California Government Code Section 985 - Interpretation
In Government Code section 985 (section 985), the Legislature has addressed the application of the collateral source rule to public defendants in personal injury or wrongful death actions.
Section 985 retains the evidentiary portion of the collateral source rule by expressly prohibiting the introduction of any evidence of collateral source payments at trial. ( 985, subd. (b).)
"However, after a verdict has been returned against a public entity that includes damages for which payment from a collateral source ... has already been paid or is obligated to be paid for services or benefits that were provided prior to the commencement of trial, and the total exceeds a specified amount, the defendant public entity may, by a motion noticed within the time set in Section 659 of the Code of Civil Procedure, request a posttrial hearing for a reduction of the judgment against the defendant public entity for collateral source payments paid or obligated to be paid for services or benefits that were provided prior to the commencement of trial."
Section 985 further provides that at any such hearing, the trial court "shall, in its discretion and on terms as may be just, make a final determination as to any pending lien and subrogation rights, and, subject to subdivisions (1) to (3), inclusive, determine what portion of collateral source payments should be reimbursed from the judgment to the provider of a collateral source payment, deducted from the verdict, or accrue to the benefit of the plaintiff." ( 985, subd. (f).)
Subdivision (g) of section 985 provides, however, that "in no event shall the total dollar amount deducted from the verdict, paid to lienholders or reimbursed to all collateral source providers, exceed one-half of the plaintiff's net recovery for all damages after deducting for attorney's fees, medical services paid by the plaintiff, and litigation costs; however, the court may order no reimbursement or verdict reduction if the reimbursement or reduction would result in undue financial hardship upon the person who suffered the injury."