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The Importance of the Napkin Deal

One of the most important laws that govern personal injury practice was written on a napkin at Frank Fat’s in 1987. This significant historical event related to plaintiff’s personal injury law occurred on the evening of September 10, 1987. Present that night were lobbyists for the tobacco industry, doctors, manufacturers, insurance industry representatives and plaintiff lawyers. Negotiations were led by elected legislatures, Willie L. Brown, Jr and Bill Lockyer. The goal of the dinner was to create tort reform that would accommodate the interests of everyone and negotiate a truce in the ongoing tort reform war that was raging at the time.

This deal was written on the back of a napkin thus becoming known as the “Napkin Deal.” It changed existing laws related to product liability, medical malpractice and punitive damages in California. The agreement became Senate Bill No. 241, which was quickly passed into law that same year in 1987. This “Napkin Deal” amended Business and Professions Code § 6146 which limits the amount of contingency attorney fees a plaintiff attorney may charge to prosecute a medical malpractice case.  

Any lawyer new to personal injury law must understand the laws that were impacted by the Napkin Deal.  For example does your state have attorney fee caps on medical malpractice cases? What is the standard of proof in your state to prevail on a punitive damages claim?  Finally, are the products in your state that have immunity from legal liability? To be a competent personal injury lawyer, you need to know the answers to these questions.

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You can read the Legislative Counsel discussion of the “Napkin Deal” here. The agreement gave the cigarette companies immunity in California starting in 1987, but that immunity came to an end ten years later on September 29, 1997. Here is the California Civil Code 1714.15 in its current state.

Understanding Health Insurance Liens and Their Importance to Anyone New to Personal Injury Law

Anyone new to the personal injury law practice must understand health insurance liens. In a personal injury case, a lien claims arises when an insurance company or government agency pays the medical bills of an injured plaintiff, who later makes a recovery against the negligence person’s insurance company.  

A good way to learn about liens is to understand the history of lien recovery.  Prior to 1988, health insurance lien claims were relatively uncommon. That all changed in 1988 when Patrick B. McGinnis left his job at a large health insurance company and started Healthcare Recoveries in Louisville, Kentucky.

Healthcare Recoveries attempts to recover money paid out in claims for health insurance companies they represent.  A personal injury plaintiff, with health insurance, will have their medical bills paid by their health insurance company post accident.  Healthcare Recoveries researches the accident and uses, right to recovery language in the fine print of the health insurance contracts, in an attempt to recover the money the plaintiff and her attorney, which they received from the negligent defendant.  This 1996 article details the early story of Healthcare Recoveries, it’s success, and growth.

Fast forward to 2015 and you can see where Healthcare Recoveries stands today. This article shows what Mr. McGinnis’s original idea has become today.  Reading these articles will help you understand why you, the new personal injury lawyer, may be receiving letters from Equian, which has a web page called “got-a-letter.”

Here are three important legal decisions that will help new personal injury lawyers begin to understand the world of personal injury liens.

1. The United States Supreme Court’s decision in Arkansas Department of Health and Social Services v. Ahlborn, 547 U.S. 268 (2006) (“Ahlborn”) provides a framework to determine what portion of a settlement, judgment, or award represents payment for medical expenses or medical care, provided to an injured individual by their insurance company.  The key question to determine is what is the appropriate reimbursement amount for the insurance company that Equian represents.

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2. The California Supreme Court in Fitch v. Select Products (2005) 36 Cal.4th 812, explains the effect of a pure wrongful death claim on MediCal’s attempt to assert a recovery against a wrongful death only recovery.  Fitch is a good case to read for its discussion of the types of damages that are available in a “survival action” survival action C.C.P. 377.62 and a wrongful death claim, C.C.P. 377.60.

3. Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan (2016) 136 S.Ct. 651, introduces you to how the ERISA law applies to health insurance liens in the context of a personal injury recovery.  Montanile, involved a health insurance plan that was attempting to reach the plaintiff’s portion of a $500,000 settlement secured against a drunk driver defendant.

In Signup to Settlement: A Personal Injury Bootcamp, we help you understand how to learn to respond to letters from Equian and reduce the amount of Equian’s claim, which means your client gets more money in their pocket.

A Big Win with “High Low Binding Arbitration”

It was 1995, I was 27 years old, suddenly I had a check for $64,000 in my pocket.

This is the story about my first big win as a new personal injury lawyer.  It’s a story of how curiosity and hustle come together to form a big win for our client and my first big attorney fee check.  This is a story about experts, alternative dispute resolution and settlement.

It was 1995, back then, I was single, living in an apartment in the Marina district of San Francisco.  Our apartment was just off Lombard Street near our restaurant of choice, Jack In the Box. I was living with my good friend Jay Campbell and working round the clock.  When I would come home on Friday nights Jay would greet me with his big warm smile and great sense of humor and say, “It’s Friday, only two more work days until Monday!”  His joke did not affect my desire to work less on the weekends. I was having fun. Each day flew by in what felt like a series of flashes and before I knew it the day was gone in what felt like moments.  I did not realize it at the time, but I was in the state of flow, doing what I wanted to do and loving it.

I had heard the term vocational rehabilitation expert, and was interested in meeting an expert that worked in this area.  Someone mentioned Ona Schissel’s name to me. At the time Ona was working as a vocational counselor and rehabilitation expert.  Her office was on Montgomery Street in San Francisco. I called her up and asked if she would meet with me and tell me about the kind of work she did and what it meant to be a vocational rehabilitation expert.  At the time my office was at 126 Post Street in San Francisco, Ona’s office was a short walk away. When I arrived Ona and I talked about her work, I asked some questions and she shared with me how a vocational counselors can help an injured person who can no longer work effectively in their chosen occupation due to the effects of an injury.  Ona looks at a person’s background, work history, aptitude and formal education and makes recommendations about fields of work they can still do post-injury. She helps people determine what types of work they have the aptitude and can actually do, given their post-injury physical ability. The level of post-injury physical ability is referred to as a person’s functional capacity.  There are health care providers that provided functional capacity testing for injured people who need to change jobs after an injury.

Eventually Ona asked what I was working on.  I shared with her that I had just opened my office and was focusing on trial work.  Ona looked at me and said, “I have a case I want you to look at.” She looked across her office to the top book shelf, stood up, walked over, reached up and pulled a case file off of her shelf.  She literally dusted off the cover of the file and said you should take a look at this case.

Ona was showing me the personal injury case file of Sidney Ford.  Sidney was a self employed barber from Richmond, who had slipped and fallen on the sidewalk near his shop.  The sidewalk had been ripped up by a construction company and a safe route of travel for the pedestrians. One day Sidney fell while navigating the negligently maintained construction site.  The fall caused an injury to Sidney’s back. Sidney’s treatment consisted of doctor’s evaluations and physical therapy at Kaiser hospital. Sidney was alleging that his low back had not improved after physical therapy and that he was living with chronic low back pain.  The lawyer Sidney was working with initially had substituted out of the case. This left Sidney to act as his own attorney. The legal lingo for this is that Sidney was acting in propria persona or In Pro Per. In Propria Persona is a latin phrase which literally means “in the person of yourself.”  Ms. Schissel was a consulting expert in the case and was doing Sidney a favor by helping him to find a lawyer that was willing to take on his case on a contingency fee. As is common for injured people, Sidney did not have enough money to pay an attorney an upfront retainer to work on an hourly basis to prosecute his claims in court.

That night I walked out of Ona’s office with Sidney’s file.  Shortly after, I called, we met and Sidney signed my contingency fee agreement. I became his attorney.  At the time I took over Sidney’s case, the case had already been filed with the court and all of the discovery was completed.  I recognized that the next step was to let the court know of my representation, inform the court that the discovery was complete, and that the case should be set for trial.  The court agreed and set the case for trial.

Sidney and I showed up for the first day of trial ready.  The case was venued in Contra Costa County in the town of Martinez.  Our case was called. Defense counsel and I were invited into the Chambers of trial Judge Maria Elena James.  Judge James greeted us with her warm smile, compassionate, yet pragmatic demeanor. She quickly got to work to determine what could be done to help the plaintiff and the defendant reach a settlement that did not involve a two week jury trial in her courtroom.  

Judge James determined that the parties’ views of the settlement value of Sidney’s case were far apart.  The defendant viewed the case as defensible, meaning the jury would not find any negligence. And even if they did find some negligence on the part of the construction company, the jury would also find significant comparative negligence on Sidney. They would argue that he should have seen and avoided the open and obvious condition that caused him to fall.  Further, the defense viewed Sidney’s injuries as nothing more than what the insurance industry refers to as “Soft Tissue” injuries with “no objective findings” to verify his complaints of pain. Essentially, Sidney may say he was hurt, but the jury will have to take his word for it. Because there is no objective test result (x-ray or MRI) to verify what was causing the pain inside of Sidney’s back.  The last settlement offer of the defendant was $10,000 dollars.

Sidney’s view of the case was that his life been forever changed for the worse because of the defendant’s negligence. This negligence caused his now lifelong, chronic low back pain.  Sidney would not consider any settlement offer that was not well above $100,000 dollars. It looked like the case was headed for a jury trial.

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After about an hour of discussions, the prospects of any settlement looked unlikely, Judge James raised the idea of resolving the case with an agreement for high low binding arbitration.  Her specific proposal was a binding high low arbitration with a low of $10,000 and a high of $200,000. What this meant was that instead of the case being heard and decided by a jury of 12 people in Judge James’s courtroom over the next two weeks, the parties would instead agree to hire an arbitrator.  A neutral attorney in the community would hear the facts of the case and decide the factual issues of negligence and damages. The decision would be binding, meaning a final outcome on the parties that was not appealable. Such an arbitration could be done in a few hours at the arbitrators office. The parties agreed and the case was settled.  We just needed to conduct the arbitration and the case was over.

Defense counsel and I hired Peter Elkind, a mediator and arbitrator from Oakland.  A date for the arbitration was agreed to and set for Mr. Elkind’s office in Oakland.  The case was presented based on the photographs of the scene and the relevant medical records and reports from Kaiser where Sidney had his medical care post accident.  The only witnesses were Sidney and his wife, Maddy. The length of the hearing was about two hours.

Two weeks later an envelope arrived from Peter Elkind with an arbitration award of $160,000.  After, attorney fees, case costs and the Kaiser lien were deducted Mr. Ford received a check for $86,000.  My attorney fee was $64,000. This was the first real money I made as a plaintiff lawyer.

Expert Witnesses: What Have We Learned From The Case of the Audacious Supermarket Site Inspection?

Sign-up to Settlement: A Personal Injury Bootcamp looks at the issue of both formal and informal discovery and how they differ. The court of appeal decision in Pullin v. Superior Court (2000) 81 Cal App 4th 1161 looked at the practical differences between the two types of discovery in the context of an informal site inspection at a Supermarket.

Pullin was a personal injury claim that arose from a slip-and-fall at a Von’s Supermarket in Los Angeles. The plaintiff attorney found himself in the uncomfortable position of having an unprepared expert, who was about to have his deposition taken. Plaintiff’s forensic safety engineer had not inspected the scene of the slip-and-fall, yet his deposition was about to be taken. Plaintiff’s attorney called Von’s counsel and asked for permission for his expert to “conduct tests” on the floor of the Supermarket. The defense lawyer denied the request, reminding the plaintiff’s lawyer that fact discovery was closed and the time had run for a properly noticed site inspection, pursuant to C.C.P. § 2031. Plaintiff responded by sending his expert to the store on their own, while the store was open for business. The expert examined the spot where the fall had occurred, used a “small machine” to test the floor and left. During the 15 minute inspection no one complained, no one asked the expert to leave and no damage was done to the floor.

Expert Witness

The expert was deposed the day after the informal inspection took place and they revealed the details of their informal site inspection conducted during store opening hours. The case proceeded to trial. At trial, the defendant moved in limine to exclude the expert’s opinion and the trial court agreed, finding the conduct “secretive” and “contrary to the spirit of our discovery laws.” Plaintiff filed a writ and the Court of Appeal overturned the trial judge’s exclusionary ruling.

Justice Miriam A. Vogel wrote the opinion and held that there is nothing in the Civil Discovery Act to prevent a party from conducting unilateral investigation, provided that the investigation is lawful. Low cost investigation should be encouraged and “evidence is not made inadmissible by the simple fact that it is obtained by investigation rather than by way of formal discovery,” Pullin at 1165.

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The question before us is whether property open to the public can be examined without recourse to section C.C.P. § 2031, Pullin at 1166. In answering this question, the justices examined the Los Angeles Municipal Code that governed private property which is open to the public. Because plaintiff’s forensic safety engineer, Ralph Engdahl, did not do anything to damage the property, no one asked him to leave during his inspection and he did not interfere with Von’s ability to conduct their business, “we do not see any unlawful conduct,” Pullin at 1165.

In Sign-up To Settlement’s session on Expert witnesses, we cover how to properly prepare an expert witness for deposition. The example set by the plaintiff attorney in Pullin is not ideal, however it was lawful and, ultimately, resulted in admissible evidence to support an expert’s opinion.

SEE ALSO:  10 Reasons Why Criminal Lawyers Make Excellent Civil Trial Attorneys.

The One “Must Know” Question To Conclude Every Expert Deposition

Question:  Are there any other opinions that you intend to give at trial, other than the opinions you have already provided?  


The case of Jones v. Moore, (2000) 80 Cal App. 4th 557, explains why this question is so important.  Jones was a legal malpractice case that arose out of a marital dissolution case.  The case went to trial and plaintiff lost on liability; it was a defense verdict. Plaintiff appealed and argued that the trial judge’s order, excluding certain opinions of plaintiff’s expert witness, was grounds for a reversal of the jury’s verdict.

The Court of Appeal analysed California’s expert witness statute at C.C.P. § 2034 and the trial judge’s order under the abuse of discretion standard.  The purpose of C.C.P. § 2034 is to permit parties to adequately prepare to meet the opposing expert opinions that will be offered at trial.  The issue that the court of appeal analysed was whether or not the offered expert opinion testimony was beyond the scope of plaintiff’s expert’s deposition testimony.  Plaintiff’s counsel was attempting to ask his expert at trial for opinions that were not given at the expert’s deposition.  

At deposition, defense counsel asked the plaintiff’s expert if there were “any other areas, in which you believe defendant fell below the standard of care in representing plaintiff?” Plaintiff’s expert replied, “Not that I am prepared to testify to at this time.” The defense lawyer asked whether the expert anticipated doing any further work on the matter that could result in any other opinions.  The expert said, “No, but if I do, you will be notified well in advance, so as to be able to properly exercise your discovery rights.”

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The court of appeal explained that a party has a right to rely on the other party’s expert’s express representation that the opinions expressed during deposition are the only ones that need to be met at trial. The court referred  to Bonds v. Roy (1999) 20 Cal 4th 140, as authority for important goal of  § 2034, which is to enable parties to properly prepare for trial and allowing new and unexpected testimony for the first time at trial is contrary to that purpose.



Jones is a good case to review while preparing to defend your own expert’s deposition or while planning to take the defense expert’s deposition. When taking an expert’s deposition, it is important to determine all of the expert’s opinions and what they are based upon. It’s also important to ask the expert if they intend to do any additional work or intend to offer any additional opinions at trial. If they answer in the affirmative, you have the right to question the expert on those opinions. Also, C.C.P. § 2034 requires an expert to be prepared for the giving of those opinions and the basis of those opinions at their deposition. The Jones case gives good authority for the rule that an expert cannot add opinions not given at deposition, especially when an express representation is made that all of the opinions have been made at the deposition and no new opinions will be given at trial.

In Sign Up To Settlement: A Personal Injury Boot Camp, we have an entire section devoted to just expert witnesses.  We go over the retention of experts, their disclosure and how to prepare your expert for both their deposition and trial.  For more information, go to www.signuptosettlement.com.

SEE ALSO: Three Keys To A Successful Personal Injury Trial

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