Issues in California Law

Collateral Source Rule

Case Name: Ingrid Cabrera v E. Rojas Properties, 2011 DJDAR 2961 (February 8, 2011)
Issue: Should a trial court have the discretion to reduce the jury’s award of economic damages for medical expenses incurred by the amount of medical expenses actually paid to the health care provider? In other words, should a plaintiff be limited to the recovery of medical expenses actually paid rather than the amount actually billed?

Holding: Yes. The trial court is permitted to reduce the claim for past medical expenses to the amount actually paid by the plaintiff or her health care insurer.

The court rejected the plaintiff’s argument that the Collateral Source Rule precluded any evidence presented during a post-trial hearing on the issues of the reduction of the recovery of economic damages of the amounts the plaintiff’s health insurer actual medical bills paid and thus precluded any reduction of the amount of medical expenses awarded by the jury.

Factual Background: The plaintiff suffered personal injuries arising from a fall on the defendant’s property. The plaintiff sued the landowner and sought to introduce the full amount of the medical bills charged by the medical providers (hospital and doctors). The defendant sought to exclude the amounts of those medical bills above the amounts that were actually paid by the plaintiff’s own health insurance companies. The parties agreed to allow the jury to consider the full amount of the medical bills and to exclude any reference to the amounts actually paid by the health insurance company. The parties agreed that the court should hold a hearing after the trial on the issue of whether the medical expenses awarded by the jury should be reduced to the amount paid by the health insurers.

Jury’s Verdict: The jury found in favor of the plaintiff and awarded the plaintiff $57,534.45 for past medical expenses. During a post-trial hearing the defendant introduced evidence that the plaintiff’s health insurers only paid $8,914.26 of the $57,534.45. This is a substantial reduction in the amount these health care providers billed the plaintiff. The trial court granted the defendant’s motion to reduce the medical bills to the amount actually paid by the health insurers and the Second Appellate District, Division Eight affirmed the decision.

Legal Analysis: The plaintiff’s challenge to the trial court’s ruling rests upon the application of the Collateral Source Rule. But the court held that the rate discounted between a health insurer and her provider is not a “collateral benefit” to the plaintiff and thus should not be excluded from evidence. “Under current California law, ‘an injured plaintiff in a tort action cannot recover more than the amount of medical expenses he or she paid or incurred, even if the reasonable value of those services might be a greater sum.” Katiuzhinsky v Perry, 152 Cal.App.4th 1288, 1290 (2007). Therefore, since the plaintiff only “paid” by and through her health care providers a fraction of the total amount of the medical bills, only that which was actually paid should be included as legitimate damages.

Notes: This issue is currently pending before the California Supreme Court.

Liability For The Negligence of Independent Contractors

Case Name: Tverberg v Fillner Construction, Inc. (3-25-11) 2011 DJDAR 4453.

Issue: What types of conditions constitute Affirmative Contribution sufficient to overcome an employer’s immunity under Privette.

Background: As a general rule an employer of an independent contractor is not liable for the tortious acts of that independent contractor. Over the years the courts developed exceptions to this general rule effectively swallowing the rule. One of those exceptions involved the application of the peculiar risk doctrine. Under this doctrine employees of independent contractors hired by an owner of property to perform inherently dangerous work could sue the owner directly for negligence arising from the injuries caused by that inherently dangerous work. However, in Privette v Superior Court, 5 Cal.4th 689 (1993) the California Supreme Court drastically narrowed the application of the peculiar risk doctrine. Under Privette an owner of property who hires an independent contractor to perform inherently dangerous work is not liable when the owner delegates authority to the contractor for the safety of the worksite.

Courts have been limiting the immunity in the holding in Privette. In Tverberg, the First Appellate District held that if the owner retains control over the worksite and acts in a way to affirmatively contribute to the injury the owner may be vicariously liable for the negligent acts of its independent contractors. The court went on to define the scope of the affirmative contributions an employer must commit in order to trigger liability for the negligent acts of its independent contractors.
Facts: Jeffrey Tverberg was an independent contractor hired by a subcontractor working on a construction project. The owner of the property where this construction was being built hired another subcontractor to perform other work near the area of Tverberg’s work. On his first day of the job Tverberg asked the owner’s representative to cover several construction holes created by another subcontractor. The owner’s representative indicated that he did not have the equipment to cover the holes. The next day Tverberg fell into one of these uncovered holes and was injured.

Tyverberg filed a lawsuit against the owner of the property based upon the negligence of the owner’s subcontractor. The owner filed a motion for summary judgment claiming immunity under Privette. Tyverberg responded by asserting that the owner was vicariously liable for the negligence of its subcontractor because the owned had retained control over the safety conditions for the jobsite and took affirmative action to contribute to the injury.

Holding: The property owner can be vicariously liable for negligent acts of its subcontractor if the owner retains control over the jobsite and acts in a manner that affirmative contributes to the plaintiff’s injury.

Analysis: Under Privette v Superior Court the court ruled that though the subcontractor may be held liable for its negligent conduct, the employer (property owner) who delegated the work to the independent contractor is not vicariously liable for those negligent acts. The Tverberg court noted that if an owner of a project hires an independent contractor to perform work but retains control over the safety of the project and also fails to exercise that control in a reasonable manner that affirmatively contributes to the injury, the owner will be held liable for the injuries that result for that affirmative negligent conduct. Kinsman v Unocal Corp., 37 Cal.4th 659, 670 (2005). But the court noted that the merely retention of control of the work site is insufficient to trigger liability. The court noted that the “imposition of tort liability turns on whether the hirer (owner) exercises that retained control in a manner that affirmatively contributed to the injury.” The court went on to note that “affirmative contribution may take the form of actively directing a contractor or an employee about the manner of performance of the construction work.” The court appears to have drawn a distinct line between active and passive conduct. Thus where the owner retains control of the worksite but merely allows an unsafe condition to exist; this is insufficient to trigger liability. Hooker v Department of Transportation 27 Cal.4th 198, 241-15 (2002).

The court ruled that while merely allowing its subcontractor to dig holes in the area near Tyverberg’s work site was passive conduct, “the act of directing that it occur is active participation.” Id. But the court struggled to find that the failure of the owner’s representative to cover the hole after Tyverberg identified the holes and requested that they be covered constituted the type of affirmative conduct necessary to satisfy this requirement.