Collateral Source Rule Does Not Preclude Introducing "Negotiated Rates" of Past Medical Costs in Workers' Compensation Benefits Action


In Lydia Sanchez v. Darrell G. Brooke, et. al., (March 8, 2012, B224835), California's Court of Appeal, Second District, acknowledged and extended the recent California Supreme Court decision in Howell v. Hamilton Meats & Provisions, Inc., 52 Cal.4th 541 (2011), finding that the collateral source rule does not preclude a defendant from introducing evidence of the "negotiated rate differential" paid as part of a plaintiff's workers' compensation benefits, thereby reducing recoverable damages.

In Sanchez, the plaintiff, an in-home health care provider, sued the estate of her patient for injuries stemming from a fire caused by the patient. The defendants asserted the affirmative defense of comparative negligence of the plaintiff and her employer, Western Health Resources. Western was not a plaintiff to the action but did have a lien against the plaintiff's award to recover for workers' compensation benefits paid to the plaintiff. The jury found that both defendants and Western were liable for the plaintiff's injuries, apportioning 50 percent of the fault to the defendants and 50 percent to Western. The jury awarded $603,000 in economic damages, consisting of $575,000 in past medical expenses and $28,000 in lost earnings. Both the plaintiff and defendants appealed. The plaintiff appealed the trial court's order denying her motion for judgment notwithstanding the verdict challenging the jury's finding of Western's comparative fault. The plaintiff alleged there was not sufficient evidence to support the finding against Western. Writing on behalf of the Second District, Justice Suzukawa affirmed the trial court's order. The defendants' appeal challenged the economic damages award, contending that it must be reduced to reflect the actual amount paid by Western to the plaintiff's medical providers.

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