The limitations imposed by Medical Injury Compensation Reform Act create major obstacles to injured patients seeking fair and reasonable compensation for their injuries. The collateral source exception, Civ.Code § 3333.1; periodic payments statute, Civ.Proc.Code § 667.7; and the $250,000 maximum recovery for non-economic damages, Civ.Code § 3333.2, place direct and indirect restrictions on recoverable damages. A systematic, strategic approach is required in order to maximize a California malpractice victim’s damages recovery.

The purpose of this article is to identify the most significant issues that arise regarding damages in California medical negligence cases, and to suggest possible approaches to resolve those issues as favorably as possible. Since 95-99% of the damages in catastrophic medical negligence cases are economic, this article will focus primarily on strategies for maximizing economic damage recoveries.

Recoverable economic damages in medical negligence cases generally include some or all of the following: (1) past and future health care expenses; (2) past and future loss of earnings or earning capacity; and (3) past and future loss of household services.

Past and Future Health Care Expenses

Civil Code section 3333.1 sets forth a substantial, but not absolute, exception to the collateral source rule in medical negligence cases. The statute permits a defendant to introduce into evidence payments from several specifically enumerated collateral payors, including health insurance, private disability insurance, Social Security disability payments, and Worker’s Compensation benefits. Medi-Cal is not one of the collateral sources that is admissible under the statute. Brown v. Stewart (1982) 129 Cal.App.3d 331, 338-341, 181 Cal.Rptr. 112, 118-120. Both the Brown rationale and federal preemption render evidence of Medicare benefits similarly inadmissible. Health insurance coverage provided pursuant to an ERISA plan is not admissible under Section 3333.1, because federal preemption renders inapplicable the subrogation elimination provision of Section 3333.1(b).

While the statute does not preclude recovery of past medical expenses and earnings loss that were covered by the enumerated collateral sources, the practical effect is that a jury might not include in its verdict the amounts paid by collateral sources that have been admitted into evidence. Even where the defendant’s conduct is egregious, plaintiff’s counsel’s request during argument to include these expenses in the verdict will likely be perceived as overreaching, and may well negatively impact the overall credibility of the plaintiff’s case. In the setting of an ERISA plan, federal law provides strong support for the plan’s right to reimbursement, and affords little negotiating leverage to the plaintiff. Accordingly, past health care expenses typically do not directly enhance the plaintiff’s net recovery in California medical negligence actions.

One significant exception to this norm is where one or more family members have provided care to the plaintiff for injuries resulting from the defendant’s negligence. The reasonable value of care by family members required by defendant’s tortious conduct may be recovered from the defendant without an agreement for, or expectation of payment. Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 644, 246 Cal.Rptr. 192, 198. The measure of these damages is “the amount for which reasonably competent nursing and attendance by others could have been obtained.” (Id.)

This element of damages represents a substantial opportunity for the plaintiff which should never be overlooked. It is improbable that care by family members will have been covered by health insurance, so these damages directly increase the plaintiff’s recovery. In a childbirth injury case in which the child is fed via a gastrostomy tube, requires suctioning of tracheal secretions, breathes through a tracheostomy or requires other care normally provided by an LVN or RN, the reasonable value of care provided by family members may total several hundred thousand dollars by the time of trial. These damages should be asserted from the time that initial contention interrogatories are answered, and the family members who provide care should be prepared to provide accurate estimates in deposition and trial of how much time they spend providing care, and what the care consists of.

Future Health Care Expenses

In many California medical negligence cases, especially those involving severe or catastrophic injuries, the single most substantial element of damages is future health care expenses. There are four factors which determine the amount that can be recovered: (1) amount of attendant care required (24/7 or something less); (2) level of care (RN, LVN, or non-licensed, i.e., CNA); (3) plaintiff’s life expectancy; and (4) economist’s methodology.

The defense typically disputes vigorously each of these factors, such that it is common for there to be an eight-figure difference between the plaintiff’s and the defendant’s final numbers. To maximize the prospects for the jury to accept the plaintiff’s future health care damages projections, it is essential that plaintiff’s counsel develop meticulously each of the four factors.

Amount of Care Required

Whether a severely injured plaintiff requires 24/7 attendant care or something less is typically determined collaboratively by one, or commonly, a team, of plaintiff’s experts. This team might include one or more physicians, a neuropsychologist, and a life care planner) based on their in-person evaluations of the plaintiff. The team will base its projections on the pertinent medical and educational records, and depositions. The defense will frequently try to claim that the plaintiff can receive care from family members, and will assume for purposes of its life care plan that the family care will be uncompensated. As discussed, supra, Hanif provides otherwise, and the plaintiff should make a motion in limine to preclude any defense attempt to discount damages in this manner.

The defense also frequently tries to claim that severely injured plaintiffs do not need nighttime care (it should be noted that live-in attendant hires are no longer practicable because of federal laws limiting work hours and requiring higher pay rates for overtime). Wakeful care is reasonably necessary if the patient is immobile; has cognitive impairment; is unable to communicate; has recurrent need to use the bathroom at night; or requires administration of as-needed medications. It is critical that the plaintiff or plaintiff’s family provide a complete, accurate history to treating physicians, expert physicians, and life care planners regarding these issues, and that the plaintiff or family members testify consistently in deposition and at trial with what they have previously said.

Level of Care

It is relatively uncommon for injured plaintiffs, even severely injured plaintiffs, to require 24/7 RN care. It is not uncommon, however, for severely injured plaintiffs to require LVN level care. The typical bases for this requirement include gastrostomy tube feedings; tracheostomy or ventilator care; indwelling urinary catheters or recurrent need for catheterization; tracheal suctioning; and administration of medications to a plaintiff who is unable to self-administer, or direct administration of, them.

Regularly scheduled medications can be set up by an RN or LVN who comes in daily, or sometimes weekly, for an hour, and then administered by a non–licensed caregiver. In Southern California, licensed nursing care currently costs at least $45-50 per hour, as compared with around $20-25 per hour for nonlicensed care. In the setting of a catastrophically injured plaintiff who may live an additional 50 years or longer (such as in a childbirth brain injury case), the cost differential over the plaintiff’s lifetime between licensed and nonlicensed care runs well into eight figures.

Plaintiff’s Life Expectancy

The defendants will often designate a statistician to testify that a severely injured plaintiff has an extremely shortened life expectancy. Defense counsel have a group of purported experts for this purpose. Some of these experts rely upon a database that they insist is proprietary — so much so that they have gone to great lengths (including withdrawing from cases) in order to avoid having to produce it. It appears, however, that these databases are largely derived from data produced by the California Department of Health Care Services regarding life expectancies for disabled people living in state institutions. Plaintiff’s counsel should pursue in discovery as aggressively as possible production of the supposedly proprietary database.

The flaw common to all of their methodologies is that they arbitrarily assign characteristics to the plaintiff which they are largely unqualified to assign, because they are not licensed health care providers and have never examined the plaintiff, and then “guesstimate” a life expectancy based on the California state data.

A further flaw is that the database they consider does not include any disabled individuals who are identified as having received care comparable to what is set forth in the plaintiff’s life care plan. These flaws can be used as a basis for a motion in limine to preclude or limit their testimony. If the motion is unsuccessful, these flaws can readily be demonstrated on cross-examination.

Additionally, the defense life care experts typically ignore improvements in life expectancies for severely disabled people, even though healthcare providers who treat such patients acknowledge and apply these medical advances. Enhancements in emergency and critical care, development of antibiotics to treat previously resistant organisms, increased use of gastrostomy tubes and home portable mechanical ventilation units, suprapubic catheters and increased societal valuation of the lives of severely disabled people have combined to dramatically increase life expectancies for catastrophically injured plaintiffs, including those suffering from spinal cord injuries or brain injuries.

Although some plaintiffs’ counsel have had good success rebutting the defense statisticians with a statistician of their own, it may be more effective (1) to present physician testimony regarding life expectancy based on clinical experience and medical literature, and (2) to cross-examine the defense statisticians based on the flawed methodologies set forth above. It is not uncommon to see a spread of 30 or more years between the plaintiff’s and defense experts regarding life expectancy. All other things being equal, that difference can result in an eight-figure difference, when the cost of attendant care alone can approach $500,000 per year in today’s dollars.

It is critical for plaintiff’s counsel to present the strongest possible life expectancy testimony from a well-qualified plaintiff’s expert. Simultaneously, plaintiff’s counsel must prepare meticulously to destroy the credibility of the defense life expectancy expert who invariably advocates for an artificially shortened life expectancy that, if accepted by the jury, would deprive the plaintiff of a very substantial portion of the funds that she or he requires for future care. Based on the level of care currently available, many catastrophically injured plaintiffs can reasonably expect to live into their sixties or beyond. That is largely dependent on the plaintiffs’ receiving the quality of care specified in the life care plan.

Economist’s Methodology

The respective methodologies used by the plaintiff’s and defendant’s economists is another factor, which, by itself, can result in a difference of millions of dollars in calculating plaintiff’s damages. The defense economist typically tries to minimize the damages by arbitrarily limiting the time frame for which economic data (interest rates, inflation rates, medical inflation rates) is considered.

Few, if any, defense economists will go back as far as 1950 (generally considered by economists to be the start of the modern economy) data, notwithstanding the undeniably cyclical nature of interest rates and inflation. The defense economists prefer to go back perhaps 30 years. Doing so, however, ignores the historic economic cycles and gives disproportionate weight to the extremely low interest and inflation rates of the past 15 or so years. The defense approach, thus, results in a substantially higher net discount rate than would be derived from consideration of all of the data going back to 1950 (the higher the discount rate, the smaller the amount of the loss, and vice versa). Additionally, defense economists often advocate investment in five-year United States Treasury Notes, notwithstanding the fact that a catastrophically injured plaintiff has ongoing care needs, and investing plaintiff’s recovery in five-year instruments would necessitate selling bonds for less than face value. The premature sale would cause the plaintiff to lose principal that is needed to fund future care needs.

Defense economists also invariably ignore the language of CACI 3904A (Present 167 Cash Value), which specifies that the jury must determine the amount of money that, “if reasonably invested today will provide plaintiff with the amount of her or his future damages.” (emphasis added) Based on the historically low interest rates available today, the only way that a sufficient return could be achieved would be by investing plaintiff’srecovery in a laddered sequence of zero coupon United States Treasury bonds (bonds which do not pay any interest along the way, and, accordingly, can be purchased at a discount, but pay par value, with what is considered to be “imputed interest,” at maturity).

Marketplace forces are such that the present cash value of a given economic loss is higher based on the assumption that the loss will be replaced through the purchase of zero coupon bonds than with long, intermediate, or short-term interest-bearing United States Treasury Notes. Zero coupon bonds, however, are the only current investment strategy which, if employed today, as required by California Civil Instruction (CACI) 3904A, would reliably provide for all of the plaintiff’s future care needs. It is important that plaintiff’s counsel investigates and thoroughly understands an economist’s methodology before retaining that economist to calculate economic loss, particularly in a catastrophic injury case.

Defense Strategies to Overcome

If the plaintiff has health insurance coverage at the time of trial, the defense will invariably argue that the plaintiff will also have coverage for the rest of his or her lifetime and that, pursuant to Civil Code section 3333.1, evidence of this future coverage is admissible. See Cuevas v. Contra Costa County (2017) 11 Cal.App.5th 163, 217 Cal.Rptr.3d 519. The defense will cite that evidence as a basis for reducing, often substantially, plaintiff’s future health care expense damages. Under Cuevas, the defense still has the burden of proving that the claimed future benefits are indeed “payable.” The future viability of health insurance coverage which may be in place at the time of trial is speculative for multiple reasons: The plaintiff may no longer be working for the employer providing the current coverage; the plaintiff may be a child who will not be eligible for coverage under his or her parents’ policy beyond a certain age; the health insurance market is volatile, and continued survivability of particular companies is, in of itself, speculative.

Also, the individual mandate of the Affordable Care Act has been declared unconstitutional. Texas v. United States, _____ F.3d _____, _____, 2019 WL 6888446 *19-20 (5th Cir. 2019) (Tax Cuts and Jobs Act, which set at zero dollars the penalty on those who failed purchase minimum essential coverage requirement in Patient Protection and Affordable Care Act’s, rendered individual mandate in excess of Congress’s powers under the Interstate Commerce Clause and the Necessary and Proper Clause). Accordingly, the ACA cannot reasonably be cited for the proposition that it is probable that the plaintiff will have future health coverage or that any such coverage will cover particular items in the life care plan.

Finally, it should be noted that no health insurance policy covers 24/7 attendant or nursing care, which typically comprises 80-90% of the cost of the life care plan in a catastrophic injury case. Plaintiff’s counsel should attempt initially to exclude this speculative testimony by way of motions in limine. Even if the motions are denied, the speculative nature of the defense position provides fertile ground for cross-examination.

Past and Future Loss of Earnings or Earning Capacity

In a case involving past loss of earnings for an injured plaintiff with a stable employment history, the differences between the plaintiff’s and defendant’s positions are typically relatively slight. Assuming that the data as to what the plaintiff would have earned in the absence of his or her injury is obtained from the employer during discovery, the most significant disagreement that might arise is whether or not the plaintiff would have received a promotion absent the injury. That issue would typically be resolved based on the testimony of a supervisor, or other higher-up, or, in other types of businesses, partners, customers, coworkers, etc. Additionally, the defense will invariably seek to introduce evidence of disability insurance payments.

With regard to future lost earning capacity, the significant factors to consider are: (1) the economist’s assumption or vocational expert’s conclusion as to the highest level of educational or occupational attainment that the plaintiff would have reached absent the injury; (2) retirement age or work life expectancy derived by the vocational expert or assumed by the economist; (3) the demographic database relied on by the economist for earnings information; and (4) the net discount rate assumed by the economist.

Typically, children at least equal the level of education attained by their parents. In immigrant families, children often substantially exceed those levels. In a case involving a severe injury to a child, it is often also helpful to look at the academic achievements of siblings to estimate what type of student the plaintiff would have been in the absence of his or her injury.

Defense economists typically use arbitrarily early retirement ages or diminished work life expectancies in order to minimize this element of loss. Additionally, defense economists are more likely to look at earnings databases specific to ethnicity and gender. Given the historical workplace discrimination against women and people of color, this also leads to unfairly low calculations as to future loss of earnings and earning capacity. Civil Code section 3361, effective on January 1, 2020, provides, “Estimations, measures, or calculations of past, present, or future damages for lost earnings or impaired earning capacity resulting from personal injury or wrongful death shall not be reduced based on race, ethnicity, or gender. Finally, the same factors regarding economists’ discount methodologies apply to future lost earnings and earning capacity calculations as with future medical care expense calculations, discussed supra.

Loss of Household Services

CACI 3903(E) specifically permits recovery by the plaintiff of the reasonable value of services he or she would have been reasonably certain to provide to the household absent the injury. Household services can take many different forms– childcare, cooking, cleaning, laundry, shopping, home maintenance, yard care, etc. If there is any evidence to support this element of damages, it should be pursued beginning with responses to initial interrogatories which ask about the damages being claimed by the plaintiff. The time estimates given, and the nature of the services claimed to have been provided, must be supported by credible corroborating evidence.

Non-Economic Damages

Civil Code section 3333.2 remains the law in California. For the time being, it isnimportant for plaintiff’s counsel to seek separate noneconomic damages recoveries of an additional $250,000 for spouses of medical negligence victims who suffer a loss of consortium, Atkins v. Strayhorn (1990) 223 Cal.App.3d 1380, 273 Cal.Rptr. 231, mothers of babies who are injured during childbirth Burgess v. Superior Court (1992) 2 Cal.4th 1064, 9 Cal.Rptr.2d 615, or close family members who meet the requirements for a bystander claim for negligent infliction of emotional distress. Dillon v. Legg (1968) 68 Cal.2d 728, 69 Cal.Rptr. 72.

Conclusion

Maximizing damages in California medical negligence cases requires stepwise consideration of all recoverable elements, including thorough understanding of the applicable law, detailed workup of the required factual aspects, timely identification of all claimed damages in discovery responses, careful preparation of the plaintiff and the family members for deposition and trial testimony, and retention of and coordination among damages experts.