Drug Testing in the Workplace, Can you Test?

Article authored by Megan Robertson

Congrats to our summer law clerk (and eventual Attorney-in-Waiting), Megan Robertson on having her article, “Drug Testing in the workplace, Can you test?” appear in the Fall 2020 update of the Public Cemetery Alliance Newsletter.  Also thanks to Amanda Iler for helping Megan on the article.  Porter Scott is grateful for the opportunity to work with both the Pacific Cemetery Alliance and PCA and Golden State Risk Management Authority.

PCA Fall 2020 Newsletter

New FEHA Statutes Mean More Cases Will Go To Trial

Article authored by Courtney de Groof & Jill Schubert

SB 820 & SB 1300

On September 30th, Governor Brown approved several bills related to workplace harassment, gender discrimination, and retaliation claims inspired by the #MeToo and #TimesUp movements. These bills impact California employers in pre-litigation and litigated claims.

SB 820 Prohibits Non-Disclosure Provisions in Settlement Agreements

One of the main targets of the #MeToo movement was the California Legislature because of its practice of entering into confidential settlement agreements pertaining to harassment and discrimination claims. The Legislature responded by enacting this statute, which prohibits non-disclosure provisions or “secret settlements” in sexual assault, sexual harassment, gender discrimination, and retaliation claims. A settlement agreement executed on or after January 1, 2019 that includes a prohibited non-disclosure provision will be considered against public policy and void as a matter of law.

The ban on non-disclosure provisions applies to settlements of civil and administrative claims, including claims under the Fair Employment and Housing Act (FEHA) for sexual harassment, gender discrimination, and failure to prevent or retaliation for reporting such acts. The law also applies to claims for sexual assault and sexual harassment between parties in a business, service, or professional relationship under Civil Code § 51.9. There are two exceptions to the ban: (1) the parties may agree to preclude disclosure of the amount paid in settlement, and (2) the claimant may request that his or her identity be shielded. However, these provisions do not apply if a government agency or public official is a party to the agreement. This aspect has an arguably unfair impact on individual defendants, since they cannot shield their identity even if the claims against them are unproven or frivolous.

Confidentiality in settlement agreements (apart from those subject to the Public Records Act) has been an important tool in resolving disputed claims. Employers are justifiably concerned about “copycat” claims based on a belief that there is easy money to be had. Many claims and lawsuits of the type subject to this restriction are settled well before any definitive finding of fact, for a variety of reasons not tied to liability. This statute curtails the benefit defendants may realize by early settlement, particularly individuals who are accused of the subject acts and challenge the viability of the claims. We can expect to see more sexual harassment, discrimination, and retaliation claims proceeding to trial in order to protect the reputation of the accused individuals and entities.

SB 1300 Limits the Opportunity for Dispositive Motions, Extends Employer Liability, and Severely Limits the Ability of Employers to Recover Fees and Costs

This statute consists primarily of legislative approval or rejection of several case law opinions on harassment. Of most concern to California employers is the language that states that a single incident of harassing conduct toward the plaintiff can meet the threshold showing that the harassment was likely motivated by a category protected by the FEHA (race, age, gender, sexual orientation, religion, disability, etc.). We should expect every opposition to a motion for summary judgment in harassment cases to include this quote from the new statute: “Harassment cases are rarely appropriate for disposition on summary judgment.”

The statute also extends liability for the acts of non-employees toward employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract for all types of harassment covered by the FEHA. Previously, this was limited to sexual harassment.

Prior to the passage of this bill, the language of the FEHA pertaining to an award of attorney’s fees and costs to a prevailing party appeared to apply evenly to plaintiffs and defendants. Over the years, case law interpreted that language to hold that a prevailing defendant may only recover fees if the court finds the plaintiff’s case to be frivolous. In 2015, the California Supreme Court held that a prevailing defendant may not recover its costs under Code of Civil Procedure § 1032 unless it proves the FEHA claim was frivolous and that the plaintiff continued to litigate it after it clearly became so. SB 1300 codifies these holdings. In addition, it eliminates the benefit of filing an offer under § 998 of the Code of Civil Procedure by stating that even if a § 998 offer is made, a prevailing defendant still must prove that the FEHA claim was frivolous.

The Takeaway

Harassment based on FEHA-protected categories is unlawful, and employees should not be subject to such conduct. Some claims of harassment are clearly true, and others are clearly not true. The vast majority fall into the grey area in the middle. Employers and individual defendants in grey areas or questionable claims may now be motivated to take the case to trial rather than settle and face media spin if a settlement agreement is made public. However, the cost of doing so is significant and a prevailing defendant has little chance of recovering its costs and fees, while a losing plaintiff faces no financial repercussion. A claim that survives a motion for summary judgment will almost never be found to be frivolous, even if the plaintiff does not ultimately prevail.

It remains to be seen whether these statutes will have the effect on litigation that the drafters intended.

Update for California Employers

Article authored by Courtney de Groof

New Labor Code § 432.3

Effective January 1, 2018, a new California law prohibits all employers—both private and public—from relying on a job applicant’s salary history in determining whether to offer employment and what salary to offer an applicant.

This new law is Labor Code § 432.3. Employers are now prohibited from seeking an applicant’s salary history orally, on a written application, or through an agent. This new law also requires employers to provide the pay scale to an applicant, “upon reasonable request.” The law is intended to combat pay inequalities in the workforce.

Section 432.3 applies only to an applicant’s private sector salary history.  Salary history that can be disclosed pursuant to federal or state law, including the California Public Records Act and the Freedom of Information Act is exempt from the new law.  Employers can legally inquire into an applicant’s salary history with government entities and consider that information in determining whether to make an offer of employment and what salary to offer.

Employers should consider this law as they conduct their hiring processes. Here are the highlights of this new law that all employers should be aware:

• The law applies to all private and public employers, regardless of size, effective January 1, 2018.

• Employers may not seek salary history information, which includes compensation and benefits, about an applicant.

• Employers may not rely on an applicant’s salary history information in determining whether to offer employment and the amount of salary to offer.

• “Upon a reasonable request,” an employer must provide the pay scale for the position to an applicant.

• This law does not prohibit an applicant from voluntarily disclosing salary history information.

• The law does not prohibit prospective employers from considering voluntarily disclosed salary information in determining what salary to offer. It is important to note that this exemption does NOT permit an employer to consider voluntarily disclosed information in determining whether to offer employment.

Important Update on Qualified Immunity

Article authored by Jeffrey Nordlander

US Supreme Court Grants Qualified Immunity

The doctrine of qualified immunity, when properly applied, shields law enforcement from burdensome litigation and armchair quarterbacking in federal court. In its first decision of 2017, White v. Pauly, 580 U.S. __ (2017), a unanimous United States Supreme Court granted qualified immunity to a back-up officer, arriving later on scene, who fired his weapon in response to shots fired.

In White, two officers responded to a 911 report of a “‘drunk driver'” who was “‘swerving all crazy.” Directed to a residence based on the license plate, the officers decided to simply ask some follow up questions. However, when voices from inside the residence asked “Who is it?,” the officers laughed and said “We got you surrounded. Come out or we’re coming in.” The residents grabbed weapons and yelled, “We have guns.” The officers claimed to identify themselves, but the occupants denied hearing it.

Just at that moment, Officer Ray White arrived, heard the “We have guns” statement and took cover kneeling behind a wall. One occupant fired a shotgun and another pointed a pistol out a window at White. In returning fire, Officer White shot and killed the occupant at the window. In the subsequent excessive force suit, Officer White argued that he was entitled to qualified immunity. The trial court and a panel of the U.S. Court of Appeals for the 10th Circuit disagreed, finding that a reasonable officer in White’s position would believe that a warning is required before shooting a suspect even if the officer is in danger of harm.

The Supreme Court quickly reversed, granting White qualified immunity. Again cautioning lowers courts against defining ‘clearly established law’ ‘at a high level of generality,’ the Court noted no prior case indicates that an officer was required to determine what steps might have been taken by officers who were already on the scene, such as whether the other officers had properly identified themselves or otherwise given a warning.  The Court expressed no opinion as to the other officers.

In short, the message of the Supreme Court is clear: federal courts are required to consider the “unique” facts of each case and are not in the business of second-guessing the reasonable, split-second decisions of law enforcement. We hope courts within the Ninth Circuit will finally take note.

Important Update for Healthcare Professionals

Article authored by Adriana Cervantes and Jon Corr

CA Supreme Court Clarifies Professional v. Ordinary Negligence in a Hospital Setting (C.C.P. § 340.5)

On May 5th, 2016, the Supreme Court of California issued a minor victory for hospitals and other healthcare clinics who have found themselves subject to allegations of “general negligence” in an action that involves any medical judgment. In Catherine Flores v. Presbyterian Intercommunity Hospital, the Court held that a claim for negligence in the maintenance of equipment and care needed to implement the doctor’s order concerning her medical treatment sounded in professional negligence and therefore was subject to the statute of limitations period set forth in Code of Civil Procedure (CCP) section 340.5 which governs professional negligence claims.

Plaintiff Catherine Flores was a patient at Defendant Presbyterian Intercommunity Hospital.  Her treating physician ordered the bed-rails raised after an assessment of her condition.  She subsequently fell out of bed while trying to get up.  In her lawsuit filed almost two years later, Plaintiff alleged that the latch on the raised bed rail failed under theories of negligence and premises liability.  Defendant argued the claim was barred by one year statute of limitations for professional negligence in C.C.P. section 340.5.  The trial court agreed, but the Court of Appeal reached a different conclusion finding that the applicable standard was “ordinary” negligence, and applied a two year statute of limitations.

The Supreme Court of California found that the application of professional negligence depends on the nature of the relationship between the equipment/ premises and the provision of medical care: “A hospital’s negligent failure to maintain equipment that is necessary or otherwise integrally related to the medical treatment and diagnosis of the patient implicates a duty that the hospital owes to a patient by virtue of being a health care provider. Thus, if the act or omission that led to the plaintiff’s injuries was negligence in the maintenance of equipment that, under the prevailing standard of care, was reasonably required to treat or accommodate a physical or mental condition of the patient, the plaintiff’s claim is one of professional negligence under section 340.5.”  Likening the claim to preventing a patient from becoming separated from an oxygen ventilator, for example, the Court concluded that because the physician ordered that the bed-rails be raised following a medical assessment of plaintiff’s condition, the negligence occurred in the rendering of professional services.  Thus, the one-year statute of limitations under C.C.P. section 340.5 applied.  The Supreme Court therefore reversed, which effectively dismissed the action as untimely.

The Litigation Debate About the Reasonable Value of Medical Expenses Continues

Article authored by David Melton, Lindsay Goulding and Colleen Howard

A few months ago, the Fourth Appellate District changed the landscape of personal injury damages by issuing its decision in Howell v. Hamilton Meats & Provisions.  Howell held that plaintiffs with private health insurance were entitled to compensation for the full amounts billed for medical care and expenses, despite the fact that the health care providers had accepted a lesser amount as payment in full.  The Supreme Court took this case under review in March 2010, which effectively depublishesHowell as valid authority.

Now, the First Appellate District has followedHowell’s lead by issuing Yanez v. SOMA Environmental Engineering.  In Yanez, the trial court held a post-trial hearing during which it reduced the jury’s award of $150,000.00 by $21,355.66 after determining that the plaintiff was entitled to receive only the amount actually paid for her medical care ($18,368.24), rather than the full amounts billed for those services ($44,519.01).  Plaintiff appealed.

The court of appeal came to the same conclusion as Howell: that the discount rate paid by the tort victim’s insurance company constitutes a collateral benefit.  The court explained that the reductions were an integral part of the consideration Ms. Yanez received for her (or her employer’s) premium payments, and this consideration came in two forms: (1) the write-offs reduced Ms. Yanez’s out-of-pocket costs; and (2) the discounts reflected non-cash, pecuniary savings in the cost of healthcare which were financed by Ms. Yanez’s premium dollars.  Furthermore, the court concluded that the negotiated rate discounts should be considered collateral benefits, which should inure to the insured plaintiff who paid for those benefits, as opposed to the defendant.

Just as in Howell, the court differentiated between private insurance and Medi-Cal because Medi-Cal recipients have not purchased insurance coverage by paying premiums, and the discounted rates paid by Medi-Cal represent rates set as a matter of legislative policy to balance the health care providers’ interests with the availability of public funds.  Thus, the rate discount was not a collateral benefit for tort victims.

In furtherance of its holding, the Yanez court hinted that it may be unfair to withhold information about the discounted amounts paid for medical services from juries, since that information would likely help them decide what was “reasonable” to pay for medical care and services.  However, that issue was not before the court as SOMA made no attempt to introduce such evidence at trial.

Yanez brings new life to the arguments raised by Howell.  Since Howell has been depublished pending review by the Supreme Court, Yanez offers tort victims another case to hang their hat on in seeking damages.  However, all is not lost for defendants asYanez leaves open the argument as to proof of the reasonable value of medical expenses at the time of trial (rather than post-trial).  Either way, a definitive decision inHowell may soon bring an end to this decades-long debate.

Contact our office to discuss the reasonable value of your medical expenses.

Litigation News – One Day Jury Trials Coming Soon

Article authored by David Melton, Lindsay Goulding and F. Will Jackson

A new day is coming for civil litigants who want their day in court without the expense and burden of a standard civil jury trial. The Governor recently passed The Expedited Jury Trials Act (AB 2284). The new law allows parties to agree to a shorter trial with modified procedural rules.

Under AB 2284, the parties agree to a jury of no more than eight people, a limit of three peremptory challenges for both sides, and three hours for each side to present its case. The parties also waive their right to appeal on most issues, as well as the right to move for a directed verdict.

Another key feature of the expedited trial authorized under the new law is the high/low agreement. This is a written agreement specifying a minimum and maximum amount of damages for which the defendant will be liable, regardless of the ultimate verdict returned by the jury. The high/low agreement is entered into by the parties before trial and is not disclosed to the jury.

Although the format of the expedited jury trial is different, some key features of a civil jury will remain the same. The jury will still be given as much time as needed to deliberate. The rules of evidence still apply, unless the parties stipulate otherwise, and statutes regarding costs and attorney’s fees remain the same.

The new format should help cut down the cost of litigation significantly. Not only can the system be used for relatively simple cases with a smaller financial amount at stake, it can also be used to try a single determinative issue in a larger, more complex case. Either way, it is a step toward greater judicial efficiency and a justice system in which the cost and burden of going to trial will no longer be as much of a deterrent for those seeking their day in court.  For more information about AB 2284, contact our office.

Prior, Dissimilar Incidents Inadmissible to Prove Notice of a Dangerous Condition of Public Property

Article authored by Stephen E. Horan and Robindeep S. Basra

Evidence of prior, dissimilar incidents are inadmissible to prove a public entity’s notice of a dangerous condition of public property.  That is the conclusion the Third Appellate District of the California Court of Appeal reached in a recent, published decision that may help public entities defend against dangerous condition claims.  The case, Salas v. California Department of Transportation, arose from the death of a pedestrian who was struck by a car at an intersection in Victor, California.  Plaintiffs, the survivors of the decedent, sued Cal Trans, claiming a lack of proper signage, failure to design signage, failure to follow recommended standards as to the location of the crosswalk, and failure to control speed in the area created a dangerous condition of public property.

CalTrans moved for summary judgment, arguing the physical nature of the intersection and the lack of vehicle versus pedestrian collisions at the accident location demonstrated no dangerous condition existed.  In opposition, Plaintiffs proffered traffic collision reports showing there were 23 prior accidents at and around the intersection, all of which were vehicle collisions.  Additionally, Plaintiffs’ expert opined that the accidents and volume at the intersection could be controlled through the installation of an all-way stop sign or traffic signal.

The appellate court affirmed the lower court’s ruling of summary judgment in favor of CalTrans.  It held that no dangerous condition existed at the intersection for three reasons.  First, it was undisputed that the intersection had no “blind corners, obscured sightlines, elevation variances, or any other unusual condition that made the road unsafe when used by motorists and pedestrians exercising due care.”  Second, CalTrans established the marking and signage at the intersection was sufficient and included a marked crosswalk and three signs notifying motorists of an approaching intersection and crosswalk.  Third, and perhaps most significant, the accident history indicated no other collisions involving pedestrians had occurred in the ten years preceding the accident.  The court excluded Plaintiffs’ evidence of prior accidents because they were not similar to the accident at issue and none involved a pedestrian.  It noted that “while there must be substantial similarity to offer other accident evidence for any purpose, a stricter degree of substantial similarity is required when other accident evidence is offered to show a dangerous condition.”  The Court refused to consider the prior accidents because they did not meet this stringent standard.

The Salas decision affirms that only substantially similar prior accidents are probative of notice of a dangerous condition.  To discuss the Salas decision or dangerous condition claims generally, please contact our office

Landowners May Have Duty to Provide Security on Premises

Article authored by David A. Melton and Michael J. Baytosh

ATTENTION LANDOWNERS: Do you provide adequate security on your premises? A recent California Court of Appeal decision extends the trend toward increased security measures where the burden of providing additional security is minimal. In Tan v. Arnel Management Co. (2009) 170 Cal.App.4th 1087, Plaintiff was rendered quadriplegic when a carjacker shot him in the neck in Defendant's parking lot. The Second District Court of Appeal (Los Angeles) found that Defendant, a property management company, had a duty to install security gates. Three prior incidents of sudden and unprovoked violent assaults within the ungated parking areas on the property put Defendant on notice that additional security was needed.

Prior to Tan, a landowner's duty to provide security was determined by balancing the foreseeability of harm against the burden of the duty to be imposed. Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666. When applying this balancing test, the California Supreme Court placed emphasis on the cost or burden of the landowner providing security guards. In Tan, rather than asking for security guards, plaintiffs argued that the landowner should have installed a security gate - "a one-time expense that does not require extensive monitoring." The Court of Appeal held Defendant liable because installing a security gate that protected the parking area where Plaintiff was injured was not an undue burden.

California landowners must assess whether the current level of property security is commensurate with the existing foreseeability of harm. Landowners should take into account past criminal acts and the efficacy of security measures to prevent reoccurrence. For example, a prudent landowner with regular occurrences of parking lot theft may decide to install perimeter fencing that will impede criminal conduct. While the history of post-fencing criminal acts would be relevant to the reasonableness of the designed security measure, the landowner likely has fulfilled its duty.

Public entity landowners are not immune from application of the Tan analysis. Although liability for the dangerous condition of public property is statutory (See California Government Code Sections 830, 835), the courts look closely at physical defects in the property and the causal connection between condition of property and injury. Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112. For example, the failure to provide reasonable parking lot lighting, a security measure, foreseeably increasing the risk that members of the public will be attacked, has been recognized as a dangerous condition of public property. Peterson v. San Francisco Community College Dist. (1984) 36 Cal.3d 799. Third-party criminal conduct coupled with a physical defect of property can be evidence of an entity's failure to respond reasonably to a known danger. Security measures designed to impede criminal acts will be judged under the Section 835 analysis, with emphasis on any alleged physical defect in the property.

Each case must be evaluated on its own facts. The first step is recognizing the potential for harm, particularly when there is a history of third-party criminal conduct on the premises. Remediation of the potential for harm through reasonable security measures substantially reduces the likelihood of personal injury liability.

Handheld Use of a Cell Phone to Obtain Directions Violates California Vehicle Code Section 23123

Article authored by Michael Pott and Charles Caraway

By now, most everyone is aware that it is illegal to drive while talking on a cell phone unless the phone is configured to allow hands-free use and is used in that manner.  This is set forth in California Vehicle Code section 23123.  However, cell phones today are capable of far more than simply talking.  A cell phone can be used to find restaurants, play games, watch videos, surf the internet, and provide driving directions.  Until recently, a grey area existed as to what types of actions violate Vehicle Code section 23123.  The recent decision in People v. Spriggs takes some of the mystery out of this as the Court held that any hands-on use of a cell phone while driving violates Vehicle Code section 23123.

People v. Spriggs
Steven Spriggs was cited and convicted for looking at a map on his cell phone while holding the phone in his hand. Spriggs appealed the conviction, however, he did not dispute the facts.   On appeal, Spriggs argued a later enacted statute (Vehicle Code section 23123.5), which prohibits driving while using an electronic wireless communications device to “dictate, send, or listen to a text-based communication” unless the device is used in a hands-free manner, supports the conclusion Vehicle Code section 23123 was only designed to address listening or talking on a cell phone while driving.  The court disagreed, stating the legislative history focused on the distraction a driver faces when using his or her hands to operate the phone.  Such a distraction exists whether the phone is used for carrying on a conversation or holding the phone while looking at a map.

Although the appellate decision just came out last month, there is already a mild grumble for legislative clarification – i.e. a request for a statute that makes the use of cell phones for purposes other than talking and texting expressly legal or illegal. For now, however, the Courts are interpreting the Vehicle Code to prohibit the hand-held use of cell phones while driving.

Take Away Tips
In addition to possibly receiving a ticket for holding a cell phone while driving, how might this decision affect civil litigation?  In a lawsuit regarding a motor vehicle accident, in order to prove liability, the trier of fact, or jury, must first find that there is a duty owed by the defendant to drive as a reasonable person. Then, in order to award damages to a plaintiff, the jury must find that the defendant was not driving in a reasonable manner at the time of the accident.  However, when the plaintiff can show a law was broken by the defendant, such as driving while holding a cell phone, then they may bypass the ordinary rules and request that the trial judge issue an instruction to the jury indicating there is a presumption of negligence in the case (otherwise known as negligence per se). This presumption makes it much easier to prove liability.  Accordingly, if a driver is involved in a traffic accident while holding his or her phone, it may result in a per se finding of negligence.

Be careful how you use your phone while driving a vehicle, and stay informed as to changes in the law so you know the impact your use of a phone while driving might have on you if you are involved in an accident.

A New Take On The Reasonable Value of Medical Care in Personal Injury Cases

Article authored by David Melton, Lindsay Goulding and Colleen Howard

Up until November 23, 2009, it was common practice for defense attorneys to argue for the reduction of medical expense awards from the amounts billed for medical services to the amounts actually paid to satisfy the debt. That has since changed.

In Howell v. Hamilton Meats & Provisions, the plaintiff was injured in a car accident with a Hamilton Meats & Provisions (Hamilton) employee. In a post-trial hearing, Ms. Howell presented evidence showing that she was billed $189,978.63 for medical expenses. Hamilton presented evidence showing that the hospital and medical center which charged plaintiff those amounts actually accepted $59,691.73 as payment in full, “writing off” the remaining $130,286.90. The trial court, basing its decision on a trilogy of cases (Hanif v. Housing Authority of Yolo County, Nishihama v. City and County of San Francisco and Greer v. Buzgheia ), agreed to reduce plaintiff’s award for past medical expenses to $59,691.73. In reaching that decision, the court stated that permitting plaintiff to receive the full amount billed would constitute overcompensation. The court of appeals, however, disagreed, concluding that the reduction was a collateral benefit for which Ms. Howell should be compensated.

California courts recognize the collateral source rule, which provides that compensation to an injured party from someone other than the tortfeasor should not be deducted from the damages calculation. The motive behind this rule was to prevent tortfeasors from receiving a financial benefit from the injured party’s years of investment in insurance premiums to assure their medical care. In Howell it was successfully argued that, while the amount plaintiff’s insurance company paid to satisfy her medical expenses clearly constituted a collateral benefit, the reduction amount was a secondary collateral benefit. The court explained that, prior to treatment, plaintiff signed agreements with the hospital and medical center stating that either she or her insurance company would accept responsibility for paying all of her bills. Thus, if Ms. Howell’s insurance had not paid the medical providers, she would have been responsible for paying the full amount of the bills. However, because her insurance company negotiated reduced payments, the difference was a secondary collateral benefit plaintiff received as a result of investing in health insurance. The court concluded that Ms. Howell should be permitted to keep this collateral source benefit “because she was responsible for the benefit by maintaining her own insurance.”

To reach this conclusion, the court distinguished the longstanding case Hanif v. Housing Authority, in which the plaintiff’s medical expenses were paid for by Medi-Cal. TheHowell court concluded that Hanif was inapplicable because the plaintiff in that case never agreed to accept responsibility for his medical bills. Therefore, the reduction was not a collateral source benefit and the damage award Mr. Hanif received could be reduced to the amount paid for his medical services. To the extent that its holding is contrary to Nishihama and Greer, which extended Hanif into the realm of private insurance, the Howell court squarely rejected those cases.

The Howell decision has a significant impact on the value of personal injury cases. Defendants will be challenged by the holding in Howell, and may be left with no choice but to accept the full amount billed as the value of medical expenses. In fact, some courts are already applying Howell to prevent discovery into what was paid versus written off on the ground that such information is no longer relevant. However, there are three caveats to the Howell decision.

First, given the split in authority, many expect Hamilton Meats & Provisions to appeal the case to the California Supreme Court sometime before January 2, 2010. Once the petition for review has been filed, Howell will no longer be citable case law. Second,Howell clearly applies only to injured parties with private health insurance. Any individuals receiving Medicare or Medi-Cal benefits will still be entitled to receive only the amounts Medicare or Medi-Cal paid for medical services, not the full amounts billed. Third, even if Howell is upheld, defendants may still argue that the amounts billed do not constitute the “reasonable value of medical care and services.” Doing so, however, will require the additional cost of expert testimony on the issue.

We invite you to contact our office to assess how the Howell decision may affect your case.

The Collateral Source Colloquy Continues

Article authored by David Melton and F. William Jackson

Diverging with several recent appellate court cases, the California Court of Appeal for the Second Appellate District recently ruled that an injured plaintiff’s recovery of past medical expenses may be reduced to reflect the amount actually paid by his or her private medical insurer, instead of the amount billed by the medical provider. (Cabrera v. E. Rojas Properties, Inc., 2011 Cal.App.Lexis 203.) In Cabrera, the trial court reduced the damages for plaintiff’s past medical expenses to reflect the amount actually paid, instead of the amount billed by plaintiff’s medical providers, a difference of almost $50,000.00. The plaintiff appealed, claiming that such a reduction violated the collateral source rule. The Court of Appeal for the Second Appellate District affirmed the trial court’s ruling.

The collateral source rule allows an injured plaintiff to recover damages for past medical expenses from the tortfeasor even if he or she receives compensation for those expenses from a wholly independent source, such as insurance. The rule is based on the policy that a tortfeasor should not benefit from the victim’s prudence in acquiring insurance. The court in Cabrera ruled that the plaintiff was entitled to recover compensation from the defendant for the amount paid for her past medical expenses, even though those expenses were paid by her insurance company. However, she was only entitled to the amount actually paid, not the amount billed. The court relied heavily on Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 641, which held that a plaintiff may not recover more than the actual amount paid for past medical care. WhileHanif dealt with medical expenses paid by Medi-Cal, the court in Cabrera applied the same rule to the private insurance context. Since there was no evidence that the plaintiff was liable for the amounts billed by her medical providers and the reductions were not based on compensation received by plaintiff from an independent source, the collateral source rule was not violated by the reduction of damages. The plaintiff still received the benefit of her insurance, because she was provided with medical services for which her insurance company paid. The plaintiff was also compensated for the detriment caused by the defendant’s conduct by recovering the amount paid for the medical bills incurred as a result of such conduct.

The issue of whether a plaintiff may recover as economic damages the full amount billed by her medical providers, even when the providers agree to accept a lower amount, remains in flux. The Court of Appeal for the First, Third, and Fourth Appellate Districts took the opposite approach as the Second Appellate District in Yanez v. Soma Environmental Engineering, Inc., King v. Willmet, and Howell v. Hamilton Meats & Provisions, Inc., respectively.   However, those cases have been granted review by the California Supreme Court and are not citable. Until Cabrera receives the same fate or the California Supreme Court finally decides the issue, Cabrera is still binding on lower courts.

Important Update for Design Professionals

Article authored by Cruz Rocha and Chad Tapp

Upcoming Senate Bill 885

Following the infamous rulings in Crawford v. Weather Shield and UDC-Universal Development v. CH2M Hill, anybody associated with the construction industry knows that almost every construction contract contains an indemnity provision that requires an immediate duty to defend, regardless of ultimate liability.

Senate Bill 885 proposes to abrogate the holdings in Crawford and UDC as to design professionals only. SB 885 would specify, for construction contracts entered into on or after January 1, 2017, that a design professional only has the duty to defend claims related to negligence, recklessness, or willful misconduct of the design professional.

Accordingly, under the bill, a design professional would not have a duty to defend claims against any other person or entity, except that person or entity’s reasonable defense costs arising out of the design professional’s degree of fault, as determined by a court or arbitrator. Notably, the bill would prohibit waiver of these provisions and would provide that any clause in a contract that requires a design professional to immediately defend claims against other persons or entities is void and unenforceable.

In other words, regardless of the indemnity and duty to defend provisions in a contract, design professionals would not owe defense fees absent a finding of actual liability. Even after such a finding, a design professional will only be obligated to reimburse reasonable defense costs based on proportionate liability. This would be a dramatic departure from current practices where the duty to defend often arises immediately, regardless of fault.

Not surprisingly, there is significant opposition to SB 885 from public agencies because public agencies may no longer have the ability to contract with design professionals for upfront legal defense costs against claims related to a project’s design work. Essentially, public agencies argue that a ‘reimbursement only’ process forces public entities to defend the scope of work of design professionals, while also bearing the financial burden.

SB 885 is currently in the originating house and is not set for hearing. As this bill is non-fiscal and faces significant opposition, it is likely that the Senate Judiciary Committee will not hear SB 885 until May 2016.

New 2016 Employment Laws

Article authored by Carl Fessenden and Amanda L. Iler

New and Updated Employment Laws in 2016

For most of us, ringing in a new year means party hats, noisemakers, and lists of resolutions that are more than likely doomed to failure. For California employers, the New Year also means something else-the start of new and updated employment legislation. Several bills went into effect on January 1, 2016 that employers should be aware of, including a minimum wage increase and amendments to the equal pay act. Here are just some of the new laws affecting employers:

• Minimum Wage Increase: As of January 1, 2016, California’s minimum wage increased to $10.00 per hour. The hourly increase naturally will also mean an increase in overtime and double pay for minimum wage employees.

o Equal Pay Act Amendments: With the passage of Senate Bill 358, California now has one of the strongest equal pay laws in the country. SB 358 amends Labor Code section 1197.5, essentially broadening the scope of what pay needs to be equal, and making it easier for an employee to prove a claim of unequal pay based on gender. The amendment to Labor Code section 1197.5 eliminates the “same establishment” requirement, and replaces it with a new standard: an employer is now prohibited from paying any of its employees at wage rates less than those paid to employees of the opposite sex for “substantially similar work.” Whether work is substantially similar is determined by considering a composite of skill, effort, and responsibility, as well as whether the work is performed under similar working conditions
o The previous version of section 1197.5 contained exceptions that allowed for unequal pay, including merit and seniority. Under SB 385, an employer must now affirmatively demonstrate that a wage differential is based on one or more of these four enumerated exceptions: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; (4) a bona fide factor other than sex, such as education, training, or experience. The bona fide exception is only applicable if the employer demonstrates that the factor is not gender-based, is job related with respect to the position in question, and is consistent with business necessity. However, the bona fide exception will not apply if the employee can demonstrate that an alternative business practice exists that would serve the same purpose without the wage differential.
o The amendment prohibits an employer from retaliating against an employee for exercising his or her rights under this legislation. It also allows an employee to disclose the amount of his or her wages and inquire about and discuss the wages of others without reprisal. SB 385 also requires employers to keep records of wages, wage rates, job classifications, and other terms and conditions of employment for three years. This is an increase from the previous two years.

• Personal Liability for Wage Violations: With the enactment of SB 588, employers or persons acting on behalf of an employer, including an owner, director, officer, or managing agent may be held liable for violating Labor Code provisions, including those related to the minimum wage or hours and days of work in any Wage Order.

Supreme Court Expands Public Entity Liability On Dangerous Conditions Claims Involving Third-Party Conduct

Can a public entity be liable for dangerous condition of public property if a third party causes plaintiff’s accident and there is no causal connection between the condition of the public entity’s property and the third-party conduct? The Supreme Court says yes. In doing so, it seemingly changed prior law and expanded public entity exposure.

Codova v. City of Los Angeles involved a motor-vehicle accident caused by the negligent driving of Rostislav Shnayder. Shnayder inexplicably veered his vehicle into Cristyn Cordova’s vehicle, causing Cordova’s vehicle to jump the curb and spin out of control before coming into contact with a magnolia tree planted 7 feet from the roadway. The impact of the collision killed Cordova and two of her siblings. Their parents then filed suit against the City alleging dangerous condition of public property.

The trial court granted the City’s Motion for Summary Judgment, finding the undisputed evidence showed the accident was caused by Shnayder’s negligent driving, not any condition of the City’s property. The Supreme Court reversed that ruling, holding the relevant inquiry is whether the condition of the property caused plaintiff’s injuries, not whether it caused the third-party conduct that led to plaintiff’s injuries. The Court based its decision on a strict reading of Government Code § 835, which provides that plaintiffs must prove the “property was in a dangerous condition at the time of the injury” and that “the injury was proximately caused by the dangerous condition.”

The Court’s ruling overturned a line of Appellate Court decisions holding there can be no liability unless the condition of the property caused, facilitated or encouraged the third-party conduct that led to plaintiff’s injuries. Those Appellate Court decisions were largely based on the Supreme Court’s ruling in Zelig v. County of Los Angeles, which involved an incident where a woman was shot and killed by her ex-husband in the Los Angeles County Courthouse. In dismissing the resulting dangerous condition of public property action, the Court wrote: “the defect in the physical condition of the property must have some causal relationship to the third party conduct that actually injures the plaintiff.”

The Court stretched to reconcile its ruling in Cordova with Zelig, explaining that “Zelig’s focus on the causal relationship between the condition of the courthouse and third party conduct simply reflected the nature of the plaintiffs’ allegations” in that case, which were that the condition of the courthouse facilitated the shooter’s efforts to harm his ex-wife. The Court’s statement that there was no evidence of a causal connection between the two was not meant to impose a new rule requiring that plaintiffs prove that a dangerous condition actually caused the third-party’s conduct.

The impact of this ruling is significant as it confirms that public entities may be liable even if the condition of their property does not cause or otherwise trigger the events leading to plaintiffs’ injuries. All is not lost. Plaintiffs still must prove a dangerous condition (i.e., a condition of property that creates a substantial risk of injury when used with due care) existed, and that the condition was a substantial factor in causing the injury. In addition, design immunity still exists if the condition at issue was part of an approved plan.

The California Supreme Court Tells Emergency Room Doctors and HMOs to Leave the Patient Out of Billing Disputes

Article authored by Jonathan Corr and David Melton

When a patient goes to a hospital seeking emergency medical care, emergency room doctors are statutorily required to provide emergency care without regard to the patient’s ability to pay. Cal. Health & Saf. Code Section 1317 (2008). Additionally, if the patient is a member of an HMO, the HMO is statutorily required to reimburse the emergency care providers for the services rendered to the HMO member. Cal. Health & Saf. Code Section 1371.4 (2008). Disputes arise when the HMO member receives emergency care from providers with whom the HMO does NOT have a prior service contract. Because there is no preexisting contract, the HMO and the emergency care providers often disagree on the “reasonable value” of the emergency services.

In the recently consolidated cases of Prospect Medical Group, Inc., et al. v. Northridge Emergency Medical Group et al., and Prospect Health Source Medical Group, v. Saint John’s Emergency Medicine Specialists, Inc., et al., Prospect, a HMO billing service, paid less than what the emergency care doctors claimed was the “reasonable price” of the emergency services rendered. The emergency care doctors subsequently billed the patient directly for the difference between the amount they asked for and the amount Prospect paid. This practice is called “balance billing.” Prospect argued that “balance billing” is unlawful. The trial court agreed but the Court of Appeal reversed, striking down Prospect’s argument on the reasoning that “balance billing” is not prohibited by statute.

The California Supreme Court criticized the Court of Appeals for not looking at the statutory scheme as a whole. Emergency care patients must either provide insurance information or agree to personally pay for the services rendered. Cal. Health & Saf. Code Section 1317(d) (2008). Where the patient has provided insurance information regulated by the Knox-Keene Act, HMOs have a “duty to pay a reasonable and customary amount for the services rendered.” Bell v. Blue Cross of California, 131 Cal.App.4th 211 (2005); Cal. Health & Saf. Code Section 1371.4 (2008). HMOs also have an obligation to “ensure that a dispute resolution mechanism is accessible to non-contracting providers for the purpose of resolving billing and claim disputes” Cal. Health & Saf. Code Section 1367(h)(2) (2008). Additionally, emergency care providers have a right to sue HMOs directly over billing disputes. Bell v. Blue Cross of California, 131 Cal.App.4th 211 (2005). The California Supreme Court held that “interpreting the statutory scheme as a whole… doctors may not bill a patient for emergency services that the HMO is obligated to pay. Emergency room doctors must resolved their differences with HMOs and not inject patients into the dispute. Balance Billing is not permitted.”

As a result of the California Supreme Court’s ban on “balance billing,” patients can not incur greater liability for emergency services than is paid by their insurer. In terms of economic damages this is a win for defendants. California courts have already prohibited Plaintiffs from recovering economic damages in an amount greater than that “paid or incurred by the Plaintiff or an independent source” where the Plaintiff’s insurance company has a service contract with the healthcare provider. See Hanif v. Housing Authority of Yolo County, (1988) 200 Cal. App. 3d 635 (finding that where a certain sum was paid or incurred for past medical care and services, that amount was the most plaintiff could recover despite the fact it may have been less than the prevailing market rate unless evidence was produced that showed plaintiff would have incurred liability for the unpaid amount). See also Nishihama v. City and County of San Francisco, (2001) 93 Cal. App. 4th 298. Prospect logically extends this line of reasoning to situations were the Plaintiff received emergency care services from non-contracting providers. Because patients can no longer incur greater liability, defendants now have a stronger argument that the “reasonable value” of the services rendered is that which was already paid and therefore the maximum amount a Plaintiff can recover. It should be noted however, that the California Supreme Court refused to expressly rule on the issue of what is “reasonable and fair” payment for doctors and hospitals. HMOs and healthcare providers must battle that issue in subsequent litigation or legislative process.

For more information on this case or other legal matters contact your legal counsel.

Design Immunity Does Not Exist Even If City Engineer Made Decision To Place Safety Devices

The case Castro v. City of Thousand Oaks seems to continue a recent trend to limit immunity under dangerous condition law.  This time, the court applied a very narrow reading of the law to overturn the granting of summary judgment.

In 2011, the City of Thousand Oaks made safety improvements to an intersection at a busy street.  At that time, the approved plan did not include warning beacons.  Later, the traffic engineer for the City decided to add the warning beacons.  At the time, the Municipal Code for the City provided that the City Engineer had the authority to place and maintain traffic control devices that in the opinion of the engineer was necessary.

In Castro, Plaintiff, her two young children, and two other children under her care attempted to cross the busy street. Plaintiff activated the pedestrian warning beacon before crossing. A vehicle in the number two lane stopped. A motorist in the number one lane failed to see the warning beacon or Plaintiff and collided with her and the four children. Plaintiff’s complaint alleged the warning beacons installed by the City created a substantial risk of injury because they lulled pedestrians into a false sense of security while crossing the street.

The City moved for summary judgment and claimed it was entitled to design immunity and immune from liability under California Government Code § 830.6. The City asserted its engineer approved the plan to install the beacons and the approval was reasonable. Plaintiff opposed the motion and argued the City Engineer merely had authority to “place and maintain” traffic control devices, but lacked the authority to “approve” a traffic control plan. The trial court granted the City’s motion.  Plaintiff appealed the ruling.

The Court of Appeal reversed and applied a narrow reading of Section 830.6. The Court noted Section 830.6 requires a plan or design to be approved by a legislative body of the public entity or by some other body exercising discretionary authority to give such approval. The City argued its Municipal Code vests the City Engineer with the authority to “place and maintain” traffic control devices necessary to protect public safety. The Court of Appeal noted the City Engineer lacked authority to “approve” the plan or design for the traffic control device. The Court held the City Engineer’s authority to purchase and install traffic control devices did not give him the necessary discretionary authority to approve such plan.

The trial court, and seemingly even the Court of Appeal, acknowledged that the placement of the warning beacons increase safety of the intersection.  However, the Court applied a very strict interpretation of design immunity law.  The Court focused on the fact there was not a specific plan, and that simply placing the beacons to protect safety was not enough.  The lesson to be learned is that all such engineer decisions need to be pursuant to a specific plan or design that is approved by the public entity or other body or employee exercising discretionary authority to give such approval.

Ensuring the Enforceability of Settlement Agreements

When one or both parties refuse to abide by the terms of a settlement agreement, the party seeking an expeditious resolution may request the court to enforce the terms pursuant to section Civil Code of Procedure section 664.6. The enforceability of settlement agreements under section 664.6 rests on the inclusion of all material terms, an unambiguous intention to be bound, and the signature of the parties.

CCP section 664.6 provides statutory authorization for the entry of judgment on a stipulated settlement by means of a noticed motion. The antecedent to invoking section 664.6 is the requirement that the parties to the litigation stipulated to a valid and binding settlement agreement either “orally before the court” or “in a writing signed by the parties outside the presence of the court.” If there is any lingering concern that the opposing party will fail to abide by the terms of the agreement, upon request, the court may retain jurisdiction over the parties until full performance of the terms of the agreement are rendered.

There is a conservative trend in California courts favoring a strict interpretation and enforcement of written settlement agreements pursuant to section 664.6. When memorializing the settlement in a final writing, it is important to consider basic contract principles and ensure the following is reflected in the written agreement.

The Settlement Agreement Contains All Material Terms

Courts will evaluate the agreement based on whether there was a meeting of the minds between the parties, and whether the material terms are reflected in the settlement agreement. In Gauss v. GAF Corp., 103 Cal. App. 4th 1110 (2002), the parties failed to include among other things the financial obligations of GAF to fund the settlement agreement. The Gauss court ultimately held that the trial court had no writing specifying material terms of the settlements to be imposed on GAF and it erred in entering judgments for the plaintiffs pursuant to section 664.6. Courts will generally decline to impose additional terms to settlement agreements thereby basing interpretation and enforcement solely on terms existing at the time of agreement. Weddington Productions, Inc. v. Flick, 60 Cal. App. 4th 793 (1998). To ensure enforceability when entering into a settlement one should expressly state material terms, and err on the side of being over inclusive.

The Settlement Agreement Reflects the Parties Unambiguous Intent to be Bound

Parties should avoid making general statements like “this agreement is enforceable.” Rather, specific references to section 664.6 will better ensure judicial enforceability. “This agreement is final, binding, and enforceable under CCP Section 664.6” is a good example of enforceable language. Conservatorship of McElroy, 104 Cal.App.4th 536 (2002) held that head nods or movements in open court assenting to whether an agreement had been reached are too ambiguous to demonstrate assent and produces the type of litigation section 664.6 was designed to expressly avoid. In that regard, “agreements to agree” are unenforceable because they inevitably lack material terms and an unambiguous intent to be bound. It is impossible for the law to affix any obligation to a mere promise. Weddington Productions, Inc. v. Flick, supra, 60 Cal. App. 4th at 817. To ensure enforceability of the agreement each individual party must express an unambiguous intent to be bound either orally in open court or in a signed writing outside the presence of the court.

The Settlement Agreement is Signed by the Parties, Not the Attorneys of Record

The California Supreme Court has construed “parties” to mean the litigants themselves – “the specific person or entity by or against whom the legal proceedings are brought.”Levy v. Superior Court of Los Angeles County, 10 Cal. 4th 578, 586 (1995). The Levycourt declined to enforce a settlement agreement which was signed only by the party’s attorney. A signature obtained after the time of execution is likely not enforceable. To ensure enforceability of a settlement agreement, have every litigant sign the agreement.

Settlement agreements reached during mediation present a unique tension between section 664.6 and California Evidence Code section 1119. One of the cornerstones of settlement discussions during mediation is the privilege of confidentiality under section 1119. The confidentiality privilege is in conflict with admitting settlement agreements in court to enforce the terms of the agreement. A settlement agreement reached during mediation should include language that unequivocally states both the agreement is enforceable, binding, and is admissible or subject to disclosure in open court. (A consequence of not including a confidentiality waiver will likely leave the parties with an inadmissible settlement agreement.) If you want to ensure admissibility of settlement agreements reached during mediation, you must include a waiver in the terms of the signed agreement. However, some parties and even mediators will balk at the inclusion of this waiver.

For more information regarding enforcing settlement agreements contact your legal counsel.

The Conundrum of California’s Primary Assumption of the Risk Doctrine Continues

Article authored by Chad Tapp

Since the 1970s, California courts have struggled to properly and definitively identify when primary or secondary assumption of risk (“AOR”) should apply. Since Li v. Yellow Cab Co., (1975) 13 Cal.3d 804, California courts have held that defendants can no longer claim a complete defense to liability where plaintiffs contributed their own negligence to an injury or voluntarily assumed a risk. These defenses were replaced by primary and secondary AOR, but the differentiation between the two has always been murky.

Under primary AOR, a defendant can assert a complete defense to liability, where the physical activity at issue is such that imposing financial liability would deter participants from vigorously engaging in the activity. Knight v. Jewett, (1992) 3 Cal.4th 296. Under this doctrine, a defendant is not required to eliminate or reduce risks of harm. Primary AOR is most often applied in the context of “active sports.” Knight v. Jewett, (1992) 3 Cal.4th 296.

So, what exactly qualifies as an “active sport”?

In the recent case of Carl Kindrich III v. The Long Beach Yacht Club, the Fourth Appellate District did not allow a Yacht Club to claim a primary AOR defense because it found Plaintiff to be a “passenger” rather than a “participant” in the physically active sport of sailing. The Long Beach Yacht Club allowed Plaintiff to use a marina owned yacht to scatter his late father’s ashes at sea. Plaintiff broke his leg after jumping from the still-moving yacht onto the dock. In finding that the Yacht Club owed Plaintiff a duty of care, the court looked to the general activity of “sailing” rather than the specific act of “jumping.” “Disembarking from the boat…be it leaping, jumping, stepping off or walking the gangplank, did not turn his activity into an ‘active sport’.” Thus, the court concluded that the Yacht Club could not claim a primary AOR defense. The minority disagreed, finding that the primary AOR defense should apply because the specific act of “jumping onto the dock” not “sailing” was the relevant “active sport.” This case is yet another example of the dichotomy among California courts when applying primary AOR.

The Kindrich case continues the courts’ tradition of ambiguous and unpredictable application of the primary and secondary AOR standards. As such, companies providing services at all analogous to the above would be well advised to initiate or continue the practice of requiring consumers to sign written releases of liability prior to entering the premises or partaking in the company’s services. If you are involved in a siArticle authored bymilar type dispute, you are strongly encouraged to contact your legal counsel for additional information on circumventing the complexities of primary and secondary AOR.

Howell Limits Liability for Medical Special Damages

Article authored by David Melton and Lindsay Goulding

In a much anticipated opinion, the California Supreme Court held today that injured plaintiffs may only recover the amounts their private health insurance actually paid to medical providers as payment in full.

In Howell v. Hamilton Meats & Provisions, the Supreme Court explained that recoverable medical expenses must be both incurred and reasonable.  Where a plaintiff’s insurance company has negotiated a discounted rate for medical services rendered on the plaintiff’s behalf, it cannot be said that the plaintiff incurred the value of the amounts billed for medical care.  Rather, the plaintiff is only entitled to the amounts actually paid by the health insurer and accepted as payment in full by the health care provider.  The Court also explained there is no distinction between private health care and Medi-Cal.  In both situations, the insurer has negotiated discounted rates with medical providers, the difference of which no one is obligated to pay.

Any argument regarding the potential windfall to a tortfeasor was rejected by the Court as well.  The Court explained that “fortuity is a fact in life and litigation,” and that a tortfeasor should not be punished based on the injured party’s particular circumstance.  The Court acknowledged the notion that “identical injuries may have different economic effects on different victims,” and held that a defendant should not be ordered to pay damages for an economic loss the plaintiff did not actually suffer merely because a different defendant may have to compensate a different plaintiff who did actually suffer such a loss.

In line with this conclusion, the Supreme Court also held that all evidence of the amounts actually paid by private insurers is admissible at trial and subject to pre-trial discovery.  However, the court left open the question of its relevance or admissibility on other issues, such as non-economic damages or future medical expenses.

Howell will have a major impact on all personal injury and wrongful death lawsuits in California.  For plaintiffs, this means their economic recovery may not be as substantial as it was just a few weeks ago.  For defendants, this will lead to lower economic damage awards and the potential for lower general damage awards.  If you would like to know more about how Howell will impact your case, please call our office.

Download a full copy of the Supreme Court Opinion