YANEZ V. SOMA Envtl. Eng'g INC.

• Decision Date: 24 June 2010
• Docket Number: A123893,No. VG-06288107,VG-06288107
• Court: California Court of Appeals Court of Appeals
• Parties: ANA SILVA YANEZ, Plaintiff and Appellant, v. SOMA ENVIRONMENTAL ENGINEERING, INC., et al., Defendants and Respondents.

ANA SILVA YANEZ, Plaintiff and Appellant,

v.SOMA ENVIRONMENTAL ENGINEERING, INC., et al., Defendants and Respondents.

A123893

No. VG-06288107

Court Of Appeal Of The State Of California

First Appellate District

Division One

Filed 6/24/10

Counsel: Law Office of Paul B. Kemp, Paul B. Kemp and Dan C. Schaar for Plaintiff and Appellant.

Hinton, Alfert & Sumner, Scott H.Z. Sumner and Jeremy Lateiner for Consumer Attorneys of California as Amicus Curiae for Plaintiff and Appellant.

Horvitz & Levy, H. Thomas Watson and David S. Ettinger; Toschi, Sidran, Collins & Doyle, Steve Toschi and Sumair S. Sandhu for Defendants and Respondents.

CERTIFIED FOR PUBLICATION

Margulies, Acting P.J.

Plaintiff Ana Yanez sued defendants SOMA Environmental Engineering, Inc., Mansour Sepehr, and Brian Tims (collectively SOMA) for injuries she suffered in an automobile accident. A jury found that SOMA's negligence caused Yanez's injuries, and returned a special verdict awarding her $150,000 in damages, including $44,519.01 in damages for past medical expenses. After judgment was entered, SOMA moved to reduce the award for medical expenses to $18,368.24, which was the amount actually accepted by Yanez's medical providers as payment in full under their contracts with Aetna and Healthnet, her private health insurers. The trial court granted the motion and entered an amended judgment reducing Yanez's damage award.

Yanez appeals from the amended judgment, contending the trial court erred in reducing the jury's award, and in denying Yanez her post-offer costs and interest under Code of Civil Procedure section 998. We reverse the amended judgment and remand the case back to the trial court to (1) enter a new judgment restoring the original amount of damages awarded by the jury, and (2) redetermine Yanez's entitlement to an award of costs and prejudgment interest.

I. BACKGROUND

Yanez sued SOMA for injuries suffered in an October 2005 automobile accident. The individual defendants were the driver of the pickup truck that collided with Yanez's automobile and the owner of SOMA Environmental Engineering, Inc.

Over SOMA's objections, the trial court granted Yanez's motion to allow into evidence the amounts billed by her health care providers for her medical treatment, without regard to the amount of the billed expenses that were actually paid (by Yanez or her health insurers) or were still considered owing by the provider. SOMA contended unpaid amounts were irrelevant to its liability but conceded the trial court had no choice but to grant the motion in light of Greer v. Buzgheia (2006) 141 Cal.App.4th 1150 (Greer).¹

Over Yanez's objection, the court ruled it would conduct a posttrial hearing to determine if her medical expense damages should be reduced to the amount of the expenses actually paid to her providers by Yanez or her insurance carriers, and accepted by the providers as payment in full for their services.

The trial was limited to the issues of causation and damages. During the trial, Yanez submitted documentary evidence of her past medical bills to the jury and her surgeon testified that the surgery bill for approximately $17,000 was reasonable. Regarding past medical expenses, the jury was instructed to award damages in an amount that would compensate Yanez for "the reasonable cost of reasonably necessary medical care that she has received." The jury returned a special verdict of $150,000, which included an award of $44,519.01 in damages for past medical expenses for services from 10 different health care providers. The court entered judgment on the verdict for $150,000.

SOMA moved to reduce Yanez's medical expenses to $18,368.24, the amount actually accepted by her medical providers as payment in full for the services she received. The motion included evidence of medical billings and actual payments, and stated further evidence would be presented through affidavits or live testimony at the posttrial hearing the court had agreed to hold. At the hearing, SOMA's witnesses, representing several of Yanez's providers, furnished business records of billings and payments, and testified that each of the providers had written off a substantial amount of what had been billed, pursuant to their contracts with Yanez's health insurers, Aetna and Healthnet, and that she did not owe the amounts written off. None of the provider-insurer contracts in question were introduced in evidence. Although the witnesses testified that set amounts or percentages were discounted, they did not testify about how the providers and insurers negotiated or arrived at the amount of the discounts. Yanez's counsel objected to admission of the business records on the grounds their admission violated the collateral source rule and the records were irrelevant. Yanez's objection was overruled and the court reduced her medical expense damages by a total of $21,355.66, for five different health care providers. The court entered an amended judgment reducing Yanez's damages award accordingly. The judgment also awarded her all of her recoverable court costs.

Before trial, Yanez had made an offer to settle for $150,000 under Code of Civil Procedure section 998 (hereafter section 998 offer). SOMA did not accept the offer. In her posttrial memorandum of costs, Yanez claimed entitlement to prejudgment interest of $17,133.67 and to $6,992.50 in expert witness fees because, including ordinary trial costs, she recovered more than her settlement offer. (Code Civ. Proc., § 998, subd. (d); Civ. Code, § 3291.) SOMA moved to tax the prejudgment interest and expert witness fees on the ground that if the medical expense award were reduced, the judgment would be less than Yanez's section 998 offer.² After granting SOMA's motion to reduce Yanez's medical expense damages, the trial court held that she did not obtain a judgment exceeding her settlement offer. The court accordingly struck the prejudgment interest cost claim in its entirety and struck $5,992.50 of the expert witness fees claimed by Yanez.

Yanez timely appealed from the amended judgment.

II. DISCUSSION

Yanez contends the trial court erred in (1) reducing the jury's award of past medical specials to the amounts actually paid by her and her insurers to her medical providers, and (2) finding it had no discretion to award Yanez her post-offer costs and interest under Code of Civil Procedure section 998 due to the reduced amount of her medical specials.

A. Medical Expense Damages Award

Yanez argues the trial court violated the collateral source rule by limiting her recoverable damages to the amounts she and her insurers actually paid for her accident-related medical care. According to Yanez, the portions of the medical bills written off by the providers, totaling $21,355.66, were in fact collateral source benefits that under California's collateral source rule could not be deducted from her recoverable damages. We begin by reviewing the applicable authorities defining the collateral source rule.

1. The Collateral Source Rule

The collateral source rule provides that the compensatory damages recoverable from a tortfeasor in a personal injury case should not be reduced merely because the tort victim also receives compensatory benefits from independent or collateral sources, such as insurance. The rule has been described as follows:" '[T]he courts generally have held that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.... [T]he wrongdoer cannot take advantage of the contracts or other relation that may exist between the injured person and third persons. Thus, while a plaintiff's recovery under the ordinary negligence rule is limited to damages which will make him whole, the collateral source rule allows a plaintiff further recovery under certaincircumstances even though he has suffered no loss.' [f] 22 Am.Jur.2d Damages § 566 (1988) (citations omitted)." (Marsh v. Green (Ala. 2000) 782 So.2d 223, 230.)

California has adopted the collateral source rule. (Lund v. San Joaquin Valley Railroad (2003) 31 Cal.4th 1, 9.) The rationale for it was explained in Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1 (Helfend). The plaintiff in Helfend was injured when a transit district bus driver sideswiped his car. (Id. at pp. 4-5.) The plaintiff sued the bus driver and his public employer. (Id. at p. 5.) At trial, the defendants asked to show that about 80 percent of the plaintiff's hospital bill had been paid by the plaintiff's Blue Cross insurance carrier and that some other medical expenses had been paid by other insurance. (Ibid.) The trial court denied the request, and the jury awarded the plaintiff $16,400. (Ibid.) The defendant appealed, claiming the collateral source rule did not apply to tort actions involving public entities. (Id. at p. 14.)

Helfend explained the rationale for the collateral source rule as follows: "Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds. If we were to permit a tortfeasor to mitigate damages with payments from plaintiff's insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums would have earned no benefit. Defendant should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance." (Helfend, supra, 2 Cal.3d at p. 10.) The Helfend court rejected arguments that the rule provides plaintiffs with a double recovery, pointing out plaintiffs rarely receive full compensation for injuries due to the significant portion of the recovery that goes to compensate the plaintiff's attorney under standard contingent fee agreements. (Id. at p. 12.) According to Helfend, the collateral source rule "partially serves to compensate for the attorney's...