Daily Blast October 10, 2016

Last week, the Court of Appeal, Second Appellate District, Division One (Los Angeles), issued an opinion in Markow v. Rosner (Oct. 4, 2016, B260715, B262530) __ Cal.App.5th __, analyzing whether an independent doctor is an ostensible agent of a hospital where the patient signed hospital admission forms stating that all physicians furnishing services to patients were independent contractors and not agents of the hospital. The court also analyzed, among other issues, whether the economic damages award for future hospitalizations was excessive. The Court of Appeal concluded that the patient knew or should have known that the doctor was not the hospital’s agent. (Slip opn., pp. 2, 26.)

The case arose from injuries sustained by the plaintiff who received treatment from a pain management physician that rendered the patient quadriplegic. The patient and his wife sued the doctor and the hospital for professional negligence and loss of consortium. (Slip opn., p. 2.) During trial, the hospital presented evidence that over the four-and-one-half-year period that the patient received treatment, he signed and initialed 25 Conditions of Admissions forms, which included a provision that “physicians are independent contractors and are neither employed by nor agents of this facility.” (Id. at p. 4.) Further, regarding future economic damages, the plaintiffs’ life care planning expert testified that the estimated amount billed for the patient’s future hospitalizations would be approximately $2 million. The expert also testified that the amount actually paid is usually 50 to 75 percent of the total amount billed. (Id. at p. 25.)

The jury found against the doctor and the hospital. The jury found the hospital vicariously liable for the plaintiffs’ damages because it intentionally or carelessly created the impression that the doctor was its agent. (Slip opn., p. 8.) The jury awarded $4.5 million for future economic loss, which included $1.3 million for the cost of future hospitalizations. (Id. at p. 23.) After reducing noneconomic damages pursuant to Civil Code section 3333.2, plaintiffs’ damages award totaled $5.2 million. (Id. at p. 8.)

The Court of Appeal affirmed the judgment against the doctor, but reversed the judgment against the hospital. The court concluded that the jury’s finding of ostensible agency was contrary to the law. (Slip opn., p. 18.) “In the physician-hospital-patient context, ostensible agency is a factual issue ‘unless the evidence conclusively indicates that the patient should have known that the treating physician was not the hospital’s agent, such as when the patient is treated by his or personal physician’ or received actual notice of the absence of any agency relationship.” (Id. at p. 10, quoting Mejia v. Community Hospital of San Bernardino (2002) 99 Cal.App.4th 1448, 1453.) It was undisputed that the patient received actual notice that the doctor was not an agent of the hospital. On 25 occasions, the patient signed and initialed admissions forms that included a disclaimer about the physician-hospital-patient relationship. (Slip opn., pp. 10-11.) Moreover, the patient was treated in a nonemergency context and the patient chose the doctor and had say in the matter. (Id. at pp. 12-13.) Thus, the patient either knew or should have known that the doctor was not the hospital’s agent. (Id. at p. 13.)

Furthermore, the court concluded that substantial evidence supported the jury’s award of future economic damages. (Slip opn., p. 26.) The jury was properly instructed with CACI No. 3903A regarding the reasonable cost of reasonably necessary medical care that the patient is reasonably certain to need in the future. The California “Supreme Court has endorsed a market or exchange value as the proper way to think about the reasonable value of medical services.” (Id. at p. 24 citing Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 556.) “This applies to the calculation of future medical expenses.” (Ibid., citing Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1330.) “For insured plaintiffs, the reasonable market or exchange value of medical services will not be the amount billed by a medical provider or hospital, but the ‘amount paid pursuant to the reduced rate negotiated by the plaintiff’s insurance company.’” (Slip opn., p. 24 quoting Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1324, original italics.) According to the court, “[w]hile [the expert] acknowledged that in one instance a hospital accepted a reimbursement rate much lower than 50 to 75 percent, she also testified that reimbursement rates vary and that there is no one ‘across-the-board, set percentage.’” (Slip opn., p. 25.) Thus, the jury could reasonably find the expert’s testimony on the reimbursement rate of 50 to 70 percent to be credible. (Id. at pp. 25-26.) Accordingly, the court concluded that “substantial evidence supports the jury’s award of future economic damages.” (Id. at p. 26.)

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