On Friday, February 5, 2010, I helped a colleague who teaches a mediation clinic in a local  school by coaching some of her students conducting a mock mediation. That is, I observed the students conduct their first  mediation  (using a fact pattern given out by the professor) and provided suggestions.

      The particular fact pattern was, in essence, a collection action. A quick reading of it showed that Plaintiff did not have a very good case and would probably lose in small claims court, were the matter actually tried.  The issue for the student mediator was how evaluative, if at all, should she be in her discussions with  Plaintiff. Should she say anything to Plaintiff to the effect that she faced an uphill battle and if so, how mildly or strongly should such a “ suggestion” be  worded.

      Each of the student mediators approached the task differently, but, they were all evaluative–telling Plaintiff she did not have much of a case and would lose. They each just conveyed  this sentiment differently.

       In driving back to my office, I reflected on this in light of a recent mediation. There, the parties reached an agreement that involved the participation of a third party who was neither a party to the lawsuit nor to the mediation. Implementing the settlement was not going smoothly as the third party was not responding in the manner envisioned by the parties. So, much communication was occurring in trying to keep the settlement on track. More and more, our discussions focused on the cultural differences of the parties and the third party. Plaintiff and the third party were Asian while the defendant was “American”, (that is, Anglo-Saxon.)  

      Suddenly, I had an epiphany or ‘ah-hah” moment. Both the students that day as well as me, must take into the account the cultural background of the participants in deciding whether to be evaluative. Why? Let me explain. In my mediation, the Plaintiff was from a country that followed Dutch law or the civil code tradition in which the judge also investigates, asks questions and prosecutes. That judge has a lot more power and control over the matter than do our American judges under our adversarial system. The system used in this Asian country is not at all  adversarial but  rather, inquisitorial.  
   

       In the later stages of my mediation and with the blessing of her counsel, I became evaluative with the plaintiff advising plaintiff that because her english was very difficult  to understand,  she might well lose the attention of the jury and thus lose her case.  I noted that using an  interpreter may also cause her to lose because again, she may well lose the jury’s attention.

       Subsequent to the mediation, plaintiff’s attorney  advised me  that after my discussion with plaintiff, plaintiff used her mobile phone and told the other party that “she had lost” her case.  At the time, the attorney did not think much of it, but suddenly, amid all of our discussions about cultural differences, he had his own epiphany or  “ah-hah” moment as well, and realizing that given plaintiff’s cultural background, (and even though I told plaintiff  that I was neither an arbitrator nor judge and was not deciding anything), she cloaked me with  authority, Thus, when I warned her that her inability to speak English could adversely impact her case, she understand that to mean that I was deciding her case and telling her that she had “lost”! 

       I have taken many training classes focusing on cultural differences.  But, the discussions have always been in the abstract. This mediation brought it home; be careful about the cultural differences.  What I say as a mediator with the intent that it be received one way may well be taken completely differently by the listener in light of her cultural background. While I wanted my “evaluation” to be taken with a grain of salt, this plaintiff, because of her culture and her country’s legal system, took it as “gospel.”

      …..  Just something to think about.

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       On November 23, 2009, the Fourth Appellate District Court of the California Court of Appeal upheld the collateral source rule. In Howell v. Hamilton Meats & Provisions, Inc., Case No. D053620, 2009 Cal. App. Lexis 1874 (Howell) the appellate court determined that plaintiff was entitled to recover the actual amount charged by her medical providers even though those medical providers took far less from her insurer in full satisfaction of their bills. By making this ruling, this San Diego appellate court diverged from its brethren in the Third Appellate District (Sacramento) in Hanif v. Housing Authority of Yolo County (1988) 200 Cal App. 3d 635, 246 Cal Rptr. 192 (Hanif) ( Hanif) and the First Appellate District (San Francisco) in Nishihama v. City and County of San Francisco (2001), 93 Cal App. 4th 298, 112 Cal Rptr. 2d 861. (“Nishihama”)(Nishihama) 

      These latter courts held that a plaintiff was entitled to a judgment in the amount of what was actually paid to and accepted by the medical providers, (rather than what was billed) in full satisfaction of the debt.

       But what is the “collateral source” rule? In Helfend v Southern California Rapid Transit District (1970) 2 Cal 3d 1, 6,( Helfend) the California Supreme Court explained:

      “[I]f an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.” (Id. at *20-21)).  

        The rationale behind this rule is that “. . . a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift” and “the tortfeasor should not garner the benefits of his victim’s providence. (Helfend, supra, 2 Cal 3d at pp. 9-10)””
(Id. at *21).

       In the present case, Rebecca Howell sustained personal injuries caused by the negligent driving of an employee of defendant Hamilton Meats & Provisions, Inc. Luckily, she had personal health insurance. She incurred medical expenses of $189,978.63 which by means of contractual arrangements between Scripps Memorial Encinitas (“Scripps”) and CORE Orthopedic Medical Center (“CORE”) and her insurer, PacifiCare, this amount was adjusted downward to $59,691.73 which Scripps and CORE accepted as payment in full satisfaction of this debt. 
 

      At trial, the jury (who cannot be told that plaintiff has medical insurance) awarded plaintiff the full sum of $189,978.63. The defendants citing Hanif, supra, and Nishihama, supra, urged that this award should be reduced to what was actually paid - $59,691.73.

       The appellate court rejected Hanif, supra, and Nishihama, supra, as not being applicable, and instead applied the collateral source rule:

      “As a result of the admitted negligent driving of Hamilton’s employee, [Howell] entered into the financial responsibility agreements with Scripps  and CORE and became contractually obligated to pay those incurred charged by means of her own cash payments, a collateral source such as her health care insurance, or a combination of the two.”
. . . 

      “We conclude that the extinguishment of a portion of Howell’s debt to Scripps and CORE in the amount of the negotiated rate differential ($130,286.90) was a benefit to Howell because she was no longer personally liable for that portion of the debt she personally incurred in obtaining medical treatment for her injuries.”

      “We also conclude that this benefit to Howell was a collateral source benefit within the meaning of the collateral source rule because it was conferred upon her as a direct result of her own thrift and foresight in procuring private health insurance through PacifiCare. . . .Under California’s collateral source rule. . . Howell, as a person who has invested insurance premiums to assure her medical care, should receive the benefits of her thrift; Hamilton, as the party liable for Howell’s injuries should not garner the benefits of Howell’s providence. The law allows Howell to keep this collateral source benefit for herself because. . . she was responsible for the benefit by maintaining her own insurance. . . .”  (Id. at *24-*26)).

        Seemingly, this appellate court felt constrained to adhere to the rulings of the California Supreme Court which established the collateral source rule, rather than follow two other appellate court decisions. It noted that if this rule is to change, the legislature should make that change, not the appellate court:

      “We conclude that any further abrogation of the collateral source rule. . . is best left to legislative enactment rather than piecemeal common law development. . . . “(Id. at *36).

      No doubt this case will be appealed to the California Supreme Court as it conflicts with the decision of the First and Third Appellate Courts. But, in the meantime, it presents an interesting quandary as to what exactly is the proper measure of damages in instances where insurance is involved: is it the amount billed? Or the amount actually paid?

        Needless to say, it will make for an interesting mediation!

       . . . Just something to think about.

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       In my various mediation training classes, we have discussed the pros and cons of an apology; whether it should be given and if so, under what circumstances.

       From my own life experience, I know that apologies are important but I did not realize what a real difference they can make or how powerful they can be until today.
 

      Today, I mediated an emotionally difficult case. The plaintiff, of baby boomer age, rented an apartment in a secure building. The owner of the building employed a resident manager and handyman on the premises. According to plaintiff, although the handyman was often drunk at work, the manager did nothing about it and, in fact, often shared cocktails with him on her patio.
 

      One evening while plaintiff was walking to the apartment of one of her friends in the building, the handyman accosted her and began groping. Only with the assistance of one of her neighbors was plaintiff able to escape out of the corner into which the handyman had pinned her.

       This event traumatized plaintiff for which she sought counseling. While the counseling helped a great deal, it was obvious during the mediation that the emotional scars still existed.

       Prior to the mediation, I was inclined not  to hold a joint session. However, just prior to the start of mediation, I discussed this issue with defense counsel and the defendant’s representative. They stated that for purposes of the mediation, they were not contesting the events or otherwise taking issue in any way with what had occurred. I suggested a joint session so that they could make this acknowledgment directly to plaintiff.
 

      So with plaintiff and her counsel’s permission, we held a short joint session. We did not discuss the event itself but simply the parties’ perspectives on the matter.
 

      After plaintiff’s counsel finished, defense counsel spoke for a few moments noting that the issues were not being contested for purposes of the mediation. Then the representative of the landlord spoke. The first words he said were directed to plaintiff: “I apologize for what happened to you.” He continued, and the reactions of both plaintiff and her counsel were visible: their hardened demeanors softened considerably. Someone had not only acknowledged that the event had happened but had apologized for it.
 

      With this acknowledgement, the sole issue remaining was the amount of damages. After several rounds of negotiation, the parties agreed on a sum, and drafted and signed a settlement agreement. It was over. It did not take very long at all to resolve this matter.
 

      Afterward, plaintiff’s counsel told me that when she and her client walked in to the mediation, they had planned to take a hard line, ask for a large sum of money and not negotiate much below their initial demand. But, then, the landlord’s representative apologized. That apology changed everything. Up until the mediation, no one from the landlord, not even the resident manager (who was well aware of the event at the time it occurred) had acknowledged to her that the event had even occurred much less asked her if she was okay. Rather, the resident manager ignored the whole thing as if it had never occurred. The apology was the first  acknowledgment  that something bad, indeed, had happened to plaintiff which should never have happened. It thus became the most important part of the mediation. Because of that apology, plaintiff was willing to settle and in fact, settled for a much smaller sum of money than she had in mind when she walked into the mediation.
 

      An apology: it can be quite powerful!  

      Perhaps this is why, within recent years, thirty five (35) states and the District of Columbia have enacted statutes excluding expressions of sympathy after accidents as proof of liability while five (5) states have passed statutes requiring mandatory notification of adverse events to patients. These statutes were enacted mainly with medical malpractice in mind:  to assist the medical  community in its efforts to deter or reduce litigation and the amounts paid in settlement by being able to express sympathy without such expressions being considered admissions of liability. These statutes allow the medical professional to be human without exacting a large price for showing that humanity.

       As Patricia  A. Bronte explains in her article entitled ‘Reviving The Lost Art of Apology” published by the Section of Litigation of the American Bar Association:
        

        “Although the apology statutes were enacted within a relatively short    period, there are significant differences among them. All of them provide evidentiary protection for simple apologies (“I’m sorry you were hurt”); unfortunately, one study has shown this type of apology to be the least effective, and possibly counterproductive, in reducing litigation and settlement amounts. Five states have apology statutes that also protect partial apologies (“I made a mistake and I’m sorry”), but only Arizona’s statute explicitly protects full apologies (“I’m sorry, it was my fault you were hurt”). Statutes in 13 states clearly protect simple apologies and may also cover broader apologies.  “
 

      One example is the California statute.  California Evidence Code Section 1160 (california-evidence-code-section-1160) provides, in part,  that “…portion of statements, writings, or benevolent gestures expressing sympathy  or a general sense of benevolence relating to the pain, suffering or death of a person involved in an accident ….shall be inadmissible… A statement of fault , however…. shall not  be inadmissible….” 
 

      So, apologies are powerful and can go a long way to avoiding  litigation altogether or greatly reducing  the settlements often exacted to conclude it.  

       The next time are in a dispute, rather than letting it get out of hand,  think about simply saying” I apologize.”
 
       . . .Just  something to think about.

      If you have not done so already, do not forget to sign up for the Southern California Mediation Association’s 2009 SCMA Conference I am in charge of it and hope to see y’all there! 

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       Late last year, I mediated a “family” dispute involving facts that were stranger than fiction. It seems that Jane Jones (fictional name) had a relationship with Joseph Smith (again, a fictional name). They had two children together, although they never married. They, then, went their separate ways.
 

      However, Ms. Jones went to family court and obtained orders requiring that Mr. Smith pay child support. Years went by, and Mr. Smith did not pay the child support. So, Ms. Jones went to the Child Support Services Department (“CSSD”) to obtain enforcement of the child support orders. CSSD agreed to do what was necessary to enforce these orders for the outstanding child support which by this time amounted to about $50,000.

       It seems that Mr. Smith had a mother (Mother Smith, another fictional name) who lived outside of the city but owned a piece of commercial real estate within the city that required remodeling. So Mother Smith wired $50,000 into her son’s bank account for his use to oversee and pay for the remodeling of  her commercial real estate.

       As fate would have it, when she wired the funds into her son’s account, there was a levy on the account by the CSSD for the outstanding child support. So, CSSD took the $50,000 (meant for remodeling Mother Smith’s property) and applied it to the outstanding support obligation of Mr. Smith.

       Suddenly, Ms. Jones found herself with $50,000. Mr. Smith, quite upset at this turn of events, telephoned Ms. Jones requesting  that she return the money, claiming that it belonged to his mother and was meant to pay to remodel his mother’s commercial real property.
 

      This is where the facts get muddled.

      During the ensuing litigation, Mr. Smith claimed that Ms. Jones agreed to return the money, acknowledging that the money belonged to Mother Smith, not  to Mr. Smith. In this connection, Mr. Smith contended that Ms. Jones met him at the Child Support Services Department and agreed to and,  in fact, signed a Stipulation and Order Waiving Unassigned Arrears (“Stipulation”) which in essence, would order the return of the money to Mr. Smith.
 

      However, Ms. Jones, during the ensuing litigation, disputed this claim, contending that while she, did, indeed, meet Mr. Smith at the CSSD’s office, she never signed the Stipulation to waive the arrears, but rather her signature was forged. She further denied ever acknowledging that the $50,000 belonged to Mother Smith or that she agreed to return the money.
 

      The Stipulation did have a signature on it, which Mr. Smith claimed to be that of Ms. Jones, and was, in fact, notarized. (Ms. Jones later claimed she signed a blank notarial form). Based on the Stipulation, the court entered an order authorizing the return of the $50,000 to Mr. Smith.

       When Ms. Jones refused to comply with the court order and return the funds, claiming her signature was forged, Mr. Smith and his mother, Mother Smith, sued Ms. Jones for the return of the money.

       So here they were. . . at my offices for mediation. A father and grandmother seeking to recover $50,000 that the father owed in back child support,  because the grandmother had sent it to her son (the father) to use for remodeling some commercial real estate. Despite the fact that the mother – Ms. Jones – claimed she had used the money to pay the mortgage (to keep a roof over the children’s heads) and other expenses for the kids, plaintiffs still wanted the money returned.
 

      Throughout the mediation, Ms. Jones – representing herself - insisted that her signature was forged and that she had never agreed to return the money. She further insisted that she had signed the notarial form in blank. Nonetheless, to avoid the  trauma of trial, she agreed to take less in child support each month so that Mr. Smith could pay the difference to his mother – Mother Smith – to pay back the $50,000 over time.
 

      At the very last moment, Mother Smith refused to sign the settlement agreement: she wanted more money and sooner. So, after a full day of mediation, the case did not settle.

       I did not hear anything more about this matter until two weeks before trial. The plaintiffs’ attorney called to tell me that he had convinced Mother Smith to accept the original settlement. He asked if I would inquire of Ms. Jones whether she would agree.
 

      Over the next two weeks, the phone calls went back and forth. Initially, Ms. Jones would not agree, but then as it drew closer to trial, she agreed, but with new terms. Finally, on the day before the trial was to start, Ms. Jones agreed to the original deal. I  advised plaintiffs’ attorney of this so that he  could formalize the agreement by putting it in writing and fax it to Ms. Jones for her signature that afternoon.

      I assumed the case had settled.

      My assumption was wrong. Around mid-morning on the next day, I received a telephone call from plaintiffs’ attorney. Ms. Jones never signed the agreement but instead showed up in court. She refused to settle, claiming her signature had been forged. The plaintiffs’ attorney thinking the case had settled, had released his witnesses from their subpoenas to appear at trial to testify and had otherwise not prepared for trial. When the court heard that the case had, in fact, not settled, it ordered the parties back that afternoon to begin trial. The plaintiffs’ attorney called me to see if I could assist in some way to settle the case. I was not successful. Ms. Jones did not want to settle but wanted to take her chances at trial. She still insisted that her signature had been forged. So, trial started that afternoon.

       The next day I telephoned plaintiffs’ counsel to learn the outcome. I was told that once under cross-examination, and  sworn to tell the truth, Ms. Jones admitted that she had, indeed, signed the Stipulation – it was not a forgery – and that she had, indeed, acknowledged to both plaintiffs that the money belonged to Mother Smith  and that she would return it.
 

      Then an even stranger thing happened. The plaintiffs’ attorney told me that based on this admission, he was about to move the court for a judgment  against Ms. Jones and in favor of his client Mr. Smith  when his client Mr. Smith stopped him and asked to confer  privately with him. Mr. Smith – about to obtain a judgment for $50,000 against Ms. Jones – wanted to renew the settlement proposal to Ms. Jones (that is, she simply pay less child support every month so that he could  pay the difference to his mother, Mother Smith). The attorney, although quite taken aback by his client’s instructions, offered the settlement to Ms. Jones and this time, she accepted, on the record in open court. Mr. Smith’s rational: “she is still the mother of my kids.”

       What a strange ending! During the mediation, Ms. Jones had the plaintiffs’ attorney convinced that her signature on the stipulation was a forgery. From the facts, it appeared to Ms. Jones that the plaintiffs were cold, heartless and selfish for wanting the money back that was owed and in fact was used to take care of the kids. But, in the end, it was the plaintiff  Mr. Smith who had the “heart” and the defendant Ms. Jones who was making it all up for reasons known only to her.

       Credibility is a hard thing to judge. You don’t always get it “right”.  Trials can be dangerous; that is why it is always better to settle. 

       . . . Just something to think about.

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       In late May 2009, I flew back to my childhood home to help my siblings move our mother into an assisted living facility. As she had been living in the family home for close to sixty years, it was the move from *!!##*##!!*,  to say the least. (See, The Greatest Generation.)
 

      Because our mother was so ornery about the move due to her inability to comprehend her situation (thanks to severe dementia), it was suggested that my siblings and I petition the court to become her legal co-guardians, and thus have her declared legally incompetent.
 

      We did so and at the hearing, the only issue about which the judge expressed concern was whether the three of us (my siblings and I) got along well enough that we would not reach an impasse or come to blows in making decisions about our mother’s care and well being. We assured the court that this would not be an issue. Accepting our responses ( as we had all been sworn to tell the truth), the court granted our petition. Each of us became a legal co-guardian of our mother.
 

      Since that day in June, I have not thought much about the judge’s concern . . .until this past week. I had a mediation involving a partition of real estate. A mother had left real property with a large home on it to her children. The children could not agree who should contribute how much to pay the mortgage and other expenses of the property. One of the children, plaintiff, claimed that the others were not contributing at all to these monthly expenses such that she was paying for everything. Due to her limited income, she could not continue to do this, indefinitely. (The situation was so bad that although the siblings were living in the same house, they were not  even speaking to each other). To prevent a foreclosure from occurring at some point in the future, thereby ruining her credit, the plaintiff sibling filed a petition requesting partition of the real property which, once granted, would lead to a forced sale of the property.
 

      So, the court set the matter for trial in late 2009 and sent the matter for mediation.  In reviewing the briefs submitted for the mediation, I quickly realized that starting with separate sessions was the proper strategy: to put the siblings in the same room initially would only lead to fireworks, an explosion of tempers and one or more of them storming out of the mediation.
 

      I met and spoke first with plaintiff and her counsel and then met with defendants and their counsel. My goal was to provide the dose of reality that if they did not stop squabbling and bickering, the house would be sold out from underneath them, and due to the downturn in the real estate market, they would end up with zero. In fact, they would be lucky because thanks to the wisdom of the California legislature during the last horrendous economic downturn (aka The Great Depression), they would not have to pay any deficiency or shortfall if the sale of the real property brought in less than what was owed on the mortgage.
 

      Slowly, I made some headway, to the point where the parties agreed in principle to sit down each month at the kitchen table in the home and go through the bills and jointly pay them. To see if this could, indeed, become a reality, since at present they were not even speaking to each other, and with everyone’s consent (their lawyers included), I held a joint session to work out the details of their plan to work together every month to make sure all of the bills were paid.
 

      Needless to say, it was a very stormy session. Each sibling had to get the anger and frustration out and off her chest. The old wounds did not heal immediately despite the apologies. When one sibling suggested a provision, the others jumped all over her, ascribing evil motives and bringing up alleged past wrongdoings, and the squabbling would begin again for a few minutes until I  “suggested” a truce.
 

      More than once, both I and their attorneys had to remind them that if they were unwilling to cooperate and work together, the real property would be sold, courtesy of a court order, and they would end up with nothing. . .  absolutely  nothing, and that this would occur before year’s end.
 

      Finally, what I and their attorneys had been telling them for more than a couple of hours, sunk in. They saw the “light” and realized they had to work together for their mutual benefit or else lose everything. They were at the tipping point, and they now realized it. (Nash’s equilibrium was at work: it became more beneficial to work together than independently towards the same goal.) They finally saw the “big picture” and stopped getting lost in the forest for the trees.      
 

      After an hour or so more, the details of an agreement were all worked out and they left with a rocky truce and sort of as a “family” again.
 

      But, watching them together, squabbling, gave me a whole  new insight into the judge’s concerns about whether my siblings and I got along well enough that we would not lose sight of the Big Picture: taking care of our mother.
 

      The lesson I learned watching these folks: Do not let minor issues distract you from focusing on your goal. There can be an awful lot of trees in a forest: don’t get lost in them.
 

     . . . Just something to think about.

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