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Category: Other

Other - Bisnar Chase Blog

Blog articles in our “Other” category are resources for presenting helpful information about legal proceedings. We provide these resources to help potential clients or other legal service providers in their efforts to make sure that negligent parties are kept accountable. If you have a question, please contact us at (800) 561-4887.

September is Suicide Prevention Awareness Month

By Brian Chase on September 15, 2016 - No comments

suicide prevention month September

Suicides are among the most heartbreaking events that could occur in one’s lifetime. Every suicide may not be preventable. But, experts say, a staggering number of suicides are preventable. In order to do that, we need to become more aware of some of the warning signs that strike and be able to identify those symptoms when we see them displayed by a family member or friend. The next step is to get them the help and resources they need in order to overcome whatever challenge it is that could be driving them to take that extreme step. …Read the rest »

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Utilizing Expert Witnesses

By Brian Chase on November 21, 2015 - No comments

Expert Witnesses swearing on the bible.

By Brian D. Chase and Scott D. Raphael

Expert witnesses have become an essential part of modern trial practice. Unfortunately, their use has become almost too casual, with may practitioners on both sides resorting to an almost “knee-jerk” routine of hiring experts in every case. Contrary to what may be prevailing conventional wisdom, however, not every case genuinely requires retention of experts, although in most cases testimony from treating physicians (nonretained experts) is still required to carry the burden of proof on causation of injury.

This article focuses on the questions of how to judge whether retained experts are genuinely required in a case and, when a case calls for it, how the handle the selection and retention process. …Read the rest »

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Expert Witnesses and Motions in Limine

By Brian Chase on September 14, 2015 - No comments

gavel in a personal injury law case

Brian D. Chase (Bisnar Chase Personal Injury Attorneys) and Scott D. Raphael (Litigitechnology, Inc.)

Introduction

Since well prior to the 1986 Discovery Act, parties were at best committed to guesswork in ascertaining what expert discovery would be permitted at trial based on pretrial inadequacies in the disclosure of expert witnesses, of the scope of expert witnesses’ opinions, the transactional nature and source of acquisition of the expert’s opinions, and the adequacy of the expert’s deposition testimony as to the scope of his anticipated trial testimony. This followed largely from the lack of any meaningful guidance by the Courts or the Legislature on these subjects.

The cost of this uncertainty was not insignificant, with many practitioners discovering only for the first time on a motion in limine at trial that their entire pretrial case strategy would be entirely altered or severely compromised by the wholesale exclusion (or admission) of all or part of both proper and improper expert testimony.

This state of relative confusion has been largely ameliorated by a string of important and informative recent Supreme Court opinions greatly clarifying the permissible boundaries of expert testimony at trial based on the adequacy of the parties’ compliance with their pretrial disclosure obligations. Even so, significant areas of misunderstanding about the permissible scope of expert witness trial testimony, e.g., what limits exist on bootstrapping hearsay, remain problematic even when experts have been properly designated and have given meaningful depositions.

This article explores the appropriate role of the motion in limine as a tool of stability and predictability in ensuring the integrity of pretrial strategy vis-a-vis anticipated expert witness testimony, as well as some useful pointers on use of in limine motions prophylactically to curb potential evidentiary abuses at trial by the adversary, i.e., the very purpose for the in limine motion. …Read the rest »

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Making Motions of Trial-Setting Preference

By Brian Chase on February 23, 2015 - No comments

Brian Chase in Trial

Brian D. Chase (Bisnar Chase Personal Injury Attorneys) and Scott D. Raphael (Litigitechnology, Inc.)

Introduction

The adage “time is money” was never more appropriately applied than to personal injury litigation. Twenty years ago, prior to adoption of Delay Reduction Act/”Fast-Track” measures in California’s trial courts, cases frequently could not receive trial settings for years after the complaint was filed, often requiring waivers of the five-year deadline for trial in larger California counties to ensure that a courtroom could be secured for the trial. Delay Reduction measures have dramatically changed the picture, with most superior courts now setting cases for trial within 12 to 18 months of the filing of the complaint. Notwithstanding the significant reduction in trial delays, plaintiffs typically do not resolve their cases unless and until a firm trial date is set, and protracted delays mean delayed resolution and delayed funding of a settlement or judgment.

…Read the rest »

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Drive Safely on Super Bowl Sunday

By Brian Chase on January 30, 2015 - No comments

Super_Bowl_XLIII_-_Thunderbirds_Flyover_-_Feb_1_2009 Law enforcement officials and safety advocates are encouraging Southern California Super Bowl party-goers to plan ahead for the big day by designating a sober ride home – be it a taxi or a friend.
…Read the rest »

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Red Light Enforcement — Not So Enforceable??

By Brian Chase on October 24, 2014 - No comments

Local communities that have been grappling with the decision whether to utilize red light enforcement machines may have another reason to think twice about installing the machines. In a decision entered on May 21st of this year, a Superior Court appellate panel ordered that a photo enforcement citation issued to Tarek Khaled be dismissed. That ruling is now final after the Court of Appeal denied transfer.

Tarek Khaled received a citation in August 2008 from the Santa Ana police. He was cited for “running” a red light. Tarek Khaled disputed the ticket and requested his day in court. At the trial, the prosecution sought to admit the photographs of Tarek “running” the red light to prove their case. The defense objected on the ground that the photographs, which had certain information, entered on them, such as the time and date they were taken, were inadmissible, hearsay. The Court Commissioner, Daniel Ornelas hearing the case, disagreed and admitted the photos and a supporting declaration from a police officer.

Upon review, the appellate panel agreed with the defense and said the objection should have been sustained and the pictures should not have been admitted.

It is a well founded principle of law that admission of a photograph or videotape requires testimony from the photographer or the person who took the video, or from a person who was present and witnessed the event that the photograph or video purports to depict, or from someone who has personal knowledge as to when the camera was started or stopped.

In the case of Tarek Khaled, the prosecution sought to have a police officer that was familiar with that specific intersection admit the testimony. The officer was unable to establish the time in question, the method of retrieval of the photographs, or that any of the photographs or the videotape were a reasonable representation of what it is alleged to portray.

The panel further rejected the argument that the photos could be admitted under the business records or official records exceptions to the hearsay rule because foundational requirements were not met. “The person or persons who maintain the system did not testify.” The panel explained. The panel further went on to rule: “Without these documents, there is a total lack of evidence to support the vehicle code violation in question.”

The result is that if you’ve had a recent traffic ticket and the basis of that citation is a red light enforcement machine than you may have a reason to contest the ticket, or if you were convicted of a violation and a red light enforcement machine was the basis of that conviction you may still have time to appeal.

Call 949-203-3814. The call is free. The advice may be priceless.

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Red Light Cameras: California Law or California Hearsay?

By Brian Chase on June 6, 2014 - No comments

california car accident lawyer video testimonialSince the birth of the first red light camera ticketing system was put in place in 1993, there have been legitimate arguments for and against its effectiveness and legal applications. Drivers running red lights account for about 22% of traffic accidents in the U.S., according to the Insurance Institute for Highway Safety, and that number was supposed to be drastically reduced after the inception of these devices. Government agencies are in favor of the system due to its ability to pass out tickets without paying police officers to regulate intersections. Drivers are outraged by seemingly random tickets received in the mail by unreliable and arguably illegal methods. No matter which side of the fence you are on, the case People v. Khaled has raised eyebrows and shed light on the improper prosecution of red light camera tickets.

People v. Khaled

The use of photographs and a police officer’s declaration to prove that a motorist ran a red light violated the Evidence Code and the driver’s constitutional right to confront his accuser, ruled the Orange Superior Court Appelate Department.

Tarek Khaled received a citation from Santa Ana police in August 2008. At trial, the prosecution sought to admit photographs that allegedly showed the defendant running a red light. The defense objected on the ground that the photographs, which had certain information entered on them, such as the time and date they were taken, were inadmissible hearsay. Orange Superior Court Commissioner Daniel Ornelas disagreed, admitted the photos and a supporting declaration, and found the defendant guilty.

The appellate panel, comprised of Judges Gregg L. Prickett, Gregory H. Lewis and Karen L. Robinson, said the objection should have been sustained.

Generally, the judges explained, admission of a photograph or videotape requires testimony from the photographer or the person who took the video. In this case, however, the panel explained, the prosecution sought to admit the photos through testimony of a police officer who was familiar with the intersection at which the photo was taken and the procedures used by his department in issuing red light camera tickets, but who “could not establish the time in question, the method of retrieval of the photographs, or that any of the photographs or the video tape were a reasonable representation of what is alleged to portray.”

“No one with personal knowledge testified about how often the system is maintained. No one with personal knowledge testified about how often the date and time are verified and corrected. The custodian of records for the company that contracts with the city to maintain, monitor, store and disperse these photographs did not testify.”

Tarek Khaled did not have to pay his ticket, due to all evidence against him being thrown out the window, and the implications of his case’s outcome point towards confirmation of driver arguments that red light camera tickets are not concrete proof that you have broken the law, and if handled incorrectly, are not admissible evidence. I wonder how many times this situation has taken place and there was not an appeal? How many people have paid for a ticket that was supported by inadmissible evidence?

Red Light Ticket Advice

Red-light ticket cameras are reported to reduce the amount of accidents where they are in use, but some studies say otherwise. If you have been seriously injured in an intersection that has a red light camera, call us at 949-203-3814. An experienced Southern California personal injury lawyer will advise you of your rights and options as well as help you obtain fair compensation for your injuries.

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Increasing Your Tort Recovery Under Proposition 51

By Brian Chase on February 26, 2014 - No comments

Brian D. Chase and Scott D. Raphael

The Electorate’s Attack on the Perceived Common Law “Deep Pocket” Rule

On June 3, 1986, California voters approved Proposition 51, the so-called “Fair Responsibility Act of 1986.” (Civil Code § 1431.2 – 1431.5) Its purpose was to remedy a perceived “deep pocket” injustice built into the doctrine of joint and several liability, whereby “if a defendant was found to be at all negligent, regardless of how minimally, under the joint and several liability rule he could be held responsible for the full damages sustained by the plaintiff, even if other concurrent tortfeasors had also been partially, or even primarily, responsible for the injury.” (See, Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1196.) This perceived injustice had been further complicated by the adoption of the pure comparative negligence doctrine in California in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, which abrogated the all-or-nothing contributory negligence doctrine and instead held that “the contributory negligence of the person injured…shall not bar recovery, but the damages awarded shall be diminished in proportion to the amount of negligence attributable to the person recovering.” (Id., 13 Cal.3d at 829.)

In American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, the Supreme Court attempted to diminish the hardship of this doctrine to defendants, by modifying the common law joint and several liability doctrine in several respects. First, plaintiffs would no longer have the unilateral right to determine which defendant or defendants should be included in an action. Second, defendants who were sued could bring other tortfeasors who were allegedly responsible for the plaintiff’s injury into the action through cross-complaints. Third, any defendant could obtain equitable indemnity, on a comparative fault basis, from other defendants, thus permitting a fair apportionment of damages among tortfeasors. (Id., 20 Cal.3d at 591-598.) Subsequent decisions enabled defendants to pursue a comparative equitable indemnity claim either (1) by filing a cross-complaint in the original tort action or (2) by filing a separate indemnity action after paying more than its proportionate share of the damages through the satisfaction of a judgment or through a payment in settlement. (See, e.g., Sears, Roebuck & Co. v. International Harvester Co. (1978) 82 Cal.App.3d 492, 496; American Bankers Ins. Co. v. Avco-Lycoming Division (1979) 97 Cal.App.3d 732, 736.) Where one or more tortfeasors proved to be insolvent and were not able to bear their fair share of the loss, the shortfall created by such insolvency was apportioned equitably among the remaining culpable parties–both defendants and plaintiffs. (See, e.g., Paradise Valley Hospital v. Schlossman (1983) 143 Cal.App.3d 87, Ambriz v. Kress (1983) 148 Cal.App.3d 963.)

Notwithstanding these developments, “the retention of the common law joint and several liability doctrine produced some situations in which defendants who bore only a small share of fault for an accident could be left with the obligation to pay all or a large share of the plaintiff’s damages if other more culpable tortfeasors were insolvent.” (Evangelatos, supra, 44 Cal.3d at 1198.) Proposition 51 was intended to target this perceived inequity.

“While recognizing the potential inequity in a rule which would require an injured plaintiff who may have sustained considerable medical expenses and other damages as a result of an accident to bear the full brunt of the loss if one of a number of tortfeasors should prove insolvent, the drafters of the initiative at the same time concluded that it was unfair in such a situation to require a tortfeasor who might only be minimally culpable to bear all of the plaintiff’s damages. As a result, the drafters crafted a compromise solution: Proposition 51 retains the traditional joint and several liability doctrine with respect to a plaintiff’s economic damages, but adopts a rule of several liability for noneconomic damages, providing that each defendant is liable for only that portion of the plaintiff’s noneconomic damages which is commensurate with that defendant’s degree of fault for the injury.” (Evangelatos, supra, 44 Cal.3d at 1198.) Civil Code §1431.2(b)(1) and (b)(2) further specifically set forth definitions for economic (so-called “special” damages”) versus non-economic (so-called “general” damages”) damages, respectively.

Thus, “Section 1431.2, added by initiative (Proposition 51) in 1986, was intended to make the tort system more equitable by partially eliminating the ‘deep pocket’ rule of joint liability, which sometimes required ‘a tortfeasor which might only be minimally culpable to bear all of the plaintiff’s damages,” (Evangelatos, supra, 44 Cal.3d at 1198), and instead “ensure ‘defendants in tort actions shall be held financially liable in closer proportion to their degree of fault.” (Hoch v. Allied Signal, Inc. (1994) 24 Cal.App.4th 48, 64, citing, Civil Code § 1431.1.)

In the advent of Proposition 51, and with regard to those tortfeasors electing to settle their cases prior to trial or judgment, Code of Civil Procedure §877 (substantially similar in content prior its version in effect at the time the Initiative became law) provides in pertinent part as follows:

“Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect:

(a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever is the greater….”

(Code of Civil Procedure §877 [Emphasis added.])

The set-off provisions of Code of Civil Procedure § 877(a), by which nonsettling tortfeasors were entitled to a credit against any final judgment for any amounts paid by settling tortfeasors, thus were essentially left unaffected by Proposition 51.

A Glass Half Empty is Also a Glass Half Full

While Proposition 51 may have been initially perceived as a glass “half-empty” from Plaintiff’s perspective, it is in reality a “two-edged sword” for Defendants. On one hand, under § 1431.2(a), “a personal injury defendant [wa]s no longer liable for any amount of the plaintiff’s non-economic damages which exceeds the percentage of those non-economic damages attributable to that defendant.” Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 272.

However, from the perspective of nonsettling defendants’ credits for prior settlements, the glass can initially be seen as at least “half-full.” “[A] personal injury plaintiff’s valid ‘claim’ for damages against one tortfeasor for non-economic damages [after Proposition 51] can never be the liability of ‘the others’,” because all liability for non-economic damages after Proposition 51 was thereafter deemed to be “several” only. (Espinoza, supra, 9 Cal.App.4th at 274.) Thus, for the purposes of set-offs governed by C.C.P. § 877(a), “[t]he payment of such a claim (for non-economic damages) by one tortfeasor is not the payment of a claim for which ‘the others’ might ever be held jointly and severally liable. Thus, there is no longer any such claim ‘against the others’ to ‘reduce.’” (Id., 9 Cal.App.4th at 274-275 [emphasis supplied].) The Court in Espinoza thus explained the resulting significance:

“Section 1431.2 provides that the responsibility for the noneconomic portion of the damages allocated to each defendant shall be several and not joint. Therefore, each defendant is solely responsible for his or her share of the noneconomic damages. Thus, that portion of the settlement attributable to noneconomic damages is not subject to set-off. To do otherwise would, in effect, cause money paid in settlement to be treated as if it was paid as a joint liability. This could not properly be done on a verdict and we see no basis why it should be done on a settlement.”

(Id., 9 Cal.App.4th 276-277 [emphasis supplied].)

What this means is that a Plaintiff theoretically pressing a general damages-only case against multiple tortfeasors may settle with successive tortfeasors and leave nonsettling tortfeasors without any set-off rights for any sums previously paid to the plaintiff in prior settlements. The more difficult problem arises when Plaintiff seeks both economic and noneconomic damages against nonsettling tortfeasors who are entitled to a set off for prior settlements for economic damages but not non-economic damages. The Courts have proposed alternative solutions to this problem.

Plaintiffs who have realized pretrial settlements with certain settling tortfeasors may proceed to trial against the nonsettling tortfeasors, await the jury’s special verdict, and then use the pro-rata percentage of economic versus noneconomic damages apportioned by the jury’s special verdict form at trial to determine the percentage of economic damages from the prior settlement for which the nonsettling defendant is entitled to an offset as against the final award. This methodology has been well-established. (See, Ehret v. Congoleum Corp. (1999) 73 Cal.App.4th 1308, 1320; McComber v. Wells (1999) 72 Cal.App.4th 512, 517; Espinoza, supra, 9 Cal.App.4th at 276-277.)

In the alternative, Plaintiff may propose an allocation of economic versus noneconomic damages in the written settlement agreement with the settling tortfeasors brought before the Court on a motion for a good faith settlement determination under Code of Civil Procedure § 877.6. (See, Erreca’s v. Superior Court (1993) 19 Cal.App.4th 1475, 1491.) However, this is the more difficult of the two alternatives because Plaintiff is required to “make an evidentiary showing…to justify such an allocation” as part of that good faith settlement determination. (Ibid.; Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825, 837.) The reasons for this are obvious: “In making an allocation between economic and noneconomic damages, a plaintiff has an interest in allocating as little as possible to economic damages and a settling defendant has “no incentive to oppose the plaintiff’s allocation because [the settling defendant is] entirely unaffected by it.” (Ehret, supra, 73 Cal.App.4th at 1322, citing Greathouse v. Amcord (1995) 35 Cal.App.4th 831, 841.) In practice, this presents potential tactical hazards since to convince the judge of the allocation suggested, Plaintiff may be required to make evidentiary admissions which could later undermine and/or significantly compromise his or her position against the nonsettling defendants at trial.

Where the allocation made in a settlement agreement has been brought before the Court on “a proper adversarial basis” is supported by competent evidence, and has thereafter been upheld as part of a good faith settlement hearing, the settlement agreement’‘s allocation will be binding even if the jury’s special verdict at tail later provides for a different allocation. (See, e.g., Erreca’s, supra, 19 Cal.App.4th at 1494-1495; Regan Roofing Co. v. Superior Court, (1994) 21 Cal.App.4th 1685, 1703.) On the other hand, where there has been no pretrial hearing on the fairness of the allocation, or the allocation is sought post-verdict, the jury’s actual allocation in its special verdict form is controlling. (Greathouse, supra, 35 Cal.App.4th at 841.) However, an allocation in the settlement agreement is not required to be brought before the Court and determined at the time of the settlement, because the final allocation (for set-off purposes) can always be made after trial based upon the jury’s allocation. (See Espinoza, supra., 9 Cal.App.4th at 276-277.)

Under these circumstances, and particularly for the reasons discussed below, the circumstances would appear rare in justifying seeking an otherwise unnecessary and premature allocation on a good faith settlement hearing. Rather, the Espinoza formula appears the most attractive, leaving all of Plaintiff’s options open until the close of trial.

Turning the Glass “Half-Full” Into the Cup Which “Runneth Over”

The truly fascinating potential of Proposition 51’s impact on set-offs lies in the fact that nonsettling defendants are not entitled to any set-offs for prior settlements under C.C.P. § 877, unless economic damages are sought and obtained against them at trial. (See, Aetna Health Plans of California, Inc. v. Yucaipa-Calimesa Joint Unified School Dist. (1999) 72 Cal.App.4th 1175, 1191-1195; Hoch v. Allied Signal, Inc., supra, 24 Cal.App.4th at 62-64.)

Accordingly, where a plaintiff who has previously entered into one or more favorable pretrial settlements thereafter elects to proceed to trial against the remaining nonsettling tortfeasors seeking solely noneconomic damages, the nonsettling tortfeasors are not entitled to set-offs for even a single penny for the prior settlements under C.C.P. § 877(a), even if those prior settlements at the time were intended to include both economic and noneconomic damages. (See, Hoch v. Allied Signal, Inc., supra, 24 Cal.App.4th 48.

This is because “even though multiple tortfeasors may have caused an otherwise indivisible injury, joint and several liability is no longer the rule for noneconomic damages [as a result of Proposition 51].” (Aetna, supra, 72 Cal.App.4th at 1192.) Code of Civil Procedure § 877.6 “presupposes the existence of multiple defendants jointly liable for the same damages…Under the scheme of purely several liability created by section 1431.2(a) however, ‘a personal injury plaintiff’s valid ‘claim’ against one such tortfeasor for noneconomic damages can never be the liability of ‘the others’…Thus , there is no longer any such claim ‘against the others’ to ‘reduce.” (Hoch, supra, 24 Cal.App.4th at 63.) “Instead, ‘pursuant to section 1431.2(a), the noneconomic damages for which the settling and nonsettling defendants could be claimed liable were, by law, separate and distinct, allocated according to the defendants’ individual fault.’” (Aetna, supra, 72 Cal.App.4th at 1193, citing Hoch, supra, 24 Cal.App.4th at 64. )

Thus, where the Plaintiff at trial seeks only noneconomic damages, the nonsettling and settling tortfeasors by law cannot be joint (thanks to Proposition 51), but are instead only several, and C.C.P. § 877(a) (entitling only joint tortfeasors to set-offs for prior settlements) is therefore inapplicable. (Aetna, supra; Hoch, supra). Moreover, because even Plaintiff’s own comparative fault is several only as to his/her noneconomic damages, Plaintiff’s final award of noneconomic damages severally as against the nonsettling tortfeasor(s) cannot be further reduced by such comparative negligence. (Hoch, supra, 42 Cal.App.4th at 62-64.)

Consequently, as recently explained by the court in Wilson v. John Crane, Inc. (2000) 81 Cal.App.4th 847,

In determining settlement credits in actions governed by section 1431.2, ” ‘only that part of the settlement value attributable to plaintiff’s economic damages may be credited against the nonsettling defendants’ liability.’ ” [citations omitted]…[W]here the plaintiff has received a settlement which fails to differentiate between economic and noneconomic damages, the credit against the later judgment is calculated in proportion to the ratio of economic to noneconomic damages awarded by the trier of fact. [citations omitted] But where the damages ultimately awarded consist entirely of noneconomic damages…the logic and arithmetic of Espinoza permit no settlement credit whatsoever. There are no economic damages to apportion, the numerator of the governing ratio is zero, and the settlement credit resulting from the Espinoza formula is therefore also zero. “ Id., 81 Cal.App.4th at 863-864, citing, Torres v. Xomox Corp. (1996) 49 Cal.App.4th 1, 35-36, [again noting that in such cases, “the total from the settlement, plus the judgment against the nonsettling defendant for that defendant’s several share of noneconomic damages, can exceed the total damages awarded” by the judgment].

The several nature of noneconomic damages under Proposition 51 potentially turns the glass merely “half-full” into the “cup which runneth over”: “Settling plaintiffs may recover more than the amount of damages ultimately determined…” (Hoch, supra, 24 Cal.App.4th at 66. [Emphasis added.]) In fact, superior negotiation could theoretically double or triple a potential global recovery at trial, through multiple pretrial piecemeal settlements followed by trial against the nonsettling tortfeasor on a voluntary waiver of economic damages. Hoch is very worthwhile reading and is instructive.

Hoch involved a survival and wrongful death product liability action brought by the decedent’s husband over a seat belt failure during a single-car accident. Plaintiff sued Ford Motor Company and Allied Signal, Inc., the manufacturers of the vehicle and subject restraints system, respectively. Plaintiff also sued the Ford dealership which sold the car and the supplier of the vehicle’s tires. Prior to trial, Plaintiff collected separate settlements from Ford, the dealer and the tire supplier in the collective sum of $382,500. In the trial against Allied Signal, Inc., at which Plaintiff waived all economic damages, the jury returned a verdict for $500,000, found Allied Signal 35 percent responsible, and Plaintiff 20 percent comparatively negligent. The Court entered judgment against Allied Signal for $175,000, i.e., 35 percent of the $500,000 verdict. Allied Signal cross-appealed from the trial court’s refusal to reduce the judgment to $ 17,500, consisting of the 20 percent for Plaintiff’s comparative fault and the $ 382,500 set off for the prior settlements. The Court of Appeal upheld the judgment as proper given the fact that Plaintiff had waived all economic damages at trial, and because noneconomic damages are assessed against Allied Signal severally only under Civil Code § 1431.2. Thus, Code of Civil Procedure § 877 did not apply, Plaintiff’s comparative fault was likewise several and had already been factored into the jury’s assessment of 35 percent against Allied Signal, and thus Allied Signal was severally liable for the entirety of its 35 percent of the $500,000 award, i.e., $175,000. (Hoch, supra, 24 Cal.App.4th at 61-64.)

It is interesting to note that, thanks to Proposition 51, the Hoch Plaintiff received a total recovery of $557,500 (consisting of $382,500 in settlements plus the $175,000 judgment at trial), yet received only a $500,000 award from the jury. Thus, it can be argued that through piecemeal pretrial settlements, followed by trial against the one nonsettling tortfeasor on a waiver of economic damages, Plaintiff Hoch earned an additional $57,500 which the jury would not have awarded globally on the same general damages case at trial, i.e., a 12 percent premium on the award at trial.

The analysis in Hoch has likewise been adopted and approved in Wilson, and Torres, supra, and in Aetna, supra, wherein Plaintiffs’ damages sought for bad faith were noneconomic only. Id., 72 Cal.App.4th at 1191-1194.

The First Appellate District Court in Hoch, supra, was fully aware and endorsed on sound policy grounds, Plaintiffs’ prospects under Proposition 51 to multiply their potential recoveries through shrewd piecemeal pretrial settlements. As the Court explained:

The trial court’s approach is also fairer to plaintiffs, and more conducive to settlement of claims, than that advocated by Allied-Signal and the amicus. Allied-Signal’s approach is unfair to plaintiffs because it would require them to bear the risk of divergence between the settlement and the jury’s assessment of the settling party’s liability, without allowing plaintiffs to reap the potential benefit of such divergence. For the same reason, it would discourage plaintiffs from settling with less than all defendants. The approach we adopt thus accords as well with the goals of section 877(a), to wit, an equitable sharing of costs among the parties at fault and the [24 Cal.App.4th 65] encouragement of settlements. (Arbuthnot v. Relocation Realty Service Corp. (1991) 227 Cal.App.3d 682, 687 … [¶] Under a system of joint and several liability, in which nonsettling defendants are liable for all of the damages unsatisfied by pretrial settlement, the nonsettling defendants bear the risk the settlement was “low” compared to the amount the settling defendant would have been liable for according to the jury verdict. The nonsettling defendant may also obtain a benefit if the settlement was “high” and the settling defendant does not obtain equitable partial indemnity. (See Sears, Roebuck & Co. v. International Harvester Co. (1978) 82 Cal.App.3d 492, 497…) The plaintiff, in the joint and several liability system, can neither lose nor win by divergence between the settlement and the verdict; whether the settlement was “high” or “low,” the plaintiff’s potential recovery from all solvent defendants is the same–the damages awarded by the jury. ([fn. omitted]) This system also provides all parties reasonable incentives to settle. (See American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 603-604…) [¶}Section 1431.2(a), as applied here by the trial court, reallocates the risks and potential benefits of settlement-verdict divergence as to noneconomic damages, but in a manner that remains fundamentally fair. If the settlement was “low,” the plaintiff loses; he or she cannot recover the difference in noneconomic damages from the remaining defendants. If the settlement was “high,” as here, the plaintiff wins; he or she retains the benefit of the settlement bargain as well as receiving the amounts allocated by the jury to the nonsettling defendants. The nonsettling defendants bear no risk and can reap no benefit from divergence; the settlement does not affect their liability for noneconomic damages. [¶] Allied-Signal’s approach, however, places all of the risk on the plaintiffs and gives all the potential benefit to the nonsettling defendants. If the settlement was “low,” the plaintiff will recover less than the noneconomic damages awarded by the jury. If the settlement was “high,” the nonsettling defendants will reap the benefit, paying less than their fault-share of the noneconomic damages. ([fn. omitted]) This would be inequitable and would provide “little incentive for the injured person to settle with one or fewer than all of the tortfeasors.” (Wilson v. Galt (Ct.App.1983) 100 N.M. 227, 668 P.2d 1104, 1109; see also In re Piper Aircraft, [(N.D.Cal.1992)], 792 F.Supp. [1189] at p. 1192 [allowing setoff “would engender situations in which nonsettling tortfeasors would be able to take advantage of the good faith efforts of settling tortfeasors,” and hence would “discourage rather than encourage settlement.”].) ([fn. omitted])

[¶] The amicus and Allied-Signal assert the trial court’s approach awards plaintiffs an “impermissible double recovery” or a “windfall,” because plaintiffs’ total recovery is greater than the amount of recoverable damages awarded by the jury. This is unpersuasive for several reasons. [¶] First, as already discussed, the limitation of total recovery according to the jury verdict makes sense in a joint and several liability situation, where the plaintiff bears no risk the settlement will turn out to be ungenerous in comparison with the jury’s assessment of the settling tortfeasor’s fault. Where, however, that risk is placed on plaintiffs, so that they are bound by their pretrial estimate of the settling tortfeasor’s proportionate liability, equity demands they also be entitled to retain the benefit of their bargain when the settlement is generous.

The fairness of disallowing a setoff in these circumstances has been recognized in cases from other jurisdictions. Holding a nonsettling tortfeasor was required to pay its proportionate share of the damages despite a settlement that “prove[d] to be more generous than the subsequent verdict” (resulting in a total recovery greater than the jury’s verdict), the Supreme Court of Pennsylvania, quoting from a Texas case, explained, ” ‘A percent credit necessarily means that settling plaintiffs may recover more than the amount of damages ultimately determined, but they also may recover less. Plaintiffs bear the risk of poor settlements; logic and equity dictate that the benefit of good settlements should also be theirs.’ ” (Charles v. Giant Eagle Markets (1987) 513 Pa. 474, 522 A.2d 1, 3 (lead opn. of Nix, C.J.), quoting Duncan v. Cessna Aircraft Co. (Tex.1984) 665 S.W.2d 414, 430; accord, Wilson v. Galt, supra, 668 P.2d at p. 1109.) ([fn. omitted]) [¶] Second, the idea of a “double recovery” is inextricably linked to the joint liability of multiple tortfeasors. When multiple defendants are responsible for the same compensatory damages, a setoff is not only mandated under section 877(a), but is required by the fundamental principle that “a plaintiff may not recover in excess of the amount of damages which will fully compensate him for his injury. [Citations.]” (Jaramillo v. State of California (1978) 81 Cal.App.3d 968, 970…) The plaintiff cannot, by proceeding separately against each of several defendants, “‘convert a joint into a several [injury], and thereby secure more than one compensation for the same injury.’ ” (May v. Miller, [(1991)], 228 Cal.App.3d [404] at p. 410…quoting Butler v. Ashworth (1895) 110 Cal. 614, 618, 43 P. 4.) In a case of joint liability, the damages for which each defendant is responsible to the plaintiff cannot be divided, and a settlement is rationally assumed to be intended to cover the entire damages…. [¶] That assumption loses its force under a scheme of several liability allocated by fault. “[T]he one recovery rule was originally adopted because the courts could not conceive of allocating liability. Injuries were considered indivisible; therefore, a settling defendant could only offer to pay for the whole injury, not just his part…. [¶] The reasoning behind the one recovery rule no longer applies…. Because each defendant’s share can now be determined, it logically follows that each may settle just that portion of the plaintiff’s suit. The settlement does not affect the amount of harm caused by the remaining defendants and likewise should not affect their liability.” (Duncan v. Cessna Aircraft Co., supra, 665 S.W.2d at p. 431.) [¶] Finally, comparison of plaintiffs’ total recovery to the jury’s award is potentially misleading. “[S]ettlement dollars are not the same as damages. Settlement dollars represent a contractual estimate of the value of the settling tortfeasor’s liability and may be more or less than the proportionate share of the plaintiff[‘]s damages. The settlement includes not only damages, but also the value of avoiding the risk, expense, and adverse public exposure that accompany going to trial. There is no conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages. [Citations.]” (Duncan v. Cessna Aircraft Co., supra, 665 S.W.2d at pp. 431-432.) That Ford was willing to make a generous settlement in order to avoid a public trial on allegations of defects in its Bronco II does not change either the jury’s assessment of total damages or its allocation of fault to Allied-Signal.” (Hoch, supra, 24 Cal.App.4th at 65-68.)

Concluding Thoughts

The now well-established strategy of multiplying your recovery utilizing Proposition 51 and piecemeal pretrial settlements, followed by trial on a waiver of economic damages (to eliminate any C.C.P. § 877 set-offs) is surprisingly little known by most judges and practitioners. It is ideally suited to wrongful death product liability cases where the general damages may conceivably dwarf the economic damages in some cases, and in product liability cases where numerous defendants within the chain of distribution all bear liability for defects in the product. See, e.g., BAJI 9.00 (Comment). These authors have enjoyed considerable success using this strategy in such cases. Often the absence of any right to a set-off comes as a complete and stunning surprise to nonsettling defendants who on the eve of trial had been expected to realize a substantial set-off and thus de minimis exposure at trial, only to find that they are potentially on the hook on a first dollar basis for all of Plaintiffs’ noneconomic damages in proportion to their fault.

Use of this pretrial strategy should be considered at the earliest possible date in appropriate cases. Assessment of the jury verdict potential must necessarily be measured against the collective gains associated with piecemeal pretrial settlements. When piecemeal settlements are realized, there should be no allocation offered in the good faith settlement paperwork, in the first place because none is necessary since the Espinoza formula is always available to effectuate an eventual computation of the allocation which can be applied retroactively, if necessary. In addition, any such an agreed-upon allocation could be binding against Plaintiff at trial (See discussion in Hoch, supra, 24 Cal.App.4th at 67, citing Wilson v. Galt, supra, 668 P.2d at 1109-1110), notwithstanding a waiver of economic damages. Most importantly, determination of such an allocation at a good faith settlement hearing is premature, and unnecessarily squanders potential future options.

Finally, given the complexity and non-intuitive nature of the Hoch strategy, time should be taken properly and thoroughly to brief the issue in writing for the Court well in advance of trial. The sudden perception that a Proposition 51 glass previously thought to have been “half-empty” for Plaintiffs may in fact be a “cup which runneth over” continues to be widely unknown, poorly understood, and contrary to many practitioners’ intuitive sense of “justice”. Careful and methodical education and explanation is essential to ensure the absence of perceived unfair surprise.

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Articles

By Brian Chase on May 13, 2013 - No comments

Identifying and Litigating Quality and Products Defect Cases

Brian D. Chase (Bisnar Chase Personal Injury Attorneys) and Scott D. Raphael (Litigitechnology, Inc.)

One of the costliest but most satisfying and rewarding areas of product liability litigation involves automobile product liability defect cases. Without considerable self-schooling, exposure and experience in handling these cases they can quickly prove overwhelming or even well beyond the resource capability to a relatively small practitioner’s office. Spotting the quality auto product liability case from an ocean of potential defect litigation is therefore essential to survival and success in this field.

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Expert Witnesses and Motions in Limine

Brian D. Chase (Bisnar Chase Personal Injury Attorneys) and Scott D. Raphael (Litigitechnology, Inc.)

Since well prior to the 1986 Discovery Act, parties were at best committed to guesswork in ascertaining what expert discovery would be permitted at trial based on pretrial inadequacies in the disclosure of expert witnesses, of the scope of expert witnesses’ opinions, the transactional nature and source of acquisition of the expert’s opinions, and the adequacy of the expert’s deposition testimony as to the scope of his anticipated trial testimony. This followed largely from the lack of any meaningful guidance by the Courts or the Legislature on these subjects.

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Multiplying Your Tort Recovery by Eliminating Settlement Set-Offs Under Proposition 51

Brian D. Chase and Scott D. Raphael

The Electorate’s Attack on the Perceived Common Law “Deep Pocket” Rule

On June 3, 1986, California voters approved Proposition 51, the so-called “Fair Responsibility Act of 1986.” (Civil Code § 1431.2 – 1431.5) Its purpose was to remedy a perceived “deep pocket” injustice built into the doctrine of joint and several liability, whereby “if a defendant was found to be at all negligent, regardless of how minimally, under the joint and several liability rule he could be held responsible for the full damages sustained by the plaintiff, even if other concurrent tortfeasors had also been partially, or even primarily, responsible for the injury.” (See, Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1196.) This perceived injustice had been further complicated by the adoption of the pure comparative negligence doctrine in California in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, which abrogated the all-or-nothing contributory negligence doctrine and instead held that “the contributory negligence of the person injured…shall not bar recovery, but the damages awarded shall be diminished in proportion to the amount of negligence attributable to the person recovering.” (Id., 13 Cal.3d at 829.)

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Cutting Edge Testing For Rollover Cases: NHTSA’s Road Edge Recovery Maneuver

By Brian D. Chase

For those of you who practice in the area of auto crashworthiness litigation, in particular rollover accidents, how many times have you heard the auto manufacturer, its experts, or a jury boldly proclaim some or all of the following: “This vehicle meets all Federal Motor Vehicle Safety Standards (FMVSS)”; “This vehicle complies with or exceeds all National Highway Traffic Safety Administration (NHTSA) guidelines or recommendations”; “NHTSA has investigated, or considered investigating, the alleged defect and determined that its not necessary to issue any new guidelines or safety standards”; and, “This vehicle passes the auto manufacturer’s rigorous stability and handling testing”? In addition to those proclamations, how many times have you had your vehicle stability experts criticized in deposition or on the witness stand as having “manipulated” their testing, that their testing it is not “objective” or “repeatable”, or that their testing is “merely a plaintiff’s test that has nothing to do with what happens in a real world accident”? Lastly, how many time have you heard, and this is the one that grates on me the most in a rollover case, the driver “panicked” and “over corrected” thereby somehow causing the vehicle to rollover unnecessarily and stating it was “driver error”?

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Making Motions for Trial-Setting Preference

Brian D. Chase (Bisnar Chase Personal Injury Attorneys) and Scott D. Raphael (Litigitechnology, Inc.)

The adage “time is money” was never more appropriately applied than to personal injury litigation. Twenty years ago, prior to adoption of Delay Reduction Act/”Fast-Track” measures in California’s trial courts, cases frequently could not receive trial settings for years after the complaint was filed, often requiring waivers of the five-year deadline for trial in larger California counties to ensure that a courtroom could be secured for the trial. Delay Reduction measures have dramatically changed the picture, with most superior courts now setting cases for trial within 12 to 18 months of the filing of the complaint. Notwithstanding the significant reduction in trial delays, plaintiffs typically do not resolve their cases unless and until a firm trial date is set, and protracted delays mean delayed resolution and delayed funding of a settlement or judgment.

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Utilizing Expert Witnesses

Brian D. Chase and Scott D. Raphael

Expert witnesses have become an essential part of modern trial practice. Unfortunately, their use has become almost too casual, with may practitioners on both sides resorting to an almost “knee-jerk” routine of hiring experts in every case. Contrary to what may be prevailing conventional wisdom, however, not every case genuinely requires retention of experts, although in most cases testimony from treating physicians (nonretained experts) is still required to carry the burden of proof on causation of injury.

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Health Maintenance Organizations and Their Lien Rights

By Bisnar Chase Personal Injury Attorneys

It is the authors’ experience that most of their clients have health care paid by an employee benefit plan which has contracted with an HMO or other health care service plan to provide health care or by Medi-Care. If the relationship is created by an employee benefit plan, the rights and obligations of the plan fiduciary, and those who claim rights reserved to the plan fiduciaries and the beneficiary of the plan are established and regulated by the provisions of ERISA. For a discussion of how ERISA may affect those rights and obligations, the reader is referred to the article written by Jonathan E. Gertler entitled “Understanding ERISA Liens in the Wake of Great-West Life and Westaff” which was published in the March, 2003 edition of the FORUM. A discussion of those issues exceeds the scope of this article. There are also HMOs which are implementation of the Medi-Cal and Medi-Care programs. A discussion of the rights secured for these health care providers under federal law, and how those rights conflict with contractual rights, is beyond the reach of this article.

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Trouble Finding A California Medical Malpractice Lawyer?

By Bisnar Chase Personal Injury Attorneys

If you or a loved one has been misdiagnosed or have been a victim of medical malpractice in the State of California and would like to take the doctor or hospital to court, you my find it very difficult to get a lawyer to represent you. There’s a reason California personal injury lawyers cringe at medical malpractice lawsuits – in this state, we have a $250,000 cap on medical malpractice awards and a cap on attorney’s fees. These two factors combine to make the pursuit of a medical malpractice not worth the costs and risks for wronged patients and their attorneys.

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Lagging Liability Limits

By Jeanna Bisnar

Nobody can drive without auto insurance. Well…nobody is supposed to drive without auto insurance. Governments have mandated for almost a century that drivers must be capable of providing compensation for most damages they may cause while operating a motor vehicle. I think it makes sense. People should be responsible for their actions. This concept of personal responsibility permeates our laws governing how we interact with one another.

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Pedestrian Accidents

By Carissa Bisnar

When cars collide with pedestrians, there is high potential for serious injury. Pedestrian/motor vehicle accidents are a serious problem throughout the world. The United States has a particular problem with pedestrian deaths and injuries. About 5,000 pedestrians are killed and another 64,000 are injured in motor vehicle accidents every year in this country.

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Medical Device Manufacturer Fights FDA Over Defective Product Recall

By Bisnar Chase Personal Injury Attorneys

A New Jersey-based company that makes tissue-based products used in open-heart surgeries is embroiled in a heated court battle and war of words with the Food and Drug Administration (FDA). This tension between Shelhigh and the FDA began April 17 when the federal regulatory agency pulled about 1 million parts at the company’s plant in New Jersey after a 10-week inspection of the facility in the fall of 2006.

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Shelhigh Medical Device Manufacturer-Under the Gun-FDA Claims of Repeated Problems with Contamination Spur ‘Recall’

By Bisnar Chase Personal Injury Attorneys

Many of us remember the TV Shows The Six Million Dollar Man and The Bionic Woman, but most of us had no idea how close we would come to rebuilding our human bodies in the 21st century. Inventions and advances in medical technology have given so many a ‘second chance’ at life.

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Large Truck Accidents According to Truck Configuration

By Carissa Bisnar

Children ATV Accidents, Injuries & Fatalities

By Bisnar Chase Personal Injury Attorneys

All-terrain Vehicles, popularly known as ATVs are becoming a major source of recreation for people of all ages in the United States. ATV trails and clubs are springing up all over the country. The most popular time for riding ATVs is in the summer and during the holidays.

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Insurance Companies Play Hardball With Minor Car Accident Claims

By Bisnar Chase Personal Injury Attorneys

Insurance companies are making it tougher and tougher to collect medical costs incurred due to minor car crashes. According to a recent 18-month investigation conducted by CNN, you could be in the fight of your life if you’re trying to get an auto insurance company to pay medical costs you incur due to an auto accident, even though the accident was not your fault.

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HMO’s and their Lien Rights

By Brian Chase on April 23, 2013 - No comments

Couple meeting regarding HMO Liens

An HMO’s Lien Rights May be Affected by ERISA, Medi-Care, and Other Laws

By Brian D. Chase

It is the authors’ experience that most of their clients have health care paid by an employee benefit plan which has contracted with an HMO or other health care service plan to provide health care or by Medi-Care. If the relationship is created by an employee benefit plan, the rights and obligations of the plan fiduciary, and those who claim rights reserved to the plan fiduciaries and the beneficiary of the plan are established and regulated by the provisions of ERISA. For a discussion of how ERISA may affect those rights and obligations, the reader is referred to the article written by Jonathan E. Gertler entitled “Understanding ERISA Liens in the Wake of Great-West Life and Westaff” which was published in the March, 2003 edition of the FORUM. A discussion of those issues exceeds the scope of this article.

There are also HMOs which are implementation of the Medi-Cal and Medi-Care programs. A discussion of the rights secured for these health care providers under federal law, and how those rights conflict with contractual rights, is beyond the reach of this article.

The HMO/Health Care Service Plan has the right to a lien, the amount of the lien is established by Civil Code Section 3040.

In 2000, the California Legislature enacted what became California Civil Code Section 3040. This act addresses the inequities which might arise from a contractual lien asserted by a health care insurer when there is a conflict between a recovery by the injured person and a reimbursement by the insurer or other payor who has already received payment of a policy premium as consideration for its payment for services. [See, for example, Samura v. Kaiser (1993) 17 Cal.App.4th 1284, 22 Cal.Rptr.2d 20, in which the Court discusses, in part, the Court’s recognition of the enforceability of plan language reserving for Kaiser the “first” position in being paid its recovery “regardless of whether the total amount of the recovery of the Member (or his or her estate, parent or legal guardian) on account of the injury or illness is less than the actual loss suffered by the Member (or his or her estate, parent or legal guardian)” (Id. at 1298.), in contrast with the usual rule of law under which the right of subrogation does not arise until the injured person is “made whole” (Sapiano v. Williamsburg Nat. Ins. Co. (1994) 28 Cal.App.4th 533, 33 Cal.Rptr.2d 659), and also discusses the unwritten “policy” by which Kaiser might allow a “common fund” type reduction in its recovery.] The act establishes an algorithm for the calculation of the right of a health insurer, health care service plan, or a health care provider who claims a right of payment because of the contractual rights retained to the health insurer or heath care service plan in its plan documents. This act created some balance in the resolution of the conflict between the injured plaintiff and the entity which paid for that plaintiff’s health care made necessary by his injuries.

A. The Amount of the Reimbursement Secured by the Lien

The amount of the lien, before reduction or the imposition of a cap, which can be asserted by a health insurance company, health care service plan, or by a health care provider whose lien rights are created by its contract with those payors, depends on whether the payments under the plan are “capitated” or “noncapitated”, and whether the services which were provided were “in contract” or “out of contract”. Before we discuss how these statuses affect repayment rights secured by a statutory lien under this scheme, an exploration of the terms is in order.

The historical payment by insurance to health care provider is a “fee for service” payment: the doctor performs a surgery, she is paid a fee for that surgery; a hospital performs an MRI on a patient, and it is paid a fee for that service. One of the empirical cost reducing factors of a HMO or other health care service plan is based upon a monthly or other periodic fee paid to a care provider (whether an individual or medical group or other contracting group of providers) based on the number of “heads” whose care that provider is servicing for the plan. It is left to the care provider to “share the risk” of the ultimate cost of providing care for the enrollees of the plan. When its enrollee population is heathier than was anticipated in setting the capitation rate, the care provider makes a profit. However, if the risk was a bad one, and the cost of providing care (either directly or through other providers) exceeds the capitation fee, the care provider must make up the shortfall in this equation. In the Knox-Keene Act, providers who are not health care service plans and are paid a capitated fee are said to be “risk bearing”.

Some providers are “in contract”: that is, they are bound by the same or similar contract payment (cost saving) terms and have agreed to accept the payment from the payor (alone or with some deductible or co-pay) as payment in full. These providers are often identified by the term “preferred provider”. Payment to these preferred providers might be capitated payments, or they might be fee for service payments. Other health care providers have not created the “preferred provider” or other such relationship with the payor. The payment to these providers are usually not accepted by the provider as payment in full. The payment to these providers is often larger than the payment to a “preferred provider”.

With the vocabulary worked out, let’s look at the terms of Section 3040(a) and (b).

In subsection (a), the amount of the reimbursement secured by the lien for care is the amount paid to “fee for service” providers by insurance companies or health care service plans, or “the amount equal to 80 percent of the usual and customary charge for the same services by medical providers that provide health care services on a noncaptiated basis in the geographic region in which the services were rendered” by capitated providers. [Sounds like a great recipe for litigation – or negotiation.]

In subsection (b), when an “in contract” provider is capitated, and must turn around and pay a “fee for service” provider for some or all of the care [for example, if the auto accident occurs in Sacramento and the preferred provider is in Santa Ana, the emergency room and hospitalization in Sacrament will usually be “out of contract” on a fee for service basis] then that “risk bearing” provider has the right to recover the sum of the amounts established under subsection (a): the fees it paid to the fee for service provider for care given to its enrollee, plus its own “80 percent of the usual and customary charge” for its own services.

B. Reductions in the Amount Reimburseable by the Lien

The best news in Section 3040 is that the Legislature has adopted in statute (subsection (f)) the previously “judicially adopted” “common fund” doctrine, by which all people who have an interest in the fund of money generated through the expense incurred by only one (or a limited number) of the owners of the fund must share, pro-rata, in the expense of generating the fund. In other words, if an insurance company or HMO or a health care provider who is seeking reimbursement because of an assignment of a right from an insurance company or HMO, is going to be paid from the judgment, compromise, or settlement, that claimant must reduce its recovery by its share of the attorney’s fees and case costs. For example, Kaiser Foundation Health Plan had a policy of “offering a reduction” to its claim for reimbursement, but that policy was not clearly defined nor binding on Kaiser. (See Samura v. Kaiser Foundation Health Plan, Inc., supra.) With the adoption of Section 3040, any insurance and health care service plan and the contracting provider who seeks reimbursement is required to reduce its claim by its share of fees and costs.

In addition, subsection (e) provides that if the injured person is found to be partially at fault in “a special finding by a judge, jury, or arbitrator”, then the lien is reduced by the injured person’s comparative fault percentage.

C. A Cap on the Reimbursement Secured by the Lien

Similar to the cap on the reimbursement recoverable by the Director of the Department of Health Services under Welfare & Institutions Code Section 14124.72, and hospitals under the Hospital Lien Act at Civil Code §3045.1, et seq., the Legislature imposed a cap on the amount which is payable from the claimant/patient’s recovery to health insurance company or health care service plan or contracting health care provider. That cap is set as a percentage of “any final judgment, compromise, or settlement agreement” as follows:

  1. If the claimant/patient hired an attorney to prosecute his claim, one-third of the moneys recovered (Civil Code Section 3040(c)(2); or
  2. If the claimant/patient did not hire an attorney, one-half of the recovery (Civil Code Section 3040(d)(2).

D. A Sample Calculation

Bring to mind the all-too-frequent unfortunate case, in which a seriously injured client has been involved in an automobile accident caused by a minimally insured driver. Your client has incurred $50,000.00 in medical bills with a hospital and physicans, all of whom have been paid by your client’s Kaiser Plan (not an employee benefit, to avoid that argument). How much does your client have to pay Kaiser out of his $15,000 recovery? Yup, $5,000.00.

Let’s up the ante to coverage limits of $100,000.00. Your attorney’s fees are 40%; your client incurred $10,000 in costs for the case. Your client’s Aetna health insurance (not an employee benefit) paid $10,000.00, in keeping with its contracts with your client’s health care providers, to pay this debt in full. What will your client need to pay Aetna on its lien? It paid $10,000 “to perfect its lien” (see Section 3040(a)(1)), so that it where you start your calculation. Now, you would subtract $4,000.00 (fees) and $1,000.00 (pro-rata portion of costs $10,000/$100,000). This leaves $5,000.00 owing to Aetna, which is less than one-third of the recovery, so your client would owe Aetna $5,000.00.

Now, think about the same case, but your client was found by the judge, jury, or arbitrator to be 20% at fault. That finding would reduce Aetna’s payment from the recovery another $1,000, to $4,000.

Just like so many other of the issues which are being discussed in articles in this month’s Forum, the final word on the nature and extent of the right of an HMO to enforce a claim of lien is yet to be written. It is important that all practitioners who represent claimant/plaintiffs in personal injury claims keep up to date with the developing law in this area. The money you save is your client’s, and will be more meaningful to and have more of an impact on them than a moderately larger recovery.

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