In Lee v. Silveira, et al., 2015 DJDAR 5287, the California Court of Appeal, Fifth Appellate District, held that a plaintiff is not entitled to recover fees under California Code of Civil Procedure (“CCP”) Section 998 where the jury’s judgment, which incorporates amounts billed for medical treatment, is less than plaintiff’s offer to compromise once the negotiated rate differential between amounts billed and amounts accepted as full and final payment for the treatment are deducted.
The underlying case in Lee involved a collision between an automobile operated by plaintiff/appellant Lena Lee, and a large manure spreader operated by defendant/respondent Joe Silveira. Plaintiff filed a personal injury lawsuit against Silveira and on August 12, 2010 issued an offer to compromise pursuant to CCP section 998 in the amount of $1 million.
Prior to plaintiff filing her lawsuit, the California Supreme Court granted review in Howell v. Hamilton Meats & Provisions, Inc., (2011) 52 Cal.4th 541. On August 18, 2011, the Court filed its opinion in Howell. The Court held that the negotiated rate differential between the amounts billed for plaintiff’s medical treatment, and the amounts accepted by the providers as full and final payment, could not be recovered by a plaintiff as past medical expenses because “the injured plaintiff did not suffer any economic loss in that amount.”
One year later trial in the Lee case began. The trial court denied defendants’ motion in limine requesting that only evidence of amounts paid for plaintiff’s medical treatment be permitted, and allowed into evidence the amounts billed. The jury returned a verdict of $1,027,014, which explicitly included the amounts billed for plaintiff’s medical treatment. Defendants immediately filed a post-trial motion for reduction of the judgment to incorporate only the amounts paid. Plaintiff agreed to a deduction of these amounts, which would bring the judgment below her $1 million offer to compromise. She concurrently argued she was entitled to her expert fees and prejudgment interest under CCP Section 998 because the initial judgment exceeded $1 million.
The trial court granted defendants’ motion to vacate and modify the judgment and entered judgment in the amount of $887,098.26. Plaintiff appealed, contending that in determining whether she is entitled to expert fees under CCP Section 998, the proper comparison is between her offer and the initial judgment, which included an award for past medical expenses in the full amounts billed.
The Court of Appeal, Fifth Appellate District disagreed and affirmed the trial court’s judgment. The Court concluded that any negotiated rate differential included in the jury’s verdict should be subtracted from the judgment or award before it is compared to the offer to compromise “for the simple reason that the injured plaintiff did not suffer any economic loss in that amount.”
Lee evidences the California courts’ continuing recognition and acceptance of the holding in Howell v. Hamilton Meats & Provisions, Inc., (2011) 52 Cal.4th 541, and its progeny that only evidence of the amounts accepted by a plaintiff’s medical providers as full and final payment, or typically accepted by the providers as full and final payment, is admissible at trial. Lee should be used by defendants in motions in limine to exclude evidence of amounts billed for medical treatment, and should be taken into consideration when evaluating a plaintiff’s CCP Section 998 offer to compromise. Lee will hopefully prompt plaintiffs in personal injury actions to make more reasonable CCP Section 998 offers to compromise in the future. Another important aspect of the opinion is where the Court of Appeal explained that the so-called “judgment” entered by the trial court before the Howell reduction wasn’t really a judgment at all. Defense counsel should use Lee to argue in their future cases that it is premature to have a “judgment” until the court has ruled on all post-verdict adjustments based on Howell and its progeny.
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