In Howell v Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 the California Supreme Court decided that a plaintiff’s recovery for past medical expenses is limited to the amount paid for the medical expenses after any contracted-for discounts rather than the larger amount billed to the plaintiff prior to the application of those discounts. Unanswered by the Howell court were the following questions: (1) is evidence of the larger amount that was billed relevant to the reasonableness of the past medical services rendered; (2) is that evidence relevant to the determination of damages for future medical care; and (3) is that evidence relevant to the determination of the non-economic pain and suffering of the plaintiff. This case answers all three questions in the negative and, as a result, also precludes expert testimony about future medical expenses that is based on the billed amount of past medical expenses as well as arguments by plaintiff’s counsel on that basis.
John Corenbaum and Charles Carter were injured when a vehicle driven by Dwight Eric Lampkin collided with a taxicab in which they were passengers. Lampkin was convicted of fleeing the scene of an injury accident. Corenbaum, Carter and Daniella Carter then filed two civil actions against Lampkin, which were later consolidated. After a trial, the jury found that Corenbaum and Carter, respectively, suffered approximately $1.8 million and $1.4 million in compensatory damages, and that Daniella Carter suffered $75,000 in damages for loss of consortium. The jury also awarded Corenbaum and Carter $20,000 each in punitive damages. Lampkin appealed contending that the trial court erred by admitting evidence of the full amounts billed for plaintiffs’ medical care, rather than the amounts actually paid and accepted as full payment by plaintiffs’ medical providers.
Prior to trial, Lampkin filed a “Request for Court to Hold a Post-Verdict Hearing on Reduction of Plaintiffs’ Medical Expenses to the Amount Incurred,” requesting a postverdict hearing “in the event that the jury verdict includes damages for past medical expenses in an amount exceeding the amount paid for those medical services.” The trial court granted plaintiffs’ motion in limine to exclude evidence of payment of plaintiff’s medical bills by a collateral source “without prejudice” subject to a posttrial “Hanif/Nishihama” motion.¹ The court also granted Lampkin’s request to hold a postverdict hearing.
In accordance with the trial court’s in limine rulings, the jury heard evidence of the full amounts billed for Corenbaum’s and Carter’s past medical care and heard no evidence of the lesser amounts accepted by their medical providers as full payment pursuant to prior agreements with Lampkin’s private insurers. After the jury returned its verdict, Lampkin filed a motion for new trial and a motion to reduce the compensatory damage awards pursuant to Hanif, supra, 200 Cal.App.3d 635, and Nishihama, supra, 93 Cal.App.4th 298, and pursuant to the trial court’s pretrial ruling granting Lampkin’s request to hold a postverdict hearing on such a reduction. Lampkin sought to reduce the awards by the difference between the full amounts billed for past medical expenses and the amounts actually accepted by plaintiffs’ medical providers as full payment for the services provided. The California Supreme Court filed its opinion in Howell, supra, 52 Cal.4th 541, on August 18, 2011.
The trial court heard Lampkin’s motion to reduce the compensatory damage awards on September 6, 2011. The court denied the motion, stating in a minute order, “[w]hile this Court feels that a reduction is appropriate, it is without jurisdiction to do so. As this Court has already denied the Motion for New Trial, the jurisdiction now rests with the Court of Appeal.”
The Court of Appeal began its analysis with a review of the Howell opinion, but noted that because the defendant in Howell had conceded that it was proper for the jury to hear evidence of the plaintiff’s full medical bills, those issues were not presented in that case. The Court stated it was persuaded by the carefully considered reasoning in Howell, and therefore held that evidence of the full amount billed for a plaintiff’s medical care is not relevant to the determination of a plaintiff’s damages for past medical expenses, and therefore is inadmissible for that purpose if the plaintiff’s medical providers, by prior agreement, had contracted to accept a lesser amount as full payment for the services provided. In contrast, evidence of the amount accepted by medical providers as full payment does not violate the collateral source rule and is admissible provided that the source of the payment is not disclosed to the jury and the evidence satisfies the other rules of evidence.
In so holding, the Court rejected the argument that the greater amount billed could have relevance to the reasonable value of the past medical expenses. Because an injured plaintiff can recover as damages for past medical expenses no more than the amount incurred for those past medical services (Howell, supra, 52 Cal.4th at p. 555), evidence that the reasonable value of such services exceeded the amount paid is irrelevant and inadmissible on the issue of the amount of damages for past medical services. (See id. at p. 559.) Moreover, for the jury to consider both evidence of the amount accepted by medical providers as full payment and evidence of a potentially greater reasonable value would very likely cause jury confusion and suggest the existence of a collateral source payment, contrary to the evidentiary aspect of the collateral source rule.
The Court then turned to the issue of the admissibility of the larger sum for the purpose of determining future medical expenses and noneconomic damages. The Court first noted that a plaintiff is entitled to recover the reasonable value of medical services that are reasonably certain to be necessary in the future. However, the argument that the full amount billed for past medical services is relevant to the reasonable value of future medical services that the plaintiff is reasonably certain to require necessarily assumes that the full amount billed for past medical services is relevant to the value of those past medical services. In the Court’s view, Howell negates such an assumption and precludes this argument. The full amount billed for past medical services is not relevant to a determination of the reasonable value of future medical services. Moreover, for a jury to consider both evidence of the amount accepted as full payment, for the purpose of determining the amount of past economic damages, and the full amount billed, for some other purpose, would most certainly cause jury confusion and suggest the existence of a collateral source payment, contrary to the evidentiary aspect of the collateral source rule. The Court therefore concluded that the full amount billed for past medical services is not relevant to the amount of future medical expenses and is inadmissible for that purpose.
The Court next observed that its holding had implications for the admissibility of expert opinion on the reasonable value of future medical services. Because the full amount billed for past medical services provided to plaintiffs is not relevant to the value of those services, the full amount billed for those past medical services can provide no reasonable basis for an expert opinion on the value of future medical services. Evidence of the full amount billed for past medical services provided to plaintiffs therefore cannot support an expert opinion on the reasonable value of future medical services. Evidence Code section 801, subdivision (b) states that an expert opinion must be “[b]ased on matter . . . that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates . . . . ” “ ‘We construe this to mean that the matter relied on must provide a reasonable basis for the particular opinion offered, and that an expert opinion based on speculation or conjecture is inadmissible.’ ” (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 770 (Sargon), quoting Lockheed Litigation Cases (2004) 115 Cal.App.4th 558, 564.) Expert opinion testimony based on matter that provides no reasonable basis for the opinion offered is properly excluded under Evidence Code section 801, subdivision (b). (Sargon, supra, at p. 776.)
Similarly, Evidence Code section 802 allows the trial court to inquire into the reasons for an expert’s opinion and to exclude expert opinion testimony if it is “based on reasons unsupported by the material on which the expert relies.” (Sargon, supra, 55 Cal.4th at p. 771.) Evidence Code section 802 also allows the courts to develop “ ‘case law restrictions on an expert’s “reasons.” ’ [Citation.]” (Sargon, supra, at p. 771.) If the material on which an expert relies does not support the expert’s reasoning, the expert’s opinion is properly excluded under Evidence Code section 802. (Sargon, supra, 55 Cal.4th at p. 771.)
Moreover, for an expert to base an opinion as to the reasonable value of future medical services, in whole or in part, on the full amount billed for past medical services provided to a plaintiff would lead to the introduction of evidence concerning the circumstances by which a lower price was negotiated with that plaintiff’s health insurer, thus violating the evidentiary aspect of the collateral source rule. Thus, the Court concluded that any expert who testifies on remand with respect to the reasonable value of the future medical services that Corenbaum and Carter are reasonably likely to require may not rely on the full amounts billed for plaintiffs’ past medical expenses.
The Court next turned to a consideration of the relevance of the full billed amount to the issue of noneconomic damages. Noneconomic damages compensate an injured plaintiff for nonpecuniary injuries, including pain and suffering. Pain and suffering is a concept that encompasses physical pain and various forms of mental anguish and emotional distress. There is no fixed standard to determine the amount of noneconomic damages. Instead, the determination is committed to the discretion of the trier of fact. The Court noted that lawyers have used the amount of economic damages as a point of reference in their argument to a jury, or in settlement discussions, as a means to help determine the amount of noneconomic damages. The Court did not comment on this practice except to state that it can provide no justification for the admission of evidence that is otherwise inadmissible and that is not relevant to the amount of economic damages. As the Court explained, the full amount billed for past medical services is not relevant to a determination of the damages for either past or future medical services if the medical providers had agreed to accept a lesser amount as full payment. The Court concluded that evidence of the full amount billed is not admissible for the purpose of providing plaintiff’s counsel an argumentative construct to assist a jury in its difficult task of determining the amount of noneconomic damages and is inadmissible for the purpose of proving noneconomic damages.
Lampkin did not raise these issues at trial. However, an appellant may challenge the admission of evidence for the first time on appeal despite his or her failure to object in the trial court if the challenge is based on a change in the law that the appellant could not reasonably have been expected to foresee. The Court found the Howell decision to be such a change in the law. The Court rejected the argument that Howell should not apply to a case that had been tried to verdict before its decision was rendered on the ground that, as a general rule, judicial decisions in tort cases are given full retroactive effect in all pending cases, including cases pending on appeal.
The Court concluded that evidence of the full amount billed for plaintiffs’ medical care was not relevant to the amount of damages for past medical services, damages for their future medical care or noneconomic damages. Because plaintiffs did not show that evidence of the full amounts of their medical bills was relevant to any other issue, the admission of such evidence was error. The Court therefore reversed, in part, the judgments in favor of Corenbaum and Carter and remanded the matter for a new trial limited to the issue of compensatory damages.
This opinion tracks the Howell reasoning closely and meticulously. The court has simply connected the dots that were left unconnected in Howell. Because of the exhaustive analysis in its 41 page opinion, this case is likely to serve as the benchmark for all future cases on these issues by well-informed Courts of Appeal.