New California Court of Appeal Opinion Re: Howell and Payments from a Medical Finance Company

The California Court of Appeal, Third Appellate District (Sacramento), issued an opinion in Uspenskaya v. Meline (Oct. 28, 2015, C071647) ___ Cal.App.4th ___, analyzing whether the amounts a medical provider accepts from a medical finance company are admissible as evidence of the reasonable value of the service. The Court of Appeal held that the trial court did not abuse its discretion when it excluded evidence regarding a third party’s payment to medical providers for a lien in the lawsuit. (Slip opn., p. 2.)

Plaintiff lacked medical insurance and contracted with her medical providers to treat her in exchange for a lien on whatever she might recover from defendant in the lawsuit. MedFin Managers, LLC (“MedFin”) purchased the lien from the medical providers for a discounted amount. Plaintiff remained liable on the total bill. The trial court denied defendant’s motion to admit evidence of the amounts MedFin paid to the medical providers as evidence of the reasonable cost of treatment provided to plaintiff. (Slip opn., p. 2.)  

The Court of Appeal affirmed. The court determined that the “MedFin payments are relevant because they have a tendency in reason to prove reasonable value.” (Slip opn., p. 12, italics in original.) But, defendant proffered no evidence to show that the MedFin payments represented the reasonable value of plaintiff’s treatment. “MedFin’s purchase price represents a reasonable approximation of the collectability of the debt rather than a reasonable approximation of the value of the plaintiff’s medical services.” (Id. at p. 13, italics in original.) Thus, “without evidence that those payments represented a reasonable value for the treatment, the probative value of that evidence as to reasonable value was minimal.” (Id. at p. 12.) As such, “there was substantial danger of undue prejudice and that the evidence of the MedFin payments would confuse the jury” and “[t]hese dangers substantial outweidghed any probabative value that evidence of the payments may have had.” (Ibid.) Accordingly, the trial court did not err in excluding the evidence of MedFin payments pursuant to Evidence Code section 352. (Ibid.)

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