Proving Reasonable Costs of Unpaid Medical Bills

Proving Reasonable Costs of Unpaid Medical Bills
By: Ara Jabagchourian & Alberto Garcia


The impact of the Howell v. Hamilton Meats decision is pretty well entrenched as it relates to paid medical invoices in personal injury matters. Yet, the issue of unpaid bills is still hotly contested. Two relatively recent cases have set forth the manner in which the reasonable cost of past unpaid medical bills are to be proven. This short article looks to summarize the key portions of these cases and also discuss some of the practical issues that arises when dealing with a matter involving past medical expenses that are not covered by health insurance.

Proving Reasonable Cost

The Howell decision and its progeny have established that “an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial.” (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 566.) But what if the person was uninsured, paid cash, or treated on a lien. The answer is we go back to the pre-Howell days.

CACI jury instruction 3903A sets forth the law on what needs to be proven to recover for medical costs as an element of economic loss. It reads in part: “To recover damages for past medical expenses, [Plaintiff] must prove the reasonable cost of reasonably necessary medical care that he has received.” (CACI 3903A) However, per Howell, if the bills were paid then “the measure of medical damages is the lesser of (1) the amount paid or incurred, and (2) the reasonable value of the medical services provided.” (Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1330; Howell, supra, 52 Cal.4th at 555.) So where the medical bills are paid, the medical bills are irrelevant and not admissible. (Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1330–1331.)

Where the medical bills are unpaid, then the plaintiff must prove the reasonable value of the medical services. The question is how this is to be done. The first step is to get the medical bills admitted. “[W]hen a plaintiff is not insured, medical bills are relevant and admissible to prove both the amount incurred and the reasonable value of medical services provided.” (Pebley v. Santa Clara Organics, LLC (2018) 22 Cal.App.5th 1266, 1275, citing Bermudez, supra, 237 Cal.App.4th at 1335, 1337.) This is a break from the case of Ochoa v. Dorado (2014) 228 Cal.App.4th 120, 135 which held that “the full amount billed, but unpaid, for past medical services is not relevant to the reasonable value of services provided.” (Ibid.)

But the bills are just the first step. “[T]he uninsured plaintiff also must present additional evidence, generally in the form of expert opinion testimony, to establish that the amount billed is a reasonable value for the service rendered.” (Pebley, supra, 22 Cal.App.5th at 1275.) “[T]he measure of damages for uninsured plaintiffs who have not paid their medical bills will usually turn on a wide-ranging inquiry into the reasonable value of medical services provided, because uninsured plaintiffs will typically incur standard, nondiscounted charges that will be challenged as unreasonable by defendants.” (Bermudez, supra, 237 Cal.App.4th at 1330-1331.) In order to show that the undiscounted charges are reasonable, plaintiff’s expert must show that the charges are reasonable through a “wide-ranging inquiry.” On the other hand, the defendant is also permitted to introduce competent expert testimony, thus making the issue of reasonable cost of medical care an issue for the jury, just as it always was prior to Howell (Id. at 1276.)

Practical Considerations

Given the state of the law related to unpaid medical bills, there are numerous issues that come up surrounding this topic. The most significant are defendants’ efforts seeking to minimize plaintiff’s medical costs. A method that is employed is the effort to establish what the healthcare provider charges for the same service under Medicare or Medi-Cal. This approach leads to numerous problems at trial. First is the pure mention of medical insurance where in this instance, there is no medical insurance to be had or applied in the first place. In fact, medical insurance cannot be mentioned when it actually exists for a plaintiff. When an insurance company reduced the amount owing on a medical bill, the reduced amount is all that can be claimed, “provided that the source of the payment is not disclosed to the jury and the evidence satisfies the other rules of evidence.” (Corenbaum, supra, 215 Cal.App.4th at 1328.)
Second is that the approach is question begging. How can public gratuitous insurance rates apply if the plaintiff does not have it? Does the plaintiff even qualify? The effort to mention Medicare or Medi-Cal creates more problems than it solves and should be excluded pursuant to Evidence Code section 352.
Third is the speed of payment. If Medicare pays from 30-60 days, how can that be compared to a lien patient where the doctor can wait several years, with the risk of not getting paid? Courts have been reluctant to allow an expert to speak of public insurance as a method to prove reasonable costs of medical care.

The same can be said about private insurance rates being applied to a medically uninsured plaintiff. In addition to the reasons set forth related to public medical insurance, private insurance rates vary and are dictated by a pre-negotiated contract with the healthcare provider. Thus, there is no such thing as an “insurance rate” that can be applied. If an expert comes forward with such testimony, press him/her on how the number was arrived at, what is the payment speed to the medical provider, what are the advantages for the healthcare provider in terms of accepting a lower amount from an insurance carrier, etc.

In a recent testimony associated with the defense expert seeking to introduce insurance rates as a basis to establish “reasonable cost”, the authors’ office demonstrated the hypocrisy associated with such an analysis:

Q. So, did I misunderstand something? You just
said you charge between either 450 or 475 for sworn
testimony; is that correct?
A. Yes, but that’s not for my time. That’s not an
increase in time. It’s an increase in bill rate.
Q. Okay. So, why is it that you charge over
400 percent for sworn testimony?
A. Because that is the value that I’ve assigned to
Q. And that is what — what you assigned to it is
what I have to pay for your deposition; is that correct?
A. Yes, please.
Q. Okay. And if I said, look, case management
folks only pay 100 bucks an hour, I should only have to
pay $100 bucks an hour. Can I write you a check for
$100 an hour for this deposition?
[Defense Counsel]: Objection. Argumentative.
Q. Can I?
A. We do not have a contract or relationship that
would provide for that.

As many of us know, reduced insurance rates for medical services are based on pre-negotiated contracts. Many factors going into the calculus for the healthcare provider to accept these reduced rates, including obtaining a pool of covered patients, prompt payment, streamlined administration, etc. A healthcare provider who operates on a lien basis for an uninsured basis does not have all these benefits. In fact, the healthcare provider runs the risk of never receiving payment if the case ends up with a negative result. Therefore, the attempt to undertake an insurance reduction analysis to equate to reasonable cost of medical services is irrelevant.

Another approach taken by defense experts is to parrot medical insurance databases to show what a particular service or CPT code charge is for any given region. One such database is the National Fee Analyzer. The problem with this approach is that it is rank hearsay. Although an expert can rely on hearsay if it is reliable, it cannot be used to “serve as a mere conduit for the introduction of otherwise inadmissible hearsay.” (I-CA Enters., Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 287; see also People v. Sanchez (2016) 63 Cal.4th 665.) An expert’s effort to just repeat what is contained in these databases as expert opinion is nothing more than hearsay. A motion to exclude should be filed if such efforts are undertaken.

Setting aside the hearsay issue, it is doubtful that the defense expert would know the methodology employed to obtain and set forth the dollar amounts published in the databases. If the expert is a life care planner, see if they use the database when conducting their non-litigation life-care plans. If the life-care planner conducts plaintiff-side life care plans (apart from the claimed billing expertise), find out how they arrive at their values. Establishing that the database is a reliable authority may require some serious analysis and lend itself to an Evidence Code section 402 hearing.

A third approach our offices have seen undertaken is evidence that the healthcare provider has taken reductions of a certain percentage for medically uninsured patients in past instances. This method of attacking the reasonable cost of medical bills is permitted. (Pebley, supra, 22 Cal.App.5th at 1280-1281.) It becomes imperative to go into the healthcare provider’s basis for reducing the bills (typically after a settlement). One reason that inevitably comes up for the past reductions was because the plaintiff’s recovery was low due to the tortfeasor’s ability to make the plaintiff whole was insufficient (liability insurance limits were too low). At trial (or videotape deposition of doctor if she/he handles the billing) have the doctor testify that they do not know what if any reduction they will provide without knowing what the verdict in the case is. This will undermine defendant’s effort to show that the healthcare provider has already discounted a certain percentage of the unpaid medical bill. Further, it is likely that the healthcare provider expects fully payment. Make sure to elicit such testimony as well.

Plaintiff’s retained experts would be wise to reach out to other healthcare providers and price out what they charge for uninsured patients. However, many healthcare providers are reluctant to provide this information. If you need to retain an expert, try to retain someone who works for a medical billing company, that person will have wide access to provider’s usual and customary charges for uninsured patients. Jurors seem to be more receptive on seeing a graphical showing nearby competitors and what they charge for the same treatment. This will further bolster that plaintiff’s healthcare providers are in line with the industry in the same geographic area. This should include everything from physician charges, surgery centers, physical therapists and radiology centers.

Also, to the extent possible, have the healthcare provider explain why they charge a higher rate for lien patients. They will inevitably explain the significant delay in payment and the likelihood of payment or lack thereof. If the treatment is on a lien, the defense will seek to establish the healthcare provider’s bias. It would be wise to raise the differentiation in rates if the court fails to exclude such evidence through motions in limine.


With a little preparation, a game plan to deal with unpaid medical bills can reap your client a verdict that is commensurate to the injury. Make sure to get out your custodian of records subpoenas for the billing. Also, have either the healthcare provider’s billing department or a retained medical billing expert opine as to the reasonable cost.

Unfortunately, many of our clients are not medically insured. Sometimes, the only way for them to receive treatment is through healthcare providers willing to operate on a lien basis. The authors hope that this article will arm fellow advocates in putting forth a reasonable and fair case for their clients while freezing the improper methods employed by defense firms.