Leung v. Verdugo Hills
hopsital
Filed 1/22/13
Leung v. Verdugo Hills hopsital CA2/4
Opinion on remand from Supreme Court
OFFICIAL REPORTS
California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
AIDAN MING-HO LEUNG,
Plaintiff,
Respondent and
Cross-Appellant,
v.
VERDUGO HILLS HOSPITAL,
Defendant,
Appellant and
Cross-Respondent.
B204908
(Los Angeles County
Super. Ct. No. BC343985)
Appeal from a judgment of the Superior Court of
County, Laura A. Matz, Judge. Affirmed.
Thomas and Thomas, Michael Thomas and
Maureen F. Thomas; Greines, Martin, Stein & Richland, Feris M. Greenberger,
Jennifer C. Yang and Robert A. Olson for Defendant, Appellant and
Cross-Respondent.
LKP Global Law and Luan K. Phan;
Esner, Chang & Boyer, Andrew N. Chang and Stuart B. Esner for Plaintiff,
Respondent and Cross-Appellant.
This appeal by defendant Verdugo Hills Hospital (the Hospital) and
cross-appeal by plaintiff Aidan Ming-Ho Leung (Aidan) is before us for a second
time. In our first opinion, we reversed
that portion of the trial court’s judgment awarding Aidan economic damages
against the Hospital. We reluctantly
concluded that under the common law release rule, Aidan’s non-good faith
settlement with codefendant Dr. Steven Wayne Nishibayashi and his medical
corporation released the Hospital from its liability for economic damages. We left undecided four issues that were not
necessary for us to address.
The California Supreme Court granted
review, abandoned the common law release rule, and held that “when a settlement
with a tortfeasor has judicially been determined not to have been made in good
faith (see Code Civ. Proc., §§ 877, 877.6, subd. (c)), nonsettling joint
tortfeasors remain jointly and severally liable, the amount paid in settlement
is credited against any damages awarded against the nonsettling tortfeasors,
and the nonsettling tortfeasors are entitled to contribution from the settling
tortfeasor for amounts paid in excess of their equitable shares of
liability.†(Leung v. Verdugo
308 (Leung).)
The Supreme Court therefore reversed
our judgment,
title="">[1]
and remanded the case for us to consider the four remaining issues, three
arising in the appeal by the Hospital, and one in the cross appeal by
Aidan. The issues now before us are as follows. The Hospital contends that the trial court
erred in (1) excluding evidence that future insurance benefits would cover much
of Aidan’s future medical costs; (2) incorporating interest under Civil Code
section 3291 into the judgment, and in awarding interest on that part of the
judgment representing the present value of future medical expenses; and (3)
determining under Code of Civil Procedure section 667.7, subdivision (a), that
the Hospital is not adequately insured, thereby requiring it to post security
adequate to assure full payment of the periodic payments judgment. Aidan contends in his cross appeal that the
trial court erred in the type of security it permitted the Hospital to provide
under section 667.7, subdivision (a): an
annuity from an approved provider, payable to the Hospital, sufficient to fund
the periodic payments in each year they are required. We are not persuaded by the parties’
contentions, and affirm the judgment.
Six days after birth, Aidan suffered
caused by “kernicterus,†a condition that results when an infant’s level of
“bilirubin†(a waste product of red blood cells which causes jaundice) becomes
toxic. Through his guardian ad litem
(his mother, Nancy Leung), Aidan sued his pediatrician, Dr. Nishibayashi, and
his professional corporation, alleging that Dr. Nishibayashi was negligent in
his care and treatment. Aidan also sued
the Hospital, where he was born,
alleging that the Hospital was negligent for, inter alia, failing to provide
his parents with adequate education on neonatal jaundice and kernicterus, and
failing to implement policies to reduce the risk of kernicterus in
newborns.
Aidan reached a settlement with Dr.
Nishibayashi and his corporation, under which Dr. Nishibayashi agreed to pay
the limits of his malpractice insurance, $1 million, and to participate at a
trial in which the jury would allocate the negligence, if any, of the Hospital
and Dr. Nishibayashi and set the amount of damages. It was this settlement that was the subject
of the Supreme Court’s opinion in Leung,
supra, 55 Cal.4th 291.
The case was tried to a jury, which
found both the Hospital and Dr. Nishibayashi negligent, and awarded damages of
$78,375.55 for past medical costs, $250,000 for noneconomic damages,
$82,782,000 for future medical care (with a present value of $14 million) and
$13.3 million for loss of future earnings (with a present value of $1,154,000). Apportioning fault, the jury found the
Hospital 40 percent negligent, Dr. Nishibayashi 55 percent negligent, and
plaintiff’s parents, Nancy and Kevin Leung, each 2.5 percent negligent.
Ultimately, the court approved a
minor’s compromise regarding Aidan’s settlement with Dr. Nishibayashi, and
incorporated the verdict into a periodic payments judgment under Code of Civil
Procedure section 667.7, which declared the Hospital jointly and severally
liable for 95 percent of all economic damages found by the jury and severally
liable for its 40 percent share of noneconomic damages.
We
discuss additional proceedings and evidence as necessary, below.
Evidence of Future
Insurance Benefits
The Hospital contends that the trial
court misconstrued Civil Code section 3333.1 (hereafter section 3333.1, a
provision of MICRA)
title="">[2]
and committed prejudicial error by excluding evidence of potential insurance
benefits that would likely cover much of Aidan’s future medical expenses. As we explain, we conclude that the record is
insufficient to address the issue. In
the alternative, we conclude that on the record presented, even assuming that
the Hospital’s interpretation of section 3333.1 is correct, there was no
error. Further, assuming error, there
was no prejudice.
A.
Section 3333.1
“Under the traditional collateral
source rule, a jury, in calculating a plaintiff’s damages in a tort action,
does not take into consideration benefits -- such as medical insurance or
disability payments -- which the plaintiff has received from sources other than
the defendant -- i.e., ‘collateral
sources’ -- to cover losses resulting from the injury.†(Fein
v. Permanente Medical Group (1985) 38 Cal.3d 137, 164 (Fein).) Section 3333.1
modifies this rule in professional negligence actions against a health care
provider, such as the instant case. (
As relevant here, section 3333.1, subdivision (a) provides that in such
cases the defendant “may introduce evidence of any amount payable as a benefit
to the plaintiff as a result of the personal injury pursuant to [such things as
health insurance or state or federal disability payments]. . . . Where the defendant elects to introduce such
evidence, the plaintiff may introduce evidence of any amount which the
plaintiff has paid or contributed to secure his right to any insurance benefits
concerning which the defendant has introduced evidence.â€
. . . does not specify how the jury should use such evidence [of
collateral source benefits payable to the plaintiff and the amounts paid by the
plaintiff to secure those benefits], the Legislature apparently assumed that in
most cases the jury would set plaintiff’s damages at a lower level because of
its awareness of plaintiff’s ‘net’ collateral source benefits.†(Fein,
supra, 38 Cal.3d at pp. 164-165.)
The Hospital asserts that in
authorizing the defendant to “introduce evidence of any amount payable as a benefit to the plaintiff as a result of the
personal injury†(italics added), section 3333.1 permits evidence not simply of
insurance benefits already paid, but also of benefits likely to be received in
the future. The Hospital’s reasoning has
three primary strands: (1) the assertion
that the word “payable†encompasses both past and future payments, (2) the
legislative intent of MICRA in general and section 3333.1 in particular to
reduce liability for healthcare malpractice claims, and (3) the decision in
suggesting that section 3333.1 permits consideration of collateral source
benefits that the plaintiff is likely to receive.
In Fein,
as here relevant, the trial court used an anomalous procedure in implementing
section 3333.1. It did not permit
evidence of collateral source benefits to be introduced into evidence. Rather, because the amount of such benefits
was not in dispute, the court ruled that it would simply reduce the verdict by
the amount of the benefits. Neither party
objected. (Fein, supra, 38 Cal.3d at pp. 146, fn. 2, 165, fn. 21.) Thereafter, the jury awarded, inter alia,
$63,000 in future medical expenses, and the trial court ordered the defendant
to pay the first $63,000 of those expenses “not covered by medical insurance
provided by plaintiff’s employer, as such expenses were incurred.†(Id. at
p. 146.)
Although this procedure was not raised
as an issue on appeal, the Supreme Court observed in a footnote that the
plaintiff did “raise a minor contention . . . which is somewhat related to this
matter.†(Fein, supra, 38 Cal.3d at p. 165, fn. 21.) The court explained: “In awarding damages applicable to
plaintiff’s future medical expenses, the trial court indicated that defendant
was to pay the first $63,000 of such expenses that were not covered by employer-provided medical insurance. Plaintiff, pointing out that he may not be
covered by medical insurance in the future, apparently objects to any reduction
of future damages on the basis of potential future collateral source benefits. Under the terms of the trial court’s
judgment, however, defendant’s liability for such damages will be postponed
only if plaintiff does in fact receive such collateral benefits; thus, it is
difficult to see how plaintiff has any cause to complain about this aspect of
the award. Indeed, if anything, the trial court may have given plaintiff more than
he was entitled to, since it did not reduce the jury’s $63,000 award by the
collateral source benefits plaintiff was likely to receive, but instead
imposed a continuing liability on defendant to pay up to a total of $63,000 for
any noncovered medical expenses that plaintiff may incur in the future as a
result of the injury. Defendant has not
objected to this portion of the judgment.â€
(Ibid., italics added.)
Relying on the italicized language
above, the Hospital contends section 3333.1 permits evidence of future
collateral source benefits that the plaintiff is “likely to receive†(
21), or more accurately (by the analogy the Hospital draws to the standard of
recovery for future medical expenses and lost earnings), benefits that the
plaintiff is reasonably certain to
receive.
There are good arguments rebutting the
Hospital’s interpretation of section 3333.1.
For instance, the italicized language in Fein appears to be dicta, and in any event is noncommittal in
referring to the use of future collateral source benefits to offset future
damages – it says that the trial court “may
have given plaintiff more than he was entitled to†by failing to reduce the
award by benefits he was likely to receive.
It does not say that the court did
give plaintiff more than he was entitled to.
Moreover, construing the language of section 3333.1 to include future
insurance coverage is arguably inconsistent with that portion of section 3333.1
which gives the plaintiff the right to introduce “evidence of any amount which
the plaintiff has paid or contributed
to secure his right to any insurance benefits concerning which the defendant
has introduced evidence.â€
(§ 3333.1, subd. (a), italics added.) Obviously, a plaintiff cannot have paid for or
contributed to insurance coverage that has not been obtained.
Although we acknowledge these
arguments concerning the proper interpretation of section 3333.1 (there are
others we do not mention), we conclude that we need not address them, because
the record on appeal alone defeats the Hospital’s contention of error. Therefore, we assume (without deciding) that
the Hospital’s interpretation of section 3333.1 is correct: the statute permits a defendant to introduce
evidence of future insurance benefits that the plaintiff is reasonably certain
to receive.
In the Hospital’s view, the status of
the record is a simple matter: “The
trial court preemptively precluded defendants from attempting to introduce
evidence that much of plaintiff’s future medical expenses would . . . be paid
by (or reduced due to) medical insurance. . . .
After initially denying plaintiff’s motion in limine . . . , the
trial court reversed itself and categorically excluded such evidence during
trial.†Thus, according to the Hospital,
the trial court granted a “mid-trial motion in limine [that] barred the
Hospital from introducing [evidence] that insurance is paying for and will
continue to pay for much of plaintiff’s future medical care,†based on an
interpretation of section 3333.1 that it allows “only the introduction of past
expenses paid by medical insurance and not of the likelihood or availability of
medical insurance to pay future expenses.â€
As we explain in detail below, this
simplistic view of the record is inaccurate.
A full explanation demonstrates that the record is insufficient to
address the propriety of the court’s ruling, and that, in any event, there was
no error. Further, if there was error,
it was not prejudicial.
B.
Trial Court Proceedings
1.
Aidan’s Pretrial Motion in
Limine
In its trial brief, filed before
trial, the Hospital argued that section 3333.1 permits the introduction of
collateral source benefits at trial. It
did not mention evidence of potential future collateral source benefits.
Aidan filed a pretrial motion in
limine to exclude evidence of collateral source payments. The motion, too, did not mention future
benefits. Rather, it assumed that the
evidence which the defendants would seek to introduce was evidence of health
insurance benefits paid or payable for costs incurred to the time of
trial. The motion declared that Aidan’s
medical bills to date exceeded $400,000, and that a portion had been paid by
insurance. The motion argued that
evidence of those payments should be excluded under Evidence Code section 352
because it would confuse the jury, and that, rather than permitting evidence of
those payments, the court should simply reduce the damage award by the amount
of the payments, as was done by the trial court in Fein, supra, 38 Cal.3d at pages 146, footnote 2, 165, footnote 21.
The Hospital filed an opposition,
arguing that section 3333.1 expressly authorized evidence of collateral source
benefits, that the procedure suggested by Aidan was not approved in
discretion to exclude evidence of collateral source benefits. Again, the Hospital did not mention future collateral source benefits. In his reply to the Hospital’s opposition,
Aidan simply reiterated his argument that evidence of payments made to date by
his health insurer should be excluded under Evidence Code section 352.
Dr. Nishibayashi also filed an
opposition to Aidan’s motion in limine.
He argued, in part, that section 3333.1 permits evidence of both past
and future collateral source benefits.
He asserted that he should be permitted to introduce “evidence of the
resources available to plaintiff from:
(1) private health insurance, (2) Regional Center Services, (3) the
public school district and (4) California Children’s Services.†He made no offer of proof as to what
“resources†of private insurance he intended to introduce. Rather, his argument focused on services
available from the Regional Centers and public schools, although even as to
these sources he made no specific offer as to what he intended to introduce.
Aidan’s reply to Dr. Nishibayashi’s
opposition argued that the contention that evidence of future collateral source
payments is admissible was “legally unsubstantiated.†He also asserted that the evidence of any
such benefits should be excluded under Evidence Code section 352.
2.
The Trial Court’s Pretrial
Ruling
At a pretrial hearing before jury
selection began, the trial court ruled on, among other matters, the motions in
limine. With respect to Aidan’s motion
to exclude evidence of payments made by his health insurance for medical costs
to date, the discussion was brief. The
court described the motion as seeking “to exclude evidence of collateral source
payments,†and stated that its tentative ruling was “to follow Civil Code
section [3333.1] in that [the] Legislature gave the option [to] the defendants
to decide whether to use that information . . . and that’s what I’m inclined to
do.†Aidan’s counsel argued that
evidence of “health insurance payments and benefits†would confuse the jury,
and suggested that the court use such evidence to offset the verdict after
trial. The court declined, stating, in
substance, that section 3333.1 required the introduction of such evidence. The court then denied the motion. At no time did the Hospital suggest that it was seeking to
introduce evidence of future health insurance benefits.
Next, referring to Dr. Nishibayashi’s
opposition, the court noted that “there were . . . interesting questions raised
in an opposition to this motion that were not raised in the motion itself,
which we haven’t talked about. And that
is evidence concerning . . . collateral sources other than the private health
insurance[,] [s]pecifically the regional center or the public . . . schools,
etc.†The court stated that it would not
extend section 3333.1 “beyond its own terms†and that it would enforce the “express terms†of
the statute. It therefore denied the
request to introduce evidence of such benefits.
There was no additional argument, and no ruling on the particular issue
of the admissibility of future insurance coverage.
3.
Testimony of Aidan’s Life
Care Planner
At trial, Aidan called Jan Roughan as
his expert in life care planning. She
presented three alternative detailed plans for Aidan’s care and treatment, one
assuming that all contingencies cited by Aidan’s physicians requiring enhanced
care would occur, the second assuming that only some would occur, and the third
assuming that none would occur. The
recommended plans covered medications, medication delivery devices, gastronomy tube feeding , architectural
changes to the home environment, a certified home health aide and a registered
nurse, placement in a supportive living facility at age 21, specialized physicians,
specialized healthcare needs, diagnostic tests, therapy (communication, speech,
occupational, and physical), therapeutic equipment (such as orthotics and
communication devices), replacement costs of necessary equipment, psychosocial
services, transportation (such as a wheelchair and modified van), and personal
needs (such as a conservator depending on Aidan’s intelligence level and
communication skills in adulthood). She
estimated the costs of all these individual items using retail cost comparisons
in “today’s healthcare dollars,†which were submitted to Aidan’s forensic
economist, Robert Johnson, for calculation of present value.
In his cross-examination of Roughan,
Dr. Nishibayashi’s attorney asked several questions without objection concerning
whether various items of recommended care and treatment would be covered in the
future by health insurance or other services, such as public school and the
regional center. In response to
questioning about future insurance coverage, Roughan testified that Aidan’s
family had insurance through Blue Cross,
but she had not contacted Blue Cross to see how much of the case plan would be
covered in the future. She explained
that, in creating a life care plan and calculating costs of recommended items,
she only determines what would be covered under “the current schedule of
benefits. The schedule of benefits
changes every single year. And what we
see is a trend of less and less . . . coverage.â€
Similarly, she testified that one
cannot know what items of the plan might be paid at the health insurer’s lower
contract rate with a provider rather than the greater retail rate on which she
based her cost estimates, because it “would depend upon contractual agreement
[between the insurer and the provider], the schedule of benefits, and whether
or not somebody within the plan approved it.â€
In his cross-examination, the Hospital’s attorney asked no questions
concerning future insurance coverage.
4.
Aidan’s Objection to
Evidence of Future Insurance Coverage
At the beginning of the morning
session the next day, Aidan’s counsel referred to the cross-examination of
Roughan by Dr. Nishibayashi’s attorney concerning future coverage by health
insurance. Although he had not objected during
the questioning, he now argued that it violated section 3333.1 and the court’s
earlier ruling on the motion in limine.
He also argued that evidence as to whether insurance might pay future
costs of the health care plan was entirely speculative: “It would be impossible for a jury to . . .
make an offset for future payments. . . .
You don’t know what the insurance company is going to allow. . . . The insurance company could go out of
business. The father could not have his
job anymore and . . . lose the policy. . . .
[T]he insurance company … retains the right to cancel the policy at any
time. . . . [T]he benefits payable under
the polic[y] change[] every year. Who
knows what is going to be allowed. . . .
We’re submitting it would be pure speculation and any reference to
future coverage by health insurance not be allowed and, in fact, that the jury
be instructed to disregard that and not to consider future insurance
[benefits].â€
Dr. Nishibayashi’s counsel argued that
his examination of Roughan as to her expectation whether insurance or other
services might cover some of the costs of the health care plan was proper. The Hospital’s attorney suggested that the
concern whether such evidence was speculative was for argument to the jury, and
was not a reason to exclude the evidence.
The court suggested that the language of section 3333.1 -- “any amount
payable as a benefit†– “is more conducive to something currently payable than
something that might be paid in the future.â€
The court was also concerned about the speculative nature of the evidence,
referring to Roughan’s testimony that she could not determine what might be
covered by insurance in the future because of such things as the changing
coverage and schedule of benefits. The
court stated that it would do some research into the issue.
Neither Dr. Nishibayashi’s attorney
nor the Hospital’s attorney made any showing of additional evidence of future
insurance benefits they might seek to introduce.
5.
Ruling on Future Insurance
Coverage
After the morning recess, before Aidan
called his forensic economist, Robert Johnson, to testify, the court returned
to the issue of future insurance benefits.
The court stated it agreed with Aidan’s attorney’s interpretation of
section 3333.1: “I don’t think the
statute contemplates future insurance. .
. . [I]t talks about amounts payable in reimbursement for . . . amounts that
have been received as full payment for bills already issued and paid.†The court could find no case law on the
issue, but reasoned that section 3333.1 “is a special exception [to the
collateral source rule] and so it’s limited to its terms.â€
Dr. Nishibayashi’s attorney asked for
the opportunity to do additional research overnight, which the court granted,
with the understanding that he would not mention the subject in his cross-examination
of Aidan’s forensic economist. Dr.
Nishibayashi’s attorney agreed. Neither
he nor the Hospital’s attorney suggested that their cross-examination of
Johnson would be hampered, and made no offer of proof as to what evidence, if
any, concerning future insurance coverage they wished to elicit from him.
6.
Robert Johnson’s Testimony
As here relevant, Johnson’s testimony
concerned the present value of Jan Roughan’s life care plan. Based on the opinions of Aidan’s physicians,
Johnson used a life expectancy of 63 years.
Depending on which of Roughan’s three alternative plans the jury
concluded was appropriate, Johnson estimated a
present value of $19,360,830 for the most comprehensive plan,
$18,784,000 for the intermediate plan, and $18,004,772 for the least
encompassing plan.
7.
Stipulation to Past
Medical Costs
The parties stipulated that Aidan’s
past medical costs charged was $405,312,
that
insurance and government programs had paid $171,949.72, that contractual
deductions were $154,986.73, and that Aidan paid and/or incurred costs of
$78,375.55.
8.
Stacey Helvin’s Testimony
In the defense case, the Hospital and
Dr. Nishibayashi jointly called Stacey Helvin to testify concerning her life
care plan for Aidan. Her plan covered
essentially the same categories of treatment and care as Jan Roughan’s --
including medication, therapy, specialized physicians, medical equipment and
orthotics, modifications to Aidan’s home, supportive living, and transportation
by wheelchair and modified van – though with some different recommendations in
types of care, frequency of care, and equipment. The major difference was that after Aidan
reached age 22, Helvin assumed that Aidan would live in a group home setting at
the regional center at no cost to Aidan’s parents, rather than the private home
setting with attendant care contemplated by Roughan.
Helvin also estimated the cost of her
plan, but nothing in the record suggests that she was prepared to give
testimony on future insurance coverage for those costs, or that she was not
permitted to give such testimony based on the court’s ruling.
9.
Ted Vavoulis’ Testimony
The Hospital called forensic economist
Ted Vavoulis to testify concerning, inter alia, the present value of Helvin’s
life care plan and the present value of Roughan’s plan. Outside the jury’s presence, before Vavoulis
testified, the Hospital’s attorney stated that because of the court’s ruling
excluding evidence of future insurance coverage, he “needed to have Mr.
Vavoulis change his first page of his report because it does talk about
insurance coverage figures as it deals with group home and live-in
setting.†At the request of the
Hospital, Vavoulis had already made the changes, and a modified exhibit was provided
to all parties and used as a demonstrative exhibit. It was not admitted into evidence and is not
part of the record on appeal. Thus, the
record does not disclose the changes made by Vavoulis.
In his testimony, Vavoulis used two
life expectancy figures for Aidan: age
40 and age 61.
title="">[7] Using age 40, he estimated the present value
of Helvin’s life care plan to be between $1,531,050 and $2,627,132, depending
on whether Aidan resided in a group home after age 22 (the lower figure, which
was cost free to Aidan) or resided at home with attendant care (the greater
figure). Using age 61, he calculated the
present value to be between $1,756,509 and $2,627,132. He estimated the present value of Roughan’s
most comprehensive plan to be $9,950,000.
10. Jury
Instructions
Regarding insurance, the court
instructed the jury pursuant to CACI No. 5001:
“You must not consider whether any of the parties in this case has
insurance. The presence or absence of
insurance is totally irrelevant. You
must decide this case based only on the law and the evidence.â€
instructions after the close of evidence, the court, in a colloquy with Dr.
Nishibayashi’s attorney, explained that it had excluded evidence of future
insurance because “it’s too speculative,†and because the court’s reading of
section 3333.1 suggested that such evidence was not admissible, especially
because of its speculative nature. The
court rejected a more specific instruction on insurance proposed by Aidan
attorney that would have precluded the jury from considering “the possibility
of medical insurance coverage†in determining any award for future medical
care. The Hospital’s attorney did not
participate in the discussion concerning how the court should instruct on the
subject of insurance.
11.
The Future Medical Costs Damage Award
The jury awarded future medical costs
of $82,782,000, at a present value of $14 million.
C.
Discussion
From this record, several things fatal
to the Hospital’s contention are apparent.
First, contrary to the Hospital’s recitation of the record (and
implications therefrom), the trial court did not somehow mislead the Hospital
by ruling on the first motion in limine that evidence of future insurance
benefits was admissible, and then, after Jan Roughan’s testimony, preemptively
preclude such evidence to the Hospital’s prejudice. It appears that evidence of future insurance
benefits was largely an afterthought.
Though it was mentioned briefly with
no specifics in Dr. Nishibayashi’s opposition to Aidan’s initial motion in limine,
no one mentioned the subject of future insurance benefits at the hearing on the
motion. The motion itself specifically
identified only evidence of past insurance benefits, and in denying the motion
the trial court did not mention future insurance benefits.
From that point until the trial court
ruled on Aidan’s later motion in limine after Jan Roughan’s testimony, the
Hospital never suggested that it intended to introduce evidence that Aidan was
reasonably certain to receive future insurance benefits. Indeed, the Hospital appeared indifferent to
the point. During his cross-examination
of Roughan, the Hospital’s attorney did not seek to elicit any evidence of
future insurance coverage, even though Dr. Nishibayashi’s attorney did. After the court’s ruling excluding evidence
of future insurance benefits, the Hospital’s attorney did not complain that his
cross-examination of Aidan’s forensic economist, Robert Johnson, would be
hampered, or that the Hospital’s defense case would be damaged.
Indeed, other than the Hospital’s
attorney’s brief reference late in the trial to having the defense forensic
economist, Ted Vavoulis, “change his first page of his report because it does
talk about insurance coverage figures as it deals with group home and live-in
setting,†the Hospital never mentioned evidence of future insurance
coverage. Neither Vavoulis’ initial or
modified report is part of the record on appeal, and thus the record is silent
as to what the precise changes were. The
record is also silent as to what qualifications, if any, Vavoulis possessed so
as to be qualified to opine on future insurance coverage, and it is likewise
silent as to the factual foundation on which he might base any such
opinion.
In short, the Hospital asks us to
decide the propriety of the trial court’s ruling in an
offer of proof in the trial court precludes appellate review of a trial court’s
exclusion of evidence. (
170 Cal.App.4th 1103, 1113; Evid. Code, § 353.) We conclude that rule applies here.
There is an exception when a court
excludes an entire class of evidence (Beneficial
etc. Ins. Co. v. Kurt Hitke & Co. (1956) 46 Cal.2d 517, 522), under the
rationale that in such a situation an offer of proof “would be an idle
gesture.†(Caminetti v. Manierre (1943) 23 Cal.2d 94, 100.) But this exception does not apply here,
because the Hospital never purported to have any evidence about the excluded
class – that is, nothing in the record suggests that the Hospital possessed
evidence that future insurance coverage for Aidan was reasonably certain. Further, the rationale for the exception does
not apply, because an offer of proof would not have been futile. The trial court concluded that evidence of
future insurance coverage was too speculative (Jan Roughan had, in substance,
so testified), and that conclusion informed the court’s interpretation of
section 3333.1. In that context, an
offer of proof demonstrating the substance of the intended evidence and the
supposed non-speculative nature of that evidence certainly might have
influenced the court’s decision. The
deficiency in failing to make an offer of proof is exacerbated by the absence
of any template from prior case law as to the form that evidence of reasonably
certain future insurance coverage might take.
Neither the record nor the Hospital’s briefing describes it. It is impossible to meaningfully evaluate the
Hospital’s contention that the trial court erred, when we have no idea what
that evidence might be in form or substance.
Similarly, it is also impossible to evaluate the Hospital’s claim of
prejudice from the purported error.
Thus, we conclude that the record is insufficient to adequately address
the propriety of the court’s ruling and whether any error was prejudicial. The court’s ruling, therefore, must be
affirmed. (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th
181, 187 [inadequacy of record on appeal requires issue to be resolved against
appellant].)
Second, assuming that the record is
sufficient to address the issue, the only evidence in this record relevant to
the propriety of the trial court’s ruling – the testimony of Jan Roughan -- is
that predicting Aidan’s future insurance coverage, if any, was entirely
speculative. Roughan testified that
although Aidan was then covered by Blue Cross insurance, in creating a life
care plan and calculating costs of recommended items, she only determines what
would be covered under “the current schedule of benefits. The schedule of benefits changes every single
year. And what we see is a trend of less
and less . . . coverage.†Similarly, she
testified that one cannot know what items of the life care plan might be paid
at the health insurer’s lower contract rate with a provider rather than the
greater retail rate on which she based her cost estimates, because it “would
depend upon contractual agreement [between the insurer and the provider], the
schedule of benefits, and whether or not somebody within the plan approved
it.†Thus, the only evidence before the
trial court, and before us on appeal, is that in the present case predictions
of future insurance coverage would be entirely speculative.
In its opening brief, the Hospital
concedes that the court ruled that predictions of future insurance coverage
were speculative (“[t]he trial court reasoned that determining the likelihood
that insurance or other benefits will be available in the future was speculative.â€) In its reply brief, however, the Hospital
asserts that the trial court did not exclude
evidence of future insurance benefits on the basis that it is speculative. The Hospital was correct in its opening
brief. The trial court explained when it
discussed instructing the jury on the subject of insurance: “I have ruled we won’t consider future
insurance. It’s too speculative.
. . . [M]y interpretation of [the
language of section 3333.1] suggests . . . that you can’t go for future medical
expenses, particularly since . . . you can’t assume they’ll be medical
insurance for the future since it’s speculative.†In sum, assuming the record is adequate, the
trial court’s ruling is unassailable, because the only showing made to the
trial court (in the form of Roughan’s testimony) was that in this case one
cannot not predict with reasonable certainty the nature or the extent of future
insurance coverage for Aidan.
Without mentioning Roughan’s
testimony, the Hospital contends in the abstract that evidence of future
insurance benefits is no more speculative than evidence of future medical
costs. On this record, based on
Roughan’s testimony, that is not accurate.
Moreover, the evidence of future medical costs presented by the parties
was based on the opinions of qualified life care planners who explained how
they came by their recommendations for care and treatment (consultation with,
among others, qualified physicians with knowledge of Aidan’s condition) and
explained how they calculated those costs (referring to cost tables and other
sources to obtain present retail costs).
Qualified forensic economists, using accepted methodology, then reduced
the costs of the plans to present value.
The Hospital fails to explain how similarly qualified testimony could be
presented to show that it is reasonably certain that Aidan or any other
plaintiff with such extensive future medical needs is reasonably likely to have
insurance coverage for those needs over part or all of his or her life span. Thus, the notion that predictions of future
insurance coverage are no more speculative than predictions of future medical
costs is entirely unsupported.
Third, the purported evidence of
future coverage that the Hospital appears to assume is admissible does not meet
the standard for admissibility the Hospital advocates. The jury’s assessment of future medical costs
was based on the costs attributed to each item in the detailed life care plans
presented by Roughan and Helvin, discounted to present value. The plans covered
every category of care and treatment Aidan might require throughout his
life. On appeal, the Hospital appears to
assume that the most general evidence of potential future insurance would be
admissible as a possible offset against the future medical costs specified in
the life care plans. Thus, the Hospital
argues that “[t]here was ample reason to believe that plaintiff’s [present]
insurance coverage [would] continue.â€
The Hospital refers to a comment by the trial court that it had “no
reason to believe†that insurance was not continuing to cover Aidan’s medical
costs during the trial. Also, without
explaining their terms or their applicability here, the Hospital refers to the
availability of “[i]nsurance continuation rights [that] exist under the
Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and the Health
Insurance Portability and Access Act [citations] and Cal-COBRA,†as well as to
“California . . . statutory programs for the purchase of medical insurance
by persons who otherwise are unable to obtain it. [Citations.]â€
The Hospital also refers to the United States Supreme Court’s decision
in National Federation of Independent
Business v. Sebelius (2012) _____U.S. ____, 132 S.Ct. 2566, which upheld
the constitutionality of the federal Affordable Care Act (with one limited
exception), and asserts that the “[t]he availability of such federally mandated
available insurance options makes the prospect of future health insurance
coverage for plaintiff anything but speculative.â€
But the mere possibility that private
insurance coverage will continue, and the availability of government programs
for the purchase of insurance, do not, in themselves, constitute relevant,
admissible evidence of the future insurance benefits that a plaintiff is
reasonably certain to receive. To show
the amount of future insurance coverage that is reasonably certain, the
evidence would have to: (1) link
particular coverage and coverage amounts to particular items of care and
treatment in the life care plan, (2) present a reasonable basis on which to
believe that this particular plaintiff is reasonably certain to have that
coverage, and (3) provide a basis on which to calculate with reasonable
certainty the time period such coverage will exist. The Hospital made no such foundational
showing in the trial court, and on appeal appears to assume that even the most
nonspecific evidence of future insurance, such as its availability through
governmental programs, is admissible.
Such evidence, standing alone, is irrelevant to prove reasonably certain
insurance coverage as a potential offset against future damages, because it has
no tendency in reason to prove that specific items of future care and treatment
will be covered, the amount of that coverage, or the duration of that coverage. (Evid. Code, § 210 [defining relevant
evidence as “having any tendency in reason to prove or disprove any disputed
fact that is of consequence to the determination of the actionâ€].)
Fourth, on the issue of prejudice
(assuming for the sake of argument that the trial court erred), the Hospital
argues that “the collateral source effect [of the purported excluded evidence
of future insurance coverage] is likely significant.†It notes, based on the parties’ stipulation to
past medical expenses, that only $78,375.55 of Aidan’s $405,312 in medical
expenses (approximately 19 percent) incurred to the date of trial was paid or
billed to Aidan’s parents. The rest was
either paid by insurance or written off by the providers based on discounts
negotiated with the insurer. However,
there is no evidentiary basis in this record to conclude that this coverage
would continue into the future, or for how long it might continue. Rather, the evidence in the record is that
such a prediction is entirely speculative.
Thus, the evidence of past coverage provides no basis on which to assert
that the Hospital was prejudiced.
Similarly, to the extent that the
Hospital relies on the apparent modification to the first page of Vavoulis’
report, which was described as deleting references to “insurance coverage
figures as it deals with group home and live-in setting,†that modification
does not establish prejudice. As we have
already noted, the record does not reveal what the specific changes were. Moreover, the record does not reveal that
Vavoulis’ opinion as to future insurance coverage was even admissible under the
standard the Hospital advocates, as there was no showing as to his
qualifications to express an opinion on future insurance coverage, and no
showing as to the foundation on which he might opine that Aidan
was
reasonably certain to receive future coverage for group home or live-in
settings. We note further that both
Stacey Helvin and Ted Vavoulis testified that after age 22, Aidan could reside
in a group home at no cost to him or his family.
The Hospital’s burden is to establish
that, in the absence of the trial court’s asserted error, there is a reasonable
probability of a different result. (
(2012) 205 Cal.App.4th 296, 308.)
The Hospital has failed to show that had the trial court not excluded
purportedly admissible evidence of future insurance benefits, there is a reasonable probability of a different
verdict as to Aidan’s future medical costs.
For each of these independent reasons,
the Hospital’s contention that the trial court committed prejudicial error in
excluding evidence of future insurance benefits fails.
Interest Under Civil Code
Section 3291
Because Aidan received a judgment more
favorable than his offer of compromise under Code of Civil Procedure section
998 (hereafter section 998), which the Hospital rejected, he is entitled to
interest on the judgment from the date of the offer to the date of satisfaction
of judgment pursuant to Civil Code section 3291 (hereafter section 3291).
that portion of section 3291 interest from the date of the section 998 offer to
the date judgment was entered, using the entire present value of the jury’s
verdict, including the present value for future medical expenses, even though
the periodic payments for those damages were not presently due.
The Hospital contends that the trial
court erred in incorporating section 3291 interest into the judgment, and in
awarding interest on that part of the judgment representing the present value
of future medical expenses. We disagree.
Under current law, when a future
damage award is periodized, interest is awarded in the judgment for the period
from the date of the section 998 offer to the date of judgment, calculated
based on the present value of the future damages. Any additional interest accrues only as to
later periodic payments that are not paid when due. (Deocampo
v. Ahn (2002) 101 Cal.App.4th 758, 775-776 [trial court’s calculation of section
3291 interest on the present value of future damages “was the proper way to
calculate the prejudgment interest on a judgment involving the periodized
payment of damages for future lossesâ€; post judgment interest accrues “on each
individual periodic payment as that payment becomes due†(italics deleted)];
964, 980 [rejecting contention of amici curiae that section 3291 interest
“cannot be awarded on the periodic portion of the judgment†based on present
value].)
The Hospital contends that
516, 530-533, requires a different result.
However, Hess held that
interest from the date of the section 998 offer to the date of the judgment
should not be added to the judgment
amount so as to permit post judgment interest to accrue on prejudgment interest
under section 3291. That is, under
compounding of interest – post judgment interest calculated on that portion of
the judgment representing prejudgment interest.
The judgment in the instant case does not provide for such compounding
of interest. Hess did not involve a periodized judgment, and did not discuss the
issue whether the value of such a judgment for calculating interest under
section 3291 from the date of the section 998 offer to the date of judgment
interest includes the present value of the periodized future damages.
The Hospital also contends that the
discussion of section 3291 interest in Deocampo
and Hrimnak, both
it is wrong. Dicta or not, we agree with
the reasoning of these decisions. As
stated in Hrimnak, supra, 38
Cal.App.4th at pages 980-981: “Section
998 and Civil Code section 3291 are designed to encourage settlements and
penalize those who refuse reasonable
settlement offers. [Citations.] Amici curiae’s argument [that section 3291
interest cannot be awarded on the present value of future periodic payments],
besides mixing legal apples and oranges, would also undermine this purpose.â€
Ruling that the Hospital Must Provide Security
Code
of Civil Procedure section 667.7,
subdivision (a), provides in relevant part:
“As a condition to authorizing periodic payments of future damages, the
court shall require the judgment debtor who is not adequately insured to post
security adequate to assure full payment of such damages awarded by the
judgment. Upon termination of periodic
payments of future damages, the court shall order the return of this security,
or so much as remains, to the judgment debtor.â€
In the instant case, the Hospital is
jointly and severally liable for 95 percent of all Aiden’s economic damages,
consisting of $82,782,000 (with a present value of $14 million) for future
medical costs, and $13.3 million (with a present value of $1,154,000) for loss
of future earnings. Given the size of
the future damages award, the trial court required the Hospital to post
security by purchasing an annuity sufficient to fund the periodic payment
portion of the judgment, which the Hospital did.
(which required an immediate payment of a portion of future damages, thus
reducing the future damages which were periodized), the stream of periodic
future payments to be paid to Aidan over his life expectancy of 57 additional
years exceeds $69 million. The
Hospital’s combined insurance policy limits covering Aiden’s injuries is only
$20 million (a primary policy of $5 million per incident with California Healthcare
Insurance Company, and an excess policy of $15 million by Zurich/Steadfast
Insurance Company).
The trial court reasoned that
insurance policy limits of $20 million were not adequate to assure full payment
of the much greater sum of payments due Aiden over his lifetime, and that, even
though the insurers were currently solvent and promised to pay the periodic
judgment, Aiden should not be required to bear the full risk that in future
decades the insurers might become insolvent.
We find no abuse of discretion in that reasoning
The Hospital contends that in
determining whether it was adequately insured, the court was required to use as
the benchmark the present value amount that its insurers carriers would have to
pay to fund the future periodic payments.
We disagree. The Hospital has
elected to pay the judgment periodically over time rather than at its present
value immediately. In fashioning a
periodic payment schedule, the gross amount of future damages is used, not
present value of the future damages. (
at p. 771; see Holt v. Regents of
University of California (1999) 73 Cal.App.4th 871, 880.) That is how the trial court fashioned the
periodic payment schedule here. Given
that the periodic payment schedule sets the stream of future damages to be paid
over time at gross value, the trial court was not unreasonable in considering
the gross amount of that stream in determining whether the Hospital’s insurance
was “adequate,†or whether the Hospital should be required “to post security
adequate to assure full payment of such damages awarded by the judgment.†(§ 667.7, subd. (a).)
Security in the Form of an
Annuity Payable to the Hospital
In his cross-appeal, Aiden contends
that the trial court erred in the type of security it permitted the Hospital to
provide under section 667.7, subdivision (a):
an annuity from an approved provider, payable to the Hospital,
sufficient to fund the periodic payments in each year they are required. Aidan contends that only a bond or similar
type of security, payable to him, can suffice as “security adequate to assure
full payment of†the periodic portion of the judgment. (§ 667.7, subd. (a).) We find no abuse of discretion. The annuity provides a stream of income to
the Hospital sufficient to fund the periodic payments. While it is true that Aidan need not accept
an annuity in satisfaction of the
judgment (Hrimnak, supra, 38
Cal.App.4th at p. 982), the court’s ruling does not violate this rule. The court ruled simply that that an annuity
payable to the Hospital is sufficient security to ensure that the Hospital will
have the funds to pay the judgment should its insurers default or otherwise
deprive the Hospital of the means to pay the judgment. Aidan’s concern that the Hospital might
become insolvent, might file for bankruptcy,
might use the annuity to pay debts other than his judgment, and other similar
speculations, are unsupported by any evidence.
In any event, they provide no basis for disturbing the trial court’s
exercise of discretion in determining
that an annuity, which provides a stream of income to the Hospital independent
of its insurance coverage adequate to fund the periodic payments over Aidan’s
lifetime, is adequate security under section 667.7, subdivision (a).
The judgment is
affirmed. Aidan shall recover his costs
on appeal, the Hospital shall recover its costs on the cross appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE,
J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.
determination that the Hospital’s negligence was a legal cause of Aidan’s
injuries (55 Cal.4th at p. 308).
Compensation Reform Act of 1975.
