Legal Insight: Limiting Economic Damages and Future Medical Expenses: Clarification Provided by the California Court of Appeal

May 9, 2025

In a significant development for California personal injury defense, a Court of Appeal’s decision has provided further clarification on the application of the collateral source rule, particularly concerning a plaintiff’s eligibility for Medicare and claims for future medical damages. The appellate court has made clear that evidence of future Medicare eligibility is admissible at trial. This ruling will significantly impact often inflated claims for future medical damages.

The Collateral Source Rule 

The collateral source rule precludes deduction of compensation the plaintiff has received from sources independent of the tortfeasor from damages the plaintiff “would otherwise collect from the tortfeasor.” (Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6.) Essentially, courts have determined that evidence of collateral benefits is generally inadmissible to reduce damages. 

In 2011, the Supreme Court of California provided insight into how courts may approach the admissibility of collateral payments. The landmark case of Howell v. Hamilton Meats Provisions, Inc. held 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.) Similarly, it was determined that when a medical care provider has accepted as full payment an amount less than the provider’s full bill, evidence of that amount is relevant to prove the plaintiff’s damages for past medical expenses and is admissible at trial. (Id. at 567.) 

In contrast to the Howell ruling which pertains specifically to insured plaintiffs, the amount of economic damages for an uninsured plaintiff typically turns on the reasonable value of the services rendered or expected to be rendered. (Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1330-1331.) 

In Pebley v. Santa Clara Organics, LLC, the California Court of Appeal analyzed how to classify a plaintiff who had health insurance but treated outside of his health insurance plan for purposes of economic damages. On appeal, the defendants asserted that Pebley failed to mitigate his damages by seeking medical treatment outside of his health insurance plan. After review, the Court determined that “[a] tortfeasor cannot force a plaintiff to use his or her insurance to obtain medical treatment for injuries caused by the tortfeasor. That choice belongs to the plaintiff.” (Pebley v. Santa Clara Organics, LLC (2018) 22 Cal.App.5th 1266, 1276.) Based upon this reasoning, the Court concluded that if a “plaintiff chooses to be treated outside the available insurance plan, the plaintiff is in the same position as the uninsured plaintiff and should be classified as such under the law.” (Ibid.) Thus, the economic damages of a plaintiff with health insurance that chooses to treat outside of his or her insurance plan would be based upon the reasonable value of the services rendered or expected to be rendered under Bermudez.

Audish v. Macias

Since the above rulings, primarily Pebley, defendants have faced not only increased past medical specials claims but also inflated life care plans introduced into evidence. These plans often project high future medical costs, significantly impacting the scope of economic damages. However, recent case law has clarified the limits of such life care plans. 

In Audish v. Macias, et al. (2024) 102 Cal.App.5th 740, plaintiff David Audish appealed a civil judgment related to an automobile collision case. At the trial court level, the jury found that Audish suffered $65,699.50 in damages, including $32,790.56 for future medical expenses. (Id. at 744.) Prior to trial, Audish filed a motion in limine that sought to preclude the admission of evidence that he had, or would have, medical insurance. (Id. at 746.) Although this motion was granted in part, it was also denied in part with the trial court reasoning that an expert witness could testify about the reasonable value of medical care based on the rates insurers pay for medical treatments. (Ibid.)

At trial, a nurse and life care planner testified on behalf of Audish and presented her life care plan for Audish, which summarized the types and costs of the medical treatments that Audish’s medical professionals recommended. (Id. at 746-747.) On cross-examination, Audish’s life care planner was asked whether Audish would be eligible for Medicare at age 65 to which she said “I assume so.” (Id. at 747.) This life care planner later testified that her future medical care estimates did not account for Medicare coverage, and that insurers sometimes pay less for medical treatments than the amounts health care providers bill for them. (Ibid.)

On appeal, Audish contended that the trial court abused its discretion by admitting evidence that he would have Medicare medical insurance at the age of 65. (Id. at 744.) In determining its ruling, the Court reviewed the case of Cuevas v. Contra Costa County (2017) 11 Cal.App.5th 163, which concluded that “the collateral source rule is not violated when a defendant is allowed to offer evidence of the market value of future medical benefits.” (Cuevas, supra, at 181-182.) After review, the California Court of Appeal held that the admission of evidence pertaining to Audish’s future eligibility for Medicare and the costs of any alleged future treatment under Medicare did not violate the collateral source rule or amount to an abuse of discretion. (Audish, supra, at 750.) 

Conclusion 

With the rising use of life care planners and inflated claims for future medical damages, it is critical that defense attorneys are aware of the ruling in Audish. Ultimately, Audish ensures that future care costs presented at trial reflect the plaintiff’s actual damages. This ruling will be essential in not only preparing for the cross-examinations of life care planners but also in equipping defense experts to rebut inflated life care plans.