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PERSONAL INJURY DAMAGES: ASCDC Files Petition for Review in Pebley v. Santa Clara Organics, LLC

Last month, we discussed the potential negative impacts of the Dave Pebley v. Santa Clara Organics, LLC (May 8, 2018, B277893) (Pebley) decision in personal injury actions involving insured plaintiffs who choose to treat on a lien basis. A petition for review was recently filed seeking to overturn the potentially devastating effects of Pebley. Amicus Curiae Letters have been submitted by numerous interested organizations, including the Association of Southern California Defense Counsel, in support of review.

Pebley held that an insured plaintiff who chose to treat with medical providers outside his/her insurance plan “shall be considered uninsured, as opposed to insured, for the purpose of determining economic damages.” In other words, plaintiffs who seek medical treatment through liens instead of health insurance will no longer be precluded from introducing evidence of those liens in support of their claim for medical damages. This decision is a significant departure from the accepted case law on point, which held that evidence of billed medical expenses is not relevant in instances where a plaintiff is covered by insurance. (Howell v. Hamilton Meats (2011) 52 Cal.4th 541; Correnbaum v. Lampkin (2013) 215 Cal.App.4th 1308; Ochoa v. Dorado (2014) 228 Cal.App.4th 120; c.f. Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311.)

On June 15, 2018, the defendant in Pebley filed a Petition for Review with the California Supreme Court on the basis that the decision would essentially render the accepted legal principal of tying damages to “reasonable costs’ optional, and thereby obsolete. Specifically, the Petition avers:

This case involves an insured plaintiff who, for no demonstrated medical reason, sought treatment from a doctor who generated bills at far higher rates than otherwise available in the marketplace, and who also demanded a lien on plaintiffs tort recovery. Approving recovery based on those bills, without any showing of marketplace value, the Court of Appeal created the legal fiction that such insured plaintiffs should nonetheless be treated as uninsured plaintiffs, and that Bermudez rather than Howell then applied….The Court of Appeal’s opinion allows a plaintiff in a personal injury action treating on a lien basis to recover more than a truly uninsured patient would ever pay because, as Howell noted, uninsured patients do not pay the face amount of “bills” prepared by providers. (Howell, supra, 52 Cal.4th at p. 561 [“Nor do the chargemaster rates. . . necessarily represent the amount an uninsured patient will pay”; noting further that uninsured patients typically pay less than insured patients].)

In reaching its conclusion, the Court of Appeal bought into a false narrative that adherence toHowell would interfere with the right of a plaintiff to choose his or her own doctor. It does not. As defendants in this case have repeatedly stressed, injured plaintiffs are free to seek treatment from whatever providers they choose. But that should not mean that they can recover as tort damages inflated amounts “billed” at many times the marketplace value by a lien doctor who has an economic interest in the outcome of the litigation, and whose “bills” reflect amounts that, outside of the litigation context, are not ordinarily paid.

On July 3, 2018, the Association of Southern California Defense Counsel submitted an Amicus Curiae Letter in support of the request for review by the Supreme Court of California. The letter states that the Pebley decision, and the Court’s ultimate decision regarding review, will have a direct impact on its 1,100 members, as the decision goes to the heart of determining and calculating damages within the State of California. The letter further echoed the same concerns as the Petition for Review in that the decision will give an incentive to Plaintiff’s to opt out of treating with their insurance carriers in favor of physicians which provide healthcare on inflated lien values for the primary purpose of increasing recoverable damages.

Given the high stakes presented with operating in a post-Pebley personal injury world, the support presented in favor of California Supreme Court Review is not only appropriate, but greatly needed to ensure that the Plaintiffs’ bar is not incentivized to essentially “opt-out” of the Howell decision and its progeny.