Jan 29, 2015

TRIAL CALL/TRIAL MOTIONS CALENDAR - DEPT 19
FRIDAY, JANUARY 30, 2015 - Judge Arthur A. Wick
3055 Cleveland Avenue, Santa Rosa, CA  95403 

 

TRIAL CALL
MCV-227857 Portfolio Recovery v. Castaneda
SCV-254516  Wagner v. Morton  Notice of Settlement Filed
SCV-255721  In re 240 Cambridge Lane, Petaluma, CA Matter resolved via stipulation and order

TRIAL MOTIONS

SCV-248442  Tuttle v. Ukiah Valley Medical

TENTATIVE RULINGS ON TRIAL MOTIONS:

 

SCV-248442 Tuttle v. Ukiah Adventist Hospital

This is on calendar for the Plaintiffs’ Motion to Augment Judgment and to Include Pre-Judgment Interest and Expert Witness Fees, and the Plaintiffs’ Motion for Order Reducing Workers Compensation Lien to the Amount Actually Paid for the Lien. Additionally, this is on calendar for the Defendant’s Motion to Vacate Judgment for Setoff Due to Prior Judgments and Workers Compensation Lien. Each motion is fully briefed.

1.      Plaintiffs’ Motion for Order Reducing Workers Compensation Lien to the Amount Actually Paid for the Lien

The Plaintiffs contend that the workers compensation lien in this case should be reduced to the amount the Defendant actually paid for it. The Plaintiffs contend that under Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 the Defendant is only entitled to a set-off in the amount it actually paid to assume the lien. Further, the Plaintiffs contend that they are entitled to an apportionment of costs, including attorney fees pursuant to Quinn v. State of California (1975) 15 Cal.3d 162.

The Defendant opposes, arguing that the holding in Howell is inapplicable to the situation at bar. Further, the Defendant contends that the Plaintiffs are not entitled to an apportionment based on costs and attorney fees pursuant to Labor Code § 3856.

From the outset the court notes that the holding in Howell is inapplicable to the circumstances in this case. Howell stands for the proposition that a plaintiff typically may not recover more than the actual amounts paid by him or on his behalf for past medical services, even though the amounts billed for those services were greater. (Howell, supra, 52 Cal.4th at 555, 566; see also Sanchez v. Brooke (2012) 204 Cal.App.4th 126, 131 [injured employee's recovery limited to amounts paid to medical providers by employer under workers' compensation law, where employee not liable for balance of billed amount].) In an interesting twist of logic, the Plaintiffs contend that workers compensation lien for $625,520.67, which represents benefits paid to Plaintiff Jack Tuttle, should be reduced to the amount that the Defendant paid to assume the lien, namely $375,000. There are multiple distinguishing features between Howell and this case.  Howell dealt with the issue of overinflated rates for medical care which did not reflect the actual amount that an insurer paid for those services. Howell essentially holds that a plaintiff may only recover for the reasonable value of the medical services provided, not the MSRP of those services (which nearly no-one pays). Here, the Plaintiffs established the reasonable value of the services provided—and neither party disputes that the benefits paid by the workers compensation carrier is inflated, or does not represent dollars actually paid. Further, the Defendant bought both the lien, and (importantly) the risk associated with that lien; thus the discount. Contrast the risk taken by the Defendant here with the windfall associated with the recovery of inflated medical bills that were never actually paid addressed in the holding in Howell. The holding in Howell v. Hamilton Meats & Provisions, Inc., cannot be applied here without butchering its logic underlying. Further, reducing the workers compensation lien in this situation would provide a windfall to Plaintiff Jack Tuttle—the type of double recovery that Howell was trying to limit. Moreover, applying Howell to reduce the workers compensation lien would effectively eliminate the Labor Code where it guarantees the right to seek reimbursement. (See, e.g. LC § 3852.)

Here, the Defendant purchased the subject lien, and is entitled to the full satisfaction of that lien from the judgment. (See LC § 3856; and Manthey v. San Luis Rey Downs Enterprises, Inc. (1993) 16 Cal.App.4th 782.)

            The Plaintiffs also contend that they are entitled to apportionment of attorney fees in off-set to the workers compensation lien. The Plaintiffs are not entitled to such apportionment. As the First District held in Walsh v. Woods (1986) 187 Cal.App.3d 1273 where a trial court finds that both an employee's attorney and an insurer's attorney “actively participated” in the action, even though employee's attorney had comparatively greater degree of “active participation” in the litigation than did insurer's attorney the employee is not entitled to have attorney fees apportioned out of the insurer's share of the award. Here, the workers compensation insurer, Liberty, actively participated in the litigation separate and apart from Plaintiffs’ counsel. Indeed, Liberty participated in the action (by way of a Complaint in Intervention) until November 7, 2014, when it dismissed its Complaint in Intervention after reaching settlement with the Defendant. (See Dec. Armstrong ¶ 5, Exhibits C(1)-C(29).)

            The Plaintiffs also contend that once the Complaint in Intervention was dismissed it was incumbent on the Defendants to prove the reasonableness of any amounts of the lien over and above the amount stated in the notice of lien. The Plaintiffs’ argument is not well-taken. (See Mendenhall v. Curtis (1980) 102 Cal.App.3d 786, 791-792 [“the amount of workers' compensation benefits which the employer has paid or has been obligated to pay constitutes the minimum damage suffered by the employer and that the third party is precluded from litigating the reasonableness of that amount.”]; see also LC § 3854.)

            Accordingly, the Plaintiffs Motion for Order Reducing Workers Compensation Lien to the Amount Actually Paid for the Lien is denied in its entirety.

2.      Defendant’s Motion to Vacate Judgment for Setoff Due to Prior Settlements and Workers Compensation Lien

The Defendant is moving under CCP § 663 to vacate the judgment and enter a new judgment to reflect set-offs due to prior judgments and the workers compensation lien. In essence, the Defendant is seeking set-offs in the amount of $1,616,462 pursuant to the CCP § 877.6 settlements entered into between certain co-defendants and the Plaintiffs. Further, the Defendant seeks a set-off of $625,520.67 for the workers compensation lien it purchased from Liberty.

The Plaintiffs opposes, arguing that CCP § 663 is the wrong procedural vehicle to obtain set-offs of the judgment. The Plaintiffs contend that the Defendant should have sought to modify the verdict prior to the judgment being entered. The Plaintiffs contend that this failure to seek modification prior to judgment being entered now amounts to a waiver. Further, the Plaintiffs argue that the Defendant’s failure to seek relief under CCP § 473 after failing to seek modification of the verdict precludes the relief it now seeks. The Plaintiffs also argue that the Defendant waived its rights to set-off when it stipulated that it alone was the cause of the Plaintiff’s injuries.    

            The Plaintiffs procedural argument is misplaced. CCP § 663 provides, in pertinent part: “A judgment or decree, when based upon a decision by the court, or the special verdict of a jury, may, upon motion of the party aggrieved, be set aside and vacated by the same court, and another and different judgment entered, for either of the following causes, materially affecting the substantial rights of the party and entitling the party to a different judgment … not consistent with or not supported by the facts.”

The Plaintiffs cite no controlling legal authority for the proposition that CCP § 877.6 setoffs, or recoupment of the workers compensation lien cannot be effected via a motion pursuant to CCP § 663. As cited by the Defendant, Poire v. C.L. Peck/Jones Brothers Construction Corp. (1995) 39 Cal.App.4th 1832, clearly allows set-offs to be applied post-judgment pursuant to a motion made under CCP § 663. (See also Ehret v. Congoleum Corp. (1999) 73 Cal.App.4th 1308, 1314 [issue of set-offs raised in CCP § 663 motion].) Following the Plaintiffs’ contention would elevate form over substance. (See CC § 3528.) Further, it would go against the principle that the law abhors forfeiture. Moreover, the trial court has broad discretion to determine the relief being requested in a post-trial motion and neither the styling of a party's request nor the label placed upon it is determinative. (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 727.) Thus, the court finds that the Defendant has not waived its right to have the set-offs applied to the judgment.

The court now turns to the issue of the amount of set-off to which the Defendant is entitled. The Plaintiffs argue that the Defendant is only entitled to set-off 40%--the percentile allocated in a stipulation of good faith settlement entered into between the Defendant and settling Co-Defendants Crane of Ukiah, Peterson Tile, and Ukiah Valley Medical Plaza, L.P. The Defendant argues that the Plaintiffs are ignoring the plain language of the stipulation, which left “allocation between economic and non-economic damages” to be “determined by the jury verdict.” (Dec. Armstrong, Exhibit C.) Thus, the Defendant contends that the settlements subject to that stipulation are more properly determined under the well-known formula set forth in Espinoza v. Machonga (1992) 9 Cal.App.4th 268.

Here, the language in the stipulation clearly left final allocation between economic and non-economic damages to be determined by jury verdict—this is not surprising. That being said, the parties to the settlement stipulated to a 60/40 split between economic and non-economic damages “for the purposes of this settlement.” 

The well accepted framework for calculating settlement credits is found in Espinoza, (supra), and Greathouse v. Amcord, Inc. (1995) 35 Cal.App.4th 831, 840–841. When prior recoveries have not previously been allocated in a manner found by the court to be in good faith, the post-trial allocation of prior settlements should mirror the jury's apportionment of economic and non-economic damages.(See Wilson v. John Crane, Inc. (2000) 81 Cal.App.4th 847; and Hackett v. John Crane, Inc. (2002) 98 Cal.App.4th 1233.) In Jones v. John Crane, Inc. [(2005) 132 Cal.App.4th 990], the First District Court of Appeal found that a trial court properly relied on jury allocations rather than allocations found in the settlement agreements, holding: “Absent a prior judicial determination of the good faith of allocations made in the settlement agreements, the trial court properly utilized the jury's verdict to allocate damage components as to which the jury made findings.” (Id. at 1008 [emphasis added].) Here, the settlements with Co-Defendants Crane of Ukiah, Peterson Tile, and Ukiah Valley Medical Plaza, L.P. were found to be in good faith, and the allocation of the settlement awards was part of that determination—by which the Defendant is now bound.

The Defendant is entitled to a set-off allocation of the Co-Defendants Crane of Ukiah, Peterson Tile, and Ukiah Valley Medical Plaza, L.P. of 40%, or $760,000. Further, the Defendant is entitled to a set-off allocation of 68% (pursuant to Espinoza, supra) of the Selberg Associates and Ceramic Tile World Inc. settlements of $292,400 and $22,443.40.

The Plaintiffs also contend that the Defendant “waived” its right to set-off when it stipulated to liability. The Defendant argues that set-offs under CCP § 877.6 is not based on the amount of fault allocated to each co-defendant. The Plaintiffs’ argument is foreclosed by the holding in Poire, (supra.) There, the plaintiff made a nearly identical argument, suggesting that CCP § 877.6 set-offs were not available where the settling co-defendants were found not liable. The trial court denied set-offs on this basis, and the appellate court reversed, and applied the Espinoza formula, notwithstanding the finding of no liability. (See Poire, supra, at 1840-1841.) The analysis employed in Poire and its holding provide clear guidance that the Defendant is entitled to CCP § 877.6 set-offs despite its stipulating to 100% liability.

Accordingly, the Defendant’s motion is granted and, therefore, defendant is entitled to a set-off of $1,074,843.40 pursuant to CCP § 877.6, and a set-off of $625,520.67 pursuant to Labor Code § 3856 (for the reasons stated above in denying the Plaintiffs’ motion to reduce the workers compensation lien), for a total set-off of $1,700,364.07 against the economic damages awarded to Plaintiff Jack Tuttle.

3.      Plaintiffs’ Motion to Augment Judgment to Reflect Expert Witness Expense

Continued to 2/24/2015 to be heard with the motion to tax costs.

 

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