Plaintiff is not entitled to recover CCP 998 fees because judgment was less than plaintiff’s offer of compromise after negotiated rate differential is deducted.
In March 2010, the state Supreme Court granted review of Howell v. Hamilton Meats & Provisions Inc., concerning the “negotiated rate differential” (NRD), the difference between the billed rate for medical care and the actual amount paid on behalf of a plaintiff, to determine whether plaintiff may collect this amount as economic damages and ultimately concluded in 2011 that the plaintiff could not. In April 2011, Lena Lee sued Joseph Silveira in connection with a 2008 automobile accident. In August, Lee served Silveira with a Code of Civil Procedure Section 998 (CCP 998) offer of settlement for $1 million, which Silveira ignored. Trial began in 2012, with the parties stipulating to the following amounts: $274,514 for billed medicals and $109,251 for the amount paid on Lee’s behalf. Ultimately, the jury found in Lee’s favor and awarded her $1,027,014, which included $274,514 in medical expenses. Accordingly, the trial court entered judgment in that amount, but specifically stated that judgment was subject to amendment concerning the reduction for Lee’s past medical expenses. Immediately, Silveira moved to reduce the jury verdict by the NRD of $165,262. Lee argued that the deduction happens later—after the trial court determines her expert witness fees and prejudgment interest under Civil Code Section 3291. Silveira disagreed, arguing that the NRD should be deducted from the jury’s verdict first, before the court may evaluate Lee’s courtroom success. Ultimately, the trial court sided with Silveira and entered judgment for $887,098, which excluded Lee’s fees and interest under Section 3291.
Affirmed. CCP 998 is a cost-shifting statute that encourages pretrial settlements. Under CCP 998, a party who declines an offer to compromise and fails to obtain a more favorable settlement may be compelled to pay the offeror’s expert witness fees incurred during trial. Additionally, personal injury defendants who refuse to settle before trial for less than the plaintiff recovers at trial must pay prejudgment interest. Thus, Lee would be entitled to fees and interest if Silveiro failed “to obtain a more favorable judgment” than Lee’s $1 million offer to compromise. Here, the judgment of more than $1 million expressly stated that it was subject to the stipulated reduction for Lee’s past medical expenses. With the deductions, Silveiro was only liable for $887,098—an amount less than Lee’s CCP 998 offer. Thus, the trial court properly entered judgment excluding Lee’s fees under CCP 998.