in calculating the fair market value of a physician's professional fees is to determine what Medicare pays for that service and then to proportionately increase that rate to reflect pricing in the relevant community. Miller takes into account the Milliman ...

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