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Jul 2014: Ochoa v. Dorado: Howell reasoning extended to Unpaid Medical Liens
By Robert M. Tessier

The Second Appellate District Division 3 filed its decision in Ochoa v. Dorado, B240595, on July 22, 2014. This is another case in the Howell and Corenbaum line of decisions considering the issue of the admissibility of unpaid past medical expenses. The court's decision extends the Howell line of reasoning to unpaid past medical expenses provided on a lien basis, and holds that the billed amounts unpaid past medical expenses provided on a lien are not admissible to establish the reasonable value of those services.

The court also addressed the scope of a non-reatined expert's opinion testimony at trial. It held that no expert witness declaration is required for a treating physician to offer an opinion concerning the issue of the reasonableness of medical expenses if the basis for these opinions are acquired outside the scope of the litigation.

Facts in Ochoa

This is a typical personal injury matter arising out of a rear end collision. The plaintiffs sought medical care on a lien basis, and received case from among others, Dr. Michael Schiffman. Dr. Schiffman was listed on plaintiff's pre-trial expert exchange as a "non-retained" expert, and hence no declaration was provided under C.C.P. 2034. The defense moved to exclude any testimony as to the reasonable of the medical expenses provided on a lien basis, arguing by way of motion in limine that the issue of whether the doctor's charges were reasonable was beyond the scope of the treating physician and therefore the doctor should not be able to offer such testimony. The trial court agreed and granted the motion in limine.

The sides then stipulated as to the amounts actually billed by the medical providers for the past medical expenses.

The plaintiff offered expert testimony from a vocational rehabilitation expert and an economist, but Dr. Schiffman was precluded from offering an opinion as to the reasonableness of the unpaid billed medical expenses on a lien.

The jury found for the plaintiff, and awarded the billed medical expenses. Defendant challenged the verdict, arguing that the billed, but unpaid, past medical expenses (which were in evidence by way of stipulation) is not evidence of the reasonable value of those expenses pursuant to Howell and Corenbaum.

The Reasoning of the Appellate Court on the Howell Issue

The opinion offers and excellent summary and background of the pertinent cases in this growing body of law on the subject of past medical expenses and the proper evidence and calculation of those damages. The court begins with Howell and quotes that opinion extensively:

"A plaintiff may recover as damages for past medical expenses no more than the reasonable value of the services provided. (Howell, supra, 52 Cal.4th at p. 555.) Such damages are limited to the lesser of (1) the amount paid or incurred for past medical services, and (2) the reasonable value of the services. (Id. at p. 556.)Howell, supra, 52 Cal.4th 541, held that an injured plaintiff whose medical expenses are paid by private insurance can recover damages for past medical expenses in an amount no greater than the amount that the plaintiff's medical providers, pursuant to prior agreement, accepted as full payment for the services. (Id. at p. 566.) Howell rejected the argument that limiting the plaintiff's recovery in this manner would result in a windfall to the tortfeasor, stating that the full amount billed by medical providers is not an accurate measure of the value of the services provided. (Id. at pp. 560-563.) Howell stated that there can be significant disparities between the amounts charged by medical providers and the costs of providing services (id. at pp. 560-562), the price of a particular service can "vary tremendously . . . from hospital to hospital in California" (id. at p. 561), and "a medical care provider's billed price for particular services is not necessarily representative of either the cost of providing those services or their market value" (id. at p. 564). Although Howell did not expressly hold that unpaid medical bills are not evidence of the reasonable value of the services provided, it strongly suggested such a conclusion."


Ochoa
(p. 17-18)

The court then considers the impact of Corenbaum:

"Subsequently, we held in Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308

(Corenbaum ) that the full amount billed for a plaintiff's medical care is not relevant to the determination of damages for past or future medical expenses, and therefore is inadmissible for those purposes, if the plaintiff's medical providers had agreed to accept a lesser amount as full payment for the services provided. (Id., at pp. 1328, 1331.) We also held that the full amount billed cannot support an expert opinion on the reasonable value of future medical expenses and is inadmissible for the purpose of proving noneconomic damages. (Id. at pp. 1331-1333.) We stated that the observations in Howell, supra, 52 Cal.4th 541, compelled the conclusion that the full amount billed for past medical services was not relevant to the reasonable value of the services provided. (Corenbaum, supra,at pp. 1330-1331.) We explained: 'Howell stated that the full amount billed is not an accurate measure of the value of medical services, that there can be significant disparities between the amounts charged by medical providers and the costs of providing services, and that the price of a particular service can 'vary tremendously . . . from hospital to hospital in California' and 'a medical care provider's billed price for particular services is not necessarily representative of either the cost of providing those services or their market value.' ( Howell, supra, 52 Cal.4th at pp. 560-562, 564.) These and other observations in Howell compel the conclusion that the full amount billed by medical providers is not relevant to the value of past medical services. For the same reason, the full amount billed for past medical services is not relevant to a determination of the reasonable value of future medical services.' (Corenbaum, supra, 215 Cal.App.4th at pp. 1330-1331.)"

Ochoa , p. 18-19.

The court also considers the impact of the recent decision of State Farm Mutual Automobile Ins. Co. v. Huff (2013) 216 Cal.App.4th 1463, 1471-1472 (State Farm) that concerns hospital bills governed by the Hospital Lien Act (Civ. Code section 3045.1):

"State Farm, supra, 216 Cal.App.4th 1463, stated that the amount of a medical provider's lien pursuant to the Hospital Lien Act (Civ. Code, § 3045.1 et seq.) could not exceed the " 'reasonable and necessary' " charges for the services provided. (State Farm, supra, at pp. 1469-1470, quoting Civ. Code, § 3045.1.) State Farm concluded that an unpaid hospital bill based on the provider's standard medical charges was not evidence of the reasonable value of the services provided. (Id. at p. 1472.) Unlike the medical providers in Howell, supra, 52 Cal.4th 541, and Corenbaum, supra, 215 Cal.App.4th 1308, the medical provider had not previously agreed with the patient's health insurer to accept a lesser amount as full payment for the services provided. The patient in State Farm was uninsured. (Citation omitted) State Farm, supra, 216 Cal.App.4th 1463, stated, 'the full amount billed by medical providers is not an accurate measure of the value of medical services' [citation] because 'many patients . . . pay discounted rates,' and standard rates 'for a given service can vary tremendously, sometimes by a factor of five or more, from hospital to hospital in California' [citation].' (Id. at p. 1471, quoting Corenbaum, supra, 215 Cal.App.4th 1308, and Howell, supra, 52 Cal.4th 541, respectively.) State Farm stated that the hospital bill itself was not an accurate measure of the reasonable value of the services provided, and the medical provider failed to present any evidence of reasonable value. (Id. at p. 1472.) State Farm therefore concluded that the evidence was insufficient to support a judgment in favor of the medical provider and reversed the judgment. (Ibid.) This conclusion is entirely consistent with a line of authority holding or suggesting that unpaid medical bills are not evidence of the reasonable value of the services provided."

Ochoa, p. 19-20.

In a part of the analysis that could foreshadow the Supreme Court examining the issue of factoring of medical expenses in the post-Howell world, the court considered the impact of the holding of Katiuzhinsky v. Perry (2007) 152 Cal.App.4th 1288 (Katiuzhinsky), and found it's reasoning unpersuasive and declined to follow the decision:

"Katiuzhinsky v. Perry (2007) 152 Cal.App.4th 1288 (Katiuzhinsky) held that the trial court erred by excluding evidence of the full amounts billed for medical services and limiting the plaintiffs' recovery to the discounted amounts paid by a lien purchaser. The medical providers accepted the discounted amounts as full payment for the accounts, but plaintiffs remained liable to the lien purchaser for the full amounts billed. ( Id. at pp. 1291-1292.) Katiuzhinsky held that the plaintiffs' recovery was not limited to the discounted amounts because the plaintiffs remained liable to the lien purchaser for the full amounts billed, and because the medical providers were not obligated to sell the accounts at a discount and had no prior agreement to do so. (Id. at pp. 1296-1298.)Katiuzhinsky also held that the exclusion of the unpaid medical bills was error, stating that the bills were evidence of the reasonable value of the services provided. (Id. at pp. 1295-1296.) Katiuzhinsky stated that regardless of whether the accounts were later sold, 'the charges billed to plaintiffs reflected on the reasonable value of the services they received.' (Id. at p. 1297.)"

Ochoa, p. 23.

The bottom line: "we conclude that an unpaid medical bill is not evidence of the reasonable value of the services provided. We therefore conclude that evidence of unpaid medical bills cannot support an award of damages for past medical expenses."

Ochoa , p. 24.

Treating Physicians Listed as Non-Retained Experts May Be Able to Offer an Opinion Concerning the Reasonableness of Billed Medical Expenses

The court also analyzed the issue of whether a non-retained treating physician can offer an opinion at trial as the reasonable value of medical services provided on a lien. The court agreed with the plaintiff that a non-retained treating physician who gains the relevant knowledge on the issue based on facts acquired not through the litigation may offer an opinion as to the reasonable value of plaintiff's past medical expenses. No expert witness declaration is required.

"The trial court here found that Dr. Schiffman acted as a treating physician at all times and did not act as an expert retained for purposes of this litigation. Yet the court precluded Dr. Schiffman and any other nonretained treating physician from testifying on the reasonable value of their services provided to Plaintiffs. We conclude that this was error and that Plaintiffs were entitled to present testimony by any nonretained treating physician on the reasonable value of medical services that he or she provided or became familiar with as a treating physician, as long as such testimony is based on facts acquired in the physician-patient relationship or otherwise acquired independently of this litigation, and not acquired for the purpose of forming and expressing an opinion in anticipation of litigation or in preparation for trial."

Ochoa , p. 27

The court's reasoning is as follows (sorry for the lengthy quotes):

"A party must identify its expert witnesses before trial in response to a demand for exchange of expert witness information under Code of Civil Procedure section 2034.210. This requirement applies to both retained and nonretained experts. (§§ 2034.210, subd. (a), 2034.260, subd (b)(1); Schreiber v. Estate of Kiser (1999) 22 Cal.4th 31, 35.)...But for a treating physician who is not 'retained by a party for the purpose of forming and expressing an opinion in anticipation of the litigation or in preparation for the trial' (§ 2034.210, subd. (b)), no expert witness declaration is required (Schreiber, supra, at p. 39), and the exclusion sanction is unavailable. Treating physicians generally are not 'retained' experts within the meaning of section 2034.210, subdivision (b). (Schreiber, supra, 22 Cal.4th at p. 36, citing former 25 'A treating physician is a percipient expert, but that does not mean that his testimony is limited to only personal observations. Rather, like any other expert, he may provide both fact and opinion testimony.... A treating physician is not consulted for litigation purposes, but rather learns of the plaintiff's injuries and medical history because of the underlying physician-patient relationship." (Schreiber, supra, 22 Cal.4th at pp. 35-36.) ...[T]he identity and opinions of treating physicians are not privileged, and they are subject to ordinary discovery with no special restrictions. (Id. at p. 38.) 'Indeed, defendants have a strong incentive to depose treating physicians well prior to the § 2034, subd. (a)(2).)... '[T]o the extent a physician acquires personal knowledge of the relevant facts independently of the litigation, his identity and opinions based on those facts are not privileged in litigation presenting 'an issue concerning the condition of the patient.' [Citations.] For such a witness, no expert witness declaration is required, and he may testify as to any opinions formed on the basis of facts independently acquired and informed by his training, skill, and experience. This may well include opinions regarding causation and standard of care because such issues are inherent in a physician's work." (Citations omitted) Accordingly, no expert witness declaration is required for treating physicians to the extent that their opinion testimony is based on facts acquired independently of the litigation, that is, facts acquired in the course of the physician-patient relationship and any other facts independently acquired. (Schreiber, supra, 22 Cal.4th at p. 39; Dozier v. Shapiro(2011) 199 Cal.App.4th 1509, 1520.) We conclude that this includes an opinion as to the reasonable value of services that the treating physician either provided to the plaintiff or became familiar with independently of the litigation, assuming that the treating physician is qualified to offer an expert opinion on reasonable value. A treating physician who has gained special knowledge concerning the market value of medical services through his or her own practice or other means independent of the litigation may testify on the reasonable value of services that he or she provided or became familiar with as a treating physician, rather than as a litigation consultant, without the necessity of an expert witness declaration. To the extent that a treating physician became familiar with services provided to the plaintiff or other facts for the purpose of forming and expressing an opinion in anticipation of litigation or in preparation for trial, however, he or she acts as a retained expert. An expert witness declaration is required for such a treating physician to the extent that he or she testifies as a retained expert. (§ 2034.210, subd. (b); Dozier, supra, at p. 1521.)"

Ochoa , p. 26-27 (emphasis added).

Impact

The Ochoa court reaffirms the Second Appellate District's view of the Howell decision and continued the expansion of it's reasoning to the issue of unpaid past medical expenses incurred on a lien basis. It provides a summary of the law to date, and foreshadows the next issue likely to be tacked by the Supreme Court: whether the reasoning of Katiuzhinsky v. Perry (that so long as the plaintiff remains responsible to a third party purchaser of past medical expenses, the plaintiff may recover the full amount billed even if the provider accepted less as payment in full from the third party lienholder) survives the Howell rule that the plaintiff can recover no more than the amount accepted by the medical provider as payment in full for past medical services. This is a battle with many stakeholders on both sides, so I predict we will see a battle royale at the Supreme Court within the next couple of years on the issue.

Most importantly though for Los Angeles County (as the Second Appellate District encompasses that County) there is now a published Second Appellate District case that declines to follow Katiuzhinsky (which is a Third Appellate District court case). Under the rule articulated in Auto Equity Sales v. Superior Court (1962) 57 Cal. 2d 450, 456, trial courts can and must make a choice between the conflicting decisions at the appellate level. (See also, Farmers Insurance Exchange v. Superior Court (2013) 218 Cal. App. 4th 580, 584, fn. 7). It will be interesting to see what trial courts in Los Angeles County will do with Ochoa, if faced with a third party lien holder, as the opinion expressly states that it declines to follow Katiuzhinsky, though not on the precise issue of factoring.

Practice Tip in Light of Ochoa

Lastly, a practice tip for each side given the discussion of C.C.P. 2034. Plaintiff's counsel may now safely designate as a treating physician a witness from whom they may expect to elicit opinion testimony on the issue of reasonableness of charges for past medical care rendered on a lien basis, provided the witness otherwise qualifies to so opine with the requisite knowledge from sources unrelated to the litigation. This could be a tough needle to thread however if the physician is expected to so opine on any medical bills other than his/her own. This is because a treater would have to become familiar with the billing from a provider by some avenue other than through counsel and the litigation in order to remain in the safe harbor of "treating physician." Plaintiff's counsel should consider the safer course, if he/she intends to use a treater to opine on the reasonableness of other provider's medical charges, which is to designate whomever is expected to render opinion testimony on the issue as a retained expert. This will be a strategic and tactical decision left for the plaintiff's trial lawyer on a case by case basis.

For the defense, it will be incumbent for counsel to depose "non-retained" experts and cover the issue thoroughly in the deposition so as not to be sandbagged. One can appreciate defense counsel's dilemma in this case, though, because the plaintiff designated as non-retained experts all 27 of plaintiff's treating doctors. It can become ridiculously expensive to take 27 doctor's depositions, and it is doubtful a trial judge in this climate of shrinking resources would allow a trial in a personal injury case to encompass the testimony of 27 medical experts. Streamlining the pre-trial expert discovery by knowing which physicians will actually be called at trial will facilitate both sides interests, so hopefully civility will prevail and Ochoa will not needlessly drive up the cost of litigation. Nevertheless, as treaters can opine on reasonableness of the medical charges if the requisite knowledge is established, even without being a "retained expert", defense counsel needs to adjust to this reality and move forward accordingly.

Conclusion

I know this newsletter is lengthy and heavy with quotes from the case, so thank you for slogging through it. Ochoa is an important case, so hopefully the quotes contained herein will help give context to the decision, and assist in any cutting and pasting for Motions in Limine, etc. If anyone has any experiences in the trial court on this issue, please drop me an email at

robert@tessiermediation.com

and let me know what the trial courts are doing on your cases.


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