Saturday, August 20, 2011

Supreme Court decision on Howell case gives certainty to damages issues

On August 18, 2011, the California Supreme Court rendered a long-awaited opinion on the Howell v. Hamilton Meats Co. case.  The central issue was whether the negotiated reduced payment a plaintiff's health plan negotiates for the plaintiff [I call this the wholesale price of medical care] should be treated as a collateral source payment in the same way the actual payment from the health plan is considered a collateral source, and consequently whether a defendant is entitled to the benefit of that negotiated reduced rate.  The Court said in essence no, the difference between the wholesale rate and the retail rate is not a collateral source benefit and consequently the measure of a plaintiff's damages is what was paid, not what was charged [the retail rate].  This decision limits a plaintiff's damages, which is certainly a negative for plaintiffs and plaintiff attorneys across the board.  Evidence of the retail amount is admissible evidence before a jury, as is evidence of what was paid.  How the word "insurance" doesn't get uttered during all this dispute over retail vs wholesale rates and payments remains unresolved.  The Court's decision further modified what was a productive and predictable method of resolving the "paid vs. billed dispute" wherein most trial courts take on the proper measure of medical damages, i.e. post-verdict hearing on whether to reduce medical damages down to what was paid assuming the evidence is presented.  The decision does provide some certainty which was missing for several years as several disparate cases [Hanif, Nishihama, Howell, King, Cabrera] from several districts weaved their way through the appellate system.  A strong, knowledgeable mediator should know these issues and knows the current state of the law in order to be effective for the parties.

Wednesday, August 17, 2011

A proposal of mediation does not signal weakness

The prevailing perception about someone proposing mediation is that the proposer is dealing from a position of weakness or urgency; that the proposing party is anxious to resolve the matter and is willing to do so at a discount or premium depending on which side the party is on.  Rather, a proposal of mediation should be taken at face value, for what it plainly is, a proposal by the opposing party to informally resolve the dispute by a cost effective means.   The proposal should not become an assumption that the proposer is weak, anxious, eager or willing to severely compromise his or her prior position.  Such assumptions, or overly optimistic expectations, only set up the mediation and the parties for failure.  If you engage in mediation based on these assumptions you will only be disappointed by the outcome, the result will always fail to meet your expectations and you will have squandered a good opportunity to resolve the case.  An invitation to mediate should be understood as an invitation to discuss the dispute, narrow the issues and compromise.  Rather than perceived "weakness", a proposal of mediation shows confidence and an open-minded approach to resolution.  My experience is that mediation works best for those parties who enter into mediation with reasonable expectations, a willingness to listen and share, and with an objective of compromise.

Tuesday, August 16, 2011

Real Estate Dispute Resolves Through Mediation

I was appointed by the El Dorado County Superior Court to serve as one of two of mediators on a pending action filed by a homeowner who claimed the home mortgage and interest rate she ended up with was not the loan she applied and was approved for.  She claimed she did not know the loan could adjust from less than 1% interest rate to over 4%, effectively doubling her monthly payment, which it did over the next four years.  She subsequently lost several thousand dollars to a fraudulent loan modification program, which she claimed she would not have lost had she not been stuck with an adjustable rate mortgage.  She subsequently sued the mortgage officer, broker and the lender, a national bank.  At the outset of the conference, the parties were reluctant to discuss settlement or even engage in any substantive discussions of the issues.  In short, both were entrenched in their positions and unwilling to move.  One party was offended at being sued, the other felt hurt and betrayed.  After some encouragement from myself and my partner about the benefits of candid discussion of the issues and reassuring that there was nothing to lose by engaging in a confidential exchange of ideas, the parties got involved.  Once the parties began negotiating in earnest, a settlement was reached within a few hours.  Continued litigation of the matter, including experts, would have cost the parties tens of thousands of dollars.  The parties avoided those expenses and resolved the dispute for one-tenth of the expense of trial.  Both parties were relieved to put the dispute behind them, emotionally and financially.