Judge Lynette Gridiron Winston, Case Number: KC069796, Date: 2023-11-15 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: KC069796, Date: 2023-11-15 Tentative Ruling

CASE NAME: Pomona Valley Hospital Medical Center v. Kaiser Foundation Health Plan, Inc., et al.

The Court GRANTS the motion for new trial unless the parties consent to a reduced judgment in the amount of $58,030,564.08.

Defendant Kaiser Foundation Health Plan, Inc. is ordered to give notice of the Court’s ruling within five calendar days of this order.

This is a medical service provider payment dispute. On November 14, 2017, Plaintiff Pomona Valley Hospital Medical Center (Plaintiff) filed this action against Defendants Kaiser Foundation Health Plan, Inc. (Kaiser), Kaiser Permanente Insurance Company, Kaiser Foundation Hospitals, The Permanente Medical Group, Southern California Permanente Medical Group, and Does 1 through 100, alleging causes of action for declaratory relief and unlawful business practices. On March 27, 2019, Plaintiff filed the operative First Amended Complaint (FAC), alleging causes of action for breach of written contract and quantum meruit.

On January 31, 2023, a jury trial for Phase I concerning the reasonable value of services Plaintiff provided to Kaiser was conducted. The jury found that the reasonable value of the services provided was $105,887,963.00. After deducting $39,796,251.00 for payments Kaiser previously made, the jury awarded Plaintiff a total of $66,091,712.00.

On February 20, 2024, Kaiser filed a notice of intention to move for new trial. On March 1, 2024, Kaiser moved for a new trial. On March 21, 2024, Plaintiff opposed the motion. On April 2, 2024, Kaiser replied.[1]

The verdict may be vacated and any other decision may be modified or vacated, in whole or in part, and a new or further trial granted on all or part of the issues, on the application of the party aggrieved, for any of the following causes, materially affecting the substantial rights of such party:

1. Irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.

6. Insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law.

7. Error in law, occurring at the trial and excepted to by the party making the application.

When a new trial is granted, on all or part of the issues, the court shall specify the ground or grounds upon which it is granted and the court's reason or reasons for granting the new trial upon each ground stated.

A new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict or other decision, nor upon the ground of excessive or inadequate damages, unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict or decision.

The order passing upon and determining the motion must be made and entered as provided in Section 660 and if the motion is granted must state the ground or grounds relied upon by the court, and may contain the specification of reasons. If an order granting such motion does not contain such specification of reasons, the court must, within 10 days after filing such order, prepare, sign and file such specification of reasons in writing with the clerk. The court shall not direct the attorney for a party to prepare either or both said order and said specification of reasons.

Kaiser moves for a new trial on the grounds of: (1) irregularity in the proceedings of the Court, jury or adverse party, or any order of the court or abuse of discretion by which Kaiser was prevented from having a fair trial; (2) excessive damages; (3) insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law; and (4) errors in law, occurring at the trial and excepted to by Kaiser. More specifically, Kaiser contends that it was prejudiced by the improper admission of the Legacy Contract (as defined in the moving papers) as evidence of reasonable value, that the Court erred in excluding evidence regarding Plaintiff’s operating costs, that the Court erred by permitting Plaintiff’s expert to rely on and testify regarding imaginary transactions, and that the cumulative errors resulted in an excessive verdict that is not supported by the weight of the evidence. The Court will address each of these issues in turn.

A verdict or finding shall not be set aside, nor shall the judgment or decision based thereon be reversed, by reason of the erroneous admission of evidence unless:

(a) There appears of record an objection to or a motion to exclude or to strike the evidence that was timely made and so stated as to make clear the specific ground of the objection or motion; and

(b) The court which passes upon the effect of the error or errors is of the opinion that the admitted evidence should have been excluded on the ground stated and that the error or errors complained of resulted in a miscarriage of justice.

Kaiser contends it was prejudiced by the admission of the Legacy Contract as evidence of reasonable value because the Legacy Contract expressly excludes its use as evidence of the reasonable value of Plaintiff’s services. The language at issue reads, “[n]othing in this Section 3 [Compensation for Services] shall be construed as an admission or otherwise used as evidence concerning what constitutes the reasonable and customary value of Contractor’s services under section 1300.71 (a)(3)(B), 28 Cal. Code of Reg.” (Shlesinger Decl., Ex. B, Kaiser’s MIL No. 1, 1:13-15, emphasis in original.)

Kaiser contends that Plaintiff’s quantum meruit claim for non-contracted emergency healthcare services provided to Kaiser’s healthcare plan members is a claim for “reasonable and customary value” under Section 1300.71, subdivision (a)(3)(B), of title 28 of the California Code of Regulations (hereinafter Section 1300.71, subdivision (a)(3)(B)), and that the Legacy Contract was therefore inadmissible at trial by its own terms. Kaiser cites Children’s Hospital Central California v. Blue Cross of California (2014) 226 Cal.App.4th 1260 for the proposition that a quantum meruit claim seeking reimbursement for emergency services necessarily seeks the reasonable and customary value of those services under Section 1300.71, subdivision (a)(3)(B). Kaiser also cites Tower Acton Holdings, LLC v. Los Angeles Cnty. Waterworks Dist. No. 37 (2002) 105 Cal.App.4th 590 for the proposition that a voluntary agreement to exclude evidence at trial is enforceable to the extent it is not contrary to public policy. Kaiser finally argues that the admission of the Legacy Contract at trial prejudiced Kaiser, as evidenced by Plaintiff’s heavy reliance upon it throughout the trial, particularly during closing arguments, and the high reimbursement rate that the jury adopted for its verdict.

In opposition, Plaintiff contends Kaiser failed to preserve its objections to the admission of the Legacy Contract at trial. More specifically, Plaintiff contends Kaiser expressly did not object to the admission of the Legacy Contract when Plaintiff moved it into evidence. Plaintiff also argues that Kaiser’s first motion in limine regarding the Legacy Contract only moved to exclude it based on relevance and based on its probative value being outweighed by the risk of undue prejudice, not on the grounds that the Legacy Contract itself barred its admission at trial. Plaintiff contends Kaiser therefore waived this objection.

Plaintiff then contends that even if Kaiser had preserved this objection, it would still not bar admission of the Legacy Contract. Plaintiff argues Kaiser’s citation to Tower Acton Holdings is unavailing because that case involved a settlement agreement limiting admissibility of settlement negotiations as evidence, which the Court of Appeal found was enforceable because it did not violate public policy and in fact promoted the public policy favoring settlements of disputes. Plaintiff contends that in this case, the Legacy Contract served the broader public policy by ensuring the jury received all relevant evidence to help it ascertain the truth, and that other California courts have held that a prior contract between parties is relevant and admissible evidence in a quantum meruit case. Plaintiff also contends the Legacy Contract was relevant, admissible evidence of the reasonable value of emergency services Plaintiff provided to Kaiser plan members from 2004 through September 2017, as the relevant period in question began in October 2017.

Plaintiff further contends that Section 1300.71, subdivision (a)(3)(B), regulates prompt payment of reimbursement claims between providers and healthcare plans, not evidence in a jury trial. Plaintiff cites County of Santa Clara v. Superior Court (2023) 14 Cal.5th 1034, for the proposition that the prompt payment regulation provided under Section 1300.71, subdivision (a)(3)(B), is different from a trial regarding the reasonable value of services. Plaintiff contends this regulation permits the Department of Managed Healthcare (DMHC) to direct a healthcare plan to modify its reimbursement methodology, not to make a judicial determination between the two parties regarding the reasonable and customary value of services provided. Plaintiff then argues Kaiser itself asserted in its third motion in limine that its reimbursement methodology under DMHC regulations is different from the market-value inquiry in a quantum meruit claim, which motion in limine the Court granted, and Kaiser is thereby judicially estopped from evading the limitation of Section 1300.71, subdivision (a)(3)(B). Plaintiff there contends the Legacy Contract by its own terms applies only to DMHC determinations regarding whether Kaiser complied with the prompt payment regulation under Section 1300.71, subdivision (a)(3)(B), and that it says nothing about the Legacy Contract being excluded from evidence in connection with Plaintiff’s quantum meruit claim.

The Court agrees with Kaiser. First, the Court finds Kaiser properly preserved its objections regarding the admissibility of the Legacy Contract by virtue of its first motion in limine. (Schlesinger Decl., Ex. B, 5:12-6:1; see People v. Morris (1991) 53 Cal.3d 152, 190, disapproved on other grounds in People v. Stansbury (1995) 9 Cal.4th 824, 830 fn. 1.) That motion in limine focused on relevance, the risk of undue prejudice substantially outweighing the probative value of the evidence, and the Legacy Contract not being admissible evidence of reasonable value. (Schlesinger Decl., Ex. B, 5:12-6:1) The Court finds this sufficient to preserve the objection.

Second, Section 1300.71, subdivision (a)(3)(B), does not establish the procedures for a regulatory proceeding before the DMHC. Instead, Section 1300.71, subdivision (a)(3)(B), defines the term “Reimbursement of a Claim” and sets forth criteria for determining the reasonable and customary value of noncontracted emergency medical services for such reimbursement claims. (County of Santa Clara v. Superior Court (2023) 14 Cal.5th 1034, 1043-1044; Admin. Code, tit. 28, § 1300.71, subd. (a)(3)(B).) The DMHC “lacks the authority to set specific reimbursement rates under theories of quantum meruit and the jurisdiction to enforce a reimbursement determination on both the provider and the health plan. Because the [DMHC] cannot provide an adequate forum, health care providers must be allowed to maintain a cause of action in court to resolve individual claims-payment disputes over the reasonable value of their services.” (Id. at 1052-1053; internal citation and quotation omitted.) There is nothing in the exclusionary language of the Legacy Contract that limits its application to proceedings before the DMHC, which has no authority to determine the reimbursement rates. Kaiser and Plaintiff agreed that the compensation terms agreed to by the parties would not be used as evidence to determine the reasonable and customary values of services rendered as that term is defined in Section 1300.71, subdivision (a)(3)(B).

Third, Plaintiff’s claim for reimbursement of the reasonable and customary value of its emergency services is predicated directly upon Section 1300.71, subdivision (a)(3)(B). (FAC, ¶ 19; Long Beach Mem'l Med. Ctr. v. Kaiser Found. Health Plan, Inc. (2021) 71 Cal.App.5th 323, 338, internal quotation marks omitted [“The underlying duty to repay is established by the Knox-Keene Act…, while the amount of repayment is governed either by contract (when the parties have a preexisting contract) or by the quasi-contractual remedy of quantum meruit (when they do not) [citations].”]) While prior contracts can be evidence of the reasonable value of services, such contracts cannot be used when the parties agreed that the contract terms could not be used to constitute such value. Paragraph 3(G) of the Legacy Contract expressly excludes itself as admissible evidence of what constitutes the reasonable and customary value of Plaintiff’s services under Section 1300.71, subdivision (a)(3)(B). (Schlesinger Decl., Ex. A, ¶ 3, subd. (G).)

Based on the foregoing, the Court finds that the Legacy Contract should not have been admitted at trial. (Evid. Code, § 353, subd. (a); See Tower Acton Holdings, supra, 105 Cal.App.4th at p. 600 [“if such agreement was not contrary to public policy, it was enforceable as written”].)

The Court further finds that the admission of the Legacy Contract at trial unfairly prejudiced Kaiser. (Evid. Code, § 353, subd. (b).) The Legacy Contract contained the highest rate (86%) out of six upon which Plaintiff’s expert, Christopher Fritz, relied upon in reaching his fair market valuation. (Motion, Ex. A; Tooch Decl., Ex. I, 13:4-9.) The Legacy Contract rate was included in Mr. Fritz’s valuation of a 77.5% reimbursement rate as reasonable. (Schlesinger Decl., Ex. J; Ex. M, 121:4-6.) The Legacy Contract rate and Mr. Fritz’s 77.5% valuation was used by Plaintiff in its closing argument and such valuation was used by the jury in determining the reasonable value or market value of Plaintiff’s claims to be $105,887,963, the amount Plaintiff requested based on Mr. Fritz’s 77.5% valuation. (Schlesinger Decl., Ex. J; Ex. M, 21:16-24:3, 45:19-46:14, 59:19-28, 121:4-6.) Without the Legacy Contract rate, Mr. Fritz’s valuation would have been lower than 77.5%. Thus, the admission of the Legacy Contract rate resulted in excessive damages to Plaintiff. (Code Civ. Proc., § 657.)

“[U]nder quantum meruit, the costs of the services provided are not relevant to a determination of reasonable value. Quantum meruit measures the value of services to the recipient, not the costs to the provider.” (Children's Hospital of Central California, supra, 226 Cal.App.4th at p. 1278.)

Kaiser contends the Court erred by excluding evidence of certain charge increases by Pomona that were purportedly untethered to its cost increases, and that Kaiser’s $40 million payments more than covered Pomona’s fixed costs. Kaiser contends juries may consider a provider’s costs in determining the reasonable and customary value of services in a quantum meruit case.

Kaiser then argues the Court misread Children’s Hospital and thereby prejudiced Kaiser. More specifically, Kaiser contends the Court’s exclusion of cost evidence effectively prevented Kaiser from rebutting Plaintiff’s valuation expert, Christopher Fritz. Kaiser argues this evidence was necessary to undermine two aspects of Mr. Fritz’s opinion, namely the Legacy Contract reimbursement rate, and the reimbursement rate Mr. Fritz “concocted” by adding a premium to actual payments Plaintiff received from in-network health plans.

Kaiser further contends it intended to present rebuttal evidence explaining that the Legacy Contract’s reimbursement rate was unreasonable because it had become untethered from Plaintiff’s overall costs in the years following the contract’s negotiation. Kaiser argues it sought to rebut Mr. Fritz’s testimony regarding the addition of a premium to the vast majority of payments Plaintiff accepted for comparable services, which in part involved calculations based on defrayment of fixed costs.

Kaiser argues the Court also erred by undermining the credibility of Kaiser’s method for calculating reimbursements by finding that the testimony of one of Kaiser’s witnesses, Michelle Abhasakun, was improper because of the methodology used. Kaiser contends the Court then instructed the parties to prepare a jury instruction indicating that evidence regarding Kaiser’s methodology served only as background information for how Kaiser determined the fair market value of Plaintiff’s services, and that the parties’ experts are not relying on that methodology to determine the fair market value of the emergency medical services at issue. Kaiser also cites to other cases as evidence of costs being admissible evidence, such as Gould v. Workers’ Comp. Appeals Bd. (1992) 4 Cal.App.4th 1059, Perdue v. Crocker Nat’l Bank (1985) 38 Cal.3d 913, and Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131.)

In opposition, Plaintiff contends the Court did not abuse its discretion in limiting evidence on costs because the Court of Appeal in Children’s Hospital made clear that quantum meruit measures the value of services to the recipient, not the costs to the provider. Plaintiff contends California law is clear that in a quantum meruit case by a hospital provider against a health plan, the factors set forth in Section 1300.71, subdivision (a)(3)(B), provide a framework for reimbursement, but they are not exclusive or necessarily appropriate in all cases.

Plaintiff also argues Perdue is inapposite because that case concerned whether the plaintiff had pleaded enough to warrant a hearing under Civil Code section 1670.5 regarding an unconscionability argument. Plaintiff then argues Moran is inapposite because the Court of Appeal rejected most of the plaintiff’s theories regarding emergency charges but concluded that procedural and substantive unconscionability had been sufficiently pleaded to survive demurrer. Plaintiff also contends the Court of Appeal in Moran did not endorse the use of costs evidence at trial to prove fair market value. Plaintiff additionally argues that Kaiser cited various cases from other jurisdictions, which do not bind this Court.

Plaintiff further argues that Kaiser’s motion does not accurately describe what transpired at trial in this action. Plaintiff contends the rulings Kaiser cites are Plaintiff’s fourth and sixth motions in limine regarding evidence of costs and portions of Kaiser’s expert opinion referencing Plaintiff’s costs, respectively. Plaintiff notes that the Court granted the fourth motion in limine to prohibit evidence of the overall costs or profits of either Plaintiff or Kaiser, and that it denied the sixth motion in limine to Kaiser’s expert value opinion because it relied upon incorrect and misleading data, which the Court found to be the proper subject for cross-examination. Plaintiff argues it was Kaiser’s obligation to get clarification on these rulings, and it failed to do so.

Plaintiff also contends Kaiser was ultimately able to present the costs evidence it wanted anyway, as evidenced by the Court permitting Kaiser to present evidence of hospital services inflation rates rather than general inflation rates. Plaintiff then argues with Kaiser having cited part of Mr. Fritz’s report as though it was part of his trial testimony in support of its argument regarding the improper premium adjustment. Plaintiff contends that Mr. Fritz did not make that statement at trial, and that his pretrial expert report was not admitted into evidence.

As for Ms. Abhasakun’s testimony, Plaintiff argues the Court allowed the demonstrative evidence and her testimony, but would not allow Plaintiff to cross-examine whether Kaiser’s methodology complied with the law. Plaintiff then points to part of Ms. Abhasakun’s testimony, wherein she stated that Kaiser wanted to make sure it was paying Plaintiff more than its costs, and argues that the Court permitted this evidence, despite Plaintiff’s motion in limine.

The Court agrees with Plaintiff. The law makes clear that costs to the provider are not relevant to a quantum meruit claim. (Children’s Hospital, supra, 226 Cal.App.4th at p. 1278.) Rather, what matters is what is being paid and accepted in the market. (Id.) While the factors set forth in Section 1300.71, subdivision (a)(3)(B), provide a framework for reimbursement claims under that regulation, they do not necessarily limit the analysis in a quantum meruit claim. (See Id., at p. 1275; County of Santa Clara, supra, 14 Cal.5th at pp. 1043-1044.)

The Court further agrees with Plaintiff that it appears Kaiser was able to present certain types of costs evidence anyway, albeit some of it with a limiting jury instruction. (See, e.g., Tooch Decl., Ex. J, 111:26-113:12 [Ms. Abhasakun’s testimony re Kaiser methodology]; Schlesinger Decl., Ex. M, 20:3-15 [limiting instruction].)[2] Plaintiff also correctly notes that Mr. Fritz’s pretrial expert report was not admitted into evidence, so Kaiser’s argument regarding that is irrelevant. (See Tooch Decl., Ex. H, 183:24-28.)

As for the legal authorities Kaiser cited, the Court finds them unpersuasive. First, Gould is factually distinguishable. (See Children’s Hospital, supra, 226 Cal.App.4th at p. 1275 [“[T]he facts and circumstances of the particular case dictate what evidence is relevant to show the reasonable market value of the services at issue…]”.) Gould involved a physician seeking to show the reasonableness of his fees that exceeded a workers’ compensation medical schedule. (Id.) This action involves legally mandated compensation for the provision of emergency medical services between a healthcare plan and a non-contracting hospital. Gould also did not involve a quantum meruit claim. (See generally Gould, supra, 4 Cal.App.5th 1059.)

Second, Perdue and Moran did not address Section 1300.71, subdivision (a)(3)(B), nor did they involve a dispute between a hospital providing medical services and a healthcare plan. (See generally Perdue, supra, 38 Cal.3d 913; Moran, supra, 3 Cal.App.5th 1131.) The Court also agrees with Plaintiff that Kaiser’s citations to non-California law is unavailing here. (People v. Lopez (2019) 8 Cal.5th 353, 379 [holdings of other states not binding]; McCann v. Lucky Money, Inc. (2005) 129 Cal.App.4th 1382, 1396 [federal court opinions interpreting state law not binding].)

Based on the foregoing, the Court DENIES the motion for new trial on the grounds that the Court improperly excluded costs evidence from trial.

“[U]nder Evidence Code sections 801, subdivision (b), and 802, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or 3) speculative. Other provisions of law, including decisional law, may also provide reasons for excluding expert opinion testimony.” (Sargon Enterprises, Inc. v. Univ. of S. California (2012) 55 Cal.4th 747, 771–772.)

Kaiser contends the Court erred by permitting Plaintiff’s expert to rely on and testify regarding imaginary transactions as the basis for determining the reasonable and customary value of Plaintiff’s services. Kaiser argues that Mr. Fritz improperly added a premium to his valuation to account for purported differences between in-network and out-of-network emergency services. Kaiser contends this was improper because in-network payers constituted the vast majority of payers to Plaintiff, and their customary price is generally significantly lower than out-of-network payers. Kaiser does not dispute that Plaintiff could present evidence regarding the differences between in-network payers and out-of-network payers, but contends this premium adjustment was improper because it artificially inflated the rates charged or paid by market participants. Kaiser contends the verdict would have been about $14 million lower without Mr. Fritz’s artificially inflated rates.

In opposition, Plaintiff contends the Court did not abuse its discretion in denying Kaiser’s motion in limine number 2 regarding Mr. Fritz’s expert testimony. Plaintiff contends that Mr. Fritz’s value calculations were based on six types of real transactions. Plaintiff argues it is well established that out-of-network payments are higher than in-network payments due in part to the significant discounts on emergency services offered to an in-network payer. Plaintiff contends Mr. Fritz testified in his report that in-network rates are discounted in exchange for the steering of patients to the hospital, which is beneficial for multiple reasons, such as providing more elective business to a hospital, which can help attract specialists like oncologists, provide reliable payments, and improve relationships between physicians and surgeons.

Plaintiff further contends Mr. Fritz explained that comparability is necessary to determine fair market value, and that he testified regarding real transactions under Kaiser’s contracts with other hospitals. Plaintiff also contends Mr. Fritz’s adjustments served to make the fair market value between in-network agreements with major payers comparable to those for out-of-network payers.

The Court finds it did not err in permitting Mr. Fritz’s testimony here. First, the Court disagrees with Kaiser’s characterization of Mr. Fritz’s valuation adjustments as “imaginary transactions.” Mr. Fritz’s valuation testimony was based on real transactions. (Tooch Decl., Ex. I, 12:14-14:17.) Second, Mr. Fritz explained differences that affect the valuations between in-network and out-of-network payers, such as increased elective business, which enhance the hospital’s ability to offer other services, and provide other benefits such as reliable payments and improved relationships between doctors and surgeons. (Id., 162:11-15, 186:16-190:6, 194:16-201:12.) Third, Mr. Fritz explained the basis for his adjustments between in-network and out-of-network payers was to make the services comparable to each other and thereby properly determine their fair market value. (Id., at 157:12-162:15.)

Finally, any issues regarding the bases for Mr. Fritz’s testimony should have been addressed on cross-examination. (See Evid. Code, § 721, subd. (a).) Accordingly, the Court finds that Mr. Fritz’s testimony was based on matters on which an expert may reasonably rely, was based on reasons supported by the materials, and was not speculative. (See Sargon Enterprises, Inc., supra 55 Cal.4th at pp. 771-772.)

Based on the foregoing, the Court DENIES the motion for new trial on the grounds that the Court improperly permitted Mr. Fritz’s expert testimony on this issue.

A new trial may be required where the “cumulative effect of the errors was unquestionably to make it ‘reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error[s].’ [Citations.]” (Victaulic Co. v. Am. Home Assurance Co. (2018) 20 Cal.App.5th 948, 987.)

Kaiser contends that the cumulative effect of the Court’s errors resulted in an excessive verdict warranting a new trial. Kaiser contends Mr. Fritz’s testimony was based on two improper matters, i.e., the Legacy Contract rate and his premium adjustment to account for the differences between in-network payers and out-of-network payers. Kaiser contends that the verdict would have been $19 million lower, but for Mr. Fritz’s improper testimony. Kaiser also contends these errors prevented Kaiser from presenting evidence and testimony to undermine Mr. Fritz’s credibility, such as the cost evidence, Legacy Contract rate, and Mr. Fritz’s adjustment for in-network payers and out-of-network payers.

In opposition, Plaintiff contends Kaiser has failed to establish error, and therefore no basis for prejudice from any purported cumulative errors. Plaintiff contends Kaiser has not presented a sufficient evidentiary record to support its contention of an excessive damage award for purposes of Code of Civil Procedure section 657.

The Court finds there was only one error and that such error warrants a new trial. The Court denied the motion on all of the other grounds raised by Kaiser. Since the Court finds the only ground is sufficient to warrant a new trial, the Court DENIES the motion for new trial on the grounds of cumulative error.

“(a) In any civil action where after trial by jury an order granting a new trial limited to the issue of damages would be proper, the trial court may in its discretion:

(2) If the ground for granting a new trial is excessive damages, issue a conditional order granting the new trial unless the party in whose favor the verdict has been rendered consents to the reduction of so much thereof as the court in its independent judgment determines from the evidence to be fair and reasonable.” (Code Civ. Proc., § 662.5, subd. (a)(2).)

Given the Court’s decision to grant the motion for new trial with respect to the Legacy Contract, the Court will issue a conditional order granting the new trial unless the parties consent to a reduction of the judgment to $58,030,564.08. The Court reached this calculation by removing the Legacy Contract rate from Mr. Fritz’s calculation and reaching a new weighted average of 71.6%, i.e., adding the remaining rates and dividing by 5, and then applying the new rate to the full billed charges at issue ($136,629,630), less the amount Kaiser previously paid ($39,796,251). This works out as follows:

The Court finds this to be a fair and reasonable reduction based on the evidence. The Court will discuss this further with the parties at the hearing.

The Court GRANTS the motion for new trial unless the parties consent to a reduced judgment in the amount of $58,030,564.08.

Defendant Kaiser Foundation Health Plan, Inc. is ordered to give notice of the Court’s ruling within five calendar days of this order.

[1] The parties stipulated to Plaintiff filing its opposition by March 21, 2024, and Kaiser filing its reply by April 2, 2024. (Order Granting Stipulation (3/7/24); Code Civ. Proc., § 659a.)

[2] Plaintiff cites certain parts of Exhibit G from Mr. Tooch’s declaration regarding evidence of general inflation versus medical services inflation, but the Court was unable to find any mention of inflation in the parts cited. (See Tooch Decl., Ex. G, 9:5-21:23, 139:25-143:6.)