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The rule originally prohibited defense attorneys from introducing evidence that injured parties had already received compensation from third parties.
These protections remained in effect for medical damages until the California Supreme Court in 2011 ruled that an injured plaintiff may recover as economic damages no more than the amounts actually paid or owed by the plaintiff or his or her insurer for medical services received, and that amounts billed by medical providers are inadmissible at trial.
Thus 3rd party compensation is now entered as evidence and medical damage awards are capped at the amount paid or owed for services.
Because medical providers typically have agreements with insurance companies to provide services at lower rates than they bill to individuals, plaintiffs with similar injuries (or their insurers) can pay or owe vastly different amounts for treatment, and thus receive radically different medical damage awards, and a defendant’s insurance company can reap financial benefit from a policy the plaintiff paid into for years.
In California, the burden of legal fees can be shifted from one party to the other through the tactical use of a California Code of Civil Procedure Section 998 offer.
The purpose behind a statutory offer to compromise is to encourage the settlement of disputes prior to trial or arbitration. CCP 998 offer to compromise can only in negotiations taking place after litigation has commenced.
There are three possible outcomes to a 998 offer:
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