Issued: Elizabeth Stewart

Pebley v. Santa Clara Organics, LLC
Court of Appeal, Second Appellate District (May 2018)

Typically, an insured injured plaintiff many not introduce evidence of the full amount billed by his or her medical providers. Pursuant to Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, an injured plaintiff with health insurance may not recover economic damages that exceed the amount paid by the insurer for the medical services provided as the amount of the “full bill” is not relevant to prove past or future medical expenses. However, in direct contrast, an uninsured injured plaintiff may present evidence of the full amount billed for medical services as the measure of damages turns on the reasonable value of the services rendered or expected to be rendered. Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311.

In Pebley v. Santa Clara Organics, LLC, the plaintiff was injured in a motor vehicle accident caused by the defendant’s employee. Although Pebley had health insurance through Kaiser, he elected to obtain the majority of his medical services outside of his insurance plan on a lien basis.

At trial, the court granted the following motions in limine brought by Pebley: (1) to exclude evidence that he was insured through Kaiser, (2) any arguments presented by the defense concerning his decision not to treat through Kaiser, (3) any evidence of the amounts an insurance company may pay or accept for both past and future medical series, and (4) evidence that Pebley obtained most of his treatment on a lien basis. Pebley also sought an order precluding one of the defense experts from challenging his evidence regarding the reasonable value of medical services. The trial court ruled that the defense expert could provide an opinion regarding the reasonable value of the facility fees but not professional fees because his opinion pertaining to the professional fees required references to insurance.
The trial court denied defendants motion to exclude evidence of unpaid bills from health care providers pursuant to Howell as well as its motion to prevent Pebley’s expert from offering opinions on the reasonableness of medical expenses based on unpaid billed amounts. In doing so, the trial court extended the ruling in Bermudez, which involved an uninsured plaintiff, to a plaintiff who had insurance but elected to treat outside of his coverage. In doing so, the court permitted Pebley to present evidence of the full amounts charged by his treatment providers.

A jury found defendants liable for Pebley’s injuries and awarded him $3.6 million in damages which included $269,000 in past medical expenses and $375,000 for future medical expenses. The defendants moved for a new trial arguing that the damages were excessive and not supported under Howell. The trial court denied the motion and defendants appealed.
The threshold question presented in this case is whether the court shall classify an injured plaintiff seeking recovery of medical expenses as insured or uninsured. The parties did not dispute that Pebley had a right to choose doctors and facilities outside of his plan. Rather, defendants maintained that Pebley had a duty to mitigate his damages and that he did not meet this duty when he elected to opt for the most expensive method to pay for his treatment. The court rejected defendants’ position.
The parties also agreed that Pebley was entitled to recover the less of the amount incurred or paid for medical services and the reasonable value of the services rendered. The court treated Pebley as uninsured by concluding that the fact he chose to pay for his treatment out-of-pocket, rather than through his insurance, is irrelevant so long as these requirements were met. The court held that the trial court did not err by allowing him to introduce evidence of the amount charged for his past medical services since he also had to establish the reasonable value of the services rendered by proffering expert testimony on the issue. The appellate court concluded that the trial court properly allowed Pebley, who was treating outside of his insurance plan, to introduce evidence of his medical bills. Pebley’s medical experts confirmed the bills represent the reasonable and customary costs for the services rendered. Defendants’ experts were allowed to present testimony to the contrary despite precluding one defense expert from providing an opinion regarding the reasonable value of physician fees. The jury simply elected to believe Pebley’s experts rather than defendants.


This case is very important for those defending personal injury claims. If an insured injured plaintiff elects to treat outside of his insurance plan, the full amount of the bills charged may be admitted in evidence. However, this alone is not sufficient to establish that the charges were reasonable. A plaintiff is required to proffer expert testimony establishing that the amount billed the reasonable value of the services rendered. A defendant can present expert testimony to the contrary and it will come down to a “battle of the experts” as to which expert the jury will deem more credible.

For a copy of the complete decision, see: Pebley v. Santa Clara Organics, LLC

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