Can a Jury Consider a Plaintiff’s Medicare Coverage in Evaluating Future Medical Damages Claims?

Can a Jury consider a Plaintiff’s medicare coverage in evaluating future medical damages claims? A California Court of Appeals held in the affirmative in David Audish v. David Macias; Case No. D081689.

California Courts generally apply the Collateral Source Rule which states 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.” Put differently, normally a Defendant shall not benefit from the fact that the Plaintiff that was injured happened to have had insurance that could cover the damages suffered as a result of the Defendants’ conduct.

Notwithstanding the Collateral Source Rule, California Courts, since Howell v Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, have held that a Plaintiff is not entitled to recover the amount of medical damages negotiated by his or her medical insurer. In other words, if a Plaintiff was charged $500 for a treatment, but his insurer paid only $150 because the remaining $350 was written off, a Plaintiff is entitled to recover only the $150 from a tortfeasor for that treatment. The underlying rationale of Howell is that insofar as the $350 in the above example was never due, that amount did not constitute an economic loss which the Plaintiff suffered. The Howell court further held that the collateral source rule did not apply because the rule has no bearing on amounts that were included in a provider’s bill but were never incurred by the plaintiff because those sums are not damages that the plaintiff would have otherwise collected from the defendant.

The underlying case arises from a motor vehicle accident in 2017 in San Diego County. Plaintiff David Audish and his wife sued Defendants for negligence, negligent entrustment and loss of consortium. Plaintiff claimed that he had suffered damages arising from past medical treatment and that he would also require medical treatment in the future. During trial, Plaintiff’s retained life care planner testified as to the nature and cost of the treatment Plaintiff would require. The life care planner calculated the average costs of each medical treatment based on the amounts that the physician would charge the patient, not on the negotiated, and usually discounted, rates that insurers actually pay providers for the treatments. On cross-examination, the Court allowed Defendants’ counsel to elicit testimony, over a relevance objection, that Plaintiff would be eligible for Medicare at age 65 and that the rates reflected in her report did not account for the amounts that Medicare would actually pay. Following trial, the jury awarded a portion of Plaintiff’s requested future damages. Plaintiff appealed the verdict after his motion for a partial new trial on damages was denied.

On appeal, Plaintiff argued, though not explicitly, that the trial court violated the collateral source rule by allowing evidence that he would have Medicare at age 65 and that Medicare would pay for a portion of his future medical expenses. The Court of Appeal assumed that the collateral source objections had been preserved by Plaintiff at trial and concluded that the trial court did not abuse its discretion in allowing the admission of the Medicare testimony.

In holding so, the Court of Appeal relied on the holding in Howell, as well as cases which relied on Howell, such as Corenbaum v. Lampkin, (2013) 215 Cal.App.4th 1308). In Corenbaum, the court concluded that the full amount charged by a medical provider for past medical services is irrelevant to the reasonable value of future medical services and that the trial court abused its discretion when it admitted evidence of the full amounts. The Corenbaum court noted that the full amounts for past services charged by providers are inaccurate measures of the true value of the services, and thus the full amounts billed cannot provide a reasonable basis for expert opinion on the value of future medical services.

According to the Court of Appeal, Howell, together with Corenbaum, supported its conclusion that the trial court properly allowed evidence regarding Plaintiff’s future eligibility for Medicare and the expected amounts Medicare might pay for Plaintiff’s recommended future medical services.

The Court’s opinion makes no statement on whether, and if so to what extent, the Court’s ruling would apply to non-Medicare insurance coverage particularly for those younger Plaintiffs who have private insurance for years or decades prior to becoming Medicare eligible.

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