Recent Appellate Decision Favors Plaintiffs in Valuation of Past Medical Damages

by Selman Breitman LLP
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The Implications of Pebley v. Santa Clara Organics, LLC

The Court of Appeal's recent holding in Pebley v. Santa Clara Organics, LLC allows insured plaintiffs to potentially recover the full amount billed for medical treatment obtained outside of the insured plaintiff's treatment network, which may result in a windfall for plaintiffs.

In general, pursuant to Howell v. Hamilton Meats (2011) 52 Cal.4th 541, a personal injury plaintiff may recover the amount paid for past medical treatment, not necessarily the amount billed.  The amount billed is often much higher than what a medical provider will accept as payment for services rendered.

In cases involving insured plaintiffs, the amount of past medical damages is relatively easily to calculate, based on the total amount paid by plaintiff's medical insurer(s) for incurred medical treatment.  However, the appropriate measure of past medical damages is not as straightforward in cases involving uninsured plaintiffs.  Courts have held that in the case of an uninsured plaintiff, "[t]he billed amounts are also relevant and admissible with regard to the reasonable value of [the uninsured plaintiff]'s medical expenses."  Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311.

The court in Pebley was confronted "with an insured plaintiff who has chosen to treat with doctors and medical facility providers outside his insurance plan."  The plaintiff initially sought treatment through Kaiser, but then sought treatment with an orthopedic surgeon who was outside of the Kaiser network. 

Counsel for the defendants argued that such treatment with providers outside the plaintiff's insurance network, on a lien basis, was a deliberate attempt to drive up the costs of the treatment, and thereby dramatically increase the settlement value.  Counsel also argued that while plaintiff had a right to choose his doctors, he also had a duty to mitigate his damages, which he failed to do by going outside his network.

The Pebley court did not buy the defense arguments, and found that "[a] tortfeasor cannot force a plaintiff to use his or her insurance to obtain medical treatment for injuries caused by the tortfeasor. That choice belongs to the plaintiff."  The court further held that a plaintiff who chooses to seek treatment outside of her or his medical insurance plan should be treated the same as an uninsured plaintiff under the law.

Thus, the court ultimately held that an insured plaintiff who seeks treatment outside of her or his medical plan, on a lien basis, can introduce evidence of the amount billed for such outside treatment.  However, importantly for defendants, plaintiffs must also use expert testimony to show that the billed amounts are "reasonable," pursuant to Bermudez.

In the aftermath of Pebley, we can expect a dramatic increase in insured plaintiffs seeking treatment outside of their network, in order to drive up the amount of medical damages, and increase the potential settlement value. 

In such cases, it will be critical to identify and retain a qualified medical expert to review the outstanding bills, and comment on the reasonable value of the treatment received.  As part of an analysis, prior case law is clear that the medical expert can conduct a "wide-ranging inquiry into the reasonable value of medical services provided."  See Bermudez.  This wide-ranging inquiry should include, among other factors, what a provider would accept from an insurer as payment for the services provided, which is often much less than the full amount billed.

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