Memo: Dodd v. Cruz

Some of you may have had experience with medical finance companies in California such as MedFin Manager and MedFi.

These companies purchase liens from health care providers, at a discount, for medical services provided
to plaintiffs in third-party lawsuits. Those services often include high priced surgeries. Those plaintiffs
then claim they are entitled to the full billed amount, since the medical financing company contends they
expect to be paid the full amount of their lien following settlement or trial.

A decision recently issued by the California Court of Appeal, Second District, has authorized a defendant to obtain records from the medical finance company on the rationale that the lien amount is relevant to both the reasonable value of the services and the amount of medical expenses plaintiff actually incurred. California law currently allows a plaintiff to recover the lesser of (1) the amount paid or incurred for past medical expenses and (2) the reasonable value of the services.

In Dodd v. Cruz, plaintiff alleged he underwent surgery as a result of a motor vehicle accident. Defendant served the medical finance company with a subpoena requesting business records, including documents which showed what the medical finance company paid to purchase the lien. The medical finance company then filed a Motion To Quash the subpoena, also seeking monetary sanctions against defendant and her attorneys. The trial court granted the Motion To Quash, and
awarded monetary sanctions of $5,600.00.

The Court of Appeal reversed, concluding that the subpoena was reasonably calculated to lead to the discovery of admissible evidence relating to the reasonable value of the health care provider's services and the amount of medical expenses plaintiff actually incurred.

Unfortunately, the Court of Appeal did not express any opinion about whether the amount the health care provider accepted from the medical finance company was proof of plaintiff's damages for establishing past medical expenses, nor whether the subpoenaed documents were admissible at trial.

We expect these two issues will be presented to the California Supreme Court in the not too distant future, since there is a split of authority among the California Courts of Appeal regarding whether, in a case involving a medical financing company as in Dodd, a plaintiff's health care provider's "billed" or "charged" amounts are admissible to prove the reasonable value of the services provided.

In the interim, we will continue to aggressively litigate and defend your interests in all matters, including those involving medical finance companies such as MedFin Manager and MedFi. Should you have any questions or comments regarding the above, please don't hesitate to give me a call.

Finally, to read the Dodd v. Cruz decision by the Court of Appeal in its entirety, please click on the link below.