Moore v. Mercer – What Defendants in Personal Injury Cases Need to Know

Although the amount a medical finance company pays for a lien might be relevant evidence of the value of services provided to an injured plaintiff, courts have discretion to exclude such evidence if it is minimally probative and requires litigation of collateral matters.  This rule, recently announced by the California Court of Appeal in Moore v. Mercer, No. C073064 (Cal. Ct. App. October 21, 2016), is important for defendants in personal injury cases seeking to rebut an injured plaintiff’s claim for economic damages. 

To recover damages for past medical services, a plaintiff must prove (1) that he or she actually incurred the medical expense and (2) the reasonable value of those services.  If a plaintiff’s liability for medical expenses is less than the reasonable value of those services, the plaintiff can recover only the amount actually incurred.  This elementary principle of tort compensation is crucial in personal injury cases involving insured plaintiffs. 

Because insurers typically negotiate with health care providers the amount they are willing to pay for services received by their insureds, the amount an insured plaintiff actually incurs may be less than the reasonable value of those services.  In such cases, a plaintiff’s economic recovery should be capped at the amount actually paid by the insurer.  The agreements between the insurer and provider are therefore relevant to establish the plaintiff’s actual economic loss.

This principle is trickier to apply in cases involving uninsured plaintiffs who incur medical expenses pursuant to a provider’s uniform schedule of prices.  To finance an uninsured’s medical expenses, medical finance companies purchase liens providers obtain against personal injury judgments.  The providers sell the medical liens at rates less than the amount charged to the injured plaintiff, and the medical finance company receives payment if the plaintiff wins the underlying lawsuit. 

This was the exact factual scenario in Moore v. Mercer where the court held that the trial court properly excluded evidence of the amount the medical finance company paid for plaintiff’s medical lien.  Although this amount may be relevant and discoverable, the court held, the trial court retains discretion to exclude such evidence if it is minimally probative and would require time-consuming litigation of collateral issues.

Importantly, the amount a medical finance company pays a provider depends on a variety of factors that may bear no relevance to the reasonable value of services delivered.  For example, the amount paid may be more indicative of the provider’s financial condition or the “medical finance company’s tolerance for risk.”  Such factors hardly reflect the reasonable value of medical services received.  On the other hand, the court noted that this amount might reveal what the provider believed was the reasonable value of the services, it might assist defense experts in rebutting plaintiff’s evidence of reasonable value, and the amount a plaintiff must pay to satisfy the lien.  While relevancy depends on the facts of the particular case, such evidence the court held is not irrelevant as a matter of law.

Under this new rule, defendants seeking to admit evidence of the amount a provider received for a medical lien should focus on factors demonstrating that the amount represents a reasonable approximation of the value of the services and the amount plaintiff paid rather than the value of the debt.