Court Opinion

ID: 9745764
Source: CourtListenerOpinion
Date Created: 2023-08-27 13:31:04.264633+00
Date Added: 2024-06-11T07:25:04.441713
License: Public Domain

MOORE, Acting P. J., Concurring.
I write separately to sound the bell of alarm: By virtue of the Hanif/Nishihama procedure (see Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 [246 Cal.Rptr. 192] (Hanif) and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298 [112 Cal.Rptr.2d 861] (Nishihama)) permitting the posttrial reduction of medical expenses, the collateral source rule has been buried without the dignity of any services or parting words. Without statutory authority or the Supreme Court’s blessing, the Hanif/Nishihama line of cases divorced the collateral source rule from the complicated area of medical insurance. Absent such approval, Hanif/Nishihama simply goes too far. I therefore decline to jump on the bandwagon by endorsing this procedure.

The Collateral Source Rule

The collateral source rule has long been a part of California law. “The rule derives its earliest articulation in cases of equity and admiralty, where a wrongdoer was held to be responsible for injury irrespective of whether *205anyone else provided protection or indemnity to the victim. ‘The respondent is not presumed to know, or bound to inquire, as to the relative equities of parties claiming the damages. He is bound to make satisfaction for the injury he has done.’ [Citation.]” (Smock v. State of California (2006) 138 Cal.App.4th 883, 886 [41 Cal.Rptr.3d 857] (Smock).)
Thus, for example, the amount given to a plaintiff as disability payments may not be deducted from the judgment against the defendant. “While it is true that he [plaintiff] received $2 per day compensation while he was unable to work, that sum may not be deducted from his loss of earnings, because it was received from an insurance company under a policy owned and held by him. ‘ “Damages recoverable for a wrong are not diminished by the fact that the party injured has been wholly or partly indemnified for his loss by insurance effected by him, and to the procurement of which the wrongdoer did not contribute ....”’ [Citations.]” (Peri v. L. A. Junction Ry. (1943) 22 Cal.2d 111, 131 [137 P.2d 441] (Peri).)
The doctrine has been reaffirmed numerous times over the years. (De Cruz v. Reid (1968) 69 Cal.2d 217, 223-227 [70 Cal.Rptr. 550, 444 P.2d 342].) The principle has been applied to payments received through insurance (Peri, supra, 22 Cal.2d at p. 131), wages received from a plaintiff’s employer (Tremeroli v. Austin Trailer Equip. Co. (1951) 102 Cal.App.2d 464, 482 [227 P.2d 923]), payments under workers’ compensation statutes (Baroni v. Rosenberg (1930) 209 Cal. 4, 6 [284 P. 1111]), and myriad other factual situations.1
More recent cases have stated the rule as follows: “[I]f an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor. [Citation.]” (Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6 [84 Cal.Rptr. 173, 465 P.2d 61], fn. omitted (Helfend).) In Helfend, the defendant sought to introduce evidence that 80 percent of the plaintiff’s medical expenses (totaling $1302.99) had been paid by his insurance policy. (Id. at p. 5.)
The court held that permitting the plaintiff’s recovery to be reduced by the amount his insurance company had paid would be improper under the collateral source rule. The court noted the sound policy behind the rule: “The *206collateral source rule as applied here embodies the venerable concept that a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift. The tortfeasor should not gamer the benefits of his victim’s providence. [][] The collateral source rule expresses a policy judgment in favor of encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. 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 pp. 9-10, fn. omitted.)
Noting concerns about potential windfalls to plaintiffs and the possibility of “double recovery,” the court pointed out that, in some situations, plaintiffs were required to reimburse their insurers through subrogation contracts. (Helfend, supra, 2 Cal.3d at pp. 10-11.) Moreover, “Even in cases in which the contract or the law precludes subrogation or refund of benefits, or in situations in which the collateral source waives such subrogation or refund, the rale performs entirely necessary functions in the computation of damages. For example, the cost of medical care often provides both attorneys and juries in tort cases with an important measure for assessing the plaintiff’s general damages. [Citation.] To permit the defendant to tell the jury that the plaintiff has been recompensed by a collateral source for his medical costs might irretrievably upset the complex, delicate, and somewhat indefinable calculations which result in the normal jury verdict. [Citations.]” (Helfend, supra, 2 Cal.3d at pp. 11-12, fn. omitted.) Quoting from commentary, the court noted: “ ‘For the present system, however, the rule seems to perform a needed function. At the very least, it removes some complex issues from the trial scene. At its best, in some cases, it operates as an instrument of what most of us would be willing to call justice.’ [Citation.]” (Helfend, supra, 2 Cal.3d at p. 7, fn. 6.)
Thus, “We therefore reaffirm our adherence to the collateral source rule in tort cases in which the plaintiff has been compensated by an independent collateral source—such as insurance, pension, continued wages, or disability payments—for which he had actually or constructively . . . paid or in cases in which the collateral source would be recompensed from the tort recovery through subrogation, refund of benefits, or some other arrangement. Hence, we conclude that in a case in which a tort victim has received partial *207compensation from medical insurance coverage entirely independent of the tortfeasor the trial court properly followed the collateral source rule and foreclosed defendant from mitigating damages by means of the collateral payments.” (Helfendsupra, 2 Cal.3d at pp. 13-14.)
Subsequent cases have reaffirmed the continuing vitality of the rule. In Arambula v. Wells (1999) 72 Cal.App.4th 1006 [85 Cal.Rptr.2d 584] (Arambula), the plaintiff, who worked for a family-owned company, continued to receive his weekly salary from his brother after a car accident. The plaintiff did not prove at trial that his brother had the right to be reimbursed, and the trial court therefore instructed the jury not to award damages for lost earnings. (Id. at pp. 1008-1009.)
We found this was error, holding that the collateral source rule allowed the plaintiff to recover despite his receiving compensation from an external source. (Arambula, supra, 72 Cal.App.4th at p. 1009.) We held that public policy weighed heavily in favor of applying the collateral source rule to gratuitous payments. (Id. at p. 1012.) Further, we noted that the “collateral source rule also recognizes the inadequacies of damage awards for personal injuries. That is because ‘[l]egal “compensation” for personal injuries does not actually compensate. Not many people would sell an arm for the average or even the maximum amount that juries award for loss of an arm. Moreover the injured person seldom gets the compensation he “recovers,” for a substantial attorney’s fee usually comes out of it. The Rule helps to remedy these problems inherent in compensating the tort victim.’ (Note, California’s Collateral Source Rule and Plaintiff’s Receipt of Uninsured Motorist Benefits (1986) 37 Hastings L.J. 667, 672.)” (Id. at pp. 1009-1010, fh. 1.)

Hanif

In 1988, the Third District decided Hanif, supra, 200 Cal.App.3d 635. The plaintiff, Hanif, was struck and injured by an automobile on the property of the defendant, Yolo County’s housing authority. (Id. at pp. 637-638.) The trial court apportioned 80 percent of the fault to the driver and 20 percent to the defendant. (Id. at p. 639.) Hanif was awarded special damages of $53,314 for past medical expenses and home attendant care and $250,000 in general damages. (Ibid.)
The defendant appealed. At trial, over the defendant’s objection, Hanif had introduced evidence that the reasonable value of the medical services rendered was more than the amount Medi-Cal had actually paid the providers. (Hanif, supra, 200 Cal.App.3d at p. 639.) The trial court had found the *208reasonable value of physician services was $4,618, although Medi-Cal had paid $2,283. Similarly, the reasonable value of the hospital services was $27,000, although Medi-Cal had paid $16,494. At trial, there was no evidence that Hanif was or would be liable for the difference, and the balance was written off by the hospital. The trial court, however, awarded Hanif the entire reasonable value of the medical services rendered. (Ibid.)
The appellate court held this was error. It began by noting “there is no question here that Medi-Cal’s payment for all injury-related medical care and services does not preclude plaintiff’s recovery from defendant, as special damages, of the amount paid. This follows from the collateral source rule. [Citations.]” (Hanif, supra, 200 Cal.App.3d at pp. 639-640.) “For purposes of analysis, plaintiff is deemed to have personally paid or incurred liability for these services and is entitled to recompense accordingly. This is not unreasonable or unfair in light of Medi-Cal’s subrogation and judgment lien rights [citations].” (Id. at p. 640.) The court further noted there was no question regarding the appropriate measure of damages: “[A] person injured by another’s tortious conduct is entitled to recover the reasonable value of medical care and services reasonably required and attributable to the tort. [Citations.]” (Ibid.)
Thus, the issue before the court in Hanif was “whether the ‘reasonable value’ measure of recovery means that an injured plaintiff may recover from the tortfeasor more than the actual amount he paid or for which he incurred liability for past medical care and services.” (Hanif, supra, 200 Cal.App.3d at p. 640.) The court held: “Fundamental principles underlying recovery of compensatory damages in tort actions compel the following answer: no.” (Ibid.)
The court explained: “ ‘In tort actions damages are normally awarded for the purpose of compensating the plaintiff for injury suffered, i.e., restoring him as nearly as possible to his former position, or giving him some pecuniary equivalent. [Citations.]’ [Citations.]” (Hanif, supra, 200 Cal.App.3d at p. 640, original italics.) “ ‘The primary object of an award of damages in a civil action, and the fundamental principle on which it is based, are just compensation or indemnity for the loss or injury sustained by the complainant, and no more [citations].’ [Citation.]” (Id. at pp. 640-641, original italics.) “ ‘A plaintiff in a tort action is not, in being awarded damages, to be placed in a better position than he would have been had the wrong not been done.’ [Citation.]” (Id. at p. 641.) Because medical expenses fall within the category of economic damages, representing actual pecuniary loss, the court reasoned *209that “an award of damages for past medical expenses in excess of what the medical care and services actually cost constitutes overcompensation.” (Ibid.)
The court believed that confusion may have been created by a comment to one of the jury instructions given in the case, BAJI No. 1410. The comment stated; “ ‘The reasonable value of medical and nursing care may be recovered although rendered gratuitously or paid for by a source independent of the wrongdoer.’ ” (Hanif, supra, 200 Cal.App.3d at p. 641.) The court stated: “This comment, however, merely restates the collateral source rule, which is not an issue in this case. The issue here is the import of the term ‘reasonable value’ when applied to past medical services, to which neither BAJI No. 14.10 nor its comment provide any clue.” (Ibid.)
The Hanif court went on to note that “ ‘Reasonable value’ is a term of limitation, not of aggrandizement. (See Civ. Code, § 3359.) Thus, when the evidence shows a sum certain to have been paid or incurred for past medical care and services, whether by the plaintiff or by an independent source, that sum certain is the most the plaintiff may recover for that care despite the fact it may have been less than the prevailing market rate.” (Hanif, supra, 200 Cal.App.3d at p. 641.)
After reviewing several cases discussing the reasonable value standard, the court stated, “Implicit in the above cases is the notion that a plaintiff is entitled to recover up to, and no more than, the actual amount expended or incurred for past medical services so long as that amount is reasonable. [Citation.] This notion is supported by the following comment on ‘value’ from the Restatement Second of Torts, which comment directly addresses the point at issue here: ‘When the plaintiff seeks to recover for expenditures made or liability incurred to third persons for services rendered, normally the amount recovered is the reasonable value of the services rather than the amount paid or charged. If, however, the injured person paid less than the exchange rate, he can recover no more than the amount paid, except when the low rate was intended as a gift to him.’ (Italics added, Rest.2d Torts, § 911, com. h.)” (Hanif, supra, 200 Cal.App.3d at p. 643, fn. omitted.) “The rule we express is consistent with fundamental principles underlying recovery in tort of compensatory damages, and it is in harmony with other rules and practices flowing from those principles, such as the practice of discounting future damages to present value [citation], the bar against double recovery [citations], the rule that damages not be imaginary [citation], the rule that when damages may be calculated by either of two alternative measures the plaintiff may recover only the lesser [citations], and the rule that damages be mitigated where reasonably possible [citations].” (Ibid.)
*210Thus, the court held, the trial court had erroneously awarded Hanif an amount exceeding that which was actually paid for past medical care and services. Accordingly, the amount of special damages was reduced to the amount actually paid. (Hanif, supra, 200 Cal.App.3d at pp. 643-644.) It is problematic that the Hanif court did not see the connection between “reasonable value” and the long line of cases on the collateral source rule, simply stating, without analysis, that the collateral source rule did not apply. This case changed the emphasis from a plaintiff’s entitlement under the collateral source rule (see, e.g., Arambula, supra, 72 Cal.App.4th at p. 1009 [“Under the collateral source rule, plaintiffs in personal injury actions can still recover full damages even though they already have received compensation for their injuries from such ‘collateral sources’ as medical insurance”]) to “a plaintiff is entitled to recover up to, and no more than, the actual amount expended or incurred for past medical services so long as that amount is reasonable” (Hanif, supra, 200 Cal.App.3d at p. 643). It could be the Hanif court intended only to harmonize a medical lien into a collateral source scheme, but it is unclear, because the opinion states the collateral source rule “is not an issue in this case.” (Id. at p. 641.)

Nishihama

Nishihama, supra, 93 Cal.App.4th 298, was decided in 2001 by the First District. The plaintiff, Nishihama, was injured when she tripped and fell in a crosswalk maintained by the defendant, the City of San Francisco (the City). (Id. at p. 301.) With respect to special damages for medical care, the jury awarded Nishihama $20,295, including $17,168 for hospital care. (Id. at p. 306.) The $17,168 reflected the amount the hospital billed at its normal rates. (Ibid.)
Nishihama, however, was insured by Blue Cross, which had a contract with the hospital. The hospital agreed Blue Cross would pay reduced rates for services to its members, and the hospital agreed to accept Blue Cross’s payment as payment in full. (Nishihama, supra, 93 Cal.App.4th at p. 306.) Under the terms of that agreement, the hospital accepted $3,600 as payment in full for Nishihama’s care. (Id. at pp. 306-307.) The City conceded it was required to pay Nishihama the $3,600—the issue it raised was whether it was required to pay Nishihama the difference between the $3,600, representing payment in full, and the amount the hospital billed, $17,168. (Ibid.) Nishihama did not contest that the hospital had accepted $3,600 as payment in full.2
*211Thus, quoting Hanif, the court found that Nishihama was entitled to $3,600, because it represented “ ‘a sum certain to have been paid or incurred for past medical care and services ....’” {Nishihama, supra, 93 Cal.App.4th at p. 306.) Like Hanif, the Nishihama court did not discuss the collateral source rule.

Subsequent Cases

Cases after Nishihama have assumed the rule set forth in Hanif/Nishihama is valid, but have not applied it for other reasons. In Greer v. Buzgheia (2006) 141 Cal.App.4th 1150 [46 Cal.Rptr.3d 780], the court held that the defendant had failed to preserve any right to a postverdict hearing by failing to request a verdict form that contained a separate entry for past medical expenses. (Id. at p. 1158.) In Katiuzhinsky v. Perry (2007) 152 Cal.App.4th 1288 [62 Cal.Rptr.3d 309], the court distinguished Hanif/Nishihama, holding that it did not apply where the plaintiff’s medical lien was sold to a third party. In that instance, the plaintiff was still entitled to the full amount billed by the medical provider, as long as that amount was legitimately incurred and the plaintiff remained liable for its payment. (Id. at p. 1291.)
Our Supreme Court has not squarely addressed the rule set forth in Hanif/Nishihama. Olszewski v. Scripps Health (2003) 30 Cal.4th 798 [135 Cal.Rptr.2d 1, 69 P.3d 927] (Olszewski), addressed whether federal Medicaid law, which limits provider reimbursement, preempts California statutes permitting medical providers to obtain liens against personal injury claims, judgments, or settlements of Medi-Cal beneficiaries for the full charges for services. The court reluctantly held that state law was preempted, noting: “By invalidating liens filed pursuant to [Welfare and Institutions Code] section 14124.791, we give the third party tortfeasor a windfall at the expense of the innocent health care provider. Because the provider may no longer assert a lien for the full cost of its services, the Medicaid beneficiary may only recover the amount payable under Medicaid as his or her medical expenses in an action against a third party tortfeasor. (See Hanif v. Housing Authority[, supra,] 200 Cal.App.3d [at pp.] 639-644 . . . [where the provider has relinquished any claim to additional reimbursement, a Medicaid beneficiary may only recover the amount payable under the state Medicaid plan as medical expenses in a tort action].) As a result, the tortfeasor escapes liability for the full amount of the medical expenses he or she wrongfully caused. *212Such a result not only benefits the party who should be responsible for the medical costs of the beneficiary at the expense of the blameless provider, it also harms society as a whole. Because health care providers cannot recover the full costs of their services from responsible tortfeasors, they must either charge more to those innocent patients who can pay in order to recoup their losses or stop providing medical care to the needy. In the end, everybody suffers but the third party tortfeasor. We therefore urge the Legislature to remedy this anomaly in a manner consistent with federal law.” (Id. at pp. 826-827.)
In Parnell v. Adventist Health System/West (2005) 35 Cal.4th 595 [26 Cal.Rptr.3d 569, 109 P.3d 69], the court addressed what a hospital could recover under a lien, where, similar to the facts in Nishihama, it treated the plaintiff at a discounted rate. The court ultimately held that the hospital’s payment was limited to the amount it agreed to accept via the plaintiff’s insurance contract. (Id. at p. 609.) It could not, therefore, recover the difference between the amount it billed and the amount paid by the plaintiff’s insurance, either from the plaintiff or the tortfeasor. In a footnote, the court stated: “Because our holding relies solely on the absence of a debt underlying the lien, we do not reach, and express no opinion on, the following issues: (1) whether Olszewski v. Scripps Health[, supra,] 30 Cal.4th 798 . . . and Hanif v. Housing Authority[, supra,] 200 Cal.App.3d 635 . . . apply outside the Medicaid context and limit a patient’s tort recovery for medical expenses to the amount actually paid by the patient notwithstanding the collateral source rule . . . .” (Id. at pp. 611-612, fn. 16.) Thus, we have no clear direction from the court outside the context of Medicaid.

Judicial Restraint and Preserving the Collateral Source Rule

In the modem medical setting, paperwork abounds. There are a variety of private, public, and supplemental insurance requirements and conditions, a range of negotiating groups, copayment requirements, provider agreements, contractual and statutory liens, subrogation claims, reimbursement provisions, and statutory rights, both state and federal, that surround every visit to a doctor or hospital. Phrases such as “network,” “nonnetwork” and “balance billing” are increasingly used. This complicated and delicate scheme includes legislation specifically designed to work within the collateral source mle (see, e.g., Civ. Code, § 3333.1; Gov. Code, § 985, subd. (f)), while at the same time recognizing that the measure of damages “is the amount which will compensate for all the detriment proximately caused” (Civ. Code, § 3333). Disastrous anticonsumer consequences could result if a court were to issue an *213opinion contrary to the legislative scheme which now surrounds a rule which was originally judge made.
During oral argument, the parties and the court embraced a hypothetical situation wherein a patient received a hospital bill of $20,000. The hypothetical hospital agreed to settle the bill for a payment of $16,000 from the patient’s insurance company. The parties could not agree what the hypothetical patient’s damages would be under Civil Code section 3333 in a personal injury lawsuit filed against a third party. They argued there would be different damages for the hypothetical insured patient/plaintiff than damages incurred by an uninsured or indigent plaintiff. In the case of an uninsured or indigent plaintiff, of course, a hospital would not have settled its bill for $16,000. Under those circumstances, some of the parties argued, the damages for an insured patient/plaintiff would be $16,000, while the damages for an uninsured or indigent person with the same injuries and the same hospital bill would be $20,000.
Much has changed since the collateral source rule first entered our jurisprudence. In addition to the changes noted above, the parties inform the court the same diagnostic test for the same injury might result in a different billing amount, depending on the contract between or among businesses which are not parties to a case before the court.
Given this setting, I decline to apply the postverdict hearing schemes3 set forth in Hanif/Nishihama to private insurance situations, absent either statutory authority or endorsement from the Supreme Court. I believe the rule abrogates, in fact if not in law, the collateral source rule and the sound policy behind it. The plaintiff who has insurance receives less than her uninsured counterpart, while the defendant benefits from the plaintiff’s prudence. This drastically undermines one of the key policy rationales behind the rule.
Changes to the collateral source rule, in my view, should be promulgated by the Legislature. Other courts have agreed. In discussing some of the Legislature’s adjustments to the collateral source rule, the court in Smock, *214supra, 138 Cal.App.4th at page 888, noted; “If other modifications or limitations to this long-established rule are warranted, their creation is best left to the Legislature. (See Helfend, supra, 2 Cal.3d at p. 13 [‘the proposed changes, if desirable, would be more effectively accomplished through legislative reform’].)” Similarly, in Olszewski, supra, 30 Cal.4th at page 827, the Supreme Court urged legislative action to harmonize state and federal law with respect to hospital liens. Legislative action to clarify how damages are to be calculated when the amount billed exceeds the amount paid by a plaintiff’s insurer would resolve this issue, but in the absence of such direction, I believe the traditional collateral source rule, and Civil Code section 3333, should be followed.

 The rule has been abrogated by statute in certain limited situations. For example, the Medical Injury Compensation Reform Act (MICRA) abrogates the rule in actions for professional negligence against health care providers. (Civ. Code, § 3333.1, subd. (a).)

 The court addressed, at some length, and squarely rejected any argument that Nishihama might be liable for the difference under California’s Hospital Lien Act, Civil Code sections 3045.1-3045.6. “We find that [the hospital]’s lien rights do not extend beyond the amount it agreed to receive from Blue Cross as payment in full for services provided to plaintiff. As [the *211hospital] has been paid that amount, it has no lien rights in the damages awarded to plaintiff, and the court, therefore, erred in permitting the jury to award plaintiff an amount in excess of $3,600 for the services provided by [the hospital]." (Nishihama, supra, 93 Cal.App.4th at p. 307.)

 Procedural confusion as to the form of this hearing demonstrates another problem with judge-made rules of this kind. None of the cases address precisely what form this hearing should take or what standard of review should be applied on appeal. The trial judge in Greer v. Buzgheia, supra, 141 Cal.App.4th 1150, seemed to think the hearing should be neither a motion for new trial nor a motion for judgment notwithstanding the verdict. (Id. at p. 1155.) The judge in the instant case treated the motion as one for partial judgment notwithstanding the verdict. The lack of a clear procedure is in itself problematic for both trial courts and litigants alike. As if to highlight the level of confusion about the Hanif/Nishihama process, while the parties in the instant case agreed during oral argument that plaintiff had the burden of proving the amount of reasonable medical expenses during trial, they each contended the other had the posttrial burden of proving the amount actually paid.