Summary
assuming without deciding that "the statute permits a defendant to introduce evidence of future insurance benefits that the plaintiff is reasonably certain to receive"
Summary of this case from Brewington v. United StatesOpinion
B204908
01-22-2013
AIDAN MING-HO LEUNG, Plaintiff, Respondent and Cross-Appellant, v. VERDUGO HILLS HOSPITAL, Defendant, Appellant and Cross-Respondent.
Thomas and Thomas, Michael Thomas and Maureen F. Thomas; Greines, Martin, Stein & Richland, Feris M. Greenberger, Jennifer C. Yang and Robert A. Olson for Defendant, Appellant and Cross-Respondent. LKP Global Law and Luan K. Phan; Esner, Chang & Boyer, Andrew N. Chang and Stuart B. Esner for Plaintiff, Respondent and Cross-Appellant.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC343985)
Appeal from a judgment of the Superior Court of Los Angeles County, Laura A. Matz, Judge. Affirmed.
Thomas and Thomas, Michael Thomas and Maureen F. Thomas; Greines, Martin, Stein & Richland, Feris M. Greenberger, Jennifer C. Yang and Robert A. Olson for Defendant, Appellant and Cross-Respondent.
LKP Global Law and Luan K. Phan; Esner, Chang & Boyer, Andrew N. Chang and Stuart B. Esner for Plaintiff, Respondent and Cross-Appellant.
This appeal by defendant Verdugo Hills Hospital (the Hospital) and cross-appeal by plaintiff Aidan Ming-Ho Leung (Aidan) is before us for a second time. In our first opinion, we reversed that portion of the trial court's judgment awarding Aidan economic damages against the Hospital. We reluctantly concluded that under the common law release rule, Aidan's non-good faith settlement with codefendant Dr. Steven Wayne Nishibayashi and his medical corporation released the Hospital from its liability for economic damages. We left undecided four issues that were not necessary for us to address.
The California Supreme Court granted review, abandoned the common law release rule, and held that "when a settlement with a tortfeasor has judicially been determined not to have been made in good faith (see Code Civ. Proc., §§ 877, 877.6, subd. (c)), nonsettling joint tortfeasors remain jointly and severally liable, the amount paid in settlement is credited against any damages awarded against the nonsettling tortfeasors, and the nonsettling tortfeasors are entitled to contribution from the settling tortfeasor for amounts paid in excess of their equitable shares of liability." (Leung v. Verdugo Hills Hospital (2012) 55 Cal.4th 291, 308 (Leung).)
The Supreme Court therefore reversed our judgment, and remanded the case for us to consider the four remaining issues, three arising in the appeal by the Hospital, and one in the cross appeal by Aidan. The issues now before us are as follows. The Hospital contends that the trial court erred in (1) excluding evidence that future insurance benefits would cover much of Aidan's future medical costs; (2) incorporating interest under Civil Code section 3291 into the judgment, and in awarding interest on that part of the judgment representing the present value of future medical expenses; and (3) determining under Code of Civil Procedure section 667.7, subdivision (a), that the Hospital is not adequately insured, thereby requiring it to post security adequate to assure full payment of the periodic payments judgment. Aidan contends in his cross appeal that the trial court erred in the type of security it permitted the Hospital to provide under section 667.7, subdivision (a): an annuity from an approved provider, payable to the Hospital, sufficient to fund the periodic payments in each year they are required. We are not persuaded by the parties' contentions, and affirm the judgment.
The Supreme Court affirmed our determination that the Hospital's negligence was a legal cause of Aidan's injuries (55 Cal.4th at p. 308).
BACKGROUND
Six days after birth, Aidan suffered irreversible brain damage caused by "kernicterus," a condition that results when an infant's level of "bilirubin" (a waste product of red blood cells which causes jaundice) becomes toxic. Through his guardian ad litem (his mother, Nancy Leung), Aidan sued his pediatrician, Dr. Nishibayashi, and his professional corporation, alleging that Dr. Nishibayashi was negligent in his care and treatment. Aidan also sued the Hospital, where he was born, alleging that the Hospital was negligent for, inter alia, failing to provide his parents with adequate education on neonatal jaundice and kernicterus, and failing to implement policies to reduce the risk of kernicterus in newborns.
Aidan reached a settlement with Dr. Nishibayashi and his corporation, under which Dr. Nishibayashi agreed to pay the limits of his malpractice insurance, $1 million, and to participate at a trial in which the jury would allocate the negligence, if any, of the Hospital and Dr. Nishibayashi and set the amount of damages. It was this settlement that was the subject of the Supreme Court's opinion in Leung, supra, 55 Cal.4th 291.
The case was tried to a jury, which found both the Hospital and Dr. Nishibayashi negligent, and awarded damages of $78,375.55 for past medical costs, $250,000 for noneconomic damages, $82,782,000 for future medical care (with a present value of $14 million) and $13.3 million for loss of future earnings (with a present value of $1,154,000). Apportioning fault, the jury found the Hospital 40 percent negligent, Dr. Nishibayashi 55 percent negligent, and plaintiff's parents, Nancy and Kevin Leung, each 2.5 percent negligent.
Ultimately, the court approved a minor's compromise regarding Aidan's settlement with Dr. Nishibayashi, and incorporated the verdict into a periodic payments judgment under Code of Civil Procedure section 667.7, which declared the Hospital jointly and severally liable for 95 percent of all economic damages found by the jury and severally liable for its 40 percent share of noneconomic damages.
We discuss additional proceedings and evidence as necessary, below.
DISCUSSION
I. Evidence of Future Insurance Benefits
The Hospital contends that the trial court misconstrued Civil Code section 3333.1 (hereafter section 3333.1, a provision of MICRA) and committed prejudicial error by excluding evidence of potential insurance benefits that would likely cover much of Aidan's future medical expenses. As we explain, we conclude that the record is insufficient to address the issue. In the alternative, we conclude that on the record presented, even assuming that the Hospital's interpretation of section 3333.1 is correct, there was no error. Further, assuming error, there was no prejudice.
MICRA stands for the Medical Injury Compensation Reform Act of 1975.
"Under the traditional collateral source rule, a jury, in calculating a plaintiff's damages in a tort action, does not take into consideration benefits -- such as medical insurance or disability payments -- which the plaintiff has received from sources other than the defendant -- i.e., 'collateral sources' to cover losses resulting from the injury." (Fein v. Permanente Medical Group (1985) 38 Cal.3d 137, 164 (Fein).)Section 3333.1 modifies this rule in professional negligence actions against a health care provider, such as the instant case. (Ibid.) As relevant here, section 3333.1, subdivision (a) provides that in such cases the defendant "may introduce evidence of any amount payable as a benefit to the plaintiff as a result of the personal injury pursuant to [such things as health insurance or state or federal disability payments]. . . . Where the defendant elects to introduce such evidence, the plaintiff may introduce evidence of any amount which the plaintiff has paid or contributed to secure his right to any insurance benefits concerning which the defendant has introduced evidence." "Although section 3333.1, subdivision (a) . . . does not specify how the jury should use such evidence [of collateral source benefits payable to the plaintiff and the amounts paid by the plaintiff to secure those benefits], the Legislature apparently assumed that in most cases the jury would set plaintiff's damages at a lower level because of its awareness of plaintiff's 'net' collateral source benefits." (Fein, supra, 38 Cal.3d at pp. 164-165.)
Section 3333.1 provides: "(a) In the event the defendant so elects, in an action for personal injury against a health care provider based upon professional negligence, he may introduce evidence of any amount payable as a benefit to the plaintiff as a result of the personal injury pursuant to the United States Social Security Act, any state or federal income disability or worker's compensation act, any health, sickness or income-disability insurance, accident insurance that provides health benefits or income-disability coverage, and any contract or agreement of any group, organization, partnership, or corporation to provide, pay for, or reimburse the cost of medical, hospital, dental, or other health care services. Where the defendant elects to introduce such evidence, the plaintiff may introduce evidence of any amount which the plaintiff has paid or contributed to secure his right to any insurance benefits concerning which the defendant has introduced evidence.
"(b) No source of collateral benefits introduced pursuant to subdivision (a) shall recover any amount against the plaintiff nor shall it be subrogated to the rights of the plaintiff against a defendant.
"(c) For the purposes of this section:
"(1) 'Health care provider' means any person licensed or certified pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, or licensed pursuant to the Osteopathic Initiative Act, or the Chiropractic Initiative Act, or licensed pursuant to Chapter 2.5 (commencing with Section 1440) of Division 2 of the Health and Safety Code; and any clinic, health dispensary, or health facility, licensed pursuant to Division 2 (commencing with Section 1200) of the Health and Safety Code. 'Health care provider includes the legal representatives of a health care provider;
"(2) ' Professional negligence' means a negligent act or omission to act by a health care provider in the rendering of professional services, which act or omission is the proximate cause of a personal injury or wrongful death, provided that such services are within the scope of services for which the provider is licensed and which are not within any restriction imposed by the licensing agency or licensed hospital."
The Hospital asserts that in authorizing the defendant to "introduce evidence of any amount payable as a benefit to the plaintiff as a result of the personal injury" (italics added), section 3333.1 permits evidence not simply of insurance benefits already paid, but also of benefits likely to be received in the future. The Hospital's reasoning has three primary strands: (1) the assertion that the word "payable" encompasses both past and future payments, (2) the legislative intent of MICRA in general and section 3333.1 in particular to reduce liability for healthcare malpractice claims, and (3) the decision in Fein, supra, which contains language suggesting that section 3333.1 permits consideration of collateral source benefits that the plaintiff is likely to receive.
The Hospital also cites two other decisions of note, Graham v. Workers' Comp. Appeals Bd. (1989) 210 Cal.App.3d 499, 505-506 (which the Hospital contends "implicitly" supports its argument) and Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 (which the Hospital contends supports its contention by analogy). Because, as we explain, we accept for purposes of discussion the Hospital's interpretation of section 3333.1, we need not mention these cases further. By declining to discuss them, however, we do not imply that we accept the Hospital's interpretation of them.
In Fein, as here relevant, the trial court used an anomalous procedure in implementing section 3333.1. It did not permit evidence of collateral source benefits to be introduced into evidence. Rather, because the amount of such benefits was not in dispute, the court ruled that it would simply reduce the verdict by the amount of the benefits. Neither party objected. (Fein, supra, 38 Cal.3d at pp. 146, fn. 2, 165, fn. 21.) Thereafter, the jury awarded, inter alia, $63,000 in future medical expenses, and the trial court ordered the defendant to pay the first $63,000 of those expenses "not covered by medical insurance provided by plaintiff's employer, as such expenses were incurred." (Id. at p. 146.)
Although this procedure was not raised as an issue on appeal, the Supreme Court observed in a footnote that the plaintiff did "raise a minor contention . . . which is somewhat related to this matter." (Fein, supra, 38 Cal.3d at p. 165, fn. 21.) The court explained: "In awarding damages applicable to plaintiff's future medical expenses, the trial court indicated that defendant was to pay the first $63,000 of such expenses that were not covered by employer-provided medical insurance. Plaintiff, pointing out that he may not be covered by medical insurance in the future, apparently objects to any reduction of future damages on the basis of potential future collateral source benefits. Under the terms of the trial court's judgment, however, defendant's liability for such damages will be postponed only if plaintiff does in fact receive such collateral benefits; thus, it is difficult to see how plaintiff has any cause to complain about this aspect of the award. Indeed, if anything, the trial court may have given plaintiff more than he was entitled to, since it did not reduce the jury's $63,000 award by the collateral source benefits plaintiff was likely to receive, but instead imposed a continuing liability on defendant to pay up to a total of $63,000 for any noncovered medical expenses that plaintiff may incur in the future as a result of the injury. Defendant has not objected to this portion of the judgment." (Ibid., italics added.)
Relying on the italicized language above, the Hospital contends section 3333.1 permits evidence of future collateral source benefits that the plaintiff is "likely to receive" (Fein, supra, 38 Cal.3d at p. 165, fn. 21), or more accurately (by the analogy the Hospital draws to the standard of recovery for future medical expenses and lost earnings), benefits that the plaintiff is reasonably certain to receive.
The Hospital asserts: "As Fein acknowledges, in introducing evidence of future collateral source benefits, a defendant is not required to prove to an absolute certainty the benefits that the plaintiff will receive, but merely to show the amount the plaintiff is 'likely to receive.' [Citation.] This is no different than the plaintiff's burden in proving future medical expenses or lost earnings." Damages for future medical expenses and lost earnings are recoverable only if the evidence shows they are reasonably certain to occur. (Bellman v. San Francisco H.S. Dist. (1938) 11 Cal.2d 576, 588 [evidence must show "'"such a degree of probability of [future damages] occurring as amounts to a reasonable certainty that they will result from the original injury"'"]; Behr v. Redmond (2011) 193 Cal.App.4th 517, 533 [same]; see also CACI No. 3903A [future medical expenses]; CACI No. 3903C [future lost earnings].)
There are good arguments rebutting the Hospital's interpretation of section 3333.1. For instance, the italicized language in Fein appears to be dicta, and in any event is noncommittal in referring to the use of future collateral source benefits to offset future damages - it says that the trial court "may have given plaintiff more than he was entitled to" by failing to reduce the award by benefits he was likely to receive. It does not say that the court did give plaintiff more than he was entitled to. Moreover, construing the language of section 3333.1 to include future insurance coverage is arguably inconsistent with that portion of section 3333.1 which gives the plaintiff the right to introduce "evidence of any amount which the plaintiff has paid or contributed to secure his right to any insurance benefits concerning which the defendant has introduced evidence." (§ 3333.1, subd. (a), italics added.) Obviously, a plaintiff cannot have paid for or contributed to insurance coverage that has not been obtained.
Although we acknowledge these arguments concerning the proper interpretation of section 3333.1 (there are others we do not mention), we conclude that we need not address them, because the record on appeal alone defeats the Hospital's contention of error. Therefore, we assume (without deciding) that the Hospital's interpretation of section 3333.1 is correct: the statute permits a defendant to introduce evidence of future insurance benefits that the plaintiff is reasonably certain to receive.
In the Hospital's view, the status of the record is a simple matter: "The trial court preemptively precluded defendants from attempting to introduce evidence that much of plaintiff's future medical expenses would . . . be paid by (or reduced due to) medical insurance. . . . After initially denying plaintiff's motion in limine . . . , the trial court reversed itself and categorically excluded such evidence during trial." Thus, according to the Hospital, the trial court granted a "mid-trial motion in limine [that] barred the Hospital from introducing [evidence] that insurance is paying for and will continue to pay for much of plaintiff's future medical care," based on an interpretation of section 3333.1 that it allows "only the introduction of past expenses paid by medical insurance and not of the likelihood or availability of medical insurance to pay future expenses."
As we explain in detail below, this simplistic view of the record is inaccurate. A full explanation demonstrates that the record is insufficient to address the propriety of the court's ruling, and that, in any event, there was no error. Further, if there was error, it was not prejudicial.
B. Trial Court Proceedings
1. Aidan's Pretrial Motion in Limine
In its trial brief, filed before trial, the Hospital argued that section 3333.1 permits the introduction of collateral source benefits at trial. It did not mention evidence of potential future collateral source benefits.
Aidan filed a pretrial motion in limine to exclude evidence of collateral source payments. The motion, too, did not mention future benefits. Rather, it assumed that the evidence which the defendants would seek to introduce was evidence of health insurance benefits paid or payable for costs incurred to the time of trial. The motion declared that Aidan's medical bills to date exceeded $400,000, and that a portion had been paid by insurance. The motion argued that evidence of those payments should be excluded under Evidence Code section 352 because it would confuse the jury, and that, rather than permitting evidence of those payments, the court should simply reduce the damage award by the amount of the payments, as was done by the trial court in Fein, supra, 38 Cal.3d at pages 146, footnote 2, 165, footnote 21.
The Hospital filed an opposition, arguing that section 3333.1 expressly authorized evidence of collateral source benefits, that the procedure suggested by Aidan was not approved in Fein, and that the court had no discretion to exclude evidence of collateral source benefits. Again, the Hospital did not mention future collateral source benefits. In his reply to the Hospital's opposition, Aidan simply reiterated his argument that evidence of payments made to date by his health insurer should be excluded under Evidence Code section 352.
Dr. Nishibayashi also filed an opposition to Aidan's motion in limine. He argued, in part, that section 3333.1 permits evidence of both past and future collateral source benefits. He asserted that he should be permitted to introduce "evidence of the resources available to plaintiff from: (1) private health insurance, (2) Regional Center Services, (3) the public school district and (4) California Children's Services." He made no offer of proof as to what "resources" of private insurance he intended to introduce. Rather, his argument focused on services available from the Regional Centers and public schools, although even as to these sources he made no specific offer as to what he intended to introduce.
Aidan's reply to Dr. Nishibayashi's opposition argued that the contention that evidence of future collateral source payments is admissible was "legally unsubstantiated." He also asserted that the evidence of any such benefits should be excluded under Evidence Code section 352.
2. The Trial Court's Pretrial Ruling
At a pretrial hearing before jury selection began, the trial court ruled on, among other matters, the motions in limine. With respect to Aidan's motion to exclude evidence of payments made by his health insurance for medical costs to date, the discussion was brief. The court described the motion as seeking "to exclude evidence of collateral source payments," and stated that its tentative ruling was "to follow Civil Code section [3333.1] in that [the] Legislature gave the option [to] the defendants to decide whether to use that information . . . and that's what I'm inclined to do." Aidan's counsel argued that evidence of "health insurance payments and benefits" would confuse the jury, and suggested that the court use such evidence to offset the verdict after trial. The court declined, stating, in substance, that section 3333.1 required the introduction of such evidence. The court then denied the motion. At no time did the Hospital suggest that it was seeking to introduce evidence of future health insurance benefits.
Next, referring to Dr. Nishibayashi's opposition, the court noted that "there were . . . interesting questions raised in an opposition to this motion that were not raised in the motion itself, which we haven't talked about. And that is evidence concerning . . . collateral sources other than the private health insurance[,] [s]pecifically the regional center or the public . . . schools, etc." The court stated that it would not extend section 3333.1 "beyond its own terms" and that it would enforce the "express terms" of the statute. It therefore denied the request to introduce evidence of such benefits. There was no additional argument, and no ruling on the particular issue of the admissibility of future insurance coverage.
3. Testimony of Aidan's Life Care Planner
At trial, Aidan called Jan Roughan as his expert in life care planning. She presented three alternative detailed plans for Aidan's care and treatment, one assuming that all contingencies cited by Aidan's physicians requiring enhanced care would occur, the second assuming that only some would occur, and the third assuming that none would occur. The recommended plans covered medications, medication delivery devices, gastronomy tube feeding , architectural changes to the home environment, a certified home health aide and a registered nurse, placement in a supportive living facility at age 21, specialized physicians, specialized healthcare needs, diagnostic tests, therapy (communication, speech, occupational, and physical), therapeutic equipment (such as orthotics and communication devices), replacement costs of necessary equipment, psychosocial services, transportation (such as a wheelchair and modified van), and personal needs (such as a conservator depending on Aidan's intelligence level and communication skills in adulthood). She estimated the costs of all these individual items using retail cost comparisons in "today's healthcare dollars," which were submitted to Aidan's forensic economist, Robert Johnson, for calculation of present value.
In his cross-examination of Roughan, Dr. Nishibayashi's attorney asked several questions without objection concerning whether various items of recommended care and treatment would be covered in the future by health insurance or other services, such as public school and the regional center. In response to questioning about future insurance coverage, Roughan testified that Aidan's family had insurance through Blue Cross, but she had not contacted Blue Cross to see how much of the case plan would be covered in the future. She explained that, in creating a life care plan and calculating costs of recommended items, she only determines what would be covered under "the current schedule of benefits. The schedule of benefits changes every single year. And what we see is a trend of less and less . . . coverage."
Aidan's father had earlier testified that he had health insurance through Blue Cross.
Similarly, she testified that one cannot know what items of the plan might be paid at the health insurer's lower contract rate with a provider rather than the greater retail rate on which she based her cost estimates, because it "would depend upon contractual agreement [between the insurer and the provider], the schedule of benefits, and whether or not somebody within the plan approved it." In his cross-examination, the Hospital's attorney asked no questions concerning future insurance coverage.
4. Aidan's Objection to Evidence of Future Insurance Coverage
At the beginning of the morning session the next day, Aidan's counsel referred to the cross-examination of Roughan by Dr. Nishibayashi's attorney concerning future coverage by health insurance. Although he had not objected during the questioning, he now argued that it violated section 3333.1 and the court's earlier ruling on the motion in limine. He also argued that evidence as to whether insurance might pay future costs of the health care plan was entirely speculative: "It would be impossible for a jury to . . . make an offset for future payments. . . . You don't know what the insurance company is going to allow. . . . The insurance company could go out of business. The father could not have his job anymore and . . . lose the policy. . . . [T]he insurance company ... retains the right to cancel the policy at any time. . . . [T]he benefits payable under the polic[y] change[] every year. Who knows what is going to be allowed. . . . We're submitting it would be pure speculation and any reference to future coverage by health insurance not be allowed and, in fact, that the jury be instructed to disregard that and not to consider future insurance [benefits]."
Dr. Nishibayashi's counsel argued that his examination of Roughan as to her expectation whether insurance or other services might cover some of the costs of the health care plan was proper. The Hospital's attorney suggested that the concern whether such evidence was speculative was for argument to the jury, and was not a reason to exclude the evidence. The court suggested that the language of section 3333.1 "any amount payable as a benefit" - "is more conducive to something currently payable than something that might be paid in the future." The court was also concerned about the speculative nature of the evidence, referring to Roughan's testimony that she could not determine what might be covered by insurance in the future because of such things as the changing coverage and schedule of benefits. The court stated that it would do some research into the issue.
Neither Dr. Nishibayashi's attorney nor the Hospital's attorney made any showing of additional evidence of future insurance benefits they might seek to introduce.
5. Ruling on Future Insurance Coverage
After the morning recess, before Aidan called his forensic economist, Robert Johnson, to testify, the court returned to the issue of future insurance benefits. The court stated it agreed with Aidan's attorney's interpretation of section 3333.1: "I don't think the statute contemplates future insurance. . . . [I]t talks about amounts payable in reimbursement for . . . amounts that have been received as full payment for bills already issued and paid." The court could find no case law on the issue, but reasoned that section 3333.1 "is a special exception [to the collateral source rule] and so it's limited to its terms."
Dr. Nishibayashi's attorney asked for the opportunity to do additional research overnight, which the court granted, with the understanding that he would not mention the subject in his cross-examination of Aidan's forensic economist. Dr. Nishibayashi's attorney agreed. Neither he nor the Hospital's attorney suggested that their cross-examination of Johnson would be hampered, and made no offer of proof as to what evidence, if any, concerning future insurance coverage they wished to elicit from him.
6. Robert Johnson's Testimony
As here relevant, Johnson's testimony concerned the present value of Jan Roughan's life care plan. Based on the opinions of Aidan's physicians, Johnson used a life expectancy of 63 years. Depending on which of Roughan's three alternative plans the jury concluded was appropriate, Johnson estimated a present value of $19,360,830 for the most comprehensive plan, $18,784,000 for the intermediate plan, and $18,004,772 for the least encompassing plan.
7. Stipulation to Past Medical Costs
The parties stipulated that Aidan's past medical costs charged was $405,312, that insurance and government programs had paid $171,949.72, that contractual deductions were $154,986.73, and that Aidan paid and/or incurred costs of $78,375.55.
8. Stacey Helvin's Testimony
In the defense case, the Hospital and Dr. Nishibayashi jointly called Stacey Helvin to testify concerning her life care plan for Aidan. Her plan covered essentially the same categories of treatment and care as Jan Roughan's including medication, therapy, specialized physicians, medical equipment and orthotics, modifications to Aidan's home, supportive living, and transportation by wheelchair and modified van - though with some different recommendations in types of care, frequency of care, and equipment. The major difference was that after Aidan reached age 22, Helvin assumed that Aidan would live in a group home setting at the regional center at no cost to Aidan's parents, rather than the private home setting with attendant care contemplated by Roughan.
Helvin also estimated the cost of her plan, but nothing in the record suggests that she was prepared to give testimony on future insurance coverage for those costs, or that she was not permitted to give such testimony based on the court's ruling.
9. Ted Vavoulis' Testimony
The Hospital called forensic economist Ted Vavoulis to testify concerning, inter alia, the present value of Helvin's life care plan and the present value of Roughan's plan. Outside the jury's presence, before Vavoulis testified, the Hospital's attorney stated that because of the court's ruling excluding evidence of future insurance coverage, he "needed to have Mr. Vavoulis change his first page of his report because it does talk about insurance coverage figures as it deals with group home and live-in setting." At the request of the Hospital, Vavoulis had already made the changes, and a modified exhibit was provided to all parties and used as a demonstrative exhibit. It was not admitted into evidence and is not part of the record on appeal. Thus, the record does not disclose the changes made by Vavoulis.
In his testimony, Vavoulis used two life expectancy figures for Aidan: age 40 and age 61. Using age 40, he estimated the present value of Helvin's life care plan to be between $1,531,050 and $2,627,132, depending on whether Aidan resided in a group home after age 22 (the lower figure, which was cost free to Aidan) or resided at home with attendant care (the greater figure). Using age 61, he calculated the present value to be between $1,756,509 and $2,627,132. He estimated the present value of Roughan's most comprehensive plan to be $9,950,000.
Vavoulis referred to the older life expectancy as extending to the year 2064. Aidan was born in 2003, which would make him 61 in 2064.
10. Jury Instructions
Regarding insurance, the court instructed the jury pursuant to CACI No. 5001: "You must not consider whether any of the parties in this case has insurance. The presence or absence of insurance is totally irrelevant. You must decide this case based only on the law and the evidence." Earlier, during the discussion of jury instructions after the close of evidence, the court, in a colloquy with Dr. Nishibayashi's attorney, explained that it had excluded evidence of future insurance because "it's too speculative," and because the court's reading of section 3333.1 suggested that such evidence was not admissible, especially because of its speculative nature. The court rejected a more specific instruction on insurance proposed by Aidan attorney that would have precluded the jury from considering "the possibility of medical insurance coverage" in determining any award for future medical care. The Hospital's attorney did not participate in the discussion concerning how the court should instruct on the subject of insurance.
We note that the Hospital, in arguing on appeal that the trial court exacerbated the supposed prejudice from its ruling by its instruction pursuant to CACI No. 5001, asserts that "[t]wice during deliberations the trial court readmonished the jury not to consider insurance as 'the presence or absence of insurance is totally irrelevant.'" This shorthand statement mischaracterizes the record, giving the impression that twice during deliberations the court formally and orally reinstructed the jury. That is not what occurred.
In the first instance cited by the Hospital, during deliberations, the court received a lengthy note from the jury referring to comments made by a particular juror, including a comment that "the insurance has covered Aidan's care," a reference to past insurance coverage. In responding to the note, the court sent a written response to the jury room that instructed the jurors to reread certain appropriate instructions, including (as relevant to the comment regarding past insurance) CACI No. 5001. When the court informed counsel of its court's decision to tell the jury to reread CACI No. 5001, the Hospital's attorney stated: "I don't have any problem with that."
In the second instance, the court received a note from the jury that the jury was deadlocked. The court summoned the jurors, and conducted an appropriate inquiry in which it asked each individual juror whether there was anything the court could do to aid in reaching a verdict. In response to the concerns of Juror No. 6, the court gave a lengthy and correct general summary of the categories of the jury instructions. As part of that summary, the court stated: "If you move on to damages, you then consider all the instructions . . . about damages, what goes into a determination of how much to recompense somebody for damages. And damages is to recompense the individual for the harm he or she has suffered. You do not consider insurance. You do not consider the wealth of the parties. You consider what harm has been done and what is appropriate to remedy that in terms of damages." (Italics added.) It is the brief italicized mention of insurance that the Hospital cites as the second time the court "readmonished the jury." There was no objection to the court's comments to Juror No. 6.
11. The Future Medical Costs Damage Award
The jury awarded future medical costs of $82,782,000, at a present value of $14 million.
C. Discussion
From this record, several things fatal to the Hospital's contention are apparent. First, contrary to the Hospital's recitation of the record (and implications therefrom), the trial court did not somehow mislead the Hospital by ruling on the first motion in limine that evidence of future insurance benefits was admissible, and then, after Jan Roughan's testimony, preemptively preclude such evidence to the Hospital's prejudice. It appears that evidence of future insurance benefits was largely an afterthought.
Though it was mentioned briefly with no specifics in Dr. Nishibayashi's opposition to Aidan's initial motion in limine, no one mentioned the subject of future insurance benefits at the hearing on the motion. The motion itself specifically identified only evidence of past insurance benefits, and in denying the motion the trial court did not mention future insurance benefits.
From that point until the trial court ruled on Aidan's later motion in limine after Jan Roughan's testimony, the Hospital never suggested that it intended to introduce evidence that Aidan was reasonably certain to receive future insurance benefits. Indeed, the Hospital appeared indifferent to the point. During his cross-examination of Roughan, the Hospital's attorney did not seek to elicit any evidence of future insurance coverage, even though Dr. Nishibayashi's attorney did. After the court's ruling excluding evidence of future insurance benefits, the Hospital's attorney did not complain that his cross-examination of Aidan's forensic economist, Robert Johnson, would be hampered, or that the Hospital's defense case would be damaged.
Indeed, other than the Hospital's attorney's brief reference late in the trial to having the defense forensic economist, Ted Vavoulis, "change his first page of his report because it does talk about insurance coverage figures as it deals with group home and live-in setting," the Hospital never mentioned evidence of future insurance coverage. Neither Vavoulis' initial or modified report is part of the record on appeal, and thus the record is silent as to what the precise changes were. The record is also silent as to what qualifications, if any, Vavoulis possessed so as to be qualified to opine on future insurance coverage, and it is likewise silent as to the factual foundation on which he might base any such opinion.
In short, the Hospital asks us to decide the propriety of the trial court's ruling in an evidentiary vacuum. Generally, the failure to make an adequate offer of proof in the trial court precludes appellate review of a trial court's exclusion of evidence. (Gordon v. Nissan Motor Co., Ltd (2009) 170 Cal.App.4th 1103, 1113; Evid. Code, § 353.) We conclude that rule applies here.
There is an exception when a court excludes an entire class of evidence (Beneficial etc. Ins. Co. v. Kurt Hitke & Co. (1956) 46 Cal.2d 517, 522), under the rationale that in such a situation an offer of proof "would be an idle gesture." (Caminetti v. Manierre (1943) 23 Cal.2d 94, 100.) But this exception does not apply here, because the Hospital never purported to have any evidence about the excluded class - that is, nothing in the record suggests that the Hospital possessed evidence that future insurance coverage for Aidan was reasonably certain. Further, the rationale for the exception does not apply, because an offer of proof would not have been futile. The trial court concluded that evidence of future insurance coverage was too speculative (Jan Roughan had, in substance, so testified), and that conclusion informed the court's interpretation of section 3333.1. In that context, an offer of proof demonstrating the substance of the intended evidence and the supposed non-speculative nature of that evidence certainly might have influenced the court's decision. The deficiency in failing to make an offer of proof is exacerbated by the absence of any template from prior case law as to the form that evidence of reasonably certain future insurance coverage might take. Neither the record nor the Hospital's briefing describes it. It is impossible to meaningfully evaluate the Hospital's contention that the trial court erred, when we have no idea what that evidence might be in form or substance. Similarly, it is also impossible to evaluate the Hospital's claim of prejudice from the purported error. Thus, we conclude that the record is insufficient to adequately address the propriety of the court's ruling and whether any error was prejudicial. The court's ruling, therefore, must be affirmed. (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 187 [inadequacy of record on appeal requires issue to be resolved against appellant].)
Second, assuming that the record is sufficient to address the issue, the only evidence in this record relevant to the propriety of the trial court's ruling - the testimony of Jan Roughan -- is that predicting Aidan's future insurance coverage, if any, was entirely speculative. Roughan testified that although Aidan was then covered by Blue Cross insurance, in creating a life care plan and calculating costs of recommended items, she only determines what would be covered under "the current schedule of benefits. The schedule of benefits changes every single year. And what we see is a trend of less and less . . . coverage." Similarly, she testified that one cannot know what items of the life care plan might be paid at the health insurer's lower contract rate with a provider rather than the greater retail rate on which she based her cost estimates, because it "would depend upon contractual agreement [between the insurer and the provider], the schedule of benefits, and whether or not somebody within the plan approved it." Thus, the only evidence before the trial court, and before us on appeal, is that in the present case predictions of future insurance coverage would be entirely speculative.
In its opening brief, the Hospital concedes that the court ruled that predictions of future insurance coverage were speculative ("[t]he trial court reasoned that determining the likelihood that insurance or other benefits will be available in the future was speculative.") In its reply brief, however, the Hospital asserts that the trial court did not exclude evidence of future insurance benefits on the basis that it is speculative. The Hospital was correct in its opening brief. The trial court explained when it discussed instructing the jury on the subject of insurance: "I have ruled we won't consider future insurance. It's too speculative. . . . [M]y interpretation of [the language of section 3333.1] suggests . . . that you can't go for future medical expenses, particularly since . . . you can't assume they'll be medical insurance for the future since it's speculative." In sum, assuming the record is adequate, the trial court's ruling is unassailable, because the only showing made to the trial court (in the form of Roughan's testimony) was that in this case one cannot not predict with reasonable certainty the nature or the extent of future insurance coverage for Aidan.
Without mentioning Roughan's testimony, the Hospital contends in the abstract that evidence of future insurance benefits is no more speculative than evidence of future medical costs. On this record, based on Roughan's testimony, that is not accurate. Moreover, the evidence of future medical costs presented by the parties was based on the opinions of qualified life care planners who explained how they came by their recommendations for care and treatment (consultation with, among others, qualified physicians with knowledge of Aidan's condition) and explained how they calculated those costs (referring to cost tables and other sources to obtain present retail costs). Qualified forensic economists, using accepted methodology, then reduced the costs of the plans to present value. The Hospital fails to explain how similarly qualified testimony could be presented to show that it is reasonably certain that Aidan or any other plaintiff with such extensive future medical needs is reasonably likely to have insurance coverage for those needs over part or all of his or her life span. Thus, the notion that predictions of future insurance coverage are no more speculative than predictions of future medical costs is entirely unsupported.
Third, the purported evidence of future coverage that the Hospital appears to assume is admissible does not meet the standard for admissibility the Hospital advocates. The jury's assessment of future medical costs was based on the costs attributed to each item in the detailed life care plans presented by Roughan and Helvin, discounted to present value. The plans covered every category of care and treatment Aidan might require throughout his life. On appeal, the Hospital appears to assume that the most general evidence of potential future insurance would be admissible as a possible offset against the future medical costs specified in the life care plans. Thus, the Hospital argues that "[t]here was ample reason to believe that plaintiff's [present] insurance coverage [would] continue." The Hospital refers to a comment by the trial court that it had "no reason to believe" that insurance was not continuing to cover Aidan's medical costs during the trial. Also, without explaining their terms or their applicability here, the Hospital refers to the availability of "[i]nsurance continuation rights [that] exist under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and the Health Insurance Portability and Access Act [citations] and Cal-COBRA," as well as to "California . . . statutory programs for the purchase of medical insurance by persons who otherwise are unable to obtain it. [Citations.]" The Hospital also refers to the United States Supreme Court's decision in National Federation of Independent Business v. Sebelius (2012) ____U.S. ____, 132 S.Ct. 2566, which upheld the constitutionality of the federal Affordable Care Act (with one limited exception), and asserts that the "[t]he availability of such federally mandated available insurance options makes the prospect of future health insurance coverage for plaintiff anything but speculative."
But the mere possibility that private insurance coverage will continue, and the availability of government programs for the purchase of insurance, do not, in themselves, constitute relevant, admissible evidence of the future insurance benefits that a plaintiff is reasonably certain to receive. To show the amount of future insurance coverage that is reasonably certain, the evidence would have to: (1) link particular coverage and coverage amounts to particular items of care and treatment in the life care plan, (2) present a reasonable basis on which to believe that this particular plaintiff is reasonably certain to have that coverage, and (3) provide a basis on which to calculate with reasonable certainty the time period such coverage will exist. The Hospital made no such foundational showing in the trial court, and on appeal appears to assume that even the most nonspecific evidence of future insurance, such as its availability through governmental programs, is admissible. Such evidence, standing alone, is irrelevant to prove reasonably certain insurance coverage as a potential offset against future damages, because it has no tendency in reason to prove that specific items of future care and treatment will be covered, the amount of that coverage, or the duration of that coverage. (Evid. Code, § 210 [defining relevant evidence as "having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action"].)
Fourth, on the issue of prejudice (assuming for the sake of argument that the trial court erred), the Hospital argues that "the collateral source effect [of the purported excluded evidence of future insurance coverage] is likely significant." It notes, based on the parties' stipulation to past medical expenses, that only $78,375.55 of Aidan's $405,312 in medical expenses (approximately 19 percent) incurred to the date of trial was paid or billed to Aidan's parents. The rest was either paid by insurance or written off by the providers based on discounts negotiated with the insurer. However, there is no evidentiary basis in this record to conclude that this coverage would continue into the future, or for how long it might continue. Rather, the evidence in the record is that such a prediction is entirely speculative. Thus, the evidence of past coverage provides no basis on which to assert that the Hospital was prejudiced.
Similarly, to the extent that the Hospital relies on the apparent modification to the first page of Vavoulis' report, which was described as deleting references to "insurance coverage figures as it deals with group home and live-in setting," that modification does not establish prejudice. As we have already noted, the record does not reveal what the specific changes were. Moreover, the record does not reveal that Vavoulis' opinion as to future insurance coverage was even admissible under the standard the Hospital advocates, as there was no showing as to his qualifications to express an opinion on future insurance coverage, and no showing as to the foundation on which he might opine that Aidan was reasonably certain to receive future coverage for group home or live-in settings. We note further that both Stacey Helvin and Ted Vavoulis testified that after age 22, Aidan could reside in a group home at no cost to him or his family.
The Hospital's burden is to establish that, in the absence of the trial court's asserted error, there is a reasonable probability of a different result. (Citizens for Open Government v. City of Lodi (2012) 205 Cal.App.4th 296, 308.) The Hospital has failed to show that had the trial court not excluded purportedly admissible evidence of future insurance benefits, there is a reasonable probability of a different verdict as to Aidan's future medical costs.
For each of these independent reasons, the Hospital's contention that the trial court committed prejudicial error in excluding evidence of future insurance benefits fails.
II. Interest Under Civil Code Section 3291
Because Aidan received a judgment more favorable than his offer of compromise under Code of Civil Procedure section 998 (hereafter section 998), which the Hospital rejected, he is entitled to interest on the judgment from the date of the offer to the date of satisfaction of judgment pursuant to Civil Code section 3291 (hereafter section 3291). In the judgment, the trial court calculated that portion of section 3291 interest from the date of the section 998 offer to the date judgment was entered, using the entire present value of the jury's verdict, including the present value for future medical expenses, even though the periodic payments for those damages were not presently due.
That statute provides in relevant part: "If the plaintiff makes an offer pursuant to Section 998 of the Code of Civil Procedure which the defendant does not accept prior to trial or within 30 days, whichever occurs first, and the plaintiff obtains a more favorable judgment, the judgment shall bear interest at the legal rate of 10 percent per annum calculated from the date of the plaintiff's first offer pursuant to Section 998 of the Code of Civil Procedure which is exceeded by the judgment, and interest shall accrue until the satisfaction of judgment."
The Hospital contends that the trial court erred in incorporating section 3291 interest into the judgment, and in awarding interest on that part of the judgment representing the present value of future medical expenses. We disagree.
Under current law, when a future damage award is periodized, interest is awarded in the judgment for the period from the date of the section 998 offer to the date of judgment, calculated based on the present value of the future damages. Any additional interest accrues only as to later periodic payments that are not paid when due. (Deocampo v. Ahn (2002) 101 Cal.App.4th 758, 775-776 [trial court's calculation of section 3291 interest on the present value of future damages "was the proper way to calculate the prejudgment interest on a judgment involving the periodized payment of damages for future losses"; post judgment interest accrues "on each individual periodic payment as that payment becomes due" (italics deleted)]; Hrimnak v. Watkins (1995) 38 Cal.App.4th 964, 980 [rejecting contention of amici curiae that section 3291 interest "cannot be awarded on the periodic portion of the judgment" based on present value].)
The Hospital contends that Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 530-533, requires a different result. However, Hess held that interest from the date of the section 998 offer to the date of the judgment should not be added to the judgment amount so as to permit post judgment interest to accrue on prejudgment interest under section 3291. That is, under Hess, section 3291 does not permit the compounding of interest - post judgment interest calculated on that portion of the judgment representing prejudgment interest. The judgment in the instant case does not provide for such compounding of interest. Hess did not involve a periodized judgment, and did not discuss the issue whether the value of such a judgment for calculating interest under section 3291 from the date of the section 998 offer to the date of judgment interest includes the present value of the periodized future damages.
The Hospital also contends that the discussion of section 3291 interest in Deocampo and Hrimnak, both supra, is dicta, and that in any event it is wrong. Dicta or not, we agree with the reasoning of these decisions. As stated in Hrimnak, supra, 38 Cal.App.4th at pages 980-981: "Section 998 and Civil Code section 3291 are designed to encourage settlements and penalize those who refuse reasonable settlement offers. [Citations.] Amici curiae's argument [that section 3291 interest cannot be awarded on the present value of future periodic payments], besides mixing legal apples and oranges, would also undermine this purpose."
III. Ruling that the Hospital Must Provide Security
Code of Civil Procedure section 667.7, subdivision (a), provides in relevant part: "As a condition to authorizing periodic payments of future damages, the court shall require the judgment debtor who is not adequately insured to post security adequate to assure full payment of such damages awarded by the judgment. Upon termination of periodic payments of future damages, the court shall order the return of this security, or so much as remains, to the judgment debtor."
In the instant case, the Hospital is jointly and severally liable for 95 percent of all Aiden's economic damages, consisting of $82,782,000 (with a present value of $14 million) for future medical costs, and $13.3 million (with a present value of $1,154,000) for loss of future earnings. Given the size of the future damages award, the trial court required the Hospital to post security by purchasing an annuity sufficient to fund the periodic payment portion of the judgment, which the Hospital did. As ultimately incorporated into the judgment (which required an immediate payment of a portion of future damages, thus reducing the future damages which were periodized), the stream of periodic future payments to be paid to Aidan over his life expectancy of 57 additional years exceeds $69 million. The Hospital's combined insurance policy limits covering Aiden's injuries is only $20 million (a primary policy of $5 million per incident with California Healthcare Insurance Company, and an excess policy of $15 million by Zurich/Steadfast Insurance Company).
Alternatively, the court required the posting of a bond to cover the periodic payments. According to the Hospital, no such bond is available.
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The trial court reasoned that insurance policy limits of $20 million were not adequate to assure full payment of the much greater sum of payments due Aiden over his lifetime, and that, even though the insurers were currently solvent and promised to pay the periodic judgment, Aiden should not be required to bear the full risk that in future decades the insurers might become insolvent. We find no abuse of discretion in that reasoning
The Hospital contends that in determining whether it was adequately insured, the court was required to use as the benchmark the present value amount that its insurers carriers would have to pay to fund the future periodic payments. We disagree. The Hospital has elected to pay the judgment periodically over time rather than at its present value immediately. In fashioning a periodic payment schedule, the gross amount of future damages is used, not present value of the future damages. (Deocampo v. Ahn, supra, 101 Cal.App.4th at p. 771; see Holt v. Regents of University of California (1999) 73 Cal.App.4th 871, 880.) That is how the trial court fashioned the periodic payment schedule here. Given that the periodic payment schedule sets the stream of future damages to be paid over time at gross value, the trial court was not unreasonable in considering the gross amount of that stream in determining whether the Hospital's insurance was "adequate," or whether the Hospital should be required "to post security adequate to assure full payment of such damages awarded by the judgment." (§ 667.7, subd. (a).)
IV. Security in the Form of an Annuity Payable to the Hospital
In his cross-appeal, Aiden contends that the trial court erred in the type of security it permitted the Hospital to provide under section 667.7, subdivision (a): an annuity from an approved provider, payable to the Hospital, sufficient to fund the periodic payments in each year they are required. Aidan contends that only a bond or similar type of security, payable to him, can suffice as "security adequate to assure full payment of" the periodic portion of the judgment. (§ 667.7, subd. (a).) We find no abuse of discretion. The annuity provides a stream of income to the Hospital sufficient to fund the periodic payments. While it is true that Aidan need not accept an annuity in satisfaction of the judgment (Hrimnak, supra, 38 Cal.App.4th at p. 982), the court's ruling does not violate this rule. The court ruled simply that that an annuity payable to the Hospital is sufficient security to ensure that the Hospital will have the funds to pay the judgment should its insurers default or otherwise deprive the Hospital of the means to pay the judgment. Aidan's concern that the Hospital might become insolvent, might file for bankruptcy, might use the annuity to pay debts other than his judgment, and other similar speculations, are unsupported by any evidence. In any event, they provide no basis for disturbing the trial court's exercise of discretion in determining that an annuity, which provides a stream of income to the Hospital independent of its insurance coverage adequate to fund the periodic payments over Aidan's lifetime, is adequate security under section 667.7, subdivision (a).
DISPOSITION
The judgment is affirmed. Aidan shall recover his costs on appeal, the Hospital shall recover its costs on the cross appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.